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WorldCom Fraud Doubles
Silvaran writes "No, this isn't a repeat story. WorldCom claims another $3.3 billion accounting error. That's about $7 billion, for those that are counting. Wish I had that kind of cash to miscalculate on my income tax forms." There's also a NYT story. I love how the news outlets are saying, "error", "irregularity", "problem", as if this was all some sort of tragic accident, instead of laying out the obvious truth, "criminal fraud committed with full knowledge it was a crime".
At this rate, I'll never be able to unload this stock.
My biggest feat at night? That the same thing is going to happen to the telecommunications company where *I* work.
Fuck.
"Aww crap, I forgot to carry the 1!"
Or maybe the batteries were low in the calculator? Ohhh, I know! Cosmic rays caused the calculator to malfunction! Ohh, ohhh! Background radioactive decay from the case caused the accounting package to "loose" $3billion!
See? Its just an honest mistake. Could have happened to anyone...
The life is not much different when you have $100000000 or $200000000.
Wish I had that kind of cash to miscalculate on my income tax forms
I'm sure the IRS wouldn't mind if you overestimated your income by $7 billion. Well, they might mind if you couldn't pay the taxes on that.
I love how the news outlets are saying, "error", "irregularity", "problem",
Those just happen to be the industry terms. The accounting has terms just like the computer industry. And considering that WorldCom executives are being arrested, it is pretty obvious that fraud is involved also. Just another slashdot editor adding his two cents to a post instead of just posting it.
...that you never hear of any accounting 'errors' that make the company look less wealthy than it is?
A pizza of radius z and thickness a has a volume of pi z z a
At this rate and with all the companies they are investigating, the government is going to single handily destroy the US economy. Sure some company's are lying about their books...but let's look at the governmental books and see how many places we can find fraud there!!
"A billion here, a billion there - pretty soon it adds up to real money" - one site attributes that to Everett Dirksen
try { do() || do_not(); } catch (JediException err) { yoda(err); }
So theres another $50.6 billion down the hole, too.
What I don't get about telecom, esp. the telecom in my area, QWest, is how the hell they are rolling in money. My phone bill is outrageous... and they have a monopoly in the region. I know they're getting at least $40 out of every person with a phone in the midwest... where the hell does all that money go?
As in 3,300,000,000 $'s, bucks credits ?
You know, I've heard about calculating errors, but
3.3 bill, is not a calculation eror, thats darn gross negligence at beast, villanous stupidity at slightly worse, and punishable by long term jail at worst..
There are countries that make less money than that on their national budgets.
I sit here, and the only way I can react to this is with a slightly disbelieving laugh.. It's so far out it's almost funny in a slight Twilight Zoney way.
Venlig Hilsen / Regards
John Hinge - shayera /
"Buffy I love you... Please God No!" S
It's going to be interesting to see if/how the US Govt steps in to support WorldCom customers if this finally takes WC down. They do carry a lot of internet traffic.
It does not suprise me at all. In 1999/2000 they would not pay bills for things like video cards and keyboards.
When a "billion" dollar company can buy a mouse, there is a problem.
The justice department needs to stop being a bunch of whores and realize that "limited liability" has to do with financial, not criminal liability. Fraud is fraud, theft is theft. Put them in the same cell with a guy doing 5 years for forging a check. It makes me sick.
I spent a year in Iraq looking for WMD and all I found was this lousy sig.
1. Used a Pentium to do the calculations
2. Used Excel to do the calculations
I think other posters have already mentioned that they never seem to make mistakes the other way round.
"Oh, crap, we forgot to carry the 1 when we added up the revenue, now we made an extra billion last year. Shit - we'd better give all the regular line employees a pay raise before our headquarters collapses under the weight of all the extra cash"
Like that would ever happen......
The spin by the media is guided by the principle that you are innocent until proven guilty. Thus the "nice" choice of words for the WorldCom bastards who are responsible for this "alleged" fraud.
Worldcom's CFO is already in jail awaiting trial and the company is going bankrupt. The hotest story I am hearing on the streets here in DC is the fact that no one from Enron is in jail yet. This will increasingly stink up the Bush administration since his staff has so many Enron ties. Enron was Ashcroft's largest campaign supporter. Congress passed laws making rules tougher for future wrongdoers but it is not clear to me that the rules needed to be made stronger. Imclone, Worldcom and Adelphia C?Os are already in jail under current laws. Why haven't the laws been applied to anyone at Enron?
I wish Ebbers could get the death penalty for perpretrating this heinous economic crime. When considering all the lives and livelihoods trashed, he deserves worse than death.
Steve Magruder, Metro Foodist
Maybe the American press are skirting the issue - but the British press certainly aren't: try
The Guardian ("fraud" appears 5 times) and The Times which even uses the word "scam".
Zack
"... and more and more now there are all kinds of electronic goodies available" -- Pink Floyd 1972
the obvious truth, "criminal fraud committed with full knowledge it was a crime".
We call this Libel / Slander.
ATH0 Bitcoin: 1DnwFLXczVZV8kLJbMYoheUrpqHesjxrSi
I can just see it now...
"
Top Story of the day! Today WorldCom states that indeed, it has never earned a profit at all, explaining that what they had previously thought was only an error of about $7 billion, actually was much more.
'Apparently after some more thorough investigation, not only has WorldCom never turned a profit, but all figures that could have been called profit were in personal bank accounts in the Swiss. We found that 90% of all documents pertaining to the company were also forged... leading us to believe that the very existance of WorldCom maybe fraudulent,' explains an investigator.
Another investigator merely states, 'It's just a front used to collect money. Now they owe everyone everything that they've ever taken in.'
"
The reason for this might be that news outlets are small parts of much larger companies, who also happen to be vulnerable to the rise and fall of the market. If you take a look at any of your major news sources, you will find that they are also fully-owned subsidiaries of large megacorps. Controlling the spin on the stock market in general is in the best interest of those who are directly affected by the public's confidence in investing in corporate stock.
For the most part, corporate news has long since quietly renounced its role as public watchdog, and is now little more than a marketing arm for its new masters.
-- lk t lv ll th vwls t f wrds. T svs lts f tm t wrt bt ts pn n th ss t rd nd mks m lk lk cmplt dpsht.
The IRS threatened to CASTRATE me for misscalcuating 33 bucks on my Mass. income taxes. Apparently though if your a full time accountant for Worldcom you can let 3.3 BILLION slide for 3 years!!!?!?!?!? wtf?
These fraudulent practices are just making every investor cringe and become hesitant to invest in the market. There should be a law against any act which deliberately causes injury to the reputation of Wall Street and makes the general population lose confidence in the system. Laws against frauds are obviously not enough. We already have defamation laws for damaging an individual's reputation... However, the impact of these acts (Enron, Worldcom, others to follow) will be felt by millions for years and nothing will prevent other financial giants from doing the same in the future. A new law could simply be an extra deterrent.
A year ago, if you had invested 1000$ in beer you would have more money returning the bottles today than if you bought Enron Stocks then and sold them today.
Worldcom is based in Mississippi? Well why didn't they just say so.
The missing money? It's buried in mason jars out behind the shed. Sheesh.
-S
--- What parts of "shall make no law", "shall not be infringed", and "shall not be violated" don't you understand?
in the first place?
Like the clowns at MerrillLynched, EdwardJones, and the rest? They had access to financials not available to the general public. These stock brokerage firms new all along what was happening, and they unloaded their positions on their customers. No prosecution for them, eh?
I'll never pay for investment advice again. Now when I trade, it's a minimal cos,t discount, online brokerage.
F 'em.
Comment removed based on user account deletion
While Dubya may be a doofus, he at least knows how to put his finger to the wind, much like his old man did, in the past he was leaning off his buddy Ken, but now that the winds have shifted, Kenny and company are just waiting in the on deck circle.
What I've been reading about the whole Enron thing, it's not a matter of figuring out who the bad guys are, but unravelling everything enough to have a clear picture to take to a grand jury. The "accounting practices" of WorldCom, Global Crossing, Adelphia, etc. are pretty blatant. Enron takes this to a whole new level.
Imagine a 4500 machine network wired by a pack of monkeys hopped up crack, crystal meth, and mescaline, and you'll have a pretty good idea of how convoluted the shell game that Enron was running was. Ken Lay and his boys are going down, it's just going to take awhile to untangle the wiring.
Not that Dubya wouldn't cover for him if he could, but that would be total political suicide.
