Bush Administration Soft on Corporate Crime?

[Felix_Nietsche]

http://news.yahoo.com/s/ap/20050620/ap_on_bi_ge/adelphia_fraud

Several months back Bush haters criticized Bush for not prosecuting corporate crime. The number of jailed corporate execs continues to grow. Is it not intersting that these people commit the crimes during the Clinton Administration and it is the Bush administration which catches them and put them in jail.

Looks like we know who is tougher on corporate crime now.

[Arnfinn Madsen]

I know a few international companies who are more careful with how they operate in the US as opposed to in other countries since in the US they fear prosecution and lawsuits the most, so it must be tougher than the norm.

[Felix_Nietsche]

Most of the corporate crime in the USA involves stock options which are given to corporate executives as part of their compensation. In theory as company performance improves the value of their stock option goes up. If they manage the company poorly, then their option are worthless.

The problems occurred when corporate executives falsified the company's financial results to inflate the price of their stock options. This worked for a while but you can't hide bad financial news forever. As a result some very powerful companies went bankrupt and investors, who were fooled by this falsified financial data, wanted these people tried for fraud.

[adios]

FWIW I think Sarbanes-Oxley has a had a big effect on U.S. public corporate CEOs. Interestingly I've read quite a bit of whining of late regarding Sarbanes-Oxley and about the SEC under Donaldson. Donaldson resigned recently as SEC chairman and Bush nominated Chris Cox a staunch conservative Republican Representative. Draw the conclusions that you will from this move. The complaint against Sarbanes-Oxley is that it is too expensive for public corporations of a certain size or smaller. However, I haven't seen a rush to take these corporations private (as some have threatened to do). I do see that U.S. corporations have made a lot of money over the past several years as well as accumulating alot of cash. This indicates to me that Sarbanes-Oxley can't be hurting the bottom line too badly. Thus I think it is a good thing at least as far as investors are concerned which means that there's alot more confidence in the "transparency" of the finances of public corporations in the U.S.

[Arnfinn Madsen]

It is off topic, but it was for me quite funny. One day in office I received a phonecall from Enron in London. I had not heard of the company /images/graemlins/blush.gif but quickly checked their website and found it to look creditworthy /images/graemlins/laugh.gif. The caller explained that they needed equipment for their Norwegian subsidiary (appx. $300k). I stayed in touch and gave them an offer. I lost to an UK competitor. I hated to lose contracts /images/graemlins/mad.gif so I made a few tries to get back in but then conceded defeat.

3 months later they went bankrupt /images/graemlins/grin.gif.