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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: The Duke of URL© who wrote (2238)	6/26/2002 4:03:46 PM
From: stockman_scott	Respond to of 3602

Business Scandals Rock On... ---------------------------- Only names have changed-business scandals rock on By Patrick Fitzgibbons Wednesday June 26, 3:41 pm Eastern Time NEW YORK, June 26 (Reuters) - Two years ago, only those absolutely obsessed with big U.S. conglomerates could identify Dennis Kozlowski, the former boss of Tyco International Ltd. (NYSE:TYC - News), in a lineup. Now, a lineup may be exactly what Kozlowski fears most. Wall Street is a pretty chilly place to be even on the nicest day. Currently, the mood is downright frigid. But it isn't the first time this has happened. Looking back, who knew in 1980 that by the end of the decade, Ivan Boesky, Michael Milken, and the Keating Five would end up being the poster boys for that period's highest profile business scandals. Who ever heard of defense company Wedtech until President Ronald Reagan's Attorney General Edwin Meese was forced out of his job in early 1988 for being a little too chummy with the company? Wasn't there a time when "The Keating Five" was commonly confused with the members of the fictional Keaton family on the hit television show, "Family Ties?" Charles Keating, head of the Lincoln Savings & Loan, and family members and colleagues were deemed responsible for the largest S&L collapse in U.S. history, running into billions of dollars in losses suffered by mostly elderly investors. Since the beginning of 2002, stock investors have been mauled almost daily, and a new rogues' gallery of corporate executives, Wall Street analysts, and even accountants has emerged and is rivaling the 1980s as "Worst Decade Ever" -- at least for the public perception of business in America. THE LIST GETS LONGER The list got a little longer when WorldCom, the No. 2 U.S. long distance company, said late Tuesday that $3.8 billion of expenses had been booked improperly and the company inflated its cash flow and profits. "I think that this is far more serious that anything that Boesky or Milken ever dreamed of doing," said John Allen, a New York-based securities fraud attorney. "This is like a 'Roaring 20's' type market when anything goes." While several sources said almost everyone is wondering who's going to be the next Dennis Levine -- the former investment banker at Drexel Burnham Lambert who was sentenced to two years in jail in 1987 after making about $13 million thanks to stolen insider information. "Ivan Boesky and Michael Milken were quite different in that they were financial figures and not responsible for an entire corporation," said Jim Grant, editor of Grant's Interest Rate Observer. "One big difference now is that most of the notorious wrong-doers are people entrusted to be top executives at these big companies. Attorney Allen said the allegations floating around some of this current crop "makes Ivan Boesky and Levine look like a couple of kindergartners." 'A CALL FOR BLOOD' A review of just a few of the recent cases has left even the most hardened Wall Street gurus shaking their heads. Bernie Ebbers, former chairman of WorldCom, is alleged to have received over $400 million in personal loans from WorldCom at the same time the company was improperly reporting its cash position. Enron's former Chief Financial Officer Andrew Fastow was being paid millions in bonuses while the company was failing to report its precarious financial situation. ImClone Systems Inc.'s (NasdaqNM:IMCL - News) former CEO Sam Waksal was taken from his home by FBI agents earlier this month and charged with conspiracy, securities fraud, and perjury. Waksal had apparently tried to unload about $5 million in company stock two days before the general public found out that U.S. regulators declined to accept the marketing application of its hoped-for blockbuster drug Erbitux. Tyco's Kozlowski was indicted earlier this month for conspiring to avoid more than $1 million in sales tax on art work he purchased. On Wednesday, he was also charged with tampering with evidence. "If you go over the line, as it appears like Kozlowski did, you're going to pay a very serious price," said Sydney Finkelstein, professor of strategy and leadership at Dartmouth College's Tuck School of Business. "Right now there's a call for blood and someone's going to have to pay." It was widely held in the late 1980s that Boesky, the head of arbitrage firm Boesky & Co., who was sentenced to three years in jail and paid a $100 million fine for insider trading, and Milken -- sentenced to 10 years, later reduced to two years, and a $650 million fine for securities fraud -- had to go to jail in order to satisfy the public demand for retribution. One further price for all this may be an increase of regulations to the market. "Dennis Kozlowski is a messenger of socialism," Grant said. "He and his ilk are likely to galvanize demand for political action, much of which will be hasty and ill thought-out."