October 2, 2002
Corruption and Greed Series #1: Theft and Self-Enrichment on a Grand Scale
Here is something I had prepared for you last week. This is just some of the things "they" try to distract our attention from with all the very convenient media frenzy on a possible war against Iraq...
Earth Rainbow Network Coordinator
"The twentieth century has been characterized by three developments of great political importance: the growth of democracy; the growth of corporate power; and the growth of propaganda as a means of protecting corporate power against democracy."
- Alex Carey
FACTS TO KNOW
Ratio of CEOs pay versus what their average employees get:
In the U.S. in 2002 - 400 times more - in 2001 it was 530 times!
In the UK it is 20 times and in Japan 10 times more
In a recent U.S. Poll, 59% of people indicated 10 times is enough.
Seen on CNN Money Lines
1. General Electrics Jack Welch and the corporate plundering of America
2. The morality of plutocracy: the Washington Post and the Harken Energy "distraction"
3. 12 Things to Do Now About Corporations
4. Quotations from the book Rich Media, Poor Democracy
Campaign Finance Corruption Erodes Citizens' Human Right to Freedom of Expression and Undermines the Public Interest: Four Case Studies (August, 2000) Old stuff but it's a most excellent article!
Democracy in the United States is in jeopardy. The litany of problems is widely recognized: brazen political deal-making based on campaign contributions; entrenched voter apathy; a two party duopoly that increasingly represents only the narrow interests of a wealthy elite. Legalized bribery is a fact of life, as is the refusal of a majority of citizens to vote. Ours is a crippled democracy, each day appearing more an oligarchy than a republic. CLIP
PAC Hard Dollar Contributions Made By Industry Groupings Over Several Election Cycles (in the U.S.)
Again Florida Fails to Deliver The Right to Vote to It's Citizens
Bankers Sued for Slave Reparations
Despite all the media hype about reparations for African-Americans, one major lawsuit involving reparations has not received much publicity. Find out why. Neither ABC, CBS, NBC, CNN nor Fox - all owned by families connected to the Rothschilds have reported this!
George W. Bush Military Record and Recent Behavior Pertaining to Military Records
In these days of guys who never fought in Vietnam advocating a tricky engagement in Iraq, it is interesting to see what George W. Bush did in the military, how he misrepresented it, and what's been done recently to make sure no one notices.
Recommended by Bill Derau <firstname.lastname@example.org>
General Electrics Jack Welch and the corporate plundering of America
By Jeremy Johnson
17 September 2002
Divorce papers filed in court earlier this month against retired General Electric Corporation Chairman and CEO John F. Welch Jr. provided a glimpse into the lifestyle of Americas corporate elite. In her suit to dissolve their 13-year marriage, Jane Beasley Welch complains that the $35,000 per month offered by her husband is nowhere near enough to maintain the extraordinary standard of living that they enjoyed together.
Her papers quantify $126,820 in monthly expenses incurred by the couple, not counting sizable additional amounts paid by General Electric as perks to its former chief executive. Among the most significant items, GE provides a company-owned luxury apartment at the Trump International Hotel and Towers on Central Park West in New York City. Besides allowing Welch to live there rent-free, GE picks up the tab for such additional necessities as fresh flowers, wine, laundry and dry cleaning services, a cook and wait staff, a housekeeper, and every other detail down to toiletries, newspaper and magazine subscriptions, even postage. GE also pays a portion of Welchs dining bills at the exclusive restaurant Jean Georges, which is located in the building.
Additionally, Welch receives a free grand tier box at the Metropolitan Opera, memberships at four country clubs, including Georgias prestigious Augusta National, court-side tickets to New York Knicks basketball games, box seats behind the dugout at Yankee Stadium plus a skybox for the Boston Red Sox, prime tickets to the French Open, Wimbledon and US Open tennis tournaments, VIP tickets to all Olympic events, and unlimited use of a corporate Boeing 737 jet. The cost of this last item alone is estimated at $291,869 a month.
The list goes on. GE pays for Welchs limousine and driver in New York, bodyguards when he travels abroad, satellite TV installations in his New York apartment and his three other homes in Massachusetts, Connecticut and Florida. And, Mrs. Welch reports, GE contributed $7.5 million over the course of their marriage to help furnish the four homes with appliances, security systems and sophisticated computer and telecommunications equipment, with GE employees assisting with the installation.