Wu-Tang Name: Half-Cut Skeleton Get your own Wu-Na
Anyone who dresses as a hollow corporate clone is a SLAVE. People should begin emancipating themselves from the corporate mindset.
Steve Magruder, Metro Foodist
I heard on the radio just last week...that there was a guy who worked at a New York investment research firm (they emphasized that he was NOT a broker/analyst), who said in a newspaper column (I think in the NYTimes) that 25 of the 29 largest telecom/photonics companies in the US were at risk of going bankrupt in the next coming months. He compared it to the early 20th century when there were over 50 car manufacturers in the US, and then after a major car industry meltdown, there were 5 companies which emerged from the dust.
This guy predicted that 25 of the largest telco companies will go down (and this 25 included Nortel, but that's the only name I remember), and NO ONE will rescue them at all, because the only way the other 4-5 companies will have a chance of a healthy life afterwards is if they let the companies go bankrupt (R.I.P.) while the 4-5 remaining companies will buy them up in a fire-sale.
Just wondering if anyone else heard about this prediction...it was just last week I think. I'd also like to get my hands on the article. If anyone knows anything about this, please let me know. I did a bit of Google searching and checked the NYTimes, but didn't find anything. Bad keywords probably.
I defy anyone to come in here and deny they ever miscounted change.
I realize that $3.3 billion sounds like a lot to the average person..
You have to remember that we aren't talking about REAL money here
I did not have fraud with that corporation.
If you aren't part of the solution, there is good money to be made prolonging the problem
About forty years ago, it looked like Lockheed was going to go bankrupt. The stock fell from $60 to $3, which was below par (i.e. breaking up the company and selling off the assets would have recovered more money than the stock was selling for). The problem was that Lockheed wasn't just a defense contractor, it was the defense contractor, and during the height of the cold war, to boot. They couldn't be allowed to go bankrupt.
So the government bailed them out.
Then, some years later, there was a little problem at a generating plant owned by General Public Utilities (GPU). You might not have heard of GPU but you've heard of the plant: Three Mile Island. GPU stock took a hit, as you might imagine. In fact it looked like it might go broke. The problem was that it was a utility, which means it was a monopoly. If it went broke the lights went out over a fair stretch of countryside. That couldn't happen.
So the government bailed them out.
Now, my father saw both of those coming. He bought Lockheed stock at fire-sale prices because he knew that they couldn't be allowed to go broke. He cried because he couldn't afford more. He made out like a bandit.
When GPU started to go under, he bought all the GPU stock he could. And this time, he could afford more. He made out like a bandit. So well, in fact, that he assured himself a comfortable retirement. He's quite conservative, and told me ruefully, "I always preached the values of thrift and economy. Now I'm comfortable in my old age, but it isn't due to any of that. Hmph."
Then the Seattle public utility, through a boring series of blunders, started to go broke. They couldn't be allowed to go broke, for the same reasons that GPU couldn't and Lockheed couldn't.
So the government...said "Hey! Wait just a darn minute here!" And didn't bail them out.
And they went broke. And the lights stayed on.
Ditto when California started having rolling blackouts. Big raspberries from the Fed, because the Shrub knows California wouldn't vote for him if he was rolling out the red carpet in front of Jesus Christ for the Second Coming. Much stick-waving, stunningly bad contracting, and shouting, but the lights came back on and stayed that way.
The days of government bailouts are over.
Does it go on forever?
their old pentium, ;-)
they would never had such errors'
I swear your honnor! I only rounded to the nearest decimal!
I'd rather be sailing...
its FAR WORSE! Add 50 billion of fraud "Good Will" on the books. This nbrings the tally to 57.75 billion.
This article neglects to refer to the fact that the AP press release mentioned that its not just 7 billion dollars missing from the accounts.... a full 50 BILLION is going to be written off immediately in a couple weeks as reevaluated Good Will assets that were not material but nevertheless padded their worth.
The total can run higher than that by the way.
But the total reachable in just a couple weeks can soar to 57.75 billion!
====
AP Business Writer
Thursday, August 8, 2002; 8:15 PM
NEW YORK -- Bankrupt telecommunications firm
WorldCom Inc. said Thursday it uncovered another $3.3
billion in bogus accounting, adding to the $3.85 billion
fraud it revealed in June.
The fraudulent accounting already revealed occurred in
2001 and the first half of 2002. The additional fraud
would bring the total of phony accounting at WorldCom
to some $7 billion.
WorldCom also said it will likely write off $50.6 billion
in goodwill and other intangible assets, too.
====
57.75 billion missing!!!!
is being able to get my self to bed after drinking so much damned coffee
What kind of world do we live in where people misrepresent their earnings, and then on being caught and come clean they are STILL LYING, how does $3.3 BILLION dollars fit into a fudge factor??????
BTW, everyone ought to check out a relevant piece of art work, I think the author here is really making a timeless point that can be applied to this situation.
US Gov't : HALLO!
World Com: pffft!
US Gov't : why?
World Com: french.
I know that may seem confusing, but check out the site, you'll understand.
Strangely, Michael, it is a convention of the "old media" that one does not refer to someone as having committed a "criminal fraud committed with full knowledge it was a crime" until that person has been found guilty in a court of having done so.
For Christ's sake. Why don't you just go the whole hog and shout "Get a rope! Let's lynch the bastards now!".
If slashdot posters started referring to Michael's "libellous editorial comments committed with full knowledge that he was libelling someone" rather than "stupid remarks", "arrogant editorialising" or whatever, you'd be out of a job in no time.
-- the most controversial site on the Web
No one knows more about smear campaigns than conservatives and republicans so I guess you must be correct.
....companies like Worldcom defraud shareholders.....and then Bush gives them a tap on the ass and tells them not to do it again....meanwhile they're under the table sucking his dick.
There was never much right with "corporate America" to start with.....but these days there sure is something wrong with corporate America. Time for some serious action and accountability.
-psyco
60 minutes did a piece on how it is not a crime to label charges as "taxes".
MCI for example addes 20 dollars in false "taxes" that the previous long distance carrier a couple months ago did not.
In the USA it is not fraud to print bogus surcharges on phone bills and call them taxes.
MCI and MCI (worldcom) alone adds over 10 extra dollars in falsigfied governement charges for its "Neighborhood Anywhere" plan.
YOu are a fool for not knowing this.
You ought to watch 60 minutes more often and quit posting lies about how high the "911 taxes" and "Lifeline low income" taxes are.
Does anyone out there KNOW all the names of the holding companies and companies Worldcom controls? If I have any control in my company or in my life, and they are a part of it... I want their product out!
It is not that I don't think the company will stick around. I think that they will take a $7. something billion dollar write off, smile at all of us, and go back to business as usual. Just like I expect all the other companies to do. Restructure and keep on moving. They have to much cash invested in to many politicians to do other wise. I even heard a audio bite on NPR this morning where a Worldcom PR spin doctor stated that everything was fine and no one would lose any services.
I want to lose their services!!! I do not want to have any dealings with a company who involves itself in illegal activities. If the person you bought gas from at the local corner gas station was found to be "lining" his pockets with your money, would you go back and buy gas there? This sort of unethical behavior is starting to be mulled over by the popular press as "ok and not to worry. Everything will be fine. Nothing to see here." Uhh, NO.
I plan on taking my families' and my business' money to another gas station thank you. I don't plan on paying the unethical or immoral gas station attendant any more if I can help it.
The wages of sin are unreported and back taxes are hell to pay.
While this is god awful, there is a small silver lining for them. They paid taxes on that 6 billion dollars of false income. The federal government will now have to refund them that money. Futhermore, since these losses occured so far back, they are unlikely to effect the current fiscal status of the company. They may very well be doing this recoup taxes; in other words, they are going to get a nearly a billion dollar windfall from this restatement.
Democrats ruined this country.
.... not now.
If we eliminate Capital Gains tax (as all other modern countries do) then more people will save money and put it in the stock market LONG TERM.
Less volatility, more growth, more capital, more GDP.
But noooooooo the class envying Joe Lunchboxes of this world want to make taxes as high as possible under socialist (Democrat) laws.
Hurray for the republicans for their business sense.
Worldcoms problems started in 1999 and 2000
(BTW i am a libertarian)
broke the internet camels back.
Speaking of taxes...
I'm guessing WorldCom gets back their tax paid on their overreported income?
If so, it's really to their advantage to dig up as much overreporting as they possibly can, now that it's out of the bag and they can't hurt any worse for it.
