NESTS ALONG WALL STREET: Part III

Nests Along
Wall Street

~ PART III ~

~ o ~

THE CORRUPTION OF RICHES

Go to now, ye rich men, weep and howl for your miseries that shall come upon you.

Your riches are corrupted, and your garments are motheaten.

Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days.

Behold the hire of the labourers who have reaped down your fields, which is of you kept back by fraud, crieth; and the cries of them which have reaped are entered into the ears of the Lord of sabaoth.

Ye have lived in pleasure on the earth, and been wanton; ye have nourished your hearts, as in a day of slaughter....

– James 4: 1-5

~ ~ ~

CONTINUING OUR WALK DOWN WALL STREET

N - O - P - Q - R - S - T - U - V - W - X - Y - Z

National Foreign Trade Council - From Corporate Predators, 5/10/98:

When the People Speak, the Corporations Squeak -

Having learned from the South African divestment movement that local actions can help stop egregious human rights abuses and bring democracy to countries around the world, citizens across the United States are increasingly mobilizing in support of state and local sanctions against countries such as Burma, Nigeria and Indonesia, all of which are ruled by brutal dictatorships.

These sanctions typically leverage the power of government agencies as consumer, using “selective purchasing” laws to bar the government from doing business with companies that do business in the targeted country. Massachusetts and more than a dozen cities have adopted such laws. . . . The idea is to encourage corporations to stop doing business in dictatorial countries, on the theory that income from their investments helps prop up autocratic regimes. . . .

Facing a rising tide of state and local sanctions, Big Business has banded together into an outfit called USA*Engage to defeat and roll back grassroots efforts to influence where multinationals do business.

USA*Engage has more than 600 members, including Aetna, Bechtel, Cargill, Caterpillar, Exxon, Mobile, Monsanto, Pepsi, TRW and United Technologies....

Now, the same band of companies is seeking to roll back Massachusetts’ selective purchasing law which targets Burma, another military dictatorship which has killed thousands, jailed the nation’s rightfully elected leader and thrives on oil money (especially from Unocal) and drug money.

Late last month, the National Foreign Trade Council, another business coalition, with 550 U.S. manufacturing company members, filed suit against Massachusetts, claiming the state’s selective purchasing law infringes on the federal government’s foreign policy-making power. . . .

But while the suit winds its way through the federal courts, it sends a powerful, chilling message to state and local officials . . . The message: states and localities that seek to enact selective purchasing proposals will face unremitting pressure from politically powerful multinational corporations. They should expect massive corporate lobbying campaigns, threats of lawsuits, pressure from a federal government which is choosing to ally itself with business interests on sanctions and the threat of suit at the World Trade Organization and other trade bodies. . . .

At root, the suit over Massachusetts’ Burma law is a clash between corporate internationalism and citizen internationalism. . . . The outcome of the clash will have huge consequences.

[In Nov 1998, a federal court ruled on behalf of the National Foreign Trade Council, finding the Massachusetts law unconstitutional. That ruling is under appeal as this book goes to press.]

NationsBank - From The Buying of the President: . . . In Dec 1994, the Wall Street Journal reported, “The Democratic party expects to close ... with a near-record financial debt ...” The debt was $5 million, the biggest debt for the party since 1968 ...

But the Center for Public Integrity has learned that the party’s debt was evident to the White House in late 1993 and ... President Clinton was “furious over the shortfall” . . .

“Fund raising is still going strong,” Terrance McAuliffe, the DNC finance chairman, told the Wall Street Journal, “and we are very optimistic about the future because of the fund-raising base, especially from the business community...”

Part of that was a $3.5 million loan from NationsBank at a very favorable rate of prime plus 1.5 percentage points.

That much-needed loan...was made two weeks before the mid-term elections, on Oct 14, 1994, and two weeks after the Democratic Congress passed the Fair Trade in Financial Services Act, signed into law on Sept 29 by President Clinton, who had worked hard for passage. Stalled for years, the new law allowed financial institutions to operate a single national bank . . .

