Sacrifice Is for Losersgreenspun.com : LUSENET : Unk's Troll-free Private Saloon : One Thread
June 22, 2002
Sacrifice Is for Losers
By FRANK RICH
Last weekend marked the media's self-congratulatory 30th anniversary of the Watergate break-in, and it would have spoiled the mood to suggest that all the energy expended on searching for ol' Deep Throat might be better spent trying to crack the Watergate under way right now.
This time the cancer is not on the presidency but on the economy, where the malignancy is a flood of corporate transgressions whose scope and scale, in the words of The Wall Street Journal this week, "exceed anything the U.S. has witnessed since the years preceding the Great Depression." As the first Watergate undermined Americans' faith in government for generations, so the replay threatens to do the same to American business. Or already is, if you regard the Dow Jones and Nasdaq averages, now flirting with their post-Sept. 11 lows, as metabolic measures of public trust in Wall Street.
It's a sign of the cultural sea change that Martha Stewart's ImClone stock trades threatened to knock John Gotti's funeral off the front page of New York's tabloids. The New York Post columnist Steve Dunleavy praised the Mafia don to his readers by saying that at least the mob didn't come near "your wallets," as "the Enron sissies did."
The new Watergate, much like its prototype in the summer of '72, is still early in its timeline — even though some in Washington, following the old script, reassure us that the story is almost over, that the public doesn't care about it, that the miscreants are all being punished and that reform is on the way. The five bungling burglars arrested on June 17 at the Watergate 30 years ago (can you name one?) are now all but forgotten by history, so minor was their role in the criminal conspiracy uncovered at the Nixon White House over the ensuing two years. The first culprit to be convicted in the new Watergate — Andersen, on June 15 — may also prove a passing footnote to the big picture.
The Justice Department is touting its victory over Andersen as a strike at Enron, much as it hyped the arrest of the bomb-less "dirty bomber" Jose Padilla as a major setback for Al Qaeda. "It's like focusing on the guy who drove the getaway car," says Thomas Cullen, the head of general litigation at the international law firm Jones, Day. Now that Andersen has received a death sentence, its thousands of innocent employees included, it has lost any institutional incentive to help the government build its tardy case against the big enchiladas at Enron itself.
Should most of "the Enron sissies" end up in Aspen rather than jail, will many Americans be shocked? Probably not. As the cancer of Watergate fed long-term cynicism about government spawned by the Johnson administration's conduct of the Vietnam War, so each new corporate scandal confirms the cynical but settled view that big business is conducted with two sets of mostly legal rules, one for inside investors who get in early and get out before the deluge, and another for the rest of us. Only the names of the insiders change from story to story in Watergate II — though some characters now recur as frequently as the ubiquitous E. Howard Hunt popped up in successive revelations about Watergate I.
Dr. John Mendelsohn, who served on the board of ImClone even as it botched the F.D.A. approval process for the cancer drug he developed, is the same John Mendelsohn who also sat on the audit board of Enron when it approved the corners-cutting partnerships that enriched a few insiders at the price of wiping out the company's plebeian stockholders. (Don't worry about the good doctor, though: he cashed out with $6 million from ImClone, and the Houston hospital he runs, the M. D. Anderson Cancer Center, raked in $600,000 in Enron bucks.)
Peter Bacanovic, the suspended Merrill Lynch stockbroker and full-time balletomane who helped Martha Stewart dump her ImClone stock at a propitious moment, also helped guide another client to one of those lucrative off-the-books Enron partnerships blessed by Dr. Mendelsohn, according to The Times.
And then there's Dick Cheney, who has achieved a trifecta through his official dealings with Enron, his stewardship of Halliburton during alleged accounting irregularities and his on-camera appearance in a 1997 Andersen promotional video touting the firm's "good advice." (It's too late to find a Rosemary Woods who might erase it.)