Maybe they can find enough overreporting that they will be able to claim a profit again this year... after classifying their tax refund as income, of course...
-- Terry
From the article at news.com.com:
So... $3.3x10^9 + $3.3x10^9 > $7x10^9 ??
WTF kind of math are these auditors using???
You see? You see? Your stupid minds! Stupid! Stupid!
Why hasn't a special prosecuter been appointed like Starr was for Clinton's minor Whitewater dealings. Bush basically took money out of peoples 401k by using the corporate jet of a company that was failing
Free cell phone tracking
(1) Why isn't every single member of Worldcom's Board of Directors in jail right now? So its okay to throw some kid in jail for cracking some piss poor encryption on a PDF file - but its not so okay to throw some suit in jail that knowingly stole billions upon billions of dollars from investors?
(2) Why hasn't Worldcom's stock been delisted? I mean comeon now - I think its about time to hang up the saddle and go on home because this horse isn't getting back up.
(3) Why is Worldcom being allowed to write off 50 billion dollars (as mentioned earlier) in addition to the 7 billion they already stole? I think Bernie Ebbers and friends better get out to the street corner and start "sucking it up" so he can play these people BACK.
(4) And once again - WHY AREN'T THESE FSCKING IDIOTS IN JAIL? If I bounce a check for 100 bucks I'm sure to face the consequences - yet if they "steal" 7 billion dollars its okay?
J
I love idealists not because I am one, but because they make life bearable for pragmatists such as myself.
Thank you Mr. "I hate represenative (i.e. the best kind of) democracy." I'm sure things would be so better in your Tyranny of the People world.
Mac OS X and Windows XP working side by side to fight back the night.
think about it. the 'news outlets' are owned by many of the same transnationals that are committing these 'irregularitys'. you expect them to turn on themselves? that's not capitalism.
Send those bastards to a federal pound-me-in-the-ass prison.
Gamingmuseum.com: Give your 3D accelerator a rest.
From a Robert Novak column:
"Through all of President Bill Clinton's last two years in office, the announced level of before-tax profits was at least 10 percent too high--a discrepancy rising close to 30 percent during the last presidential campaign. Most startling, the Commerce Department in 2000 showed the economy on an upswing through most of the election year, while in fact it was declining."
Yes, thats an 'error' of 150 billion, and the clown in charge of the prediction still has his job. Do economists and accountants have any standards?
hmm... maybe I could conveniently 'book' my credit card interest and my new computer as a 'capital loss' and take it as a deduction on my 1040 next year...
:-P
oh, wait... but if *I* get caught by the IRS, I'll go to jail for tax fraud. I don't have enough money handy to pay-off my senators and congress-people so they will help me get away with it.
Of course, I suppose I could offer to give them *your* 401k... maybe that would help.
In related news, the federal government has reversed the Greene decision, and is putting the pieces of AT&T back together. Government sources are quoted as saying "What the heck were we thinking!?!?".
-- Terry
I know that the Worldcom issue is not quite this simple. Worldcom was writing off operating expenses as capital investments. I also can't believe that I am advocating higher taxes, but...
During this bubble, companies were doing everything that they could to overstate earnings.
I do exactly the opposite with my company. I hire a sharp accountant to make my profits legally look as small as possible. I have to write a big fat check to the IRS at the end of the year for my profits. I certainly wouldn't want to overstate them.
It also seems to me that if I was pulling this kind of stuff I would be in a federal pound you in the ass type of prison already.
Let's lynch the bastards now!
(Damn that "power of suggestion"...)
Shifting revenue around is hardly a new practice. In fact, everyone's favourite company has done it...
--------
Bleah! Heh heh heh... BLEAH BLEAH!!! Ha ha ha ha...
Go on, then, explain to the court how the capitalisation of local line costs in de novo telecom operations is the wrong accounting policy. Then prove that it is so obviously the wrong accounting policy that no reasonable man could have thought otherwise. Then prove that the particular officers of WorldCom who are up for trial were the ones responsible for the adoption of this policy, rather than auditors, consultants, other managers. Then prove that they adopted it with the intent to commit criminal fraud. Then, maybe, you'll have some credibility in your glib assertion that the defendant is guilty without need for a trial. This is a complex case, and the assertion that the defendants are guilty of criminal fraud (rather than of some lesser offence of the kind generically described as "accounting irregularities") is not supportable.
-- the most controversial site on the Web
What bugs me the most about all this is how people still don't seem to make a big deal about it. Here's a good way to think:
Imagine every crime that has been committed against you that cost you money. This can include having your bicycle stolen, your car stolen for a joyride and crashed into a wall... your house vandalized and your stereo ripped off, your credit card number hijacked, your wallet taken in a mugging, etc. Whatever cost you money. Now, try to remember the anger. Try to remember how pissed off you were. How much you would've loved to bash the punk's face in with a brick.
Now listen.
Corporate crime has stolen about twice that from you, and other investors and tax payers. You are an invesor if you have a retirement plan. You are a taxpayer if you have a job. Even if you don't in either case, your sales taxes go to governments, and governments are effected by the stock market. The total monetary cost per year of street crime in the United States is well below the total amount of money lost due to white collar corporate crime. That is money you should have in your assets right now.
The thief, the mugger, at least they have some balls about it - if you catch them, you could very well bash their faces in with a brick, then get them arrested by the police (who kick the living crap out of them if they try to run) and then end up in a federal "pound me in the ass" prison for quite a long time.
The white collar criminal is not caught. If he is, his company gets fined something around 1% of their earnings this quarter. If he personally is caught, he just gets sent to a minimum security country club for a few months.
And people don't seem very mad about this.
There's something I don't get, tell me if I'm wrong :
- they filed for bankruptcy claiming about $100b in assets, and $41b in debt.
- now they say they'll have to write off about $50b out of it. (at least, they said).
- and for the past 3 years they made a $7b fraud (and it may be the tip of the iceberg)...
So let's do the math now:
$100b - $41b - $50b - $7b = $2b (!)
Worldcom is worth $2 billion dollars, which means ZERO if you substract also the $2b loan they just got while filling for bankruptcy...
It looks like I should really start looking for another hosting provider... no?
This country needs some new people in government to weed out all the bad crab grass strangling the public. There's absolutely no way I'm gonna vote for any politician who contributed to this f0cked up situation.
A few executives have been 'arrested'.
You won't be able to 'unload' your stock until a some executives are sitting in cages in Camp Xray.
That's what it's going to take to restore investor confidence.
"Battle No Against Flesh, But of Powers and Principalities, and wickedness\corruption in high places." "The love of money is the root of all evil." "A Little Power Corrupts a little, A Lot of Power Corrupts a LOT." and my personal favorite quote: "WorldCom and Enron are like a well made pryamid scheme. Only the top get rich and once they get rich they'll strip the pryamid and build a private Cairo from the stone.." (Umm long ago the limestone was stripped from the Giza pryamids and the stone was reported to have been used in building parts of Cairo)
-=[ Who Is John Galt? ]=-
Income smoothing was a problem for Microsoft too.
Here's a Seattle Times article talking about the settlement.
The only thing is, the government refused to own up to their part in the whole scandal: they assisted and turned a blind eye to their corporate and banking misconduct for years, and took kickbacks and bribes from all the parties involved. I was over there during the whole time that the IMF was helping them out of their economic hole, and they called the downturn and rebuilding of their economy "The IMF Era", as if their problems were all the IMF's fault.
Are they better off now than they were? Heck yeah. Have the root causes been addressed? Nope, just gone underground for a few years. Mark my words, in five to ten years, the ROK will go through the whole thing all over again.
Wu-Tang Name: Half-Cut Skeleton Get your own Wu-Na
'another $3.3 billion' doesn't mean that the previous amount was exactly $3.3 billion, and it doesn't mean that there was only one previous amount.
Johan Veenstra
you know, while americans try to play polititcs with this, here's a thought to consider. the us needs investment from foreign countries. my pension is invested in us stocks and yet i live in ireland. however once the market creeps up a bit, that money gets invested elsewhere.
the us gov't continues to be more and more business friendly, and yet in reality that's bad for business in most cases. if i as an investor don't see that changing, i don't put my money in. and i'm not alone.
US Citizen living abroad? Register to vote!
I remember a report quoting Bin Laden himself making a statement very much like this!
I wonder how much he really knew? There was a lot of very dubious insider trading just before Sept. 11.
I love how the TODO list mentions, "fix issues with Save As dialog", as if this was all some sort of tragic accident, instead of laying out the obvious truth, "this crap application just wiped three complete pages from my document!"
