No subject
Wed Mar 2 11:56:33 PST 2005
as revenue. The "major media company," by the way, appears to have been
America Online, which is already under SEC investigation for erroneously
inflating advertisement revenue.
The SEC also has a complaint against Homestore, which charges the former
executives with a second bogus deal, this one worth $9.6 million. The SEC
complaint also requires John Giesecke, Homestore's former chief operating
officer and former chief financial officer Joseph Shew to pay shareholders
$4.4 million for their illegal stock sales.
10. Xerox could face criminal charges
Earlier this year, Xerox was slapped with a record $10 million fine from
the Securities and Exchange Commission (SEC) for accounting violations.
Last week, Xerox confirmed that the US attorney's office in Bridgeport,
Connecticut was investigating its accounting practices as well.
The SEC complaint accused senior Xerox management of increasing the
company's pre-tax profits by $1.5 billion from 1997 to 2000 through
fraudulent accounting.
11. Enron's Fastow may be indicted this week
Andrew Fastow, Enron's former CFO, is expected to be charged criminally
this week with multiple counts of fraud. Fastow is seen as the architect of
the secretive off-the-books partnerships that Enron used to fudge its
books. Fastow himself made $30 million from the partnerhips.
Investigators are also finding that Enron's use of complicated
off-the-books partnerships may have begun in the early 1990s, a few years
before they were thought to have originated.
NEWS AND VIEWS
Captive politicians avoid confronting capitalist excess
By Molly Ivins, for the St. Louis Post Dispatch
Poverty is up, unemployment is up, 40 million Americans don't have health
insurance, we have allowed unrestrained greed to ruin the economy and the
president wants to know, "What, apart from government, can we do?"
This is not the result of an economic failure in this country-it is the
result of political failure. We have institutionalized "infectious greed"
with this right-wing free-market claptrap and the accompanying corruption
of our political system through the system of legalized bribery called
campaign financing. I have yet to see serious reform proposals emerge from
Congress (honorable mention to Sen. Paul Sarbanes).
We need an entire package of reform bills on corporate governance alone,
and we need to regulate derivatives and crack down on offshore money. The
most commonly asked political question in America today is, "Where the hell
are the Democrats?" The answer is they're also corrupted by campaign
financing, but since they are the only ones likely to do anything about
this mess, I suggest the gutless wonders that pass for an opposition party
in Washington get up off their fat duffs and get to work.
http://home.post-dispatch.com/channel%5Cpdweb.nsf/TodayFriday/86256A0E00
68FE5086256C410035AEAF?OpenDocument&PubWrapper=Editorial
Tax-Haven Firms Lobbying Against Curbs
By Jonathan Weisman, Washington Post
When Congress began moving this summer against U.S. companies that avoided
taxes by being headquartered in offshore havens, Bermuda-based Accenture
Ltd. took a decidedly American line of defense.
It hired lobbyists, lots of lobbyists: Bush family confidant Charlie Black,
former House Appropriations Committee chairman Robert L. Livingston
(R-La.), former senator Dennis DeConcini (D-Ariz.) and Reagan White House
chief of staff Kenneth Duberstein.
Accenture is not alone. Tax haven-based companies may be persona non grata
to many on Capitol Hill, but they have become a godsend to K Street. And
the high-priced lobbyists prowling the halls of Congress on the companies'
behalf may be succeeding in delaying or watering down what once looked like
an unstoppable tide of legislation designed to force the companies back
into the U.S. corporate tax fold.
http://www.washingtonpost.com/wp-dyn/articles/A57407-2002Sep23.html
Business Reform Hopes Dim
Congress: The focus on a possible war with Iraq may imperil measures to
bolster workers' pensions and to seek new rules dealing with corporate
corruption.
By RICHARD SIMON, Los Angeles Times
The brewing face-off with Iraq may have claimed its first casualty: more
corporate reform legislation.
