Leftovers
That There’s So Much G-d Damn Lying and Cheating in Business Surprises You?
The past few years have exposed corporate greed and disdain for the consumer at its finest, Enron being the poster child of bad behavior. The world seemed shocked, despite our common opinion of corporate giants being anything but flattering. Perhaps it was how particularly outlandish those few individuals behaved. Especially in the case of Enron, we got to know the faces behind corporate evildoing in ways that made Ken Lay seem like Damien.
These were faces like ours with a nose, two eyes, lips and ears, but at the same time seeming so alien. How can people knowingly corrupt and take advantage of a business that so many others relied on to literally keep food on the table? Where does the arrogance of these power mongers come from that leads to this above the law crap – where people work so hard to screw so many people and all those corporate Nazis on the payroll play along? (And this little bit of anxious hand wringing comes from two dudes who like to think of themselves as appreciating obnoxiousness!) So anyway, with any luck the light that’s been shed on corporate corruption will spawn a new age of ethics.
We repeat: With any luck.
Here are some highlights, just to make sure you see how bad it’s been.
April 2002
The Rigas family, who founded the Company, collected $3.1 billion in off-balance-sheet loans that were backed by Adelphia; results were overstated by inflating capital expenses and hiding debt.
July 2002
AOL, in desperation likely from a poor ad sales market and purchase of Time Warner [this was not a merger], inflated sales by booking barter deals and ads it sold on behalf of others as revenue to keep its growth rate up. AOL also boosted sales via "round-trip" deals with advertisers and suppliers. These types of transactions are often described as a company selling an unused asset to another company while at the same time agreeing to buy back the same or similar assets at about the same price.
July 2002
These people inflated their 2001 revenue by $1.5 billion by forcing wholesalers to accept more inventory than they can sell to get it off the manufacturer’s books. A clever, illegal practice known as “channel surfing.”
October 2001
Improperly used off-the-books partnerships to boost profits and hide debt totaling $1 billion. In addition they manipulated the Texas power market; bribed foreign governments to win contracts abroad; manipulated California energy market.
November 2001
In an attempt to disconnect themselves from the Enron scandal they shredded documents connecting them to the company. This was a shame for them beyond recognition since Arthur Anderson until this date was the leader of their own field.
February 2002
They swapped assets and recorded them as gains on their income statements; a practice known as "capacity swaps." They also shredded documents related to accounting practices.
May 2002
Booked $100 million in annual construction cost overruns before deals were finalized. And gave us Dick Cheney to kick around.
May 2002
When Ex-CEO L. Dennis Kozlowski was indicted for tax evasion the SEC began an investigation into whether the company was aware of his actions. The allegation included possible improper use of company funds and related-party transactions, as well as improper merger accounting practices.
July 2002
Recorded $12.4 billion in consumer-to-pharmacy co-payments that Merck never collected.
March 2002
Booked $3.8 billion in operating expenses as capital expenses, a huge overage, and gave founder Bernard Ebbers $400 million in off-the-books loans. And when Ebbers was at the top of his game, no one questioned how a former basketball star with no business acumen could buy MCI, the giant of all the telecoms that started the industry’s foray into playerdom as a competitive industry.
June 2000
Boosted income by $1.5 billion. by falsifying financial results for five years. Imagine, Xerox. A blue chip company. Don’t go blaming those dot com kids anymore.
We hope you enjoyed our history lesson. It’s important during the revolution that all of us recall those who came before us. And screwed up corporate America for everyone.