Right on the money.
Wu-Tang Name: Half-Cut Skeleton Get your own Wu-Na
Cheap jibe...
Do the media also use this choice for the people stuck in Guantanamo Bay?
The $50bil is probably being charged to a write down in goodwill. (Keep me honest here accountants!) Goodwill is the subjective value Company A places on Company B above or below the price they actually paid. Its sort of funny money anyway, so its not like $50bil in cash went out the door or anything.
Can anyone say The Cayman Islands?
It is theft, pure and simple. You give them money so that they will grow a company for profit, and then with no regulation to watch that money, they funnel it to some tax haven and then lie to you about what it is doing. It is no different than paying for something in the mail and it never arrives, because the jerks have already skipped out with the cash.
Either way, if they go to "golf prison" or not, they come out and they will have money to play with for the rest of their lives.
*AND NOW MY POLITICAL SOAPBOX* (please disregard if you do not agree)
Please don't vote Republican again because we are in the middle of a "terrorist crisis." Its not good for you... Mr. and Mrs. John Q. Public.
This is what happens when you take all of the restrictions off of business. I am not for restriced business, but I am defineitely not for what they have been getting away with. If they are doing this to people who spend their paychecks on a better future with this company, then what do you think they are doing with the environment? What about a little safety regulations to protect an employee?
Let's keep in mind that our Republican friends constantly say that they want to "run the Government like a business."
The last time I checked, that meant charging too much, underpaying the working stiffs, and playing golf on the profits for the handfull of winners. Good luck.
...they'd blame this on the Pentium floating-point bug.
:wq
Are we talking about the same Times? I think my friend is referring to the London Times here.
Please give us some examples of the "well-documented history of sensationalizing " the Times indulges in.
Certainly the New York Times has a more glamourous, brash look to it, the last time I read it (last over in February).
I have to agree that the UK tabloid press are some of the most appalling rags in Europe, perhaps it is these you refer to?
The Guardian is mildly left of centre which would probably annoy most of the slashdot US readership from a political perspective, but hardlt a gutter rag, and The Times is one of the most establishment, conservative papers around.
Looking forward to hearing your examples...
In the USA, there is such a thing known as due process. Basically it means "innocent until proven guilty". I love it how media outlets, even such as Slashdot, provide arm chair judgers and arm chair jurors a platform for "Trial by Media".
For anyone saying "criminal fraud committed with full knowledge it was a crime" without fully knowing all the details in the case, is cutting short the defendants due process. Perhaps you should have stated it "Alleged criminal fraud committed with full knowledge it was a crime".
-- "Perceptions create reality. By changing your perceptions you change your reality."
MCI always paid as late as possible, and I heard that Worldcom often simply didn't pay many of its creditors.
The funny part about this is that last year they were looking for ways to save money - and decided to go with cheaper coffee in one of their largest facilities.
So, Worldcom failed to integrate the sixty companies that they acquired - and their operations were bleeding money like an arterial wound. Additionally, they had overspent on MCI by about $10 billion, and had $7 billion +
hidden in accounting gimmicks --- but thank god they saved $400 a year on cheap coffee.
just another 'decision made at internet speed' I suppose.
Here's what I don't understand. This kind of crap is EXACTLY why we have "auditors" who are supposed to validate a company's books. We've got all kinds of news stories about bad CEOs going to jail. I don't have a problem with that. I have a HUGE problem with the fact the no auditing company's CEO has been sent away yet. The accounting companies conspired to hide all these losses and artificially inflate these bogus companies stocks.
I used to work for a Big Five accounting firm (not Andersen) and I did a variety of work -- tax consulting, mostly, but also some auditing. I am both an accountant and an attorney. I have left the tax world for the general practice of law, and despite all the lawyer jokes to the contrary, I feel "cleaner" about what I do now (mostly chasing ambulances). I would never have guessed that if you asked me about it when I graduated from law school lo those many years ago.
/. readers from other countries, I hope you aren't getting too giddy about this. The simple fact is that many, many studies have been done about transparency of financial reporting and business ethics. The US is always at or near the top of those studies in having transparent accounting/reporting and having a reasonably honest system. In the present, only a tiny, tiny fraction of publically-traded companies have been affected by this, and I think the worst is over. I think overseas investors should wonder about what is being concealed on the books of some of their companies. Japan's banks' problems are widely known, but I throw that out there as an example. I will bet that it is not just the US affected by this -- the US is simply the most prominent place where it is going on. The fact that many people around the world like to watch the US get it in the crotch from time to time doesn't hurt the publicity, either. Especially after so much nationalistic chest-thumping from the US about its place in the world lately. I understand the schaden freude, but I don't necessarily think that the smugness associated with it is really very wise.
Here is my spin on the Worldcom situation:
1. Auditors will never, I repeat, never, catch outright fraud at companies they audit if the company is actively trying to deceive the auditors. Auditors look at only a fraction of financial records of a company, and if certain transactions are concealed or are outright misrepresented by the audited company's employees, it is extremely difficult to get to the bottom of the situation. Auditing is, reduced to its bare essence, statistical sampling of transactions with the sampling focused on major items and a certain percentage of the "ordinary" transactions. At a large company like Worldcom, it would be relatively simple for the CFO to completely fool the auditors (most CFOs come from the public accounting world and know very well the game that they are trying to cheat at).
2. Audits do not pass on the quality of a business, they simply try to determine if a company has followed "generally accepted" financial accounting practices as promulgated by the financial accounting standards board FASB - located in CT, home to Joe Lieberman who fought vigorously an attempt to reform accounting back in 1995, btw -- it's not just Harvey Pitt and the GOP Enron cronies at work here - the whole system is rotten. Shareholders who expect auditors to let them know a business model sucks will be waiting a long time and they are exhibiting pathological ignorance.
3. Of all the big accounting problems rearing their heads, a disproportionate number are coming out of Andersen audits. KPMG, PWC, E&Y, and C&L are all mostly avoiding the maelstrom. Why? The culture at Andersen? Leadership at Andersen? I honestly do not know, but it is striking that Andersen is auditing most of the problem children of the stock market.
I know people at Andersen at all levels who are smart, diligent, and honest. I have worked with many folks from Andersen. People move from Big Five firm to Big Five firm all the time, so there's no inherent "you are evil if you audit for Andersen" rule. I am at a complete loss to explain why Andersen is in the neighborhood at the time all these arsons are taking place, but it seems peculiar.
4. The changes recently enacted by the Congress and GW prohibiting consulting and auditing to be done by the same firm will do bupkus to stop accounting problems. The biggest source of accounting fraud results from the company misleading auditors. "Aren't the outside auditors professionals? Can't they see through the frauds?" The simple answer is, no, they can't under most circumstances where they are being wilfully mislead by the audited company. Outside audits are simply not as good a method for identifying fraud as the public perception makes them out to be.
5. Something I have seen pushed hard by accounting firms is what is called an accounting "product." Accountants have things they sell to companies and their work involves "deliverables." It is first and foremost a business.
What are the "deliverables" that I am now most vividly recalling? Ways to move debt off of balance sheets by arranging lease purchase agreements. Setting up subsidiaries to hold assets that drag on earnings growth. The thing is that these sorts of strategies complied with FASB rules for GAAP. The Big Five became more and more aggressive at coming up with and pushing these strategies. Nothing was more desirable than going into a company you audited with something that could add a cent or two to EPS while following GAAP and then billing $20 million dollars for it. There were (and are, I am sure) national sales teams pushing the hell out of these things.
What is the significance? The underlying businesses of the companies that purchased these products did not change. The reported earnings appeared to be growing or growing faster with no substantive change in the quality of the audited business. Especially at a time where P/E multiples were at record historical levels, an added cent or two could result in billions (BILLIONS) of added market capitalization. Combine that with the enormous amount of stock options offered to management level folks, and you begin to see why these "accounting products" were so popular -- accounting firms got huge fees, execs got enormous increases in the value of the shares/unexercised options, and the cost to the audited business was a pittance in comparison.
Your average investor knew nothing about this. The average brokerage firm analyst probably knew less than s/he should have. Finance majors know very little about accounting and generally end up on Wall Street sneering at their boring(!) friends who majored in accounting who largely go to the financial accounting world. The result is that the audited companies (and their management) were in the middle knowing pretty much the whole story while trying to mislead investors and analysts (who have their own house to clean, btw).
The fact that all of this took place during one of the biggest bubbles in the history of american financial markets only exacerbated the problem.