No one wanted it more than NationsBank and its president and CEO, Hugh McColl. Indeed, NationsBank lobbyists reportedly helped to draft the legislation. McColl calculated it would save his bank $50 million a year.

Critics of the law said big banks would just swallow up small ones.

We learned that candidate Clinton’s openness to considering NationsBank’s interstate banking legislation apparently was a fundamental condition of support for McColl, who endorsed Clinton late in the 1992 campaign after the two had breakfast, and sent a personal check to the campaign for $1,000.

In 1992, prior to the breakfast, Clinton campaign officials had unsuccessfully solicited a major Democratic party contribution from NationsBank representatives . . .

McColl has become one of Clinton’s closest advisors on banking issues and Clinton has called McColl “the most enlightened banker in America.”

On July 15, 1993 ... McColl spoke at a White House media event to promote Clinton’s community development lending program. An American Banker editorial at the time groused that McColl had appointed himself banking’s “official mouthpiece . . . on behalf of bankers everywhere, he endorsed the lending plan, which is about as bank-friendly as John Dillinger ... McColl would endorse any half-baked Clinton idea in return for the White House’s support for interstate branching legislation.”

McColl left nothing to chance with Congress either. NationsBank significantly increased its PAC contributions, giving $626,800 to congressional candidates in 1993-94 . . .

When McColl and Clinton were seen sitting together in the NationsBank box at the 1994 Arkansas-Duke NCAA basketball finals in Charlotte, NC, one banking industry commentator said of McColl, “Based on what the president has done for him lately, I would have expected to see Hugh sitting on his lap . . . In days gone by, political quid pro quos were usually paid off with stuffed ballot boxes. Laws were passed to stop that sort of chicanery. Now it’s done with money.”

While the interstate bill was moving through conference, on Aug 23, 1994, Clinton and McColl were present at the White House Community Development bill signing, and the president declared, “Today, I’m proud to announce commitment from two of the nation’s leading banks to help us in this effort— $25 million from NationsBank and $50 million from Bank of America over the next four years.”

Five weeks later the interstate banking bill was law; the $3.5 million loan to the DNC came two weeks afterwards.

* * *

At the same time the interstate branch legislation was being lobbied by McColl and NationsBank, in May 1994 Clinton White House Senior Adviser George Stephanopoulos, who makes $125,000 a year, received a controversial 25-year, $668,000 loan at 6.375 percent interest from NationsBank....

* * *

The NationsBank relationship with Clinton is just one example of what to look for with respect to the financial industry’s influence on the president and his party generally in 1996.

In 1992, the Clinton/Gore campaign received more than $800,000 from financial interests.

Nauru - From About.com by Linda DeLaine, 11/23/99: Nauru, Hiding Place for Russia.

Nauru is a 21 sq. mile Pacific island located south of the Marshall Islands. It is surrounded by sandy beaches which rise to raised coral reefs with a phosphate plateau in the center. The primary industry has been phosphate mining, conducted primarily by England, Australia, and New Zealand. This has turned about 90% of the island into a wasteland. Revenues from over 90 years of mining are expected to be exhausted by the year 2000.

For a time, Nauru enjoyed the highest income per capita in the world and lived the indulgent life-style that goes with wealth. The other two main industries are financial services and coconut products. . . .

It seems that Nauru has, not only figured out how, but has implemented a way to bolster its economy and Russian citizens are, allegedly, helping. Nauru, as an off-shore banking center, has been one of the best kept secrets, up to now. . . .

According to Victor Melnikov, deputy chairman of the Central Bank of Russia, roughly $70 billion was transferred from Russian banks to accounts chartered in Nauru, in 1998 alone.

The primary purpose was to avoid taxes. In reality, the money never transits the island. It is moved from the Russian account to the Nauru account and then to accounts which the Nauran banks have at other foreign financial institutions. Nauru is using its state of independence to charter accounts and offer clients anonymity as they wheel and deal in the international financial system. . . .

The number of such accounts, registered on Nauru, is impossible to determine. These, so called, banks exist only on a ledger. There are no buildings, bank tellers, safes, etc. Working within the international banking system, funds are electronically transferred to and from accounts registered with the Nauru banks and other financial centers, such as New York. . . . Nauru exercises stricter secrecy than even the well known Swiss bank accounts enjoy. . .

