Where I Stand — Guest columnist Michael J. Conway: Board plays favorites

Friday, Aug. 23, 2002 | 4:14 a.m.

Editor's note: In August the Where I Stand column is written by guest writers. Today's columnist is Michael J. Conway, chairman, president and chief executive officer of Las Vegas-based National Airlines Inc.

THE ACCOUNTING scandals that have rocked Wall Street and the business world have led to the government's demand that the chief executive officers and chief financial officers of large corporations personally certify their financial statements. This was done in an attempt to restore investor confidence. I applaud the government for taking such a strong stance and whole-heartedly support this effort that requires more accountability from corporate America.

What troubles me, however, is the hypocrisy being displayed by certain branches of our government at the same time the federal government is calling for the private sector to clean up their act. Greater accountability is needed in corporate America, and it's also needed in Washington. Enter pork barrel spending.

This long-standing tradition of earmarking money for absurd pet projects continues. Bills passing Congress have included money being spent towards a tattoo removal program in California and more than a quarter of a million dollars to combat "Goth culture" in Missouri.

Some of this stuff, like subsidies for farmers' markets and roadside produce stands, found its way into early drafts of the $29 billion Homeland Security Bill. Is nothing sacred? Yeah, I know this is the way our system works and how stuff gets done. But that doesn't make it right.

All too often, "I'll do this if you do that," is what shakes our confidence in elected officials to the core, just like it has with respect to the country's corporate officials.

Media coverage of a few corrupt CEOs and biased financial analysts being handcuffed and carted off to jail serves only as a temporary stopgap to the loss of confidence. Some quick research of media archives would also show a host of elected officials being carted off in the same direction as the corporate "confidence-busters." The real problem has to do with greed and influence peddling, and unfortunately, it's alive and well in both the private and public sectors.

Closer to home, most people in Las Vegas are now aware that the Air Transportation Stabilization Board (ATSB) denied the government loan guarantee application of National Airlines for $51 million. The ATSB was created to assist in the airline industry's recovery from the heinous events of last September and the resulting financial fallout.

To date, the ATSB has approved only one applicant (America West for $380 million), and conditionally approved one other (US Airways for $900 million). While I believe these carriers warranted the action taken, I cannot fathom the blatant disregard the ATSB has shown toward smaller, more efficient airlines.

The ATSB is comprised of members from the Departments of Treasury and Transportation, and the Federal Reserve. The message they are sending is that if you want something, you better be big and you better have a lot of political juice behind you. Is this a new phenomenon? No. Is it a source of the erosion of confidence in our elected and appointed officials? Of course it is.

With all the financial consulting firms to choose from, the ATSB selected a firm that is partially owned by General Electric to assist them in evaluating airline applicants. It just so happens that General Electric is one of the largest creditors of both the airlines that have received ATSB approval.

In addition, when the ATSB granted approval of America West's application, they received warrants, that if exercised, would give the government a one-third ownership stake in that carrier, a carrier that just happens to be National's largest competitor.

I'm sure there are some who will read this and say, "Well, this is just sour grapes coming from a company that didn't get approved." I assure you, this is not the case. As the editorial boards at the Las Vegas Sun, the Las Vegas Review-Journal and the Reno Gazette-Journal can attest, I sat with them several months ago and told them about our concerns regarding the politics and conflicts inherent in the ATSB process.

The need for people to be accountable for their actions has never been greater. If this is required across-the-board, it will help. More importantly, what is really needed in our corporate boardrooms and governing bodies are leaders who will define a culture where runaway greed and influence peddling have no shot at succeeding.