WE HAVE NO INTENTION of prejudging the case against the investment banking house of Drexel Burnham Lambert, currently the subject of an inquiry by the Securities and Exchange Commission and a federal grand jury for its junk bond activities and role in corporate takeovers. Just the other day a former Drexel arbitrage analyst, Robert Salisbury, drew a lenient sentence for cooperating with the government in the "Yuppie Five" insider trading case. And it was Dennis B. Levine, a former Drexel Burnham merger specialist, after all, who led the feds to Ivan Boesky and Wall Street's biggest scandal in recent years.
However, we have to confess a certain sympathy for Frederick H. Joseph, Drexel's chief executive. He noted the other day that if his work force was 99.9 percent clean, that still meant 10 possible Robert Salisburys or Dennis Levines. Moreover, as a private employer, it was often difficult, if not impossible, to find out what has been going on. This, despite extensive compliance and internal auditing staffs. One can check references and conduct extensive private investigations, but if a present or potential employee chooses to lie, the employer - unlike the government - has no effective penalties to assure that he gets the truth.Indeed, employers have learned that even if there is damaging information, it is not easily discovered. Former bosses won't tell because, from painful experience, they have found that disclosure can trigger costly damage suits for libel or invasion of privacy. The same goes for inquiries into the off- the-job behavior of present employees.