Nigeria - From www.moneylaundering.com: . . . A front-page article in the Oct 20, 2000 edition of the Financial Times reports that the London branches of some of the world’s largest banks played a key role in what is believed to be a $4 billion international money laundering operation involving former Nigerian dictator Sani Abacha.

The Times says 15 banks, including Citigroup, Merrill Lynch, Barclays, HSBC, Standard Chartered, and Australia and New Zealand Banking Group, handled transactions for the Abacha Family and their collaborators.

The transactions allegedly involved funds looted from Nigeria’s central bank and other corruption proceeds. The Times says British officials have been slow to respond to requests by the new government of Nigeria for assistance in that country’s investigation of Abacha.

* * *

From Oil & Gas Journal, 8/29/00:

U.S. TDA To Assist Nigeria With Energy Infrastructure Projects

During U.S. President Clinton’s trip to Nigeria, U.S. Trade and Development Agency Director J. Joseph Grandmaison announced Aug. 27 in Abuja the agency’s approval of $1.605 billion in grant assistance [aka US taxpayers money] for priority infrastructure projects in the country.

These grants are the first offered since TDA officially opened in Nigeria following the country’s successful transition to a democratically elected government in 1999.

Among the grants are two related to the energy industry. The first, a $400,000 grant to Nigeria Gas Corp., will provide funds for a feasibility study on the domestic use of natural gas, the country’s dominant energy resource. . . . Also in the energy sector, TDA announced its recent approval of a $360,000 grant to the Warri Refining & Petrochemical Company to fund a premium gasoline and aviation fuel feasibility study in Nigeria. . . .

Nomura Securities Group - From Sydney Morning Herald - 12/11/98 by Ben Hills —

The Financial Monster That
Tried to Eat Australia

The world’s oldest and largest financial conglomerate broke the law when it attempted to ambush the Australian Stock Exchange and wipe $15 billion off the value of Australia’s public companies, the Federal Court ruled yesterday. . . .

Justice Ronald Sackville found, “Nomura engaged in deliberately misleading conduct designed to achieve illegitimate ends.”

Nomura International is a division of the scandal-plagued, Tokyo-based Nomura Securities Group, founded in 1872, which has $151 billion in assets. ...

The verdict is expected to trigger action against Nomura in the two cities from which the “sting” was organised — London, and in Hong Kong where legal action has been launched by the local securities regulators.

The decision followed a trail that ran for 16 days in the Federal Court and involved millions of documents, electronic records, and taped telephone calls. It represents a major victory for the ASIC. . . .

Mr. Cameron said it was a “landmark” decision that “...will help establish the boundaries of acceptable trading strategies not only in Australian boundaries but also for players in the international securities and futures markets.”

The case focused on the drama of March 28, 1996, when Nomura tried to destroy billions of dollars of the value of the Australian Stock Exchange by dumping a portfolio of shares worth $600 million — more than the normal total daily turnover — in the closing minutes of trading.

The court was told that Nomura executives and traders in London and Hong Kong laughed and joked about what they were doing as they faxed instructions to 10 different brokers, hoping to drive the stock exchange’s All Ordinaries index of 353 stocks down by as much as 10 per cent.

This would have destroyed $15 billion of the value of Australia’s major public companies, with devastating consequences to pension funds and hundreds of thousands of individual shareholders....

This is the latest of a series of adverse findings against the world’s largest stockbroker. In June last year, the Tokyo District Prosecutors’ office filed charges against the company and two former managing directors accusing them of paying a sokaiya (racketeer) $625,000 to ensure that a shareholders’ meeting was not disrupted. The company was also banned from trading on its own account on the Tokyo Stock Exchange for four months for compensating a gangster for trading losses.

In July last year, Nomura agreed to pay $94 million to Orange County, south of Los Angeles, in settlement of an action over the biggest bankruptcy in US municipal history.

Nomura was one of the brokers the county used in gambling on high-risk securities which cost it nearly $3 billion....