Prospects for a bevy of measures designed to strengthen protections for
workers' pensions and impose new rules of corporate behavior appear to be
dimming, in part because of Washington's preoccupation with President
Bush's aggressive new stance toward Iraqi President Saddam Hussein.
The measures have been stalled by shifting legislative priorities, such as
the possibility of war, by aggressive lobbying by business to head off more
regulation and by heightened election-year tensions.
http://www.latimes.com/news/nationworld/nation/la-na-reform27sep27.story
COMPANIES & FINANCE THE AMERICAS: Whistleblowers start to call the tune
By Joshua Chaffin, london Financial Times
Mr Chacon is not the only laid-off Wall Street employee to turn against his
former firm. He serves as a warning to Wall Street that some of their most
dangerous enemies may be the tens of thousands of employees they have
dismissed amid the extended slump in the securities industry.
"We have stockbrokers at prominent brokerage houses who have been calling
us non-stop," says Michael Bachner, a New York securities lawyer. "They're
concerned that wrongs have been committed."
Although the banks question their motive and the veracity of their claims,
disgruntled ex-employees are receiving considerable attention from
regulators investigating Wall Street firms and securities lawyers suing
them.
http://search.ft.com/search/article.html?id=020924000433&query=Whistlebl
owers+start+to+call+the+tune&vsc_appId=totalSearch&state=Form
The Best & Worst Boards
How the corporate scandals are sparking a revolution in governance
By Louis Lavelle, Business Week
The yearlong study provided a richly detailed view of governance in the
post-Enron age, revealing a broken system undergoing radical repairs.
"Enron is bringing about the most sweeping structural changes in
governance that have ever occurred," says Donald P. Jacobs, former dean of
Northwestern University's Kellogg School of Business and a governance
watcher. "We thought there had been an enormous increase in the quality of
boards, but Enron has shaken the hell out of that confidence."
That wake-up call has spurred companies to make radical improvements.
Problems that were simply ignored a couple of years ago are now the
subject of heated boardroom debate. Boards are being forced to grapple with
tough questions: How much is enough when it comes to paying the chief
executive? What's the best way to account for option grants? What kinds of
ties should be banned between directors and the companies they oversee? How
many boards can directors serve on without being stretched too thin? How
should the audit committee be staffed and run? And how much additional
consulting, if any, is acceptable for the outside accounting firm? The
recent scandals have made it all too clear that the decisions boards make
on these issues can have profound consequences for their companies.
http://www.businessweek.com/magazine/content/02_40/b3802001.htm
-------------
FROM THE POLLS...
According to a Jericho communications poll of 264 CEOS, 36 percent said
their companies are more conscious of corporate social responsibility in
the wake of 9/11. But just 12 percent said they're actually allocating more
money for it.
---------------------------
THIS WEEK'S ACTION ITEM:
This Wednesday, the Senate Treasury and General Government Subcommittee
will be holding hearings to "examine the appropriateness of U.S. companies
moving their headquarters to offshore tax havens."
Citizen Works founder Ralph Nader will be among those testifying that U.S.
companies moving their headquarters to offshore tax havens is inappropriate
and that legislators should take action.
You should also tell your senators this week that you believe it is
inappropriate for U.S. corporations to reincorporate offshore. Tell them
that the government should crack down on these tax cheaters and not award
them any government contracts.
US Capitol Switchboard - (202) 224-3121
To contact your senators - http://www.senate.gov/contacting/index.cfm
For more background on corporate tax escapees, visit
http://www.citizenworks.org/enron/corp_tax_dodgers.php
UPCOMING EVENTS
1. Wall Street rally scheduled for Friday, October 4
To unify the plights of workers, shareholders, and pensioners, Ralph Nader
is headlining a major rally on Wall Street on Friday, October 4. The event
will take place at 12 noon on the steps of Federal Hall, facing the New
York Stock Exchange on the corner of Wall St. and Broad St. Nader will join
singer/songwriter Patti Smith, author and professor Francis Fox Piven, and
cartoonist Tom Tomorrow along with other national performers and speakers
in calling for a crackdown on corporate crime The Wall Street rally will
launch a series of events nationwide to channel the people's sense of anger
at the recent corporate scandals into a focused and disciplined movement to
break the grip of over-reaching corporate power and highlight honest
business practices. To find out more or to volunteer for the event, visit
http://www.democracyrising.org or call 212-349-6460.
