Creative Accounting Reconsidered

What riles me most about creative accounting scandals, besides their moral and ethical no-no's, is the monstrous greed and hubris exhibited by their perpetrators. Enron. Adelphia. Tyco. (Fodder all for CEO See-Ya!) These are just a few companies rocked by scandals that at their heart were about money and power. How then should I react to a new case of misleading accounting in which inaccurate financial data were used for the good of the many instead of the one?

Last week Greece admitted using fudged economic data on multiple occasions to gain entry into the European Union. Potential members of the union are required to keep their budget deficits to within 3 percent of their gross domestic products. In 2000, Greece submitted an official budget deficit of 2 percent of the gross domestic budget that has since then been revised to 4.1 percent. Additional data released also shows that the budget deficit has been revised upward by at least 2 percent for the following three years.

The current conservative Greek government has quickly shifted blame to the former socialist administration. The issue of punishment is still outstanding and will be determined by the European Union finance minister. It is possible Greece will get off with merely a slap on the wrist, if that.

The gains from Greece's fraud are obvious and huge -- tariff-free access to the European Union marketplace, use of a stable currency, the Euro, and EU subsidies for its local industries. These spoils are also spread across the entire Greek population. The victims of this fraud, the other members of the European Union, perhaps suffered a slightly devalued currency and a loss of subsidies to Greek industry.

On the face of it, it is hard to build a case against Greece's misdeed on anything but ethical grounds. However, that should be enough. Greece has gotten what it wanted, EU membership, but it also has set an ignoble example for its domestic businesses. Perhaps the lesson here is that creative accounting will surface whenever numbers are the only obstacle preventing an entity -- person, corporation, or nation -- from getting what it wants.