All of these fringe benefits supplement a retirement agreement that includes a pension of over $9 million a year and a health insurance and life insurance package that Welch negotiated with the GE board of directors in 1996 when he agreed to extend his tenure as chief executive until age 65. The contract specified that upon retirement, Welch would retain lifetime access to company facilities and services comparable to those made available to him as CEO. Welch formally retired on September 1 of last year, but, in addition to everything else, he receives a consulting fee of $86,535 for his first 30 days of work each year, plus $17,307 for each additional day.
Yet another company-paid perk is the cost of financial planning services to help Welch manage his fortune, estimated at $900 million.
In statements released on September 6, neither Welch nor General Electric disputed the extent of the perks, most details of which had never been revealed to shareholders. GE spokesperson Gary Sheffer insisted that the company had complied with all legal disclosure requirements, while Welch asserted that the arrangement had worked to the benefit of all constituencies.
Welch has been lionized as the model corporate executive for producing higher profits year after year. He is credited by his corporate admirers with almost single-handedly turning GE from a company valued at $15 billion when he took over to one valued at over $400 billion when he retired a year ago. Since then, the company stock has declined some 25 percent, in spite of reporting a 15 percent increase in six-month profits this year to $7.94 billion.
His ruthless methods earned Welch the nickname Neutron Jack among GE workers, due to the layoffs he carried out soon after taking over. In the course of the 1980s Welch cut some 100,000 jobs.
He established the principle of selling off any subsidiaries that failed to maintain a number one or number two market share in their respective industries, while meeting profit expectations. General Electric owns businesses that range from its traditional lighting and appliance production to aircraft engine manufacturing, electric generating systems, financial services and insurance, and the major broadcast network NBC.
This latter enterprise provided Welch with exceptional political clout. Analysts point to the kid glove media treatment of George W. Bush during the 2000 presidential election campaign, after his top advisor Karl Rove promised Welch and other media moguls that, if elected, Bush would carry out a major deregulation of the broadcast industry.
Welch reportedly took a keen personal interest in the NBC News division. He had fired its president Lawrence Grossman in 1998 after the latter spoke of the news as being a public trust that should not be subjected to the profit requirements of the other GE operations.
It was widely reported that on election night 2000, Welch made a personal visit to NBCs New York studios and used his influence to get NBC News to reverse its initial announcement that Democratic presidential candidate Al Gore had won the state of Florida. NBC was the second major network after Fox News to announce Bushs victory in the early morning hours of November 8, only to retract the call later and declare Florida too close to call.
At congressional hearings in February of 2001, Representative Henry Waxman (Dem.-Calif.) asked the then-president of NBC News, Andrew Lack, to produce a promotional videotape filmed in the studio on election night that could prove or disprove Welchs presence. To date, despite numerous follow-ups, NBC has failed to turn over the tape in question.
Soon after the Supreme Court decision giving Bush the presidency, Welch was included on an elite panel of business leaders assembled to help shape the new administrations pro-business agenda. Two days after his inauguration, Bush appointed Michael Powell, son of US Secretary of State Colin Powell, to head the Federal Communications Commission. Powell subsequently announced a comprehensive review of media ownership rules to allow an even greater concentration of outlets in the hands of a few giants, including overturning the current prohibition against mergers among the four major television networksABC, CBS, NBC and Fox.
Welchs lavish lifestyleat company expense even in retirementis typical of the elite group who dominate the worlds economic life. The bursting of the stock market bubble has brought into the open numerous other instances of top executives looting corporate assets for personal use.
While both Welch and GE claimed that his retirement compensation package was completely legal, the Securities and Exchange Commission announced last week that it would investigate the deal, and Welch wrote a column in the Wall Street Journal Monday announcing that he was relinquishing many of his company-paid perks.
Examples have been made of a few executives, such as Tycos deposed CEO, Dennis Kozlowski, under indictment for tax evasion and outright fraud in charging $135 million in personal expenses back to shareholders. But the revelations about the sums spent on Welch, perhaps the most celebrated business leader of the last decade, underscore the fact that the plundering of society by the corporate elite in the US is not some aberration, but rather a systemic feature of contemporary capitalism.