2. The Stop ExxonMobil Campaign is calling for a National Day of Action for
October 19. Coordinated by the Stop ExxonMobil Alliance, the Day of Action
is an unprecedented effort between environmental, human rights, and
pro-democracy groups to address ExxonMobil's unchecked corporate abuses.
Check out www.stopexxonmobil.org to locate an Exxon or Mobil gas station
near you, and to find out how to get involved in the broader campaign.
---------------------
MAKE YOUR VOICE HEARD
White House Comment Line - (202) 456-1111
White House Fax Line - (202) 456-2461
President George W. Bush's e-mail - president at whitehouse.gov
Vice President Dick Cheney's e-mail - vice-president at whitehouse.gov
White House Address - 1600 Pennsylvania Ave, Washington, DC 20500
US Capitol Switchboard - (202) 224-3121
To contact your senators - http://www.senate.gov/contacting/index.cfm
To contact your representative - http://www.house.gov/writerep
For more information about Citizen Works, please visit
http://www.citizenworks.org.
For any questions regarding this list, please email
ldrutman at citizenworks.org.
To unsubscribe from this list, please send an email to
corporatereform-unsubscribe at mlm.citizenworks.org.
News summaries based on original reports in other publications are prepared
by Citizen Works staff and are not created, sponsored, approved or endorsed
by the publications to which the original reports are attributed.
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<b><font size=3D+4>The Corporate Reform Weekly</font></b>
<br><i><font size=3D+2>Citizen Works=92 look at the Campaign for =
Corporate
Reform</font></i>
<p>Volume I, =
#30 &nbs=
p;  =
; =
&=
nbsp; &n=
bsp; &nb=
sp; &nbs=
p;  =
;
September 30, 2002
<p>1) The Week in Review (a summary of corporate reform and rhetoric)
<br>2) News and views
<br>3) From the polls
<br>4) Action items
<br>5) Upcoming events =96 Ralph Nader Wall Street rally scheduled for =
October
4.
<br>
<p><b><font size=3D+4>THE WEEK IN REVIEW:</font></b>
<br>1. Anti-corporate globalization protests attract 10,000
<br>2. Citigroup faces split of investment and brokerage, new SEC rules
may follow
<br>3. Spitzer goes after executives=92 IPO profits
<br>4. Bush cites progress on corporate reform crackdown
<br>5. FERC official finds energy price manipulation
<br>6. Former WorldCom exec pleads guilty to accounting fraud
<br>7. Hearings into Qwest, Global Crossing continue.
<br>8. Dynegy pays SEC $3 million to settle charges
<br>9. Homestore execs plead guilty to inflating earnings, implicate AOL
<br>10. Xerox pays record fine for accounting fraud
<br>11. Enron=92s Fastow may be indicted this week
<br>
<p><b><i>1. Anti-corporate globalization protests attract 10,000</i></b>
<p><b>More than 10,000 activists from all over the nation came to =
Washington
D.C. on Saturday to protest the pro-corporate policies of the World Bank
and International Monetary Fund and =93quarantine corporate =
greed.=94</b>
<p>In a peaceful manner, protestors rallied and marched, making their =
four
demands clear:
<br>· Open all World Bank and IMF meetings to the media and the
public.
<br>· Cancel all impoverished country debt to the World Bank and
IMF, using the institutions' own resources.
<br>· End all World Bank and IMF policies that hinder people's =
access
to food, clean water, shelter, health care, education, and right to =
organize.
(Such "structural adjustment" policies include user fees, privatization,
and economic austerity programs.)
