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Is There an Enron Within the GeoTechnologies These are, without question, trying times. Our confidence was shaken by the dot-com meltdown, making us realize that our country’s economic foundation does not necessarily rest on bedrock. Then on September 11 we took a shot to the heart. Once the dust settled and the grieving subsided, we rediscovered that our spirit and our principles are the twin components of that foundation. We remain strengthened by our resolve and our might in the war on terrorism. Nonetheless, the collapse of our nation’s seventh largest corporation has caused concern throughout society. One learns from history that the events having the greatest impact on human endeavor are generally not good deeds performed by heroes, but rather acts of folly, incompetence or the evil deeds of bad people. The recent Enron debacle is a case in point. The greed, ignorance, and avarice of Enron executives utterly betrayed those who invested their trust, as well as their savings, in the company. Enron executives might well be described as a gaggle of blindfolded peacocks, dressed in pinstriped suits, attempting to describe to the outside world what an elephant looks like. No one has the whole picture, but they are all culpable. Do we have an Enron in this industry? That may be like asking if there are members of the Bush administration who do not have ties to the beleaguered company. There are most likely Enrons in any industry, although certainly not to the magnitude that Enron has had a deleterious effect on business. For example the rise, fall and subsequent struggle for survival of Analytical Surveys Inc. (ASI) illustrates how greed, ignorance, and a lack of financial accountability can have a devastating effect, not only on the company’s employees and customers, but throughout the GeoTechnologies. On January 23, 2002, ASI announced, "the Securities and Exchange Commission has commenced a formal investigation of the company, its former officers, directors and others as to the company’s accounting policies, procedures, disclosures and system of internal controls relating to the period from October 1998 through March 2000. On March 7, 2000, the company restated earnings for the fiscal year ended September 30, 1999. "Since March 2000, a new executive management team has implemented remedial measures to improve accounting procedures and internal financial control systems, particularly with respect to project cost-of-completion estimates. In addition, the company has already settled a class-action lawsuit against the company and certain of its former officers and directors for damages sustained by shareholders during the timeframe under SEC investigation. The company intends to cooperate fully with the SEC in this investigation." Shortly after this ASI announcement, I received a message from a gentleman who owns a competing mapping company. He told me, "All of those in the industry from 1995 to 2000 knew what was going on. Countless good people and good companies suffered from this deception. It’s a damned shame. I remember your call to me while their stock hit a high of $52 [per share]. At the time it seemed like sour grapes from me. Well the truth is finally coming out." The truth to which he refers involves ASI drastically underbidding jobs to win contracts and thereby show significant revenue growth. However, as was discussed at the time, ASI had to show their true earnings figures eventually, and this was what started them on their road to decline. The stigma has followed ASI around like the smell of an old hound dog that got cross with the wrong end of a skunk. This is regrettable, since current ASI president/CEO Norm Rockosh is both an honorable man and a very capable corporate executive. By all indications his company has behaved in an exemplary manner since he landed in the hot seat. But no matter what he does, there is not enough tomato juice in the world to eliminate that odor. "We are doing everything we can to cooperate with the SEC and correct any past transgressions. The company is feeling the effects of the general economic malaise. Since selling the Colorado Springs (Colo.) office to Sanborn, the company no longer provides photogrammetry services but focuses on its core business of data conversion, field-data collection, cadastre mapping, and some software development," Mr. Rokosh recently told me. Despite the travails of ASI, the lesson has not been learned. It’s 1998 all over again, with complaints by mapping/photogrammetry firms about certain companies-not ASI this time-winning contracts by drastically undercutting bids. This often sounds like sour grapes from those who lost out. But mapping and photogrammetry are controlled by the laws of physics and economics. In other words, there are no magic potions to produce a mapping or photogrammetry product that will meet certain specifications. There are definite costs that must be applied to achieve those specifications. Something fails if they are not adhered to, either the product or the company. One can never forget that there will ultimately be a day of reckoning. Just ask any of the executives at Enron. Until next time... Cheers! |