Enron executive pleads guilty [27 August 2002] http://www.wsws.org/articles/2002/aug2002/enro-a27.shtml
How George W. Bush made his millions [1 August 2002] http://www.wsws.org/articles/2002/aug2002/bush-a01.shtml
SEC Will Investigate Bush Friend and Former GE CEO Jack Welch
The morality of plutocracy: the Washington Post and the Harken Energy "distraction"
By Joseph Kay
15 July 2002
The lead editorial in the July 12 Washington Post casts a great deal of light on the nature of social life in the United States. Entitled The Harken Energy Distraction, the editorial is dedicated to a defense of President Bush and the corrupt dealings by which he made his millions. Coming from one of the bastions of American liberalism, the defense is an indication of the insularity of the entire ruling elite from the broad masses of the American population.
The editorial begins with a recapitulation of the basic argument marshaled by the Bush administration regarding his past actions while on the board of directors of Harken Energy. Most of the questions surrounding these actions, the paper states, have been aired over the years, and one has been the subject of a government investigation. Congress shouldnt let the temptation to play politics with this issue distract from corporate reform.
At his press conference earlier in the week, Bush made the same point. All the questions were old stuff, and any further investigation was an unjustified attempt to win petty political advantage.
That this is actually presented as an argument against further inquiry is indicative of the poverty of Bushs defense. That these issues have been aired in the past means little. The Securities and Exchange Commission (SEC), after all, looked into the accounting practices of WorldCom in 2000 and did nothing, only to have that company implode in financial scandal last month.
Over the past two decades, an environment was fostered in which large-scale fraud was routinely committed. Investigations carried out by the government and auditors generally sanctioned such fraud. The fact that Bushs dealings at Harken have been raised before is not an argument against further investigation, but merely an evasionan attempt to ensure that no serious investigation takes place.
After clearly stating its sympathies for the arguments advanced by Bush, the Post identifies two major issues regarding Bushs past corporate dealings. The first is insider trading. The Post does not provide its readers with any of the background to this issue, because to do so would raise questions that do not have an easy answer.
Bush was on the board of directors and was a member of Harkens auditing committee during the late 1980s, after the company acquired Spectrum 7, which had in turn acquired Bushs own Arbusto Energy some years back. Both Spectrum 7 and Arbusto were financial failures, but Harken paid a pretty penny for the acquisition because it provided the company with a valuable asset ... namely, George W. Bush, a business failure whose father happened to be US president.
Thanks to these connections, Harken received an extraordinary contract with Bahrain to drill offshore oil wellsextraordinary because Harken was relatively small and had no experience in such matters. As Harken ran into financial trouble, it began to manipulate its accounts. At one point it gave a loan to executives to buy a subsidiary of Harken, essentially loaning money to itself to buy a part of itself, and the payment was then booked as revenue. By means of this accounting device the company was able to understate its losses by some $10 million, a massive amount for the relatively small energy company.
As a member of the audit committee, Bush was certainly privy to knowledge that the company was in crisis, and likely knew about the accounting fraud. He sold over $800,000 of stock options while the price was right, just before an announcement by the company of large losses and some months before Harken had to restate its prior earnings.
How does the Post deal with all of this? The Securities and Exchange Commission investigated the case, the editors write, and did not take action, apparently because it could not find firm evidence of wrongdoing. Perhaps the SEC was not really looking very hard, since the case involved the presidents son and the SEC was headed by a Bush appointee. Dismissing this possibility, the Post assures us that the chairman was a renowned enforcement hawk and refers to the reckonings of people who worked inside the SEC that the organization would have gone after the son of the president if it had sufficient evidence.
Forgive us for being suspicious of these reckonings, which are generally not very difficult to come by. Bernie Ebbers and people working inside WorldCom will be quick to reckon that nothing criminal was going on there, and people working inside the FBI and CIA will not hesitate to reckon that the American government did not really know anything prior to the attacks of September 11.
To base ones case on such reckonings is to have come to a conclusion before any of the evidence has been heard. The issue is whether people in the SEC really wanted to find out anything about Bush.
The editors of the Post choose to withhold from their readers the fact that one of these people in the SEC was Richard Doty, the commissions general counsel, who was responsible for making decisions concerning legal action. Doty also happened to be George W. Bushs personal lawyer at one point, assisting him in carrying out the Texas Rangers deal that netted the future president millions of dollars and helped propel him into the presidency.
