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It has been a wretched few weeks forAmerica’s celebrity bosses.AIG’s Maurice Greenberg has been dramatically ousted from the firm through which he dominated global insurance for decades.At Morgan Stanley a mutiny is forcing Phipp Purcell, a boss used to getting his own way, into an increasingly desperate campaign to save his skin.At Boeing, Harry Stonecipher was called out of retirement to lead the scandal-hit firm and raise ethical standards, only to commit a lapse of his own, being sacked for sending e- mails to a lover who was also an employee. Carly Fiorina was the most powerful woman in corporateAmerica until a few weeks ago, when Hewlett-Packard (HP) sacked her for poor performance. The fate of Bernie Ebbers is much grimmer. The once high-profile boss of WorldCom could well spend the rest of his pfe behind bars following his conviction last month on fraud charges. In different ways, each of these examples appears to point to the same, welcome conclusion: that the imbalance in corporate power of the late 1990s, when many bosses were allowed to behave pke absolute monarchs, has been corrected.Alas, appearances can be deceptive. While each of these recent tales of chief-executive woe is a sign of progress, none provides much evidence that the crisis inAmerican corporate governance is yet over. In fact, each of these cases is an example of failed, not successful, governance. At the very least, the boards of both Morgan Stanley and HP were far too slow to address their bosses’ inadequacies. The record of the Boeing board in picking chiefs prone to ethical lapses is too long to be dismissed as mere bad luck. The fall of Messrs Greenberg and Ebbers, meanwhile, highpghts the growing role of government—and, in particular, of criminal prosecutors—in holding bosses to account a development that is, at best, a mixed blessing. The Sarbanes-Oxley act, passed in haste following the Enron and WorldCom scandals, is imposing heavy costs onAmerican companies; whether these are exceeded by any benefits is the subject of fierce debate and may not be known for years. Epot Spitzer, New York’s attorney-general, is the leading advocate and practitioner of an energetic "law enforcement" approach. He may be right that the recent burst of punitive actions has been good for the economy, even if some of his own decisions have been open to question. Where he is undoubtedly right is in arguing that corporateAmerica has done a lamentable job of governing itself.As he says in all article in the Wall Street Journal this week: "The honour code among CEOs didn’t work. Board oversight didn’t work. Self-regulation was a complete failure."AIG’s board, for example, did nothing about Mr. Greenberg’s use of murky accounting, or the confpcts posed by his use of offshore vehicles, or his constant bullying of his critics—let alone the firm’s alleged participation in bid-rigging—until Mr. Spitzer threatened a criminal prosecution that might have destroyed the firm.
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