* * *

For more, GO TO > > > Yakuza Doodle Dandies

Overseas Private Investment Corporation (OPIC) - From The Buying of the President (1996):

The Ron Brown trade missions would not have been so successful for some U.S. corporations if it had not been for the special government financing and support available to them from two government-backed entities: The Export-Import (Ex-Im) Bank of the United States and the Overseas Private Investment Corp. (OPIC).

Ex-Im and OPIC provided a total of $39.8 billion in financial backing in 1993 and 1994. President Clinton appointed long-time Arkansas political supporters to both organizations. . . .

Lottie Shackelford, a former mayor of Little Rock, is one of the members of the OPIC board of directors appointed by Bill Clinton in 1993. During the 1992 Clinton-Gore campaign, Shackelford held the position of deputy campaign manager . . .

Today she is a vice chairman of the DNC. Since April 1994, Shackelford has also worked as a lobbyist and registered foreign agent for the Washington-based firm, Global U.S.A. The firm is also registered to represent the Westinghouse Corporation. As it turns out, Westinghouse is listed as a client of OPIC for 1994. . . .

OPIC provides loans and loan guarantees for U.S. companies unable to obtain conventional funding for foreign projects. OPIC’s 1994 annual report says direct loans are “reserved for small businesses and cooperatives and generally ranging from $2 million to $30 million.”

OPIC, however, financed loans to major American corporations for much more than the stated $30 million high end. A joint venture by GTE Corporation and AT&T got $200 million loan from OPIC to finance a cellular telephone services deal in Argentina. . . .

* * *

WorldNetDaily, by Charles Smith, Softwar, 7/14/98, via Clinton’s Rogues Gallery: The Nov, 1994 Commerce Dept advocacy document shows the Indonesian Paiton project encountered difficulties with financing because the Asian Development Bank (ADB) knew it contained a Suharto family kick-back. Suharto’s son-in-law, according to the U.S. government advocacy document, was known to be a share holder in P.T. Batu. . . .

Commerce documents show that Lippo business partner Mission Energy (now named Edison Mission Energy) received strong Clinton administration support for the Paiton project. One 1994 document ... noted the Indonesian government-backed project had “state-of-the-art emissions-control technology ... by using low-sulfur Indonesian coal”. ...

In 1996, President Clinton created the 1.7 million-acre Grand Staircase-Escalante National Monument in Utah, placing off-limits the world’s largest deposit of low-sulfur coal.

The Lippo Group is the primary owner of the only other supply of low-sulfur coal in the world, located in Indonesia. Clinton’s move left the only remaining low-sulfur coal supply in Lippo hands, creating a Riady monopoly. The move vastly increased the dollar value of Riady’s low-sulfur coal reserves in a single stroke of Clinton’s pen. . . .

The questionable parts of the Paiton project are not only centered around coal from Riady. For example, Senator Tom Harkin has a close connection. It just happens that Ruth Harkin, Sen. Harkin’s wife, was also 1994 head of the U.S. Government’s Overseas Private Investment Corporation (OPIC), a major Paiton financial backer.

Ms. Harkin approved the OPIC financing for Paiton in 1994. Harkin, a former partner in the law firm Akin, Gump, Strauss, Hauer & Feld, is a close Clinton friend. Harkin’s partnership in the powerful D.C. based law firm also included other Clinton friends Robert Strauss and Vernon Jordan. . . .”

Pacific Islands - From Pacific Islands Report, by Pacific Islands Development Program/East-West Center - Center for Pacific Islands Studies/University of Hawai`i at Manoa:

RUSSIAN MAFIA USING PACIFIC REGION
TO LAUNDER MONEY: OECD

Paris, France (Feb. 14, 1999 - AFP) — Russian organized crime is increasing using the Pacific region as a base for laundering its ill-gotten gains, the Organization of Economic Cooperation and Development (OECD) Financial Action Task Force (FARF) said last week.

“A heavy concentration of financial activity related to Russian organized crime has been observed, specifically in (Western) Samoa, Nauru, Vanuatu and the Cook Islands,” the FATF said in an annual report on money laundering.