For
Long enough, back to work. So many people to sue, so little time. (that's a joke, people)
Lots of petrified grits
There are people who are dead that deserve to live. There are people alive who deserve to die. Can you grant the former? Then don't be so hasty to grant the latter.
If they overstated their profits, it stands to reason they overpaid their taxes. So shouldn't the IRS pay them a big fat check?
WWJD? JWRTFA!
> I love how the news outlets are saying, "error",
> "irregularity", "problem", as if this was all
> some sort of tragic accident, instead of laying
> out the obvious truth, "criminal fraud committed
> with full knowledge it was a crime".
I suspect that's for the courts to decide - not the press.
Wasn't the first mistake they announced $3.85 billion?
Everyone knows that goodwill from acquisitions is bullshit. It simply shows how much of a premium WCOM paid for assets of companies it acquired. There is some pretend theorization floating around about goodwill and how it should be shown on a balance sheet, but the real core of the business is operations, overhead, and debt. Goodwill is a fantasy and has no appreciable effect on the operation of a business from a financial reporting standpoint, IMHO.
The simple equations is that operations need to throw off more cash than the debt service and the overhead. If that doesn't happen, you will be visiting the federal courthouse for a bankruptcy field trip. That is why the revenue and expense frauds were a problem. I don't think it is a big secret that WCOM used inflated stock to buy the inflated stock of other companies.
After all, that is what WCOM's business was -- selling WCOM stock at inflated prices. They only had to convince the world that the marginal companies they bought would achieve some magical "synergy" resulting in greater enterprise value simply by bringing them under the same corporate umbrella. In the 90's investors were gullible enough to believe in financial philosopher's stones.
Lots of petrified grits
You are clueless, completely clueless. The current economy that Mr. Bush has inherited was created during a Democratic administration, so if it's anyone's fault it is Clinton's.
With that said, I agree with the other stuff you said. I do not think government should be run like a business, large businesses are usually just as corrupt and inefficient as government. Big businesses grow and grow, just like government. Government needs to be kept on reigns, it needs to be constantly poked and prodded by the people to keep it from getting too large and out of control, like it currently is to the extreme.
So, don't vote Republican if you don't want, but for the love of all that is good, don't vote fucking Democratic either!
Keep in mind, it's the Democrats who have done more to harm "your right online". The DMCA had more support among Democrats, and so do the new CBDTA^H^H^H^H^Hrights removal type laws.
Sticking feathers up your butt does not make you a chicken - Tyler Durden
The thing about things we don't know is we often don't know we don't know them.
No, a minimum-security prison is no picnic. I have a client in there right now. He says, the trick is kick someone's ass the first day, or become somebody's bitch. Then everything will be alright.
</officespace>
I believe the first time around they claimed $3.8B in accounting errors.
Now they've found another $3.3B.
$3.8B + $3.3B = $7.1B
Which is over 7 billion dollars. Voila! That wasn't so hard to figure out...
This one is easy: People have a tendancy to believe the world is 'fair'. (I think phsycology textbooks call it the 'just world' phenomenom.) So, the rich folks who commit crimes cant be all that bad - after all, they're rich, so they must do something right. The bike theif obviously has nothing more than bikes as his revenue stream, so he's obviously worthless to society and doesn't deserve any benifit of doubt or sympathy.
.. this is why I want to punch people who immediately place faith in those in power without doing their homework. Just because you're a leader doesn't neccessarily mean that you have constributed to society in a more positive way than some homeless dude. Sometimes, yes, sometimes no, but for those who don't spend any brain cycles on determining who deserves your angst, considering both the attribtion (personality) *and* disposition (environment in which behaviour in question was undertaken), their opinions are simply the stuffed ballots and "me too" posts of public opinion. And, as noted above, usually people will side (understantably, but not unforgivably) on the dude with more wealth.
Thats why people will forever feel less upset about White Collar crime (other than the obvious optics issues)
"Old man yells at systemd"
Hoppeism and the Bailout
Unfortunately, I know of no way as an American to profit from these bail-outs.
Also, the protectionist tariffs on behalf of the American steel and soft wood industries have the same basis as a bail out. Oh! Don't forget the Airline Industry, well see what happens the next time they whine for a bail out...
All the creatures will die, And all the things will be broken. That's the law of samurai. (Jubai, 1605)
I love how the news outlets are saying,
"error", "irregularity", "problem", as if this
was all some sort of tragic accident,
As far as I can tell those are Worldcom's words. The newsies are reporting what they were told. Calling it criminal in a news story would be to run the risk of losing a libel suit as there have been no convictions yet.
While it is pretty obvious that there was criminal fraud, that has not yet been proven in a court of law. Let's not encourage the newsies to inject their opinions into the news any more than they already do.
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
Intel is NOT going to expense options. Big respected "old economy" companies like Coke and GM have said they would. What's Microsoft going to do. The lure of riches is a big drive for all the microsurfs. If they discontinue options the employees would be far less motivated, if they don't expense the options they are being (er) irregular.
"Wish I had that kind of cash to miscalculate on my income tax forms."
It isn't cash. It's earnings that were booked when they shouldn't have been. Good ol' matching principle.
Slashdot needs a review in accounting, commercial law, bankruptcy, etc....
Yes the United States has a judicial system, innocent til guilty, etc, remember that?
Calling it criminal fraud is slanderous.
... because I do....
IANAL but write like a drunk one.
This is bad not just for the US, but for a whole lot of other economies in other countries.
Just as an example, VSNL, a semi-govt. owned organization in India and the biggest ISP, had deals worth billions with WorldCom.
Now, VSNL is unsure whether it would get the services or the money. The crux of the matter is that this would affect the shares here a whole lot more, since there are a lot of companies that use the services from VSNL, which in itself is paid for.
And unfortunately, who pays for this? The second and third tier customers in developing countries, who have to endure a whole lot more than their counterparts. Because, they too would be accountable, and I'm just waiting for the VSNL stock prices to plummet, along with others.
I think the executives of Multinationals should be held responsible and should be put to something of an international tribunal that analyses the consequences of their actions, worldwide.
Maybe the punishment should be to throw them in some third world country's prison with hardly a square meal a day and no water to drink, then they'd understand what the hell they were doing.
Funny. I was just thinking the same thing about a much larger class of thieves. You see, corporate criminals haven't stolen nearly as much from me as government con artists.
Funnier still, because I couldn't understand WCOM's books (nor the books of any other telco), I didn't buy their shares. I'm breaking even so far this year, after being up the past two years.
Yeah yeah, enough bragging. You see, the reason I was able to do this is because nobody put a gun to my head and forced me to by WCOM.
What went down at WCOM and ENE (Enron) sucked major ass. $10B frauds resulted into hundred-billion-dollar quantities of market-cap-ass being sucked. But Which is worse - Social Security or WorldCom? Social Security is a $13 trillion dollar black hole of unfunded liabilities. (That's accountant-speak for "debt that we've managed to hide from the balance sheet to the tune of about $45,000 for every man, woman, and child in the States".)
Unlike WCOM and ENE, if you don't pony up 6.5% of your salary every year into the scam (oh, and another 6.5% from your employer, for a total of 13% if you have the gall to work for yourself), people with guns will take it from you. Since when did Bernie Ebbers put a gun to your head and force you to buy his stock?
And unlike WCOM and ENE, who, when their frauds were exposed, were crushed - and their accomplices at Arthur Andersen in the process, SS is still in business.
Just like WCOM and ENE, Social Security is all about off-balance-sheet financing.
I'm not gonna pretend that a webzine like "capitalismmagazine" is unbiased (hell, they're a bunch of raving l00ny randroids, but some of their less-political articles, such as this one on Intel and this one on old-school investing are great) - but if you can dig through the rhetoric and politics, you might realize that if it's fraud and theft you wanna eliminate, we need to remove the two-by-four in Social Security's eye before we can see clearly enough to expose the grit in Worldcom's eye.
> And people don't seem very mad about this.
People are mad - and rightly so - about corporate fraud. And Congress is responding, because it's an election year.
I just wish people realized where the real fraud was being perpetrated, and force Congress to do something about that, too.
"the attribtion (personality) *and* disposition (environment in which behaviour in question was undertaken)"
Isn't disposition closer to personality?
"Disposition is the natural humor of a person, the
predominating quality of his character, the
constitutional habit of his mind. Character is this
disposition influenced by motive, training, and will.
