Posted on 08/14/2002 9:50:54 AM PDT by scoogie38
Corporate Scandals and Accounting “Irregularities” (By Rob Klein) ---- www.scoogiespin.com =========================================================
By now you should be familiar with all of the recent corporate scandals, especially the accounting irregularities. Enron, Global Crossing, WorldCom, Imclone, Adelphia Communications, and good old Martha Stewart, are just a few names, which come to my mind. I am an investment professional by trade, and I have seen investors’ portfolios devastated by these scandals. Fortunately, I had only a minor exposure to WorldCom, and my clients avoided many of these disasters. A coworker of mine referred to the scandals as corporate suicide bombings. I can not use that term out of respect for the many Israelis murdered by suicide/homicide bombers, and the thousands who died on September 11, 2001. I refer to these corporate actions as land mines. If you step on a land mine, you either die or lose a limb. If you had invested in these companies you either blew up part of your portfolio, or you completely destroyed it.
I do not despise corporations, and I do not hate the rich. A poor person has never employed me, and corporations employ many Americans. Many Americans have made significant profits by investing in the equity markets. Chances are that even if you are a unionized laborer working on an assembly line, part of your pension is invested in the securities of corporations. State pension systems were not immune from these disasters either. I am not an apologist for the Rigas family (Adelphia), Mr. Waksal (Imclone), and Ms. Stewart. Please note, no matter how bad some of these apples are, in America we do not eat grass and live in caves. Many Americans own homes, automobiles, and have an excellent standard of living. People risk their lives to come to our country for employment, better healthcare, and the opportunity to live the American dream.
I strongly believe that the bad apples will be purged from the system. Our markets will recover, and so will our economy. Corporations, in particular some of their executives, need to be punished for their actions, but we should not stop there. I believe we should investigate the largest continuous scandal ridden organization – the United States of America! Recently, I believe I heard Senator Fritz Hollings (D- SC) calling for the government to “certify” its own books. I normally disagree with the Senator from South Carolina, but he makes a good point.
How many bogus contracts and “Fleecing of America” stories (Tom Brokaw) do we need to hear? Uncle Sam has a great accounting system, which in my mind is the same or worse than Anderson’s. For example Social Security runs on a system of IOU’s. Democrats continue to have us believe in the fantasy story of the “Social Security Trust Fund.” There is no such thing!!! Our government “robs Peter to pay Paul” by raiding one area to pay the debts of another– sound familiar?
Let us say company XYZ listed assets in “trust fund.” This was money, which was supposed to be used for future dividend payments. However the trust fund was never there, and the assets listed were really future revenues from sales, or simply misrepresented earnings. Could you imagine the outrage? Oh wait, doesn’t this sound familiar too?
Now is our chance, let us clean up corporations and hold the government to the same standards as corporate America. So before you curse the companies, remember what our own government does.
Congressman Billybob
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