Nobody believes them, from today's Sunday Times (London)
On Wall Street: Dominic Rushe: ‘Liars’ poker costs America dearly
THERE was a telling moment in the Chancery Court in Wilmington, Delaware last week that seemed to sum up the anti- business mood of America. On the stand for a second day Carly Fiorina, chief executive of Hewlett-Packard, had had enough of the needling questions about whether or not she overstepped the line in trying to rally votes for HP’s merger with Compaq.
“Sir,” she snapped indignantly. “You are accusing the chief executive of a publicly traded company of lying.” There was an audible giggle from the back row and a Mexican wave of eye rolling. In the current climate her indignation seemed wholly out of place. Of course he was accusing her of lying — she’s a businesswoman.
Nobody believes business people any more. America’s small shareholders have have watched in horror as scandal after scandal has engulfed corporate America and hit their savings.
Bankers are liars, financial analysts are worse, chief executives are out solely for personal gain and will attempt to rob shareholders at every opportunity. The general public’s view of business life has never been so bad. At least one chief executive, Joseph Nacchio, head of Qwest, one of dozens of companies under investigation by regulators for questionable accounting, is crying foul in public claiming that companies are victims of “corporate McCarthyism.”
Not that anyone is listening. Naturally companies like to sort out their own mess, away from the interfering hands of regulators and politicians. And it is true that the falling stock market is making its own adjustments — weeding out bad companies and officers. The pay packets of business leaders too are suffering the consequences of all this mistrust. A recent Business Week magazine poll revealed the average chief executive’s pay dropped 16% last year. They now have to eke out a living on $11m a year — just 411 times the average factory salary.
Last week Tyco, one of the world’s largest conglomerates, saw its latest plans derailed because of the anti-business mood. Tyco ditched plans to split up its business after repeated questions about its accounting practices and its management. The company had put the plans forward in the first place because its complex business structure had led commentators to compare it to Enron.
Dennis Kozlowski, Tyco’s chief executive, apologised, calling the breakup plan “a mistake”. But he continues to insist that the company is sound and that most of its problems in the market are caused by false rumour and innuendo. If Kozlowski is right then Tyco’s case starkly illustrates the high cost of all this mistrust. Tyco has lost 65% of its value this year — at a cost to shareholders of more than $76 billion.
If you can’t trust the boss, who can you trust? The regulators and politicians have moved in hard in an attempt to punish wrongdoers.
But they have a lot of work to do if they are going to bring back an era when it seemed outrageous to accuse a chief executive of lying.
sunday-times.co.uk |