Temper is a quality of the fiber of character, and is
displayed chiefly when the emotions, especially the
passions, are aroused."
Webster's Revised Unabridged Dictionary (1913)
And attribution, "The act of attributing or ascribing, as a quality, character, or function, to a thing or person, an effect to a cause," is close to neither personality nor disposition.
Maybe people don't get upset about white collar crime because the one thing that suits can do is communicate effectively. Even if you don't know what the hell they were saying, you go away with the impression that they're probably right.
(And then you go and try to actually do what they suggested, and waste tons of time... but never mind that small point.)
It goes into twenty to fifty $250 rounds of golf at Hilton Head Golf Club under the guise of a "management retreat."
It goes into the corporate learjet that whisks some of these officers away to the above two destinations.
It goes into the CEO's million dollar annual pension whether he retires a hero or gets the pink slip for delivering his company to chapter 11.
It trickles...straight up.
The tragedy isn't that this stuff happens. It is part of the human condition. Admit it. Most of us would do the same if we were in these fuckers shoes. The real tragedy is that we won't challenge this behavior until it is too late to make meaningful amends. Think Charles Dickens.
"This discovery is very disappointing to me -- as I'm sure it is to you. And it is quite possible that as our investigation continues we will find other questionable entries." - WorldCom CEO John Sidgmore in an email to employees
Here's the email
Would you prefer the media outlets to play judge or jury?
Of course they don't come out and call it fraud. That would be an editorial piece not a solid news piece. Judgement has not been passed by the COURTS, therefore the media does not predict the verdict. Of course we all suspect it is fraud at this point, since they've already been busted before. I'll bet you wouldn't want someone to proclaim you were guilty before you hit the court room, now would you? This is just something to think about for the site that calls themselves "News for Nerds..."
Russian Russian Russian RussianDollSig DollSig DollSig DollSig
Uuuuh, Mr. Powell, it's a $70 billion debt, now. Maybe the problem is that we have an FCC chairman who's OPTIMISTIC about the future of Worldcom, and makes lame excuses saying "don't blame me for being optimistic". We blame you for being an idiot, because you're an optimistic corporate suck-up.
Take a look and feel free: http://www.PieMenu.com
D'oh, right, got it the wrong way around. Thanks for the correction.
"Old man yells at systemd"
or else every corporation in America is guilt of it to almost the same degree. Why do you think they're not looking anymore. After Enron, everyone was looking for the next big thing, sending relatively legitimate new companies plummeting (Tyco.) Pick any fortune 500 company and I can guarantee you will find *at least* $1 billion of the same problem; its only when a company falls out of favor politically or socially that these things are exposed.
If getting business after business bailed out at taxpayer expense qualifies you as being "morally and ethically correct," I guess Bush is.
If being AWOL during your time in the National Guard (which coincided with the Vietnam War) qualifies you as being "morally and ethically correct," I guess Bush is.
If killing more people in Afghanistan than were killed in the World Trade Center qualifies you as being "morally and ethically correct," I guess Bush is.
If getting in the White House by winning a lawsuit after depriving thousands of their right to vote, qualifies you as being "morally and ethically correct," I guess Bush is.
Research the Bush family a little bit. Find out about Laura Bush's homicide via hit and run. Notice what agency G.W.H. Bush headed in the 1970s. Find out where Prescott Bush got his money from. Look at how much the Carlyle Group and Halliburton have received as a result of the W.'s war. See if you still think they're qualifies you as being "morally and ethically correct."
-- haaz.
I dont have any WCOM shares but my pension is still being fucked up by this. I would like to see these guys breaking up rocks for ten years or so.
I think these 7 billion should be "accounted" as the savings O'Neill is making for American carpenters and plumbers by not lending any money to Argentina.
Not that I, personally, want any more IMF cookies in the Argentine cookie jar, but come on! Now I'm very tempted to say the word hypocrisy. But I will refrain from it.
Hit her in the shitter!
Bush, put your money where your mouth is
MADISON, Mississippi (CNN) -- In the shadow of WorldCom's headquarters Wednesday, President Bush assured voters -- some of who had lost their jobs, pensions and even life savings when the telecommunications filed for bankruptcy -- that the days of such corporate irresponsibility are over.
'nuff said
you wrote:
:to produce an effect upon: as a : to produce a material influence upon or alteration in b : to act upon (as a person or a person's mind or feelings) so as to effect a response : INFLUENCE
governments are effected by the stock market.
That is the finest bit of freudian spelling slip I've ever seen...all the better for its subtlety and the ease of overlooking it.
from http://www.m-w.com/cgi-bin/dictionary
Main Entry: 2 effect
Function: transitive verb
Date: 1533
1 : to cause to come into being
Main Entry: 3 affect
Function: transitive verb
Etymology: Middle English, from affectus, past participle of afficere
Date: 15th century
First, I believe part of this is due to the fact that white collar criminals simply aren't seen as criminals. Criminality suggests violence, and since the only damage committed by these individuals to others is monetary, it doesn't register as a crime.
I'll give you an example--if you've ever been mugged (I have--he used an icepick for a weapon), one of the things you think afterward is "why couldn't he just take the money and leave me the wallet". It's not the money that you think of primarily; it's your life, the contents of your wallet, etc.
Second, I disagree with your premise that white collar criminals are equal to the "typical" criminal element. While Bernie Ebers and crew may have been responsible for billions of dollars of fraud, they also *created* thousands of jobs, and *earned* millions of people billions of dollars in the process.
Don't misunderstand--I'm not condoning their actions, and I do think jail time is appropriate. But don't tell me that someone who genuinely was a net producer to society, but cooked the books is morally equivilent or worse than someone who puts a knife to your throat for a $20.
That--and the fact that anyone putting their life savings (and more) into the stock market without paying attention to the fundamentals of the companies they were investing in deserve to suffer the consequences of a lack of due diligence--are why I'm not very mad about this...
Their accounting dept people work with M$ computers, and well, i don't think that M$ planned for the calc feture on the computer to account for anything higher then 12.
At least in the U.S., opinion pieces are [usually] clearly marked as such.
They sure are. Typical markings denoting an opinion piece include "CNN", "Washington Post", and "MSNBC".
Please. Take a typical news story, any news story, and tell me you honestly can't see the bias and slant. Look at the use of loaded words and phrases. There's no such thing as journalism any more; it's all opinions.
The phrase "journalistic integrity" no longer has any meaning, and those pompous and pretentious novelists who pretend they are genuine journalists should take a typical high-school journalism class to be reminded what it is they're supposed to do.
As an investorwho got burned, (wiping my ass with some worldcom stock right now). The company looked solid, made profits, had a real product. Much more than I could say about the dozen or so dotcom stocks I bought during the bubble and made out on. Turns out they world com was managed by some clever crooks who made pets.com seem wel managed. But these guys fooled me, and oh yeah I want their balls.
I used to have a cool sig, back when I cared
Did you happen to see "Nachman" on PMSNBC last night? He got all weepy over the fate of a friend of his who was in a low-security prison. Nachman said that it was not a "country club," and that life was hard because the inmates did not have a choice of where to eat for breakfast.
I've got to wonder, with their employees flying cover like this -- just how many trillions of dollars of fraud Microsoft is responsible for. Wouldn't want to see Gates get pounded in the ass, would we?
"When a "billion" dollar company can buy a mouse, there is a problem."
Ummm..don't you mean *can't* buy a mouse?
Mmmkay.
sincerely,
the same guy from the AC correction above.
What's going to be the next Enron/Global Crossing/Worldcom?
I'll have a website up shortly, but you can bet on the company, the industry, the date, the percentage stock drop, or convictions/resignations/fines. I'm not ready to be slashdotted yet, but here's my pick:
Disney, (or one of its subsidiaries like ABC), sometime late this month or early next, only a 50% stock cut (They still have the IP to Steamboat Willie, so there's still real value left), and Michael Eisner resigns. Indicted but not convicted.
> I just wish people realized where the real fraud was being perpetrated, and force Congress to do something about that, too.
Not only did people not force Congress to do something, people "elected" a President who said he was going to remove the few safeguards you already had!
Meawhile, the poor Europeans, who have safeguards against just this sort of thing (called 'regulation') have had to put up with all sorts of arrogant accusations from exactly the US market fundamentalists who have dragged the whole show down, that this regulation is 'socialist' or 'uncompetitive' or 'immoral' etc.
Madness!
> But don't tell me that someone who genuinely
> was a net producer to society, but cooked the
> books is morally equivilent or worse than
> someone who puts a knife to your throat for a
> $20.