It cited “an increasingly common scheme whereby apparently American middlemen are used to open accounts or charter banks in one of the locations” to hide the Russian origin of the money after local authorities became suspicious at the high level of Russian activity in the region.

The Russian mafia are also looking for “potential alliances” with drug traffickers in Central and South America and the Caribbean . . .

There is also concern over the rise in internet gambling, which generates nearly $1.5 million dollars a month in the Pacific region and is seen as “another potential vulnerability for money laundering and financial crime.”

Such electronic casinos offer clients virtual anonymity, making the source of their cash all the harder to trace.

Elsewhere in the Asia-Pacific region, the report said, the principal sources of criminal funds are human trafficking, drug trafficking, gambling and organized crime.

South Asia is a particular focus for money laundering activities as it is home to several major international banks as well as being a transshipment point for drugs from Afghanistan, Iran, Myanmar, Thailand and Laos.

In South Asia, money laundering through gold transactions is particularly popular, either through a gold dealer who provides gold in exchange for cash and checks received by the presenter, or through a cash transaction in one country which is completed by a gold deposit to the owner in another country.

But as elsewhere in the world, electronic payment transactions are also a cause for concern, along with the increasing use of accountants and lawyers to help set up and manage accounts set up to launder the proceeds of criminal activity. . . .

For more, GO TO >>> Broken Trust

Panin Group - From The Honolulu Star-Bulletin, 10/29/97, by Rick Daysog: Bishop, partners alter Chinese bank plan. . . .

The turmoil in Hong Kong’s stock market may hamper plans by Bishop Estate and its partners to take a mainland Chinese bank public. . . . With the benchmark Hang Seng index losing more than a fifth of its value during the past weeks, analysts said that a proposal to list shares of Xiamen International Bank on the Hong Kong Stock Exchange could be put on hold.

The development underscores Bishop Estate’s growing exposure to global economic trends. It also calls attention to the $10 billion trust’s high-risk, high-reward investment strategy. . . . Bishop Estate, the state’s largest private landholder, owns nearly 5 percent of Xiamen, which last year applied with the People’s Bank of China to list its shares on the Hong Kong Stock Exchange.

Henry Peters, a Bishop Estate trustee and a member of Xiamen’s board of directors, conceded that the volatile Hong Kong market may delay Xiamen’s initial public offering. But he said the bank’s partners are committed to taking it public, which would greatly enhance the estate’s investment. . . .

Critics say the trust should not be investing in exotic companies such as Xiamen. They argue that the nonprofit foundation — which finances Kamehameha Schools — should avoid high-risk ventures in emerging markets such as China. . . .

The list of Xiamen International Bank’s investors reads like a who’s who of Wall Street and Pacific Rim finance. They include former U.S. Treasury Secretary William Simon, Manila-based Asian Development Bank and Long-Term Credit Bank of Japan Ltd. . . .

The largest shareholder is Min Xin Holdings Ltd., formerly the Panin Group, which owns 36.75 percent of the bank. An affiliated company, Panin Bank, formed Xiamen in 1985.

Panin was founded by Indonesian businessman Mu’min Ali Gunawan, a brother-in-law of Indonesian banking tycoon Moshtar Riady . . .

Riady, who heads the Lippo Group, is at the center of the campaign finance scandal plaguing the Clinton administration. . . .

Peters said he was unaware of the relationship between Panin Bank and the Riady family. ...but investments of Simon, Panin and the estate have been linked for years.

The estate was a big shareholder in First Interstate Bank of Hawaii Inc. when Simon sold the local bank to First Hawaiian Inc in 1991. Simon, in turn acquired much of his stake in First Interstate in the mid-1980s from Panin Bank executives...

Peters was a director of the local affiliate Panin North America Inc. in 1983 when he was a legislator, according to filings with the state Ethics Commission. . . .

For more, GO TO > > > The Indonesian Connection

PNC Financial Services - Bank headquartered in Pittsburg, PA.

