New Institute's Corporate Partners Help Craft Meaningful Responses to
Regulatory Change


By John H. Ostdick


Deloitte & Touche, Haynes and Boone and Marsh Inc. are first to join the
Institute for Excellence in Corporate Governance in building better
business in a Sarbanes-Oxley world.


The strategies that are shaping The University of Texas at Dallas School
of Management's new Institute for Excellence in Corporate Governance (see
New Centers of Relevance on page 10) are as critical as the issues the
institute will explore, say its director and the four founding strategic
partners helping to pour its ideological foundation.

"Our corporate partners make us unique from every other operation I'm
aware of, and I've analyzed 40 other efforts," says Dr. Constantine
Konstans, professor of accounting and information management and institute
director. "In our model, strategic partners are each service providers who
can inject real-world substance into the program."

Those founding members include Bank One, the nation's sixth- largest
bank-holding company with assets of nearly $300 billion, Deloitte &
Touche, a leading professional services firm with 30,000 employees in more
than 80 U.S. cities; Haynes and Boone, an innovative law firm with more
than 450 lawyers in nine offices; and Marsh Inc., an operating unit of
Marsh & McLennan Inc., one of the world's top risk and insurance services
firms with annual revenues of $5.9 million, 410 offices and 38,000
employees in more than 100 countries.


The act

They are positioned to help The School of Management's new institute
explore the tide change in corporate governance in the wake of the
Sarbanes-Oxley Act of 2002, the most far-reaching government crackdown on
business fraud in nearly 70 years. The partners also can help educate
officers and board members on the act's short- and long-term effects.

The act, sometimes referred to as the Enron Bill, is designed to combat
corporate and accounting misdeeds. The measure seeks to improve the
quality of financial reporting, independent audits and accounting services
for public companies by creating a Public Company Accounting Oversight
Board. Overseen by the Securities and Exchange Commission (SEC), the board
will enforce standards, ethics and competence for the accounting
profession; strengthen the independence of firms that audit public
companies; increase corporate responsibility and financial disclosure;
stiffen fines and criminal penalties for fraud, misrepresentation and
destruction of documents; protect the objectivity and independence of
securities analysts; and enhance the SEC's enforcement of the securities
laws.


Marsh: Offering insurance access

"Deloitte & Touche, from the accounting perspective, and Haynes and Boone,
from the legal perspective, are right at the heart of the corporate
governance changes, how you report earnings and disclosure issues," says
Joe Gunn, senior vice president of the Dallas office of Marsh Inc.
"Investors, both institutional and individual, will look more fondly upon
organizations that have strong corporate governance policy.

"We're the third leg of the stool, at a minimum providing entrée into the
underwriting community and hopefully getting these institutions credit for
the hard work they've done and deeper access to the insurance marketplace
at more favorable premiums."

Mr. Gunn's firm is at the root of a main focus point for directors and
officers - liability insurance. "There are all kinds of new changes coming
down from the SEC and governmental agencies about what corporate directors
and officers are going to have to do in the future in light of the
problems Enron and WorldCom have caused," Mr. Gunn says. "The resulting
high premium increases for liability insurance are making it increasingly
difficult for corporations to recruit outside directors, who are
scrutinizing the personal risks associated with these positions more
closely.

"We want to take a leadership role in the rollout of these regulatory
changes and put ourselves in a position to go to the underwriting
community and help set the standards for how they should proceed to better
comply with these new ordinances."


Deloitte & Touche: Bringing tools from the marketplace

Skip Moore, who joined Deloitte & Touche in 1978 and has been a partner
for 14 years, finds fortuitous alignment of the institute's aims and his
company's business.

"What the partnership offers for us is validation in the marketplace," Mr.
Moore says, "as it offers really nice synergies in what we have to offer
and what UTD and the business school can provide. We bring knowledge,
contacts and practical experience from the marketplace, and UTD brings
some great research capabilities and academic qualifications. When you put
those two together, it makes for something that neither of us could do as
well alone."

Mr. Moore, whose specialty areas include technology, media and
telecommunications says, "Our clients ask us all the time for resources
that a management or a board can use to educate themselves. Since we are
involved with setting the agenda, this program offers a solution that we
can know and trust."


Haynes and Boone: Answering directors' questions

Greg Samuel, a Haynes and Boone partner for corporate/ securities, mergers
and acquisitions, believes it is in everyone's interest to have a better
corporate America.

"We all benefit if there is more integrity and trust imbued in corporate
boardrooms," says Mr. Samuel, who has been with Haynes and Boone for 18
years and was identified in May by D magazine as one of the city's best
lawyers. "What we try to bring to the table is the ability to answer
questions that these directors are asking. ...The ones near and dear to
their hearts are the ones we want to strike at and therefore make it more
germane and worthwhile to them."

Most importantly, Mr. Samuel says, is that the programs he helps devise
should give participants a conceptual understanding of what's behind the
Sarbanes-Oxley Act. "That way, good men and women who want to do right may
not remember every detail but have enough awareness that they avoid foot
faults and can fully understand their duties," he says.


Bank One: Reinforcing character

Fred Points, first vice president of Bank One, believes the real- life
experiences each partner brings to the institute make it much more than an
academic exercise.

Corporate boards must operate not only within the law but also within
ethical and moral subsets, says Mr. Points, who has been in the banking
industry for 20 years, the last eight with Bank One. "A lot of what
happened in the Enron reporting, for example, was within the law but just
not right." 

Bottom line, he says, "as a bank, we put our money into a company."

 "When I started out in banking, many years ago, we used to talk about the
four "Cs" of lending. When you want to make a loan to a public company,
you look at four things: credit, cash-flow, collateral and character. What
we are talking about now is number four. All the others, however, are
sourced through character. With character, you know that the other three
are clean and clear. That issue is at the heart of what this program gets
at."


Corporate Sponsors: Fortifying the ranks

The institute will continue to fortify the ranks of its strategic
partners, Dr. Konstans says. 

"We'll supplement these members with other critical components in
corporate governance," he says. "This group will meet with our faculty and
design programs that are going to benefit the directors and officers of
public corporations in the discharge of their duties. To make sure these
programs provide value to directors and officers, we have a group of
corporate sponsors with a different role: They will review the programs
and offer feedback, help the program attract speakers and send their
officers and directors to attend the programs."

The institute's sponsors include the Texas General Counsel Forum, made up
of 350 members, many of whom are general counsels of Texas-based
corporations; Texas Instruments Inc.; Haggar Corp.; Lennox International
Inc. and AdvancePCS. 

"We have a faculty that is extremely well-versed in research methodology
and is already involved in corporate governance research, including such
issues as stock options and the effects of restatements," Dr. Konstans
notes. "My partner in this effort, Dr. Suresh Radhakrishnan, our director
of research, and I have had a series of meetings with several of our
strategic partners, and we've come up with a wealth of researchable ideas
based on issues that are perplexing their profession."


SOM: Aggressive in research

So far, the founding partners have found the process vigorous.

"We think that UTD is a leader in the educational community here - not
just in technology but in business as well - and is very aggressive in
this arena," Mr. Gunn of Marsh says. "UTD's aim to include all business
facets rather than just corporate law concerns is unique and more
beneficial to the corporate community. UTD has a clear advantage with this
type program because it is one of the strongest research institutions in
Texas, if not the South or nation. The combination of having the practical
hands-on experience of the strategic partners combined with the corporate
sponsors and the academic research background really makes this program
special."

Mr. Moore of Deloitte & Touche also notes that he has been "very impressed
about how responsive UTD has been to our involvement and input."

It's a strategy officials here hope builds a better corporate America, one
partner at a time.