Not only is it not morally equivalent, it is often *worse*. But not in the way you think.
The odds are the mugger is a drug addict who is stealing essentially because he has an untreated disease. The corporate criminal however, typically has no disease to excuse his actions.
Indeed, he often has had the kind of opportunities in life denied the mugger. In many ways, the executive criminal is morally *worse* than the executive because he has greater freedom to choose an alternative action!
Maybe it was a $3.3 billion accounting error in the opposite direction, cancelling out their earlier mistake?
> is morally *worse* than the executive
I meant, of course, 'morally worse than the mugger'
we are anticipating a war against a monster we created, and which will likely cost nearly a hundred billion dollars. do we ask why? how much would it cost to truly fund an educational system which includes everybody? (1/100 of the militaries budget.) where does the money go? hundred dollar toilet seats are simply the extreme! hopefully we as a democracy will wake up and pay attention rather than watching the tube. perhaps we will one day learn to treat the world around us (both people and land) with respect rather than paying up at the end.
If you're not careful, mass media comment that the defendant in a criminal trial is guilty can be taken to be contempt of court. It certainly makes it much more difficult to find a jury that can give the defendant a fair trial, and is in general a rather shitty thing to do.
-- the most controversial site on the Web
Offtopic? WTF?! Thanks, now I'm posting at 0.
--Vik
To dying day, I'll never forget the sound of 30,000 people droning in unison: "We don't need no thought control".
The stock market can have higher returns than safer investments, but it can also go DOWN. The risk is the price you pay for a possibility of a higher return. The stock market is NOT significantly different than going to a casino and gambling! Would you gamble your life savings in a casino?? No, I don't think you would! Then why are you doing it in the stock market? A 401k is NOT a retirement plan -- it is plain and simple GAMBLING! Anyone who tells you otherwise is a liar.
Doh...please read the first "billion" as "million", or alternately all millions as billions. :-)
Didn't you notice that Bush wasn't elected, he was appointed by the Supreme Court?
Anyone who voted for him was a fucking idiot.
Yeah, don't get me wrong - I'd like to see them breaking rocks too. They earned it.
Quit your commie whining.
WorldCom and Enron are *Corporations* in a Capitalist Free Market(tm), they are *incapable* of breaking any law because their only function is to make as much money as possible for their stockholders by any means necessary.
Accounting errors are an unfortunate reality. If you don't like them, don't buy stock in a company that _reports_ them. The market will correct itself.
The very fact that someone can mistakenly believe that a company can do something illegal is evidence of how much unnecessary governmental regulation we have been brainwashed to accept.
It's not WorldCom's actions that has put their stock in the toilet, it's the government's interference and the liberal media's constant misreporting that is making it go down. If WorldCom was allowed to continue operating the way they have, their stock and the economy would be sky-high.
What we need to correct the situation is not more laws, we need more deregulation of accounting procedures and SEC filings. The only way to generate a strong economy is to get big government off the back of hard-working big business.
It's nobody's job but mine to protect me from my own stupidity.
> The stock market can have higher returns than safer investments, but it can also go DOWN. The risk is the price you pay for a possibility of a higher return. The stock market is NOT significantly different than going to a casino and gambling!
But here, I'm gonna call "Bullshit" on ya.
For every casino game other than Blackjack, the math proves the House has an advantage. You will lose. (And if you play Blackjack well enough to guarantee a win, they'll spot it and kick you out for counting cards :-)
> Would you gamble your life savings in a casino?? No, I don't think you would! Then why are you doing it in the stock market? A 401k is NOT a retirement plan -- it is plain and simple GAMBLING! Anyone who tells you otherwise is a liar.
I am not betting my life savings in the stock market. I am betting portions of my life savings in companies. I am doing so because - unlike the casino - I believe those companies will be able to provide me with a return on my investment by providing goods and services to people at a profit.
You're right in that it's not risk-free. If I'm wrong - if I believe the wrong people (like the CEOs of Worldcom and Enron, or the analysts who claimed that the dot-coms were gonna continue to go through the roof) - I stand to lose.
I think you'd agree with me when I say it's not easy. If I can't trust what the analysts say (and I can't!), then I have to do my own research. That's non-trivial.
But how's that different from any other buying decision? Most of us spend hours reading about technology every day - so that when we wanna play UT2003 or Doom 3, we know what hardware to buy that'll give us the most bang for our buck? Several hours of work (sometimes hundreds of hours, if you're a regular reader of hardware sites, or even Slashdot) for a $500-1000 purchase of hardware.
If you're going to invest in individual stocks (or even indirectly, through mutual funds), why not spend some time learning some accounting basics? Why not spend as much time taking care with your life's savings as you would with a new video card? (Or, depending on how much you've saved -- as much time as you'd spend researching a new car, or even a move to a new house?)
A balance sheet or earnings statement is like the specs on the side of a flashy retail box of hardware - it's a start, but it's not everything you need to know to make an informed purchase.
Just as any geek can learn enough to determine the front-runner in the never-ending race between Duron/Athlon/TBird/TBred/Palomino/Clawhammer/Sledg ehammer vs Celeron/Celeron2/P3/P4/P4-Northwood/Itanic - any geek can learn enough to determine whether a company's worth investing in.
The reason that the news outlets are saying this is because it is responsible journalism. Even the worldcom execs deserve a fair trial, and if they are condemned in the media for their alleged crimes, then that takes away what little hope of a fair trial they have. I would expect a journalist such as yourself, michael, to understand that.
shane d.
Here's a flash version of your rant.
... uh ... run Linux too.
Worldcom, Imclone, Global Crossing, Enron, Adelphia, Anderson -- "a few bad apples" or a systemic problem? I think Bush saying that the American people don't care about this "stock market stuff" just shows how out of touch he is. Either that, or he simply doesn't care and he's just filling time until the next topic of the day comes along.
Here's what we know:
- George W. Bush wanted to run the government like a business
- George W. Bush has never come within 50 feet of a successful business himself. Not Harkin, not the sweetheart deal with the Texas Rangers, not even that stupid airline catering company
- Neither has Dick Cheney
- Both Cheney and Bush are so close to the oil industry that they're willing to allow companies steal money from taxpayers and business in fradulent energy schemes.
Any talk of this being a Clinton-caused recession is just willfully ignoring that the Bush's tax cut caused nearly half of the budget shortfall.
What can you do?
- Demand that the Bush Administration release information on the secret energy task force. We want to know how Enron, Haliburton, Harkin, and Unocal were involved in this
- Demand that the Bush Adminstration support an independent investigation of the goverment's actions before and after September 11. If the attacks were due to the U.S.'s quest for oil, the American people deserve to know.
- Demand that the SEC open the files on Bush's dealings with Harkin
- Demand the Justice Department come down hard on Enron
- Demand to know why Bush is so interested in attacking Iraq
- Ask yourself if you're better off now or 4 years ago. Good, now vote Democrat in November.
Oh, and
Insert simplistic political, ideological, or personal proselytization here.
Actually, MS did this receantly. What they had been doing was underreporting earnings so as to be able to build up a reserve that they could then use later to prop up earnings when the market slowed down. It's not illegal, but still frowned on.
That's really odd, because if I underreport my earnings, I get in trouble for tax evasion.
I'm not trying to compare apples and oranges here; I'm really curious if MS reported the same numbers to SEC and IRS / Washington State Department of Revenue. If so then someone ought to get that money from them; Washington state needs every penny it can get right now.
Finding God in a Dog
Go cry in a pillow you bleeding-heart liberal. Everything now-a-days is a disease, isn't it? Overeating isn't a choice, it's a disease. I can't put down this burger because I'm sick... I can't put down this crack-pipe because I'm sick... No personal responsibility, no choice in the matter, I'm sick, that's why I do these things.
How about this, the execs in all this have a disease too. They're addicted to making money. Rather than jail these poor sick people, we should get them counseling and hug them and sing happy songs with them. Life will be good then. Just raise taxes so we can pay for all these things for these people. It's not their fault they want more and more dough, it's their untreated disease.
great point anonymous coward, i agree. i'd much rather be mugged then be cheated by a greedy politician or business man. atleast they have balls!
I believe the white collar criminal is fundamentally worse than a mugger or car jacker.
The white collar criminal costs us all money. In the lost taxes and lost jobs that eventually follow from corps. eating shit.
