Sarbanes-Oxley is a U.S. federal law enacted in response to the rising incidence of corporate and accounting fraud at prominent corporations, as exemplified by Enron, whose annual revenues in 2001 decreased from over $100 billion to nearly zero in a matter of months. Enron”s market capitalization prior to its collapse was over $60 billion, while its ten year annual growth rate exceeded 50%. Enron collapsed primarily because its business-model was inextricably linked to the amount of trust customers placed in its financial integrity. Once this confidence withered, Enron”s clients became unwilling to trade long-term natural gas contracts due to a concern they may never be fulfilled. The underlying market dynamics are similar to those of a bank run, where panic-driven depositors race to withdraw their funds as quickly as possible. A mounting lack of trust quickly envelops into a self-fulfilling prophecy.
These same principles, in a sense, also apply to the Catholic Church. Were the laity and non-believers alike cease to believe in the fundamental moral integrity of the Church, a global institution that is of enormous value and importance, would quickly fail. Loss of trust precipitates failure, thus justifying the initial loss of trust. The only effective antidote for preventing this outcome is the restoration of trust. Unfortunately the U.S. Catholic Bishops have failed to meet the growing public demand for greater transparency, but instead have enacted a series of measures designed to prevent further instances of abuse in every arena except those where it actually occurred.
In order to begin restoring public trust in the Catholic Church, all members of the clergy who contributed to the scandal, including Bishops and even Cardinals, must be removed from authority, and as required by law, prosecuted. Contrary to the legislative reforms enacted in response to mounting corporate scandals, the reforms enacted within the Catholic Church in America have been superficial so as to spare those directly responsible. Whereas Enron”s former leaders are now serving serious time in prison, Cardinal Mahoney and other leaders who were aware that priests were abusing children have not been removed or even held responsible.
With respect to Cardinal Mahoney, the estimated cumulative financial loss to the Los Angeles Archdiocese is as high as $1 billion, which the laity will be expected to cover. However, the Cardinal could have easily avoided or mitigated this scandal had he acted responsibly as a leader, given that in many cases he had full knowledge of the illicit behavior committed by select priests. As a leader, he must- voluntarily or otherwise- accept full responsibility for this scandal, just as Enron”s leaders were forced to accept culpability as well as punishment under the law for their leadership failures. This is a prerequisite if the Catholic Church in America is to retain any shred of credibility as a moral force for good in the world.