GM’s new CEO’s assignment is nothing more than to oversee “Corporate Governance and Reputation Concerns”: with a twist.

Although an old twist this role is fashioned after and set with the introduction of the “Political officer” of the Red Army. It was in the early 1920’s in the Soviet Union when the institution of a political commissar was introduced.   

By defination a politically annointed or selected commissar (CZAR) is actually a political officer whose position is equal to that of the CEO of any given business and has the authority to countermand the orders of the CEO.  This edinonachalie,("single command”) concept was introduced in two ways -- either the CEO joined the Party and also became the political officer, or the position of "pompolit": ????????) (assistant CEO for political work) was created under him. Either way, the position would be manufactured and filled by a governmental sychophant.

General Motors evidently decided it would be to their best interest to play the game. With the successful termination/resignation of Mr. Rick Wagoner the Obama administration signaled a nod of approval as Fritz Henderson became the pompolit.   In essence, GM now has a “politically appointed” Czar to offer an explanation for the operations within a corporate governance context.  That is, of course, providing we consider a setting in which the management of this firm sets up financial statements that are plausible.

The way this may work is that these statements will be reviewed/audited by the governmental Czar and, to ensure proper oversight, by an internal company audit committee.  Both will report the result of their audit, the Czar, of course, acting first.  By nature of this beast the Czar and the audit committee must use a(n) (im)perfect auditing technology as only government can provide.   And of course, ours’ is not to question the sagaciousness of governmental wisdom in developing such a measure.

As a result of their work these committees, made up of the regular GM officiates and the new Czar, privately observe the surreptitious signals regarding the quality of the financial statements.  The probability for a correct signal in the sense that an unbiased report is labeled correct and a biased one incorrect, depends on the type of the government agent.  In this scenario, a toady will do quite well.

Keep in mind good as well as bad agents exist in this scenario.  The Czar, and the audit committee as well, are anxious to build up a reputation regarding their ability to translate  (manipulate) the figures. Importantly, while good agents may observe identical informative signals the signal observed by the Czar may be uninformative and uncorrelated to those of other agents. Given this goal they report on the company’s performance in order to maximize the market’s assessment of their ability to operate.  At the end of the game the true character of the financial statements is publicly learned and the market uses this information along with the Czar’s reports to update procedures.  What is important here is the Czar, by definition, has the authority to countermand and replace the findings of any committee:  Obama wins.