April 25, 2005

More Misleading Accounting in the Adelphia Corporate Scandal: Corporate Criminals Keep 80 Million Dollars and Avoid Charges

So, the masterminds of the Adelphia corporate scandal, who have robbed the public of billions of dollars, will get to keep almost eighty millions dollars of their ill-gotten gains, while being spared any criminal charges:

Adelphia Communications Corp. agreed on Monday to pay $715 million under a deal with the U.S. government that avoids criminal charges for accounting fraud against the now-bankrupt cable operator.

The Rigas family, which founded the company, will forfeit 95 percent of its assets in Adelphia as part of the settlement agreements reached with the Justice Department and the Securities and Exchange Commission.

...

The securities regulator said the assets the Rigas family will forfeit exceed $1.5 billion in value.

So, let's do the math here. If $1,500,000,000 is 95 percent of your assets, than the five percent you get to keep is ... $78,947,368.

In other words, this man walks away with almost 80 million dollars and no punishment. "Today is a day of restitution for the victims of corporate corruption," Attorney General Alberto Gonzales apparently said in a statement.

Only if you buy into the tortured logic and misleading accounting of this Attorney General[corrected].

Most people would indeed be left with very little if 95 percent of their assets were seized, so it sounds as if there is some punishment. Of course, once you have stolen billions, you can give back 95 percent of it and remain obscenely rich.

Just imagine how much time Mr. Rigas would get if he had broken a window and stolen a few hundred dollars.

Posted by zeynep at 07:45 PM | Comments (0) | TrackBack

April 08, 2005

My Way or the Highway, Says GM

While we are on the subject of the propaganda model, here's GM in action:

General Motors Corp. on Thursday pulled its advertising from the Los Angeles Times over disagreements with car reviews and other articles that have appeared in the newspaper.

The world's largest automaker said the move was "based on strongly voiced objections from our dealers in California about factual errors and misrepresentations in The Times editorial coverage."

A GM spokesman would not specify the errors or say which articles caused the rift.

...

A GM executive, who spoke on condition of anonymity, said Wednesday's review of the Pontiac G6 by Times Pulitzer Prize-winning automobile critic Dan Neil was particularly offensive.

Neil wrote that "GM is a morass of a business case" and called for the ouster of GM's chairman and chief executive, Rick Wagoner. Among other things, Neil took the company to task for not more aggressively developing fuel-efficient cars and focusing instead on SUVs.

All this over a few critical reviews... Imagine if there were critical reporting on our automobile culture. (I guess it's easy to see why the previous sentence had to be in the hypothetical subjunctive mood.)

Posted by zeynep at 09:35 PM | Comments (1) | TrackBack

April 02, 2005

Family Values and Corporate Heroes: The Curious Makeover Jack Welch

Here's Jack Welch, ex-CEO of GE on honesty and family values:

Bosses know that the work-life policies in the company brochure are mainly for recruiting purposes and that real work-life arrangements are negotiated one on one in the context of a supportive culture, not in the context of, "But the company says ...!"

People who publicly struggle with work-life balance problems and continually turn to the company for help get pigeonholed as ambivalent, entitled, uncommitted, incompetent—or all of the above.

In other words, don't believe what we say. And families are not our problem. He hobnobs with all the politicians who can't stop saying how much they are for family values. Why is this man on the cover of Newsweek? And why are these corporations allowed to control our airwaves?

Posted by zeynep at 01:10 PM | Comments (0) | TrackBack

November 15, 2004

Mafia Administers Pension Funds Better than Wall Street

It turns out, at least in the case of Teamsters, the Mafia was better than Wall Street at administering the pension fund. Great to hear, isn't it? Especially since the Bush administration is trying hard to turn over our Social Security savings to these Wall Street fund managers.

Since 1982, under a consent decree with the federal government, the [teamster pension]fund has been run by prominent Wall Street firms and monitored by a federal court and the Labor Department. There have been no more shadowy investments, no more loans to crime bosses. Yet in these expert hands, the aging fund has fallen into greater financial peril than when James R. Hoffa, who built the Teamsters into a national power, used it as a slush fund.

Why? Well, for one thing, Wall Street managers want to make money for themselves, now. By the time you retire, the money managers that are making decisions now on how to invest "your" money have long retired themselves, and will not be accountable for their decisions. As things stand, they have an interest in "churning" -- carrying out many transactions, each of which generate a fee for the manager, regardless of the benefit to your account. They also take actions that make them look good now and hide problems. Results are predictably disastrous:

But the kinds of investments that make sense for such a fund - like long-term bonds that will mature as members enter retirement - are not attractive to most money managers, because they generate few fees. Consequently, very few pension funds use such strategies today.

...

Money managers promised pension funds big returns, and to get the big returns they began to add riskier assets to pension portfolios than pension funds had used before. Sleepy bond portfolios were livened up with stocks. Venture capital, junk bonds, securities of companies in developing countries and other exotica began to appear in pension funds.

That said, I think the most important reason the Bush administration wants to privatize Social Security is not these hefty fees and profits they will generate for their corporate backers. The real goal is ideological misdirection through the creation of a large number of households who hold some of their savings in stocks, and thus believe their interests to be congruent with the interests of corporations and "the stock market" when, in reality, it is more of a see-saw -- they rise as we fall.

Posted by zeynep at 05:21 PM | Comments (1) | TrackBack