Is it any surprise that a Gartner study found that most consumers don't trust online identity and authentication services? And that consumers are signing up for services such as Microsoft's Passport and AOL's Screen Name so they can obtain free access to other online services such as instant messaging and e-mail.
And that they would probably not sign up if they realized that their surfing movements are being tracked?

It's happening all around us. And while everybody was aware of such happenings in 3rd world (developing) countries, it is shocking to note the extent of the decay in the so-called developed countries. Here are a few examples, mainly from the advertising media industry.

NTL, U.S.A.
While this ailing, listed U.S. cable co. NTL was preparing to declare bankruptcy, it's Chairman, CEO & CFO "accepted" bonuses cumulatively exceeding $ 1.6 billion! And that's not all - they also "awarded" themselves generous stock options!

All this at a time when the future of NTL was as uncertain as the day after a nuclear holocaust!

Mediaset, Italy
Italian P.M. Silvio Berlusconi appointed his "party" man as the new chairman of state-owned broadcast group RAI. Nothing unusual about that? Prime Ministers world over routinely appoint their "party" men as chairman of state-owned companies including television companies. Yes, but what if the same P.M. happens to own/control the largest private TV network in the country?

Berlusconi controls Mediaset, the largest private TV network in Italy. And RAI is the only major competitor to Berlusconi's TV empire. This gives Italian PM Berlusconi effective control of 90% of the domestic TV market! Including near-total control over his largest competitor (RAI)!

What more could a businessman ask for?

Adelphia Communications, U.S.A.
John Rigas owner of 20% of Nasdaq listed cable co. Adelphia Communications, has got the company to fund (amongst others) the following personal items:

- 50 automobiles from an auto dealership owned by the Rigas
- 2 large, luxurious apartments in Manhattan
- Payments for a large collection of privately owned stock
- Finance for a number of private ventures including competing cable companies
- All this totalling to $ 3 billion!

With the 2001 recession, followed by 9/11, Adelphia's income started dipping sharply, bringing it to the brink of insolvency. After the inevitable enquiries, the $ 3 billion cash 'irregularities' were discovered.

And guess what happened to Rigas after that?
John Rigas was paid a further $ 4 million to "relinquish" control on Adelphia!

Grey Worldwide, New York & Bates, New York
Officials from Grey Worldwide New York & Bates, N.Y. offices have been indicted for colluding with print production companies and 'over-invoicing' large clients of the likes of P&G. The modus operandi was simple : the vendor company over-billed the agency by pre-arrangement with conniving agency officials, who accepted the invoice and in turn over-billed the client. The extra margin (loot) charged by the vendor company was 'shared' by the vendor company with the colluding agency officials. While such incidences are not uncommon, the case of Grey Worldwide and Bates are special because they involved the same set of vendors and more importantly, carried on for a decade! In a similar case, employees of promo. experts Simon Marketing misappropriated expensive promotion material belonging to major client McDonalds, causing loss of business, fees & bringing Simon Marketing to near insolvency. Simon Marketing in turn, sued the auditors KPMG, PwC & EYI for dereliction of duty! (PwC resigned the Simon account subsequently.)

SEC, U.S.A.
In April 2002, the U.S. Securities Exchange Commission (SEC) detected undesirable links between the equity research division and the stock-broking operations of a number of reputed (trusted?) financial services companies. Names include Merrill Lynch, Credit Suisse First Boston and many others. Most of these reputable firms had invested surplus funds from their core operations to expand into new profit centers for financial services. Perceived from a client's point of view, many of the new financial services operations had conflict of interests with the firms' core business. Company officials however, claimed that they had separated these conflicting operations into 'independent' divisions and further built "China Walls" to seal critical information flow between conflicting operations. As it has been revealed, the truth was almost exactly the opposite.

The business operation was simple - Company 'A' listed on the Stock Exchange approached financial services co. for say, a merger deal with another company. Strategy demanded that share price should 'shoot' up. (Naturally. Or artificially! And the higher the better.) So a report was made out to subscribing clients recommending to 'buy' Company A stocks. (Company A and other close clients were discreetly advised to hold from investing.) Rumours were circulated, some 'activity' initiated. And gullible investors would contribute the rest to make stock price shoot up.

As the example illustrates, from the financial services company's point, there is 'business synergy' rather than conflict. Yet, there was a pretense of separation of operations, with separate divisions, China Walls and what-have-you.

Microsoft and eTrust
From all reports, Microsoft continues to collect personal data from web surfers (surreptitiously of course!). It has recently offered internet users "free.NET", a free 'passport' that purports to guarantee their bona fides when surfing or shopping, promoting this as 'one easy way to sign-in and shop online'. As per a report filed with the European Commission, Microsoft is apparently 'harvesting' personal information either from their email address or from websites they visit to make a purchase, play games or even conduct a bank transaction!

Auditing is big business - despite Andersen
Despite the collapse of (erstwhile top 3 audit firm) Arthur Andersen, more opportunities are opening up for audit firms. A recent entrant is media audit. (Refer industry survey conducted by Media Trends team on 'Mega Media Buying Shops' Media Trends April 12, 2002.)
As more & more media shops combine into large conglomerates, the clients' fear of conflict of interest increases. There are several reasons for this:

Alignment & Confidentiality: While the group flagship may be the main (roster) media shop for General Motors U.S.A., a smaller shop belonging to the same group may deal with Ford Motors, India. Leading to potential client conflicts, due to (perceived) lack of control of confidential data.

Skills set: Is the media shop able to identify / negotiate the best deals? Is / should the media shop be able to identify potential media properties for low cost, long term investments? Skills for new media?

Transparency: Are benefits being passed on to the client as per agreement? Completely? Is the buying based on any 'considerations' other than the client/brand benefit?

Promise & Performance: How to monitor the performance of the media shop? Have they kept their delivery promises?

Lack of trust has assumed such alarming proportions that we may soon see auditors who audit auditors. Just to ensure that the audit is without bias!