Dodgy dotcom directors

Senior executives at dotcom companies are four times more likely to have “unsavoury backgrounds” than top managers in other industries according to research by Kroll Associates. The business intelligence and investigations firm carried out 70 due diligence studies of Internet board members in the middle six months of this year in the US, Europe and Asia. 27 (39 per cent) of these revealed individuals whose backgrounds included Securities and Exchange Commission rule violations, insurance fraud, undisclosed bankruptcies, frauds perpetrated overseas and associations with organised crime. Kroll says that it usually expects to find problems in about ten per cent of key person investigations. Ernie Brod, executive managing director of Kroll’s New York office said, “We’ve been concerned for some time about the young founders of Internet start-ups bringing in the ’grey beards’ to add stature to their companies – without carefully checking them out.” Instead of providing a guiding hand and sound advice to individuals whose experience is primarily technical rather than managerial, “their real expertise is often in looting the company,” he said, adding “It’s a ready-made market for fraudsters.”