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Employment

No End in Sight for Scandals

What is it about the telecom industry and financial shenanigans? In the U.S., the column inches devoted to the WorldCom Inc. accounting scandal are mounting up, following the guilty pleas of the former CFO and the charges levied against former CEO Bernie Ebbers (see Sullivan to Testify Against Ebbers)

Ebbers has denied the charges against him. His trial date is set for November 9, and he remains a free man until then -- though he cannot leave the U.S. under the terms of his $10 million bail.

But while the WorldCom saga has been rumbling on for a couple of years now, so has an ongoing probe into payments worth hundreds of millions of dollars made to consultants by LM Ericsson (Nasdaq: ERICY).

The Swedish vendor has been the subject of a tax investigation since late 2001 regarding the payments, believed to be worth about 2.5 billion Swedish crowns (about $330 million at today's exchange rate) made to agents and consultants in Switzerland in 1998 and 1999.

The Swiss tax authorities are investigating whether these payments could be constituted as bribes or be part of a money laundering scheme, but no evidence has been uncovered so far. Last year they raided the homes and offices of an attorney who had worked for Ericsson and a former Ericsson executive.

Now the probe by Swedish investigators into whether Ericsson's financial reporting for that period could constitute tax evasion has helped compel the resignation of the vendor's chief auditor, Carl-Eric Bolin of PricewaterhouseCoopers (see Ericsson Auditor Quits). Bolin, who had been auditor for more than 10 years, told Swedish newspaper Dagens Nyheter that he had stepped down from the position because of personal reasons but that the ongoing investigation was a contributing factor.

Ericsson is not commenting on the issue, as the investigation is still underway.

The Swedish company has had other trust issues to deal with in the past 18 months (see Cops Arrest Vendor Spies). And in Finland, national operator TeliaSonera AB (Nasdaq: TLSN) saw a number of its executives hauled away by the cops in late 2002 (see Sonera Slammed Up).

But that's not all. Another ongoing case in Europe surrounds the acquisition by Vodafone Group plc (NYSE: VOD) of German company Mannesmann AG in late 2000 for a staggering $180 billion. Six former Mannesmann officials are on trial regarding payments made as a result of the aggressive takeover by the mobile giant.

The men face allegations of breach of trust over payments worth €57 million to Mannesmann managers after the board of the German company caved into pressure from Vodafone to approve the acquisition. Prosecutors allege the payments were improper payoffs, while the defendents claim they were fairly rewarded for the performance of the German company.

Given all these court cases and investigations, how oddly apt is this headline from yesterday: Crook Named CEO of the Year?

— Ray Le Maistre, International Editor, Boardwatch

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wilecoyote 12/5/2012 | 2:19:24 AM
re: No End in Sight for Scandals When they are convicted, take them into the street and shoot them like the lame donkeys they are.

These bastards have caused a lot of misery for a lot of people, shamelessly. They are unremorseful and still think they're above it all. A lot of people lost a lot of money, jobs, sense of security, sense of self worth, etc. Lots of peripheral damage you could never calculate, due to the indiscretions of the ebbers', the grubmans', the lays', skillings', fastows' of the world. In the words of good old James Hetfield, I say "Kill 'em All."

They should be given ZERO leniency. In fact, we should make examples of them. But you're gonna see Marth Stewart get away scott free, Dennis Kozlowski and probably 80% of them emerge completely unscathed while the next series of plots are hatched.
dodo 12/5/2012 | 2:19:21 AM
re: No End in Sight for Scandals The more we read and learn about corporate scandals, it seems ( or should i say that by default) that the big four were in "cahoot" with them.

Who can we trust these days?
Looks like we can bundle the auditors with lawyers.

EOM
hyperunner 12/5/2012 | 2:19:16 AM
re: No End in Sight for Scandals Well, I guess we all knew in our hearts that there's one law for the rich, another for the poor (and ethnic minorities, of course).

White collar crime is truly judged in a different light.

Back in the old days, society used to treat some white collar crimes in a Robin Hood sort of way - stealing from the rich was OK. But Ebbers and his sort stole from ordinary folks' 401ks, savings, and pensions.

They are scum - and sadly they're still rich.

Grubman got off with a wrist-slapping. So many others may never even be prosecuted. Maybe Ebbers will be the guy that prosecutors will nail just so they can claim that "justice is being served". In a parallel universe, dude. There's plenty more dirt where that came from.

hR.
truelight 12/5/2012 | 2:19:13 AM
re: No End in Sight for Scandals eom
technonerd 12/5/2012 | 2:19:10 AM
re: No End in Sight for Scandals There will be a few prominant scalps on the wall, but it will ultimately be a diversion from the massive level of unpunished crime that took place. The entire U.S. financial system was corrupted, and it still is. Every time I hear an American lecturing Indonesia about "crony capitalism," China about official bribery and corruption, Latin America about an indifferent elite and Europe about a lack of financial transparency, I laugh a sarcastic little laugh and think to myself, "The best defense is a good offense."

When it comes to corruption, the U.S. is the undisputed world champ.
truelight 12/5/2012 | 2:19:10 AM
re: No End in Sight for Scandals Amen
edgesansonet 12/5/2012 | 2:19:07 AM
re: No End in Sight for Scandals It is accomplished

Amen


steve 12/5/2012 | 2:19:03 AM
re: No End in Sight for Scandals Just curious if any of you who benefitted from the sky high stock prices during the bubble are considering giving back any of your gains?

Some of you must have benefitted from selling your company to CSCO? Cashed out of your options at ridiculous prices?

Why shouldn't you have to disgorge those profits??? How do you sleep at night knowing you profited from this illegal activity?
CAlbinson 12/5/2012 | 2:19:03 AM
re: No End in Sight for Scandals The next wave - is revenue real if you have not been paid in over 12 months...
technonerd 12/5/2012 | 2:19:02 AM
re: No End in Sight for Scandals Just curious if any of you who benefitted from the sky high stock prices during the bubble are considering giving back any of your gains?

Some of you must have benefitted from selling your company to CSCO? Cashed out of your options at ridiculous prices?

Why shouldn't you have to disgorge those profits??? How do you sleep at night knowing you profited from this illegal activity?

It's not illegal to sell a worthless company to Cisco.
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