Now it's cool being honest.

Former U.S. Attorney General Richard Thornburgh, no slouch when it comes to being a good corporate citizen, made an instructional film some time back for executives that dealt with legal and ethical issues. His message was simple: Do the right thing. A culture that emphasizes ethical conduct, Thomburgh said last week, would make a much bigger imprint than all the laws and regulations Washington can conjure up.

His reflections on skullduggery came, as luck would have it, on the same week that the embezzlement trial of Dennis Kozlowski featured the now-infamous video of a $2.1 million birthday bash in Sardinia the former Tyco chief executive threw for his wife Karen.

You've probably heard about the highlights: Ancient Roman theme, flaming urns, helmeted centurions, togas, women "slaves" feeding grapes, etc. The festivities were sufficiently sleazy for the judge hearing the case to order several scenes cut, including an ice sculpture of Michaelangelo's "David" urinating vodka into crystal glasses.

The judge was concerned that such images could prejudice the jury.

Smart judge.

When it comes to corporate excess in the 1990s, Kozlowski has emerged as the preeminent poster boy--almost a cartoon character for his piggish ways (he had an affair with the assistant who prepared his wife's birthday bash). But getting forgotten amid what the Wall Street Journal headlined as "Corporate America's Funniest Home Video" is a question that's been looming for almost two years: Are these and other scandals outrageous yet isolated incidents or was corporate America steeped in a systemic pattern of financial fraud and abuse?

Judging by the limited number of executives who have been prosecuted so far, it's easy to conclude that the government overreached and overreacted. Look at the mistrial of Frank Quattrone. Look at the failure to develop a case against Enron's Ken Lay or even Global Crossing's Gary Winnick. Our own Business Journal poll of local executives a few months back found that nearly two-thirds of those surveyed thought the new financial disclosures required under the Sarbanes-Oxley Act were overkill.

But don't confuse the judicial scorecard with the fundamental matter of right and wrong. On that score, we all know that greed corrupts and that by the late 1990s there was plenty of greed to go around--not only at Enron, Worldcom and Tyco but most anywhere you looked. Auditors will tell you now that they were under intense pressure from their clients to make the numbers look as impressive as possible, even if it meant crossing the line a time or two. A few brave souls stood their ground and said no; many others didn't

These days, of course, it's cool to be honest. Boards have been overhauled to give directors more oversight, independent audit committees are actually looking at the numbers, and management is being asked to sign off on pretty much everything. Good for them. But it's easy to be good when everyone is watching--and, for that matter, when there is no massive IPO market to go after and no temptation to make the numbers look better than they are. If anything, the temptation is to be too conservative.

Doing the right thing is not some passing fad--it's part of who we are, regardless of whether it's convenient or fits our profit projections. As Thornburgh noted, "it's a message that must be taken to heart within America's business and financial communities if they are to continue to prosper and maintain the confidence of the investing and taxpaying public."

I wonder if Dennis Kozlowski was listening.

Mark Lacter is editor of the Business Journal.