<br>· Stop all World Bank support for socially and =
environmentally
destructive projects such as oil, gas, and mining activities, and all =
support
for projects such as dams that include forced relocation of people.
<p>For more information, visit <a =
href=3D"http://www.globalizethis.org">http://www.globalizethis.org</a>.
<br>
<p><b><i>2. Citigroup faces split of investment and brokerage, new SEC
rules may follow</i></b>
<p>One of the more egregious practices of Wall Street banks during the
stock market bubble was their habit of recommending company stocks not
based on whether or not the stock was a good investment, but on whether
or not the company was a potential banking client. Investors lost =
trillions
as a result. One of the most aggressive firms on this front was =
Citigroup
subsidiary Salomon Smith Barney.
<p>Now regulators are firing back, leaving Citigroup scrambling.<b> Last
week, Citi paid $5 million to settle charges brought by the National =
Association
of Securities Dealers (NASD) that it misled investors. NASD also filed
a lawsuit against former Citigroup telecom analyst Jack Grubman for a =
misleading
research report</b>. Citi is now talking about splitting up its =
investment
and brokerage arms, a model move that would eliminate the conflicts of
interest that led to the bad advice.
<p>But this may just be the beginning. <b>Reports last week indicated =
that
the Securities and Exchange Commission was close to announcing =
across-the-board
rules that will require companies to split investment banking from =
brokerage
research.</b> The New York Stock Exchange has supported similar =
proposals.
<p>Up until 1999, banking laws mandated separation between the two =
services.
But in the frenzy of financial deregulation, such protections were =
removed,
creating incredible conflicts of interest.
<br>
<p><b><i>3. Spitzer goes after executives=92 IPO profits</i></b>
<p><b>New York Attorney General Eliot Spitzer has plans to force certain
top corporate executives to return profits they made from Initial Public
Offerings (IPOs)</b>, according to a Washington Post report. Spitzer, =
thus
far one of the most aggressive government forces doing battle with the
excesses of Wall Street, will go after executives who received IPOs from
Salomon Smith Barney while their companies were paying the firm =
boatloads
for investment banking services, the Post said. The most high profile =
executive
would be former WorldCom CEO Bernard Ebbers, who made nearly $11 million
from IPOs he got through Salomon.
<p><b>The process of awarding hot IPO shares in return for banking =
business
is called =93spinning=94 and it is illegal</b>, though such laws were =
hardly
enforced in the roaring =9190s. Spitzer called the practice =
=93commercial bribery=94
in remarks at a pension-fund managers conference last week.
<br>
<p><b><i>4. Bush cites progress on corporate reform crackdown</i></b>
<p>For a brief second last week, President Bush put the focus back on =
corporate
crime, if only to tell those gathered at his Corporate Fraud Conference
that his administration was doing a bang-up job on the topic. He said =
that<b>
in the two months since he set up a financial crime task force, the =
Justice
Department had opened more than 100 corporate fraud investigations (24
of which have been made public) and secured convictions or guilty pleas
of 46 people in connection with corporate fraud cases. He claimed that
150 individuals had been charged with civil or criminal wrongdoing under
the taskforce's watch.</b>
<p>"This broad effort is sending a clear warning and a clear message to
every dishonest corporate leader: You will be exposed and you'll be =
punished,"
Bush said. "No boardroom in America is above or beyond the law."
<p>Attorney General John Ashcroft used even stronger rhetoric at the =
conference:
"Those executives that choose to prolong the damage to the public by =
refusing
to cooperate with investigators should be forewarned: if you obstruct,
if you impede -- you leave your company vulnerable to public indictment,
prosecution, and conviction. We appreciate the gravity of charging a =
corporation
with a crime -- it may be a corporate death sentence,=94 he said.
<p>So far, he has not applied this rhetoric to Ken Lay or Enron.