July 19, 2002

U.S. Accuses PNC Bank of
Concealing Bad Loans

by Ken Berzof, The Courier-Journal

PNC Financial Services has been accused of hiding $762 million in bad loans through questionable accounting practices that inflated profits.

The bank company was ordered by the U.S. Securities and Exchange Commission to “rigorously comply” with accounting standards. Failure to do so could subject PNC to criminal action.

Its stock immediately dropped 30 percent on news of the SEC action yesterday. . . .

Yesterday’s action by the SEC is its first enforcement action since the Enron scandal involving misuse of so-called special purpose entities. Those are companies that can be misused to appear that a company has unloaded its liabilities on someone else.

In PNC’s case, these were subsidiary companies responsible for trying to recover bad loans, or with other poorly performing investments....

In January, PNC recalculated its profits. . . .

“This falls on my watch, and I regret the impact it had on our employees and investors,” said James Rohr, PNC’s chairman, president and chief executive.

“But it does not affect our ability in any material way to perform for our customers or businesses.” . . .

Priceline.com - The company you know and trust – as pitched by William Shatner.

November 22, 2000

Priceline Forgives $3M Loan To Ex-Exec

Clare Saliba, E-Commerce Times

Claims that a CFO left on her own raise questions about the decision not to collect on the loan. Despite a string of well-publicized financial reversals, name-your-own price e-tailer Priceline.com has agreed to forgive a US$3 million loan it extended to a former top executive and will incur a roughly $3.3 million charge in the fourth quarter as a result.

According to published reports, the loan was made to Heidi Miller, who served as a senior executive vice president and chief financial officer until she left the company earlier this month. A highly regarded finance chief who had come to the company from Citibank, Miller departed after Priceline announced it was slashing 16 percent of its workforce in its continuing bid to trim operating costs.

"In connection with Ms. Miller's separation, the company will record a charge of approximately $3.3 million in the fourth quarter 2000, primarily as the result of the forgiveness of a loan pursuant to the terms of Ms. Miller's employment agreement," said the filing. . . .

Public Relations Fiascoes

The murky reason for Miller's departure is the latest in a string of recent public relations fiascoes for Norwalk, Connecticut-based Priceline.

Last week, it was reported that Priceline founder Jay Walker had sold 2.1 million Priceline shares for tax purposes. Earlier this month, another top executive left the firm, slamming the e-tailer's car sales model as a failure.

The company has also been hit with numerous class action suits from investors alleging that company directors misled shareholders about Priceline's growth potential.

Bad Times

In addition, Priceline's membership in the Connecticut Better Business Bureau has been yanked. Connecticut attorney general Richard Blumenthal is investigating the company after receiving more than 100 complaints.

Although the company did have some positive news in its third quarter earnings report, these incidents have left many investors skittish and sent Priceline stock into the throes of a market meltdown.

Wednesday morning, shares were trading at a 52-week low level of $2.25.

PricewaterhouseCoopers - SEC News Release 01/06/00: Independent Consultant Finds Widespread Independence Violations at PricewaterhouseCoopers:

The staff of the SEC today made public the report by independent consultant Jess Fardella, who was appointed by the Commission in March 1999 to conduct a review of possible independence rule violations by the public accounting firm PricewaterhouseCoopers arising from ownership of client-issued securities. The report finds significant violations of the firm’s, the professionals, and the SEC’s auditor independence rules. . . .

The independent consultant’s report discloses that a substantial number of PwC professionals, particularly partners, had violations of the independence rules, and that many had multiple violations. . . .

A year ago, the firm agreed in a settlement to conduct the review and create a $2.5 million education fund after the SEC alleged that some of its accountants compromised their independence by owning stock in corporations they audited. As a result of the review, five partners of the firm and a number of other employees had been dismissed.

The independent consultant’s report found that nearly half the firm’s 2,698 partners reported having committed at least one violation of the auditor independence rules, while 153 of them admitted to more than 10 each. Of a total 8,064 violations reported by those involved, 81.3% were by partners and 17.4% by managers.

Almost half the reported violations involved direct investments by the PwC professionals in securities, mutual funds, bank accounts or insurance products related to client companies...

