By Hale Champion
Many – perhaps most – of this nation’s captains of industry may be honest and reasonably ethical, but you'd be forgiven for thinking otherwise if you based your opinion on a perusal of the front page of the New York Times business section – especially the August 4th edition.
Every item teemed with evidence of greed, fraud, duplicity and mendacity.
In the featured top left column was the story of an incredibly convoluted illegal tax avoidance scheme engineered by some con artists masquerading as lawyers and accountants on behalf of two entrepreneurial brothers from Texas.
The brothers have declared their intention to take the Fifth. Tens of millions of dollars are involved.
Across the top of the page above the fold was the story of the bitter court fight over whether Richard Grasso, the resigned-under-pressure head of the New York Stock Exchange (laughingly classified until last year as a non-profit), is entitled to $80.6 million in compensation and $119.8 million in retirement benefits from 1999 to 2002. Apparently a lot of this was based on (could you guess?) "improper accounting" techniques.
At the top of the right hand column there was an explanation of why charges of illegal handling of stock options are anticipated by New York prosecutors against one Jacob Alexander, the chief executive officer of Comverse Technology. This article also notes that more than 80 other companies are caught up in comparable investigations of stock option manipulation, one of them being the trendy Apple Corporation. (Update: Alexander and two others have now been indicted and Alexander is on the lam.)
Another major story, this one placed modestly below the fold, outlines how insurance firms are trying to dodge billions in payments for wind-related structural damage from the Katrina catastrophe. The problem is that the coverage offered by the salesmen differed rather sharply from what was contained in the close-to-impenetrable small print of the policies they were selling. The salesmen told the buyers that all wind damage would be covered, but didn't add that there was a clause, known as "anti-concurrent coverage", that if the buildings involved were also affected by either a flood or an earthquake, such wind damage claims would not be honored. The claimants have lost the first round in court: in the unlikely event they eventually see some money, it won't have helped when it was most needed.
We are being told that the scandals arising from Enron and Tyco and their fellow havens for white-collar crime are pretty much behind us – so far behind us, according to lobbyists and their friends in the Bush Administration, that the strict regulatory regimen they brought about should now be relaxed. Sure. Why not? If the business of America is business, as we've been told from time to time, why not let it be monkey business?
P.S. Inside that same Times business section there was another story about how the American Amicable Life Insurance Co. (yes, that's the real name) has agreed to pay back $70 million to settle State and Federal complaints about "deceptive practices" in selling policies to members of American armed services both at home and abroad. It's nice to know that friendliness can be retroactively enforced.