<p>And <b>for all President Bush=92s stated commitment to cracking down =
on
corporate crime, he has not requested more staff or more funding for =
this
task force, even though he removed white-collar staff to battle the war
on terror.</b>
<br>
<p><b><i>5. FERC official finds energy price manipulation</i></b>
<p><b>For first time since the California energy crisis, a federal =
official
has found widespread manipulation of energy prices. Curtis L. Wagner =
Jr.,
the chief administrative law judge at the Federal Energy Regulatory =
Commission
(FERC), ruled last week that El Paso illegally drove up natural gas =
prices
in California in 2000 and 2001.</b>
<p>=93El Paso Pipeline withheld extremely large amounts of capacity that
it could have flowed to its California delivery points," Judge Wagner =
said
in the ruling. These actions "substantially tightened the supply of =
natural
gas at the California border."
<p>Wagner=92s ruling comes a week after the California Public =
Utilities
Commission released a report blaming five other independent energy =
companies
-- Duke, Dynegy, Mirant, Reliant and AES/Williams -- for the energy =
crisis.
<p><b>The California Public Utilities Commission had filed a =
complaint
against El Paso at the FERC in early 2000</b>.
<br>
<p><b><i>6. Former WorldCom exec pleads guilty to accounting =
fraud</i></b>
<p><b>As a WorldCom controller, David F. Myers manipulated accounting to
inflate profits and then tried to cover it up. That=92s what Myers told =
U.S.
District Court Justice Richard C. Casey last week as he pled guilty to
fraud charges.</b>
<p>=93Along with others who worked under my supervision, and at the =
direction
of WorldCom senior management, such accounting adjustments were made for
which I knew there was no justification or documentation and were not in
accordance with generally accepted accounting principles,=94 Myers said.
<p>He could face up to 20 years in jail and a multimillion fine, but =
will
probably get less because of his cooperation.
<br>
<p><b><i>7. Hearings into Qwest, Global Crossing continue</i></b>
<p>The House Energy and Commerce Committee continued to peel away the =
layers
of corruption at Qwest and Global Crossing last week, building to a =
crescendo
this week when Global Chairman Gary Winnick and ex-Qwest CEO Joseph =
Nacchio
will be asked to testify. So far, the committee has yet to turn up any
smoking gun documents implicating these two corporate heads, who cashed
out almost $1 billion in stock between the two of them.
<p><b>Last week, employees at both companies described the heightened =
sense
of pressure they felt to reach overly aggressive sales goals, pressure
that led them to make phony trades by swapping unneeded network =
capacity.
These trades went on the books as sales, artificially inflating revenue
and making the companies look like they were doing more business.</b>
<br>
<p><b><i>8. Dynegy pays SEC $3 million to settle charges</i></b>
<p><b>Dynegy has agreed to pay the Securities and Exchange Commission $3
million to settle investigations into whether or not the energy company
engaged in phony natural gas swaps to fraudulently boost the company=92s
revenue.</b> The SEC says it did and then misled investors about it in
press releases earlier this year.
<p><b>The SEC also found that Dynegy misidentified $300 million as =
financing
rather than operating cash and overstated net income by the same amount
as the tax benefit.</b>
<p>Last week, Dynegy also admitted that employees in its marketing and
trading departments provided inaccurate information on gas trades to =
industry
publications.
<p>For Dynegy, The $3 million SEC fine is small potatoes, considering =
the
company=92s total assets amount to $9.69 billion.
<br>
<p><b><i>9. Homestore execs plead guilty to inflating earnings, =
implicate
AOL</i></b>
<p><b>In yet another case involving complex but ultimately false =
transactions,
three former executives of Homestore.com, the nation=92s largest online =
real
estate company, are pleading guilty to inflating their company=92s =
earnings.</b>
<p>Their scheme, according to the Justice Department, was to pay $49 =
million
for phony software licenses and other services from technology =
companies,
which then bought $45 million in advertising from a =93major media =
company,=94
which in turn bought ads for itself and other advertisers on =
Homestore.com.
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