Thursday, March 25, 2004

The Ukranians should adopt Sarbanes-Oxley 

It seems that we have a small internal controls problem in the Ukraine:

Ukrainian Defence Minister Yevhen Marchuk has said that several hundred of his country's missiles are unaccounted for.

The weapons were supposed to have been decommissioned in the years that followed the break-up of the USSR.

But it is now being claimed that there is no record of them being destroyed.

This is being blamed on accounting problems during the period of transition that followed the country's independence in 1991.
(emphasis supplied)

How alarming is this? If we've learned one thing in the last year, it's that the failure of some lame government to account for the destruction of weapons (such as anthrax) is not in and of itself proof that the weapons still exist. Unfortunately, bad accounting also forces us to prove a negative -- that the weapons are not still extant. We are left to stew in our fear that they have fallen into malevolent hands, even if the more likely explanation is that they were scrapped for their precious metals.

Of course, as those of us in the American investor class have learned during the last 28 months, any "accounting problem" undermines the credibility of the entire system. If the Ukranians can't account for their big old missles, how certain can we be that they have kept track of their tiny little warheads?


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