The myth of the rogue CFO

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Let’s take a moment to consider the unique challenge of being a chief financial officer. As corporate fiduciaries, financial wizards, and guardians of the currency, CFOs have the onerous task of overseeing taxes, cash flow, spending, borrowing, closing deals, investing, risk, supply chains, transformation, and their employer’s financial health — while answers to Wall Street and personally vouch for the accuracy of financial reports if they work for a publicly traded company.

They also need to live up to the numbers and, as former CFO John Rex puts it, every aspect of the business inside and out. That makes them targets when those numbers don’t add up or, in the case against Huawei CFO Meng Wanzhou, fired last week, their business is in violation of US law. (Tyson Foods CFO John Tyson’s recent challenges can come more from problems with alcohol than from bookkeeping.)

Donald Trump’s latest legal troubles are a reminder why a chief of finance is often the first stop for regulators and prosecutors investigating crimes. When Allen Weisselberg, the longtime CFO of the Trump Organization, drew attention, he admitted to scoring free cars, tuition and other secret perks during his five decades with the company. Company lawyers cast Weisselberg as a greedy and corrupt man. But a Manhattan jury decided last week that his employer was just as greedy and corrupt as found the Trump Organization guilty of 17 counts of criminal tax fraud. (For a scary look at what the IRS can do to individuals, by the way, check out Bill Baldwin’s latest piece.)

Prosecutors know it’s rare to find a rogue CFO. The access and control that makes them such obvious suspects in fraud cases also makes it difficult, if not impossible, to act alone. They are usually part of an ecosystem, the first domino to fall in widespread fraud. Enron’s Andy Fastow, WorldCom’s Scott Sullivan and Tyco International’s Mark Swartz were some of the CFOs who went to jail for accounting scandals a generation ago. But their bosses were the initiators of the plans: Enron’s Jeffrey Skilling and Kenneth Lay, for example, or WorldCom’s Bernie Ebbers and former Tyco chief Dennis Kozlowski.

Under the Sarbanes-Oxley Act of 2002, drafted in response to a series of high-profile accounting scandals, the CFO and CEO must personally vouch for their numbers — and the systems they have in place to ensure they are accurate. At least five years later, the President’s Corporate Fraud Task Force reported that 53 CFOs were convicted of fraudalong with 214 CEOs and presidents.

Andy Fastow was one of them. Enron’s dissolute CFO had won awards and even one CFO Excellence Award from CFO magazine for his bold creativity in deploying off-balance sheet special purpose vehicles to keep cash flowing to what was then America’s seventh-largest publicly traded company. A Lehman Brothers analyst called his strategy “groundbreaking.”

Not long after, he was arrested and eventually sent to prison six years for securities and wire fraud. Fastow testified that former CEO Jeffrey Skilling told him to give him all the juice he could to make Enron’s earnings look good. The board, including chairman Kenneth Lay and Skilling, approved the creation of a rogue shell company to cover up Enron’s losses and illegalities. In other words, it took a village.

In several recent high-profile cases, there was no CFO. FTX founder Sam Bankman-Fried, who was hit with fraud charges today from the SEC, had no CFO or board at the now bankrupt crypto exchange. In a interview yesterday with Steven Ehrlich of, SBF blamed his lawyers. (We also followed how much the former billionaire knew, which is a lot.) Convicted fraudster Elizabeth Holmes apparently had a CFO for 8 months of Theranos’ 15-year lifespan. For leaders with a lot to hide, a sworn fiduciary in the C-suite is the last thing they want.

What’s next

Twitter Tantrum of the Week: The award – again – goes to CEO Elon Musk who managed to insult the outgoing public health official Anthony Fauci and the LGBTQ+ community in a random weekend tweet. If you missed it, congratulations. My colleague Brittany Lewis and I discussed it why Musk uses a tactic that most CEOs agree is dubious and damaging to the company. He has his reasons. But Musk’s behavior since acquiring the social media platform has helped diminish enthusiasm for all things Musk, to the point where he’s now the the second richest man in the world.

Ken Griffin sues IRS: In keeping with the week’s theme, billionaire Ken Griffin has sued the IRS and the Treasury Department for alleged negligence a leak that exposed the taxes paid by the wealthiest Americans. Citadel’s founder claims IRS employees “deliberately stole the confidential tax returns of several hundred successful U.S. corporate executives,” adding that officials “did not thoroughly investigate the source of the leak.”

Wealthy kids follow apprenticeships: On-the-job training is becoming increasingly popular as a way to recruit diverse workers and train workers who do not have college degrees. But new research from the UK shows that working-class children are be squeezed out as the programs are accepted.

The fastest growing skills: Concerned about OpenAI’s ChatGPT? It may seem like the chatbots come for your work, but automation turns out to be good for people’s pay. These are the skills that are increasingly in demand.

An HR guru goes to a guild: Check out Jena McGregor’s piece on former Patagonia guru Dean Carter’s move to become Guild Education’s chief people officer. It’s a much more expansive role than we usually associate with HR.

You can now apply for the Aviram Awards, a competition for promising startups in the Middle East and Africa, with a grand prize of $500,000 and more.