After thus dismissing the accusations of insider trading, the Post goes on to the second serious question ... dubious accounting. The choice of words here is significant.
What was involved at Harken was not dubious accounting, but outright fraud, on the basis of which Bush made a handsome profit. The money he made was essentially stolen from those investors who lost money when the stock value fell after the accounting fraud was revealed.
What does the Post have to say about this? The fact that Mr. Bush himself may have profited from a misstatement is embarrassing. But it was not illegal, and there is no suggestion that Mr. Bush played a role in devising the accounting trick or that he sold the stock because he realized a restatement was coming.
The newspaper hopes that by merely claiming there is no suggestion that Bush was guilty of fraud, there will, in fact, be no such suggestion. In reality, it is not necessary to suggest anything. The facts themselves speak loudly and clearly of fraud.
After all, Bush received a memo shortly before he sold his shares warning of a company shutdown effective 30 June unless third-party funding is found. Clearly, Bush was aware things were not quite so rosy at Harken as the accounting figures suggested.
After having thus dealt with the main issues, the Post proceeds to the remaining threads, which, it declares, are no more compelling. Bush was late in filing some of the paperwork, but this was no big deal.
The Post would like us to believe that paperwork is of little importance. But what was the fraud of Enron, WorldCom and the rest, if not a manipulation of paperwork? What was Enrons accounting firm Arthur Andersen shredding, if not paperwork? If the average person is late in filing his tax reportsanother form of paperworkhe gets a knock on the door from the IRS. Much of modern economy depends on an accurate and timely filing of paperwork.
Bushs paperwork consisted of a report that is required whenever an insider sells shares in his own company. This is because a large sell-off of company stock by its directors or executives is generally a sign that something is amiss within the company, as was the case with Harken. Bushs late filing of some paperworkby some 34 weeks!is, in fact, quite significant. It is further circumstantial evidence that he was up to no good when he sold his stock options.
The loans that Bush received from Harken are dealt with in a similarly cynical manner. The size of the loan, you see, was relatively modest and there is little shame in having participated in a legal practice years ago and then advocating its reform when others turn out to have abused it. The relatively modest figure was ... $180,000. For the editors of the Post and the social layer with which it associates, such a figure is indeed small change. For the average American, it is a fortune.
It might strike some as unjust that Bush could, because of his connections, net a loan of $180,000 that he was never required to repay. For the editors of the Post it does not merit consideration, because it is the normal state of affairs. In todays business climate there is, indeed, little shame in such a practice, and there is little shame in the papers defense of it. The Post is truly shameless.
Finally, we come to perhaps the one true sentence in the piece. After explaining how Bush accepted consulting fees while at the same time sitting on a committee tasked to oversee the company, the Post states, This is the kind of conflict that undermines the board independence Mr. Bush now urges. But it has to be said that almost nobodythis page includedobjected to board members accepting consulting fees before the recent outbreak of scandals.
Quite right, though here the Posts specificity is unwarranted. Almost nobody, the Washington Post included, objected to any of the methods by which the American corporate elite perpetrated its massive fraud of the past two decades. Nobody in the political establishment or the media opposed the fantastic accumulation of wealth by a tiny elite, of which they formed a part.
To borrow a phrase from that philosopher of capitalism in Joseph Hellers novel Catch-22, Milo Minderbender: Everyone had a share. Everyone, that is, except the majority of the population, which is now being forced to pay the tab. That Mr. Bushnow the president of the United Statestook part in this orgy ... well, it is no big deal really, since everyone was doing it.
So, the newspaper concludes, lets forget about the whole thing. Apparently, unlike the Clinton sex scandal and the Whitewater affair dredged up the right wing, this is not one of those cases in which an officials past dealings deserve to become a public issue.
In defending Bush, the Washington Post is at the same time defending itself. The fraud that has been committed against the American people was not simply a product of a few individuals. It benefited an entire social layer, including the liberal media.
It is in this light that one must understand the calls by the Post and the Democratic Party for greater reform. They are not interested in seriously changing a system that has generated their own wealth and forms the basis of their own social position. To the extent that there are differences within the highest echelons of the political and media establishment, they are differences within a privileged elite over how best to defend its dominant status.