1) Since Enron and Worldcom are subsidized by our tax dollars in the first place (telecoms and the electric industry wouldn't exist today if we hadn't payed for the infrastructure)
2) We eat the taxes they don't pay. Now that we're having all these bitches being brought to trial we're all hurt and demoralized by having the executive world exposed for what it is. A bunch of crooks looking to take your money and run as fast as they can.
The illusion drops for a second and we see the situation for what it is. As soon as the news stops we'll all get our medication and the stock market will bloat up on the same bullshit as before though. And then there's be more tax based subsidies to support and maintain our corporate masters.
I dunno, I'd rather have my president fucking (or, "technically", not fucking) his intern, his daughter, his cat, whatever, than raising my taxes and sending me to war in Iraq. (Remember, some of us are of age for the draft here.)
Laws do not persuade just because they threaten. --Seneca
Wow. So how many jobs do you have to create in order to get your crime justified? What about, say, your local mob boss. He employs a couple dozen made guys...is he cool?
These people didn't just steal. They DESTROYED WEALTH. They took tens of billions of dollars of market capitalization, and turned it into tens of millions of dollars in their own pockets. They destroyed 99% of the wealth, and pocketed 1%. At least the mugger's going to turn around and spend the money he steals from me on crack, and then the crack dealer will go buy a new Benz. Yay. Money in economy good.
So, no, I'm not going to let the bastards who did this off the hook because they used a fountain pen instead of a gun.
Why yes, I AM a rocket scientist!
But it started and was tacitly allowed (wink wink from Bob Rubin) under Clinton/Gore.
Imagine what would happen to Bush if he were just sued for sexual harrassment - even if he were to tell the truth, the whole truth, and nothing but the truth about it....
actually, the "pound me in the ass prisons" tend to be the state penitentaries. more violent crimes like murders, rapes, and assaults are governed by state and not federal law. a "minimum security country club" is what people also call club fed, which deals with white collar criminals.
Where'd that come from?
Seems to me that comes from a time before Bush was president.
This is the same mentality that leads in 3rd world countries to the "They steal
and cheat, but they do things"; causing to the most rampant levels of government
corruption in the world. These mediocre, gutless idiots are content that they now
have phones, or proper roads, so they look away while the people in government
commit the worst frauds. It's great to have phones and proper roads, but this
in no manner excuses fraudulent behavior.
Are a mugger and a corporate con artist morally equivalent? No, the mugger is
to a great degree constrained by his socioeconomic situation. Certainly, he
could have chosen better, he can't be excused for his choice. But isn't the
degree of freedom to choose much broader for the corporate robber?
The idea that a certain GoodThingForSociety can compensate for BadCrimeAgainstSociety
is simply too stupid to defend. Should a nobel prize winner be free to commit
crimes? He already did so much good. To frame the problem in terms of, "what would
you prefer, more stealing execs or more muggers?", etc, is flawed. We should strive
to have none of both. Both are unacceptable and yes, morally equivalent.
And wasn't Clinton the one who wanted to "cook the books" in the US census?
Why is it a surprise he cooked the books economically, and encouraged corporations to do the same?
You don't believe me?
Look into the connections between Bob Rubin and Ivan Boesky et al.
Everybody wants to point fingers and blame somebody, but lets look at it rationally starting with the first $3.8 Billion dollars.
Worldcom is accused of capitalizing too great a fraction of its customer acquisition expenses.
Does it make accounting sense to spread the cost of acquiring a customer out over several years?
-Absolutely. The customer is going to be generating revenue for many years, and revenue and the costs of that revenue ought to be recognized at the same time.
Is it industry standard practice to capitalize customer acquisition costs?
-Yes
Did Worldcom does this for over a decade, dating back to the early days of LDDS?
-Yes
Did the capitalization of expenses make sense at the time it was implemented? (When long distance customers were worth much more than they are today.)
-Yes
Did the accountants approve this?
-Yes
Why did Worldcom want to capitalize as many expenses as possible?
-Because it boosted the stock price. More expenses capitalized means fewer expenses in the current quarter. If your revenue remains constant and your expenses go down, your earnings go up. And if your earnings go up, your stock price goes up.
Who wanted a short term stock price boost?
-Worldcom's shareholders. So gunghoe were they about boosting Worldcom's stock price that they repeatedly approved massive grants of incentive options that encouraged Worldcom's executive to focus on one and only on goal -- boosting the short term stock price.
In my opinion Worldcom's shareholders got what they voted for. Charges of fraud only distract attention from the shareholders, with whom responsibility ultimately lies. I fear that as a consequence, Wall Street investors will fail to learn, what should be an important lesson from all this.
What we need to do with these people is not fine them 1% of their earnings or even throw them in a minimum-security prison for 5 years or so. They need something more effective; something that will allow them to see the pain that they have created.
I propose we strip them of all their wealth and make them live in inner-city Detroit, or better yet, Mexico City. Make them work in the assembly lines, under dangerous conditions, for slave-wages. Make them breath the noxious fumes that give workers athsma, lung cancer, emphysema. Hell, make them work in the sweatshops.
Make them try to find affordable houses with the minimum wage they make. Make them find apartments that aren't owned by blood-sucking landlords who overcharge rent and leave the buildings run-down simply because they have the power to - because people need a roof over their heads. Have Black or Latino police patrol their neighborhood.
"Cruel"? No more cruel than the conditions they subject their workers to. "Unusual"? Hardly, when millions of people already live like this.
Oops I did it again......
I used to work at SportsMart, does anybody care??
Why haven't the laws been applied to anyone at Enron?
You know, more to the point, I want to understand why any of these companies are allowed to continue to exist in any way, shape, or form. It seems to me that there was never a better application of the federal antitrust laws that are designed to protect investors and citizens in general from this kind of thing.
So why do any of these companies continue to have charters? I don't care if they've been driven to backruptcy; they'll just restructure and come back to do the same thing. Their charters should be revoked. These companies should never be allowed to do business in America again. They haven't demonstrated any ability to do so responsibly.
I'm sorry sandwich! --Brak
I've already started bailing on UUnet for AT&T. But this is going to affect alot of customers if UUnet feels fall out from this.
FWIW, I plan to vote Libertarian next election ;-)
IMO, the Libertarian party is the only party these days that cares about the freedom of the citizens.
Sticking feathers up your butt does not make you a chicken - Tyler Durden
Drug use is not a disease, thats true. But treating it as a CRIME helps create decompensated adicts. There are scientific studies that show when drugs are illegal a much higher percentage of adicts are decompentated.
There are plenty of people who have compensated addictions to alcohol and nicotine. (The difference between compensated and decompensated is the compensated adict can carry out a normal life. Someone who needs a drink after work or they get crabby is an example of an adict who is compensated.)
The mugger is stealing because the price and scarcity of an illegal drug makes it hard to obtain and therefore the ability to obtain his drugs rule most of his life. If he had no worries about how to get his drug, chances are he could hold down a job.
This may not be the definitive answer to the question, "Why Andersen, but not KPMG/PWC/E&Y/C&L?", that you raise in point #3, but to me, it's a darn good one:
All auditing companies have an internal review panel for reviewing auditing practices when questions arise, right? But when a client wanted to stretch the rules, that could be a problem. Andersen decided to make a significant marketing element out of the fact that at Andersen, the local engagement partner (e.g. David Duncan, in the case of Enron) would have final say as to the auditing standards used. No need for things to get held up by some board at headquarters or worse, overruled.
Needless to say, this was a system whose architecture would inevitably corrupt the local engagement partners. David Duncan did some stupid and perhaps criminal things, but the real misdeed was done by whoever decided to adopt the policy of auditing standards being settled by the local engagement partner. Greedy dumb bastards.
I took the time to go back and look up where I read about this so you wouldn't have to take my word for it. You can find it discussed in this interesting Business Week Online article. Worth reading.
--LP
You ask, "If Pres. Bush was so ready to go to bat for Enron then why would he refuse help prop Enron before the whole scadal(sic) broke?".
A rule for politicians and lobyists should be, "Never, ever embarass the president!". Enron did this and instantly became toxic waste.
A better question would be just an unqualified, "What has Bush done for Enron lately?"! And the answer is obvious, he has kept all of Enron's top executives out of jail!!!
A couple of big companies went bust in Australia recently after carrying out some extemely dodgy practices - Andersen audited both of them and has been caught in the fallout. It looks like the best career choice over here at the moment is "secretary" to a company director - big salary (bigger than a CIO), big travel account, accomodation in the best hotels five days a week - and possibly a big lingere allowance as a valid work expense!