Corporate Governance Issues
I feel that this is one of the most important issues in our country today. Corporate Governance has a most profound effect on the average citizen in our country. Decisions made in the boardroom affect normal employees, investors, clients and suppliers.
Chairmen and CEO’s have a tremendous power in our world. Their power is checked only by Wall Street and their Boards, which in light of history is amazing! Wall Street? The biggest bunch of crooks in the world. Boards? Lazy overpaid Cronies. One result was WorldCom and an entire industry destroyed (telecom) and $100 billion in investor money lost; caused by who? A Mississippi University two time drop out named Bernie Ebbers, who still denies that he did any thing wrong! Who was his shill? Jack B. Grubman, the Harvard educated All-Star Analyst for Saloman Brothers division of Citibank, who shilled for Bernie and nine Telecom IPO’s which all went Bankrupt and collectively cost investors over 3.5 Trillion Dollars?
Citibank just settled the WorldCom lawsuit for $6.8 Billion dollars. Why? Because Citibank figured that their total exposure to this fraud would have cost them over $53 billion dollars if they lost in court. So these are the facts, so who paid for this incredible fraud? Investors and employees that’s who! Bernie Ebbers who is now a brand new Born again Christian (surprise) declared in his church that he did nothing wrong. “It was those stupid low level employees” again!.
Speaking of Citibank, since their new CEO Sanford Weill has been running the company Citi, whom before his leadership had never had a criminal investigation of it or paid a criminal fine has now paid several multi billion dollar fines for illegal activities at the Associates Sub Prime lending Division which he bought, The Travelers Insurance Company, which he created, and the Citibank consumers loan division. Who paid for these illegal activities? Citibank Investors. How did these activities affect Mr. Weill’s paycheck? Well instead of going to jail the Board gave him $28 million dollar bonus, and it appears that Elliot Spitzer NYS attorney general influenced the Board to take away the Chairmanship but keep him as CEO. And of course another big bonus. Who paid? The same Citibank Investors.
I am perplexed by all this, by the way, both Bernie and Sanford’s defense is that these imperial control freak CEO’s were surprised by the mischievous nature of their underlings that caused all of these problems. If you have ever worked for a big company you know that the internal auditors will hang you, so where were the auditors?
Well do we need more laws? I mean fraud is already a crime, how come in the WorldCom case and the Citibank case the CEO’s are still walking the streets, why is Sanford Weill still CEO of Citibank? Where is the supervision that is given freely to employees when it comes to CEO’s?
Who can investors trust their money to, how can we invest our money for our retirement, can we trust the companies we work for like AT&T , Citibank, or WorldCom/MCI to pay the common mans’ pension or health benefits? And why? Sounds like CEO’s are just common men and have to be managed like the rest of us, and paid like the rest of us.