To many this panorama of corporate self-dealing recalls the 1980's Wall Street scandals. Indeed, it's practically an old-home week for the Bush administration's bizarre choice to police Wall Street — its S.E.C. chief, Harvey Pitt, who was not only a lawyer for Andersen in the 1990's, but also defended Ivan Boesky in the 1980's. Yet what makes the new scandals more noxious than the old is the hypocrisy of its players.
Gordon Gekko, the symbolic apotheosis of 80's Wall Street corruption, was candid about his motive: "Greed is good." Today's Gekkos cloak their greed in pieties or pious causes, like finding a cure for cancer. Samuel Waksal, the former ImClone chief executive now indicted for insider trading, is also the chairman of the beneficent New York Council for the Humanities (which, under his leadership, honored the literary icon Martha Stewart in 1999). John Rigas, the founder of Adelphia, a cable TV company gutted by his family's alleged plundering of corporate funds, was famous in the entertainment industry for banning adult movies that conflicted with his family values.
Terry McAuliffe, the Democratic chairman, calls Enron "a metaphor for the Bush administration" after making some $18 million on a $100,000 insider's stake in the now-bankrupt Global Crossing. Dennis Kozlowski, the indicted Tyco C.E.O., actually gave a commencement speech last month instructing the graduates at St. Anselm College in New Hampshire to "do the right thing, not the easy thing" when "confronted with questions . . . that test your morals." Let's not even revisit Linda Lay's flaunting of her family's association with Houston's Holocaust museum during her infamous "Today" show appearance.
What also distinguishes our current corporate scandals from those of the 1980's is the backdrop. After Sept. 11, greed on this scale starts to look as obscene as wartime profiteering. Take the case of Mr. Kozlowski, who made $300 million over the last three years, will net a disproportionately large tax break from the Bush tax cut and is alleged to have ripped off still another $1 million in sales taxes. Under his guidance, Tyco, which is based in New Hampshire, connived a tax break of its own, to the tune of $450 million a year, by incorporating itself, quite legally, as a mail drop in Bermuda. If you believe the president's declaration that an effective new department of homeland security will cost no additional taxpayers' dollars, then don't worry. But if you think that a big bill for the war may come due some day, guess who will have to pick up that $450 million per annum that Tyco might have contributed as its fair share.
Given this sleazy climate, what is the Bush administration doing to repair broken public confidence? It is trying to slow down a bipartisan Congressional effort to plug the Bermuda loophole and it is promoting Mr. Pitt's efforts to keep his old accounting-firm clients in the loop of "enforcement" at the S.E.C. Otherwise, the administration seems less intent on policing corporate leaders like Mr. Kozlowski than in rewarding them with still more tax breaks.
Of course that's not what the president says. Last week, in an Ohio State commencement address that an aide said was inspired by writers ranging from Aristotle to the pope, Mr. Bush called on students to enlist in our "new ethic of responsibility" by eschewing "a culture of selfishness" to embrace "some cause larger than his or her own profit." As examples of such selflessness, he invoked New York's firefighters of Sept. 11.
But the day before that speech, the brain trust of his administration, Mr. Cheney and Karl Rove, both turned up at a Washington conference of business leaders to deliver the administration's true message, one backed up by policy rather than homilies. "This is a war," Mr. Rove said, "and we need to make an ongoing commitment to winning the effort to repeal the death tax."
Far from asking the nation's discredited corporate leaders to do their bit in our war on terrorism, the administration wants to fight another war to enable the Kozlowskis and Lays to sacrifice even less than they already are. As for those firefighters who did make a sacrifice by embracing "some cause larger than his or her own profit" on Sept. 11, their families are no more likely to reap serious dough from a repeal of the "death tax" than they are to be protected from losing their pensions in a future Enron by Mr. Pitt's "reforms." Let 'em eat Aristotle.
-- Cherri (email@example.com), June 22, 2002
The 1990s were the 1920s, but with a less interesting soundtrack.
-- Little Nipper (firstname.lastname@example.org), June 22, 2002.
And designer drugs instead of bathtub gin.
-- Jack Booted Thug (governmentconspiracy@NWO.com), June 25, 2002.