Wall Street crisis staggers Bush [12 July 2002] http://www.wsws.org/articles/2002/jul2002/bush-j12.shtml
On eve of Wall Street speech Bushs past business dealings come back to haunt him [9 July 2002] http://www.wsws.org/articles/2002/jul2002/bush-j09.shtml
Threatened collapse of WorldCom sends political establishment into crisis [28 June 2002] http://www.wsws.org/articles/2002/jun2002/wcom-j28.shtml
12 Things to Do Now About Corporations
By Sarah Ruth van Gelder, YES! Magazine
September 11, 2002
Americans know that corporate excess is about more than flawed accounting. It corrupts democracy, drives a wedge between rich and poor, degrades the environment, and disrupts communities. So what might we the people do?
1. Give it back
The first step in any rehabilitation is to take responsibility for wrongdoing and make amends. In sentencing corporate executives, judges should consider how much of their ill-gotten gains they voluntarily returned. States should seek to recoup ill-gotten gains on behalf of pensioners, ratepayers, taxpayers, and investors. To set an example of the new ethic of personal responsibility in the business community President George W. Bush called for in his July 9 speech, he and Vice President Cheney should give back any gains they have earned through questionable accounting and insider trading. (See Give it Back, Mr. President, http://www.alternet.org)
2. Three strikes, youre out
Why not a corporate death penalty; three criminal convictions and your corporate charter is history. The town of Wayne is one of several Pennsylvania towns that prohibit corporations with repeated violations from setting up shop. So far, the law has been used to keep out hog farms that have repeatedly broken the law.
3. Personhood for people
Corporations were first chartered to serve the public good. POCLAD (Program on Corporations, Law, and Democracy) is developing a model charter based on that idea; it includes time limitations on corporate charters, incorporation only for specific purposes, charter revocation for violations, prohibitions on one corporation owning another. It would also require that corporations refrain from infringing on the health, dignity, and rights of employees and refrain from damaging such commons as air, water, and wildlife habitat.
The legal fiction giving corporations legal personhood was a result of an interpretation of the 14th amendment by an 1886 Supreme Court decision (Santa Clara v. Southern Pacific Railroad Co.). But there has never been a vote of the people on corporate personhood nor on bestowing on corporations the rights contained in the Constitution. We should be clear: The rights of persons are reserved for real people. (See http://www.poclad.org)
4. Favor local
From the town council up through the UN, rules, incentives, and subsidies should favor locally owned enterprises that serve local needs. (See the Institute for Local Self-Reliance http://www.ilsr.org)
5. No deals for lawbreakers
Lets quit rewarding corporate law breakers with lucrative government contracts. White-collar crime is costing America an estimated $200 billion per year, about 50 times the cost of street crime. According to Business Ethics editor Marjorie Kelly, Lockheed Martin has 63 violations and alleged violations, yet its 1999 government contract awards totaled $14 billion. Companies with more than one criminal conviction or civil judgment in three years should face contract suspensions or debarments, says the Project on Government Oversight (http://www.pogo.org)
6. Quit exporting Enron
According to the Institute for Policy Studies, Enron-related projects have received more than $4 billion in federal financing since 1992 and $3 billion from the World Bank, the European Investment Bank, and other public sources. Now Enron wants more; the company is after a $125 million loan from the Inter-American Development Bank to expand a Bolivian gas pipeline through ecologically sensitive areas and the lands of indigenous people. Of course, Enron is not the only one. Public money should not subsidize exploitation. (See http://www.ips-dc.org)
7. Clue in the public
Sunlight is the best disinfectant. All those with a stake in a corporationemployees, communities, customersshould have access to information about its practices and impacts. (See page 19.) Heres one example: Studies by EPA and others show that many corporations under-report environmental liabilities. Get real about costs; report them honestly.
8. Serve all stakeholders
Corporations are required by law to maximize profits for shareholders. Robert Hinkley, a corporate lawyer, is pressing for a law that prohibits making profit at the expense of the environment, human rights, the public safety, the welfare of the communities in which the corporation operates, or the dignity of employees. Groups in several states have taken up this Code for Corporate Citizenship. (See http://www.citizen works.org or call 202/265-6164)
9. Tax the casino
Every day, $1.5$2 trillion is exchanged on world currency markets; over 95 percent of that is speculative. The Tobin tax, a proposed small tax on currency transactions, would calm financial markets, protect developing countries, and generate billions of dollars to address global poverty. (See http://www.waronwant.org) A similar tax on stock transactions could slow stock speculation.