* * *

From Business Week, 09/25/00:

ACCOUNTING WARS . . .

Powerful consultants are the targets of Arthur Levitt’s crusade

It’s a pitched battle the likes of which Washington and Wall Street have never seen before. Largely out of the public eye, a morality play is being acted out, and the plot involves power and greed.

On one side: Arthur Levitt, Jr., chairman of the Securities & Exchange Commission, convinced that greed and arrogance have diverted the accounting profession from its mission of providing sound financial reports for shareholders. ...

Levitt is determined to halt a wave of auditing failures— breakdowns that have cost investors $88 billion in the past seven years— by ending what he sees as a massive conflict of interest between accountants’ duties as auditors and the profits they earn as consultants to the same corporate clients....

THE SEC SAYS:

Audit Quality. Audit failures are soaring: 362 companies have restated annual financials since 1997. ... Cost to investors in just 9 cases: $41 billion ...

Consulting Services. Accounting firms that consult for audit clients aren’t truly independent. Firms should be banned from selling their audit clients a wide range of consulting services, including acting as an advocate for clients. SEC says its proposal mainly clarifies existing ethics rules.

Disclosure. Companies should disclose consulting fees paid to their auditing firm. Boards and audit committees must spell out steps taken to ensure the audit wasn’t compromised.

Investment Conflicts. Strict rules that now bar accountants and their families from owning stock, even indirectly through a retirement plan, in any of their firms’ audit clients should be relaxed.

New rules should apply mainly to firm members who can influence a client’s audit. . . .

* * *

For more, GO TO >>> What Price Waterhouse?

Providian Financial Corp. - From (AP) 12/30/00, by Michael Liedtke: Providian Agrees to Settle Lawsuit for $105 Million....

Credit card giant Providian Financial Corp has disclosed a $105 million settlement of a class-action lawsuit alleging that the lender duped customers into buying products and services they didn’t want.

The settlement ... covers millions of consumers who used Providian credit cards dating to March 1995. . . .

Providian is the nation’s fifth largest issuer of Mastercard and Visa cards.

The lawsuits alleged that Providian misled customers into buying a hodgepodge of products and services, such as credit protection. The lawsuits also alleged that Providian then gouged them with fees that were difficult to remove from their charge accounts.

Consumers won’t receive the entire $105 million settlement– five law firms involved in the case will draw legal fees from the pool. . . .

With the settlement, San Francisco-based Providian will close the books of a legal onslaught that cast the company as an abusive lender that prospered by exploiting unsophisticated, credit-strapped consumers. . . .

In June, Providian agreed to pay more than $300 million to close investigations by the San Francisco district attorney, Connecticut’s attorney general and the U.S. Comptroller of the Currency.

Providian hasn’t admitted any wrongdoing . . .

The settlement will result in a one-time charge of $22 million against Providian’s fourth quarter profit.

Still, Providian expects its earnings to live up to Wall Street expectations of 71 cents to 73 cents a share.

Prudential Insurance Company - From Los Angeles Times, 10/1/93, by Scott Paltrow:

Prudential Securities Payout Due

Seeking to end a swarm of government fraud investigations, Prudential Securities has tentatively agreed to pay at least $45 million in fines and an unlimited amount of restitution to customers . . .

A restitution fund will be established with an initial commitment from Prudential of $320 million . . .

The money will go mainly to several hundred thousand investors nationwide, who put up $7.7 billion in dozens of limited partnership programs that Prudential marketed aggressively throughout the 1980s.

Sources close to the negotiations said the SEC is expected to continue with a second phase of its investigation focusing on possible action against individual executives, including some who are still senior officials at Prudential, the nation’s fourth-largest brokerage.

Several states, too, are likely to bring civil disciplinary charges against current and former Prudential executives . . .

As is common in SEC settlements, Prudential will not be required to admit any wrongdoing....

No punitive damages will be paid, but investors could receive back their out-of-pocket losses plus interest, depending on the facts of their individual claims, sources said. . . . SEC enforcement officials declined to answer any questions about the settlement or investigation. . . .

