Corporate Greed & Corruption

It’s now fairly clear that corporate corruption will continue in this country. Steven Scrushy, former CEO of HealthSouth, was found innocent by a moronic jury a few years ago, similar to the moronic jury that let Michael Jackson go free a while back. Five, that’s five, former CFO’s testified that Scrushy was well aware of phony numbers reporting and directed the CFO’s to report the phony numbers anyway.

The jury didn’t seem to care. They did not believe the former CFO’s. The defense claimed that there were no documents that demonstrated that Scrushy knew or gave such orders. As a former executive, let me clue in the moronic jury on how it works when hanky-panky is going on in a company.

The CEO is not stupid enough to put illegal activity in writing. Instead, they walk into the CFO’s office and orally tell them what to do. There will be no smoking gun. But, why would five former CFO’s all lie? Scrushy, of course, did not take the witness stand in his own defense.

Is it just me or are other people losing confidence in the jury system? The government believed that it had an extremely strong case. It certainly appeared so. But, the moronic jury probably did not understand most of the testimony and let the guy go free. In complicated business cases we should probably change the law and mandate that a jury trial is not available to a defendant. Or, in the alternative only have a jury pool that truly is a pool of the defendant’s peers, i.e., business executives who understand what the hell is going on. Some out of work truck driver is simply incapable of understanding complex business litigation. Justice is not being served here, it is being subverted, and the crimes will continue unabated to the detriment of shareholders throughout America and to our economy at large.

The AIG Fiasco and GM Too

O.K., let's all take a collective deep, furious breath and see what should have been done by the government to prevent these 165 million bonuses that were paid out to the division, ironically, that caused AIG's failure.

It's really very simple. The government should have let AIG go into Chapter 11 bankruptcy. The Federal Bankruptcy judge would almost certainly have canceled the contracts that mandated the payouts. Remember, federal bankruptcy judges can do anything. They can trow out contracts, modify contracts, etc. and nobody can voice a peep.

After that was done the judge could then go to the government and say, "Hey, unless AIG gets 170 billion dollars soon it will have to go into liquidation, Chapter 7. "The government then could do what it has done and give AIG the 170 billion without all this angst, and the unbelievable, unconstitutional bill in the House of Representatives taxing 90% of the recipients bonuses. You see, this action is called a Bill of Attainder. A Bill of Attainder targets a group of people because the government doesn't like them. This has been illegal for roughly 200 years but apparently there are no lawyers in the House that have read or understand our Constitution. We as Americans should even be more outraged by this Bill than we are with Nancy Pelosi's plastic surgeon.

O.K., so the government screwed up. why did AIG go ahead with the payments? First, it was bound by contract. Secondly, it is my understanding that the contract said that if the specified bonus was not paid on a date certain that the bonus amount would triple by the terms of the contract. Actually, if I were AIG's lawyers I would have advised the company to pay them too. AIG's other argument that it could not lose these valuable idiots who ruined the company is less compelling. Where are they going to go? Lehman Brothers? Bear Stearns? Merrill-Lynch?

If you are a fancy derivative trader on Wall Street today you are about as needed as a three legged race horse. A lot of these people are physicists who can't even spell business. what the hell are they even doing there in the first place? they should be explaining string theory and nano technology to nerds at MIT and not running or ruining our economy.

Much of what I have said above applies to GM. Rick Wagoner, CEO and Chairman, doesn't want the company to go into Chapter 11 because he believes no one will want a GM car if the company is in Chapter 11. Rick, let me tell ya something buddy, no one wants your cars anyway! Besides, after Rick told Congress this nonsense a USA Today poll a couple of days later said that more than 60% of Americans would not consider GM's bankruptcy a factor in purchasing an auto from GM.

Why Wagoner doesn't want to go Chapter 11 is pretty simple. Why go chapter 11 when you can scare the hell out of Congress with the loss of 4 million jobs and Congress keeps giving you taxpayer's money!

If Congress had the guts to say "No", Gm would go into chapter 11 and the UAW workers and the retirees would finally stop making what an M.D. General Practitioner makes when he graduates with $100,000 in debt. A bankruptcy court judge would put an end to this largesse which has gone on for at least 35 years. I am sorry Union guys but putting a bumper on a car correctly just doesn't equate with diagnosing cancer in the minds of most thinking Americans.

The American car industry will die if it doesn't become competitive with the Japanese car makers who manufacture cars in this country regardless of the bailout money. Rick Wagoner must have a brother-in-law making $100,000 working in the plant putting int the spark plugs on a GM truck.

Just like AIG let the Federal Courts make the tough decisions that these cowards, yes cowards, are incapable of making to preserve value for the shareholders which should be the ultimate goal, and this clearly is not the goal of Liddy, CEO of AIG, or Wagoner of GM. Their goals remain a mystery to everyone but them.