Hi Hawk, Bill Parish's site is very interesting. I've been
looking at couple of his articles. I think we should be exploring this in greater detail.
this is an interesting section of nov 1999 MSFT article.
-----------------
billparish.com
A Breakthrough With The Independent Editorial
In October of 1998 a prominent British publication, the Independent newspaper, published a lead editorial, citing my study and concurring that Microsoft had erected a financial pyramid scheme in which employees were prepaying their own wages and the retirement system was being plundered. I can still remember the editor's voice who interviewed me and his startled realization that the study was credible. The study results and follow-up work were then sent to The Economist and several leading business publications here in the US, more than a dozen times, in addition to regularly calling once a month and leaving detailed messages. Another breakthrough could have occurred when CNBC scheduled a panel discussion on World Business Review with Caspar Weinberger yet the show was canceled due to the controversial nature of the content.
The Economist Story Legitimizes My Study
Bill Gates has publicly said that this is his favorite publication on finance and economics. It is also generally believed to be the leading such publication in the world. In an 8/7/99 cover story, The Economist noted that a proper accounting at Microsoft would result in a loss of $18 billion for 1998 rather than the reported earnings of $4.5 billion. If you are not an accountant, don't waste the time pretending you are, trust The Economist, the earnings are not real. Don't let yourself be intimidated or deceived by financial analysts, TV commentators, bullies on Internet forums or Microsoft's elaborate public relations campaign. Bill Gates trusts The Economist and you should too. Abbey Joseph Cohen and Rick Sherlund of Goldman Sachs have been sent this material numerous times over a 9 month period and neither has publicly divulged this situation. A link to the Economist article in available in the featured press releases at www.billparish.com. Do note, however, that the reference to Microsoft occurs well into the article.
Microsoft's Response to The Study
Microsoft's perspective is best reflected by Bob Herbold, Chief Operating Officer, to whom the CFO reports. Bob very sincerely replied, "Bill, everyone is doing it." My response was that Microsoft is a leader and that others are now seeking to emulate these fraudulent practices they have legitimized. Naturally Bob was not pleased by this perspective and that was our final conversation. A second informal response came when Microsoft asked PR Newswire to stop issuing my press releases.
Microsoft is PR Newswire's largest client. Pam Edstrom, director of Microsoft's public relations, Steven Holley, lead outside counsel with Sullivan and Cromwell and Bob Herbold are regularly called prior to releasing any new information on the study yet they no longer respond to inquiries, which is disappointing. Although confident of the findings, it would be nice if they could issue a formal statement or response. A key legal point here is that they were all informed regularly over a several month period that their actions constituted fraud. This is important because in order to prove fraud you must demonstrate a willful intent to misrepresent the financial results.
A critical mistake of Microsoft's was not paying adequate attention to the SAS auditing standards which have very strict disclosure requirements. Most investors have never heard of the Statement of Auditing Standards but it is adherence to these standards which has resulted in Certified Public Accountants being granted a monopoly over the ability to express an opinion on audited financial statements. Far too much emphasis has been placed on GAAP which are Generally Accepted Accounting Principles. Statements must indeed be prepared according to GAAP yet equally important is to conform to the SAS auditing rules. By issuing an unqualified opinion with no reference to key disclosure requirements due to the materiality (size in plain English) of several key issues, Deloitte is itself clearly guilty of financial fraud. An expanded discussion of this will follow in a later section... |
