Monthly Archives: March 2005

Hard times for powerful men: the Bernie, Joe and Ken Show

Boy, it’s a butt-ugly morning for America’s Captains of Corporate Shenanigans, ain’t it? First, we see that Bernie Ebbers is looking at spending the rest of his formerly rich-and-powerful days behind bars:

NEW YORK (CNN/Money) – Bernard Ebbers, the former CEO of WorldCom, was found guilty Tuesday for his role in the huge accounting scandal that led to the largest bankruptcy in U.S. history.

A federal jury in New York, on its eighth day of deliberations, convicted Ebbers on all nine counts that he helped mastermind an $11 billion accounting fraud at WorldCom, now known as MCI.

Ebbers, 63, had been charged with one count of conspiracy, one count of securities fraud and seven counts of filing false statements with securities regulators. He faces up to 85 years in prison, but sentencing guidelines are expected to result in a shorter term that legal experts say could nonetheless put Ebbers behind bars for the rest of his life.

Then, as if on cue, we learn that the SEC is landing on former Qwest CEO Joe Nacchio with both boots:

“The Securities and Exchange Commission sued Joseph P. Nacchio, the former chief executive of Qwest Communications International, and six other former executives yesterday, accusing them of orchestrating a sweeping $3 billion accounting fraud intended to mislead investors during the telecommunications bubble and its bursting.

The civil complaint, which grew out of an investigation by the S.E.C. lasting more than two years, was filed in Federal District Court in Denver, where Qwest is based, and covered the period from April 1, 1999, to March 31, 2002.

The S.E.C. is seeking to force Mr. Nacchio and his associates to give back what it calls their ill-gotten gains in higher salaries, bonuses and stock sales from inflating Qwest’s financial results. Mr. Nacchio alone reaped $216 million, according to the complaint, and the profits to the others came to $84 million.

Of course, the bad news here is that since this is a civil action Nacchio isn’t looking at any jail time. Still, if they find him guilty, it serves two useful purposes. First, it forces him to offload some plunder. It won’t leave him begging for change on the mall, but still. Second, it will hit him where it hurts guys like Nacchio the worst – the ego. Busted, publically disgraced, and within any luck, ruined to the point where no other company will ever hand the reins over to him again.

Fingers crossed.

All of this comes hot on the heels of Sunday night’s 60 Minutes sit-down with former Enron CEO Ken Lay, who’s facing 175 years in his own little legal proceeding. I’m sure his lawyers won’t use these exact words in their opening remarks, but it looks like Lay’s defense is going to center on the contention that he’s dumber than cornbread. It’s stunning – seriously, the sweep and grandeur of Lay’s ignorance was nothing short of knee-buckling, folks. Nobody is born as stupid as Lay wants us to believe he is – you have to work at it. Work hard. We’re talking drooling hillbilly territory here.

Well, maybe he is that dumb, although having worked in the corporate world and seen the kinds of people who rise to the C-Suite, let’s just say I’m skeptical. They may be a lot of things, but they are rarely so out of touch that you can hide billions of dollars of activity from them unless they’re actively cultivating plausible deniability.

For my money, that doesn’t make you less guilty.

[Credit: Thanks to Aaron Butler of the Indana Law Desk and Cody Barstow of Mojo City News for the story tips.]