The Oregonian: Freedom gap, credibility gap near-cousins: “Royal Dutch/Shell agreed three weeks ago to pay the SEC $120 million to settle an inquiry into the company's vast overstatement of its oil and gas reserves. The fraud inflated profits. No admissions or denials of wrongdoing here, either, but the company nobly vowed not to violate securities laws in the future.”: “You've got to be awed by the corporate stealth operators. Even when they're conspicuously guilty, most of them prove themselves rich enough or influential enough to buy their way out of cell time.” (ShellNews.net)
Tuesday, September 14, 2004
Posted 15 Sept 04
A corporate ethics gap threatens Americans' well-being more than does the Middle Eastern "freedom gap" that national security adviser Condoleezza Rice described in Portland last week.
A credibility gap yawns, or gapes, in Rice's suggestion that Americans' safety is intimately tied to how foreign nations govern their citizens. Her idea that the United States would be more peaceful and safe if nations geopolitically cloned themselves in our image is superficially seductive. A long list of U.S. military interventions over 40 years, though, atomizes her argument.
The 9/11 assaults notwithstanding, America is attacked from within more often than from outside -- with effects felt nationwide, not just in a few vulnerable locales. Here are indications of a tiny portion of the damage inflicted by blue-suited corporate financial stealth terrorists, measured only by settlements since May:
Just last week Denver-based Invesco Funds Group and a sister company agreed to pay $376.5 million and surrender $75 million in fees to settle allegations of improper market-timing trading in its mutual funds. This type of rapid, in-and-out trading becomes thievery when it skims profits from long-term fund shareholders.
Total price tag: $451.5 million.
Yet no one admits wrongdoing.
Also last week, Qwest's union said the company had reached a $250 million settlement with the Securities and Exchange Commission to halt an investigation of an accounting fraud that understated company losses by $2.54 billion.
Janus Capital Group Inc. last month finalized a $226.2 million settlement with state and federal regulators over improper market-timing trading allegations. Janus settled without admitting or denying the findings.
Pilgrim Baxter & Associates settled with regulators for $100 million in a similar mutual fund trading case.
Royal Dutch/Shell agreed three weeks ago to pay the SEC $120 million to settle an inquiry into the company's vast overstatement of its oil and gas reserves. The fraud inflated profits. No admissions or denials of wrongdoing here, either, but the company nobly vowed not to violate securities laws in the future.
Bristol-Myers Squibb Co. cured an Excedrin headache in August by paying $150 million to the SEC. The payoff settled an alleged accounting fraud -- manipulation of its drugs inventory to inflate earnings and meet Wall Street targets. The company admitted nothing but said it wouldn't violate securities laws in the future.
Drug giant Schering-Plough agreed on July 30 to pay $345.5 million to settle a government Medicaid investigation into how, violating federal law, it allegedly manipulated prices to overcharge state and federal medical-insurance programs. This scam ripped off both investors and taxpayers.
Duke Energy Corp. said on July13 that it would take a $104.9 million second-quarter charge to help foot a $207.5 million settlement (including $3.25 million for energy consumers in Oregon) of claims it overcharged for wholesale electricity during the California energy crisis.
Richard S. Strong and the investment firm he founded, Strong Capital Management Inc., which until recently managed Oregon's 529 College Savings Plan, agreed in late May to pay a combined $140 million to settle fraud charges involving improper trading in the company's mutual funds -- again with no one conceding that anyone did anything wrong.
These are just settlements with government regulators. There also have been gigantic settlements in class-action lawsuits since May. Shareholders who sued Raytheon for supposedly giving them misleading financial information heard the defense contractor's cash register ring up $410 million for them. Citigroup Inc. agreed to pay out $2.65 billion in a securities-fraud case involving WorldCom.
You've got to be awed by the corporate stealth operators. Even when they're conspicuously guilty, most of them prove themselves rich enough or influential enough to buy their way out of cell time. The most surprising news is when one of the big-time corporate crooks actually goes to jail. It's enough to turn a saint into a cynic.
Robert Landauer: 503-221-8157 or firstname.lastname@example.org