Eliot Spitzer, New York State’s attorney general, filed a lawsuit Tuesday against five corporate executives for abuse of initial public offerings. Mr. Spitzer’s suit charges that the executives, from such disgraced firms as Worldcom and Qwest, gorged themselves on exclusive IPOs throughout the best of the bubble years, in exchange for steering millions of dollars in business to the banks that dealt the IPOs.
Is this grandstanding by an aggressive young attorney general who obviously has his eye on higher office? Probably, but if this is grandstanding, make the most of it. Mr. Spitzer’s suit alleges the executives engaged their corporations in transactions not for the benefit of shareholders, but only for their personal profit.
It’s come to this. God knows there are few restrictions governing the behavior of corporations or the executives that run them. Corporations extort the communities in which they reside, foul the air and water and consort with dictators around the globe. Much of this excess is excused for the sake of “shareholder primacy.” Shareholder primacy is the rule that says executives and trustees have only one duty – to increase the value of shares of the corporation. The men charged by Mr. Spitzer did not send the millions in IPO profits along to the shareholders, they kept the money for themselves. And if the banks had to bribe the CEOs to get the contracts, you can bet the shareholders were not well served.
These are only the most recent examples of corporate malaise. Several generations of the Rigas family of Adelphia cable are under indictment for using their shareholders’ money as a private piggy bank, the Enron arrests have only just begun and it wasn’t so long ago popular culture was celebrating looters and pillagers like “Chainsaw” Al Dunlap, who shredded Scott Paper and Sunbeam, taking a huge salary and bonuses for himself and leaving shareholders with an empty bag. Tyco money bought a wonderful art collection for Dennis Kozlowski and Jack Welch gets fresh flowers for life, with no benefit to GE shareholders.
The point is not to pity the shareholders, the point is to notice how poorly we police corporations in America. How bad is it? We don’t know. The Federal Bureau of Investigation compiles annual crime statistics, but only for street crime, not corporate crime. Bobby Three Sticks and the G-men care more about a five-dollar purse snatching that they do about corporate felonies that results in thousands of layoffs and millions in lost pension funds. Eliot Spitzer may be a grandstander, but someone has to begin to put a limit on corporate crime in America. We could all grow old and die waiting for the Bush administration to do something.
The irony is, an entire industry – auditing and accounting – is devoted to preventing this sort of thing from happening, but they too, the Arthur Andersens, the KMPGs, the Pricewaterhouse-Cooperses are in the dock and facing indictment. Think about that the next time you hear the familiar refrain about over-burdensome regulations and the glories of privatization.
All of the above is why George W. and company are dancing and clapping so loudly about Saddam Hussein. The United States of America is facing a corporate crime wave and an economic recession the likes of which make Japan’s money troubles look like so much Kabuki theater. These are all the things you’re not supposed to think about for the next month, just go into that polling place and vote Republican. Then what? More tax cuts for the wealthy?
We can’t rely on Eliot Spitzer for everything; we’ll have to do some of this ourselves. Corporate crime and the wretched state of our economy should be the top issues in this year’s election. Candidates should have five-point platforms for dealing with corporate crime. Ask for them. If they don’t have a position on white-collar crime, give them one.
Here are two places to start:
1 – The federal government should refuse to grant contracts to any corporation which has repeated violations of Security and Exchange Commission regulations.
2 – Whistleblowers, both inside and outside corporations, should be given standing to bring lawsuits against corporations that violate the law.
These are minor reforms and won’t go far toward cleaning up the mess we’re in, but a candidate that won’t support them doesn’t deserve to represent you in Congress.
It’s Come To This
Eliot Spitzer, New York State’s attorney general, filed a lawsuit Tuesday against five corporate executives for abuse of initial public offerings. Mr. Spitzer’s suit charges that the executives, from such disgraced firms as Worldcom and Qwest, gorged themselves on exclusive IPOs throughout the best of the bubble years, in exchange for steering millions of dollars in business to the banks that dealt the IPOs.
Is this grandstanding by an aggressive young attorney general who obviously has his eye on higher office? Probably, but if this is grandstanding, make the most of it. Mr. Spitzer’s suit alleges the executives engaged their corporations in transactions not for the benefit of shareholders, but only for their personal profit.
It’s come to this. God knows there are few restrictions governing the behavior of corporations or the executives that run them. Corporations extort the communities in which they reside, foul the air and water and consort with dictators around the globe. Much of this excess is excused for the sake of “shareholder primacy.” Shareholder primacy is the rule that says executives and trustees have only one duty – to increase the value of shares of the corporation. The men charged by Mr. Spitzer did not send the millions in IPO profits along to the shareholders, they kept the money for themselves. And if the banks had to bribe the CEOs to get the contracts, you can bet the shareholders were not well served.
These are only the most recent examples of corporate malaise. Several generations of the Rigas family of Adelphia cable are under indictment for using their shareholders’ money as a private piggy bank, the Enron arrests have only just begun and it wasn’t so long ago popular culture was celebrating looters and pillagers like “Chainsaw” Al Dunlap, who shredded Scott Paper and Sunbeam, taking a huge salary and bonuses for himself and leaving shareholders with an empty bag. Tyco money bought a wonderful art collection for Dennis Kozlowski and Jack Welch gets fresh flowers for life, with no benefit to GE shareholders.
The point is not to pity the shareholders, the point is to notice how poorly we police corporations in America. How bad is it? We don’t know. The Federal Bureau of Investigation compiles annual crime statistics, but only for street crime, not corporate crime. Bobby Three Sticks and the G-men care more about a five-dollar purse snatching that they do about corporate felonies that results in thousands of layoffs and millions in lost pension funds. Eliot Spitzer may be a grandstander, but someone has to begin to put a limit on corporate crime in America. We could all grow old and die waiting for the Bush administration to do something.
The irony is, an entire industry – auditing and accounting – is devoted to preventing this sort of thing from happening, but they too, the Arthur Andersens, the KMPGs, the Pricewaterhouse-Cooperses are in the dock and facing indictment. Think about that the next time you hear the familiar refrain about over-burdensome regulations and the glories of privatization.
All of the above is why George W. and company are dancing and clapping so loudly about Saddam Hussein. The United States of America is facing a corporate crime wave and an economic recession the likes of which make Japan’s money troubles look like so much Kabuki theater. These are all the things you’re not supposed to think about for the next month, just go into that polling place and vote Republican. Then what? More tax cuts for the wealthy?
We can’t rely on Eliot Spitzer for everything; we’ll have to do some of this ourselves. Corporate crime and the wretched state of our economy should be the top issues in this year’s election. Candidates should have five-point platforms for dealing with corporate crime. Ask for them. If they don’t have a position on white-collar crime, give them one.
Here are two places to start:
1 – The federal government should refuse to grant contracts to any corporation which has repeated violations of Security and Exchange Commission regulations.
2 – Whistleblowers, both inside and outside corporations, should be given standing to bring lawsuits against corporations that violate the law.
These are minor reforms and won’t go far toward cleaning up the mess we’re in, but a candidate that won’t support them doesn’t deserve to represent you in Congress.