10. End corporate welfare
After working hard to get impoverished mothers and children off public assistance, Congress should turn its attention to CEOs. To start, we could help executives learn self-reliance by sunsetting corporate giveaways; eliminating tax breaks for companies that move off shore; and doing rigorous, independent assessments of tax incentives and subsidies to see which, if any, work.
11. Hands off public assets
Those who propose privatization of public assets or services carry the burden of proof to show that long-term public benefits outweigh the costs.
12. Restore democracy
Lord John Browne, CEO of British Petroleum, announced in February a halt to BP political contributions anywhere in the world. We mustnt confuse our role, he said. We must be particularly careful about the political processnot because it is unimportantquite the reversebut because the legitimacy of that process is crucial both for society and for us as a company working in that society. We can hope that other corporations will follow BPs example.
Realistically, though, we need to enact clean-election reform of the kind that is helping to restore democracy in Maine, Arizona, and Massachusetts. (See http://www.publicampaign.org)
Reprinted from Yes! A Journal of Positive Futures, PO Box 10818, Bainbridge Island, WA 98110. Subscriptions: 800/937-4451 Web: http://www.yesmagazine.org
Quotations from the book Rich Media, Poor Democracy
by Robert McChesney
The New Press, 1999
"The United States spends a fortune on the military for no publicly debated or accepted reason. But it serves several important purposes to our economic elite, not the least of which is as a lucrative form of corporate welfare. Since no element of the economic elite is harmed by military spending, and nearly all of them benefit by having an empire to protect profit making worldwide, it rarely gets criticized - unlike federal spending on education or health care or environmental improvements. If a reporter pursued the story of why we are spending $300 billion on the military, he or she would appear to have an axe to grind and therefore to be unprofessional, since top official sources are not critical of the spending."
"By 1998, discounting home ownership, the top 10 percent of the population claimed 76 percent of the nation's net worth, and more than half of that is accounted for by the richest 1 percent. The bottom 60 percent has virtually no wealth, aside from some home ownership; by any standard the lowest 60 percent is economically insecure ..."
"In the crescendo of news media praise for the genius of contemporary capitalism, it is almost unthinkable to criticize the economy as deeply flawed. To do so would seemingly reveal one as a candidate for an honorary position in the Flat-Earth Society. The Washington Post has gone so far as to describe ours as a nearly "perfect economy.""
"The corruption of journalistic integrity is always bad, but it becomes obscene under conditions of extreme media concentration as now exist."
"Blue collar" crimes generate harsh sentences while "white collar" crime - almost always for vastly greater amounts of money - gets kid gloves treatment by comparison. In 2000, for example, a Texas man received sixteen years in prison for stealing a Snickers candy bar, while, at the same time, four executives at Hoffman-LaRoche Ltd. were found guilty of conspiring to suppress and eliminate competition in the vitamin industry, in what the Justice Department called perhaps the largest criminal antitrust conspiracy in history. The cost to consumers and public health is nearly immeasurable. The four executives were fined anywhere from $75,000 to $350,000 and they received prison terms ranging from three months all the way up to ... four months.'
"The corrupt nature of U.S. communication policy making continues on course. Vital decisions are made all the time concerning the future of our media system, but they are made behind closed doors to serve powerful special interests, with nonexistent public involvement and minuscule press coverage ... the commercial broadcasters have effectively stolen control of digital television from the American people, with the support of their well-paid politicians. The one sop thrown to the public, the Gore Commission, which was to recommend suit able public-interest requirements for commercial broadcasters in return for the free gift of some $50-100 billion of public property, was a farce."
"... the corporate media system ... generates a depoliticized society, one where the vast majority of people logically put little time or interest into social or political affairs."
"We are in precipitous times. The corporate media system is consolidating into the hands of fewer and fewer enormous firms at a rapid rate, providing a hypercommercialized fare suited to wealthy shareholders and advertisers, not citizens. At the same time, there is a budding movement for media reform which is part and parcel of a broader anti-corporate movement."
More quotes at http://www.bankindex.com/read.asp?ID=1213
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