The fines and initial payments to the restitution fund total $345 million, making the package the third largest securities fraud settlement in U.S. history. Drextel Burnham Lambert paid $500 million in 1989 to settle charges related to its junk bond operation, and former Drexel executive Michael Milken paid $600 million in 1990.

The impact on Prudential will be eased by the fact that whatever it pays out in restitution will be tax deductible . . .

Nearly all the partnership programs involved in the investigations and settlement were unsuccessful, with investors’ losses estimated in the billions of dollars.

But the partnerships were extremely profitable for Prudential, bringing in well over $1 billion in commission revenue and management fees.

In numerous civil lawsuits, Prudential has been accused of misleading small investors by claiming that partnership units were as safe as insured bank certificates of deposit and of engaging in financial manipulations to hide losses from investors.

* * *

Some other Prudential Insurance connections worthy of note:

>> Prudential Insurance Co. is the 4^th largest institutional investor in Chubb Group.

>> Prudential Securities is the 6^th largest institutional investor in Putnam, a Marsh & McLennan subsidiary.

>> Prudential Insurance Co. is the 6^th largest institutional investor in AXA Financial.

>> AXA Financial is the #1 institutional investor in Goldman Sachs.

>> AXA Financial is the 3^rd largest institutional investor in Citigroup.

>> AXA Financial is the 3^rd largest institutional investor on American International Group.

>> AXA Financial is the 8^th largest institutional investor in scandal-ridden Columbia/HCA

>> AXA Financial is the #1 institutional investor in Loral Space.

>> Prudential Insurance Co. is the 6^th largest institutional investor in Loral Space.

>> Prudential Insurance Co. is the 4^th largest institutional investor in Columbia/HCA

>> Columbia/HCA’s financial restructuring was handled by Goldman Sachs.

>> Bishop Estate invested millions in Columbia/HCA.

>> Bishop Estate owned approximately 10% of Goldman Sachs before Goldman’s IPO.

>> Bishop Estate was the #1 institutional investor in Underwriters Capital (Merritt) Bermuda.

>> Prudential handles Bishop Estate’s pension plan.

>> Putnam (Marsh & McLennan) is the 2^nd largest institutional investor in Chubb Group.

>> Putnam is the 6^th largest institutional investor in Citigroup.

>> Putnam is the 5^th largest institutional investor in AXA Financial.

>> Putnam is the 3^rd largest institutional investor in Starwood Hotels.

>> Goldman Sachs is the 10^th largest institutional investor in Starwood Hotels.

>> Wellington Management Co. is the 9^th largest institutional investor in Starwood Hotels.

>> Wellington Management Co. is the #1 institutional investor in Marsh & McLennan.

>> Putnam (M&M) is the #1 institutional investor in Harrah’s Enterprises.

>> Putnam (M&M) is the 6^th largest institutional investor in Isle of Capri Casinos.

>> Goldman Sachs is the 3^rd largest institutional investor in Isle of Capri Casinos.

>> etc., etc., etc.

* * *

For much more, GO TO > > > Prudential: A Nest on Shaky Ground

Putnam Mutual Funds Corp - Putnam is just one of the huge corporations anxious to sink their talons into the nest eggs of the millions of working people around the world. The following is just a brief peek at some of the birds who control one of thousands of mutual funds:

SEC Info: Putnam Convertible Opportunities & Income Trust - On 6/26/95:

Trustees and Officers

George Putnam. Mr. Putnam, age 68, is the Chairman and President of the Fund and of the other Putnam funds. He is the Chairman and a director of Putnam and Putnam Mutual Funds Corp and a director of Marsh & McLennan Companies, Inc, their parent company. Mr. Putnam is the son of the founder of the Putnam funds . . . Mr. Putnam currently also serves as the Director of the Boston Company, Inc, Boston Safe Deposit and Trust Company, Freeport-McMoRan, Inc., a mining and natural resources company, General Mills, Inc. . . . Houghton Mifflin Co, a major publishing company, and Rockefeller Group, Inc., a real estate manager. . . .

George Putnam III. Mr. Putnam, age 43, is the President of New Generation Research, Inc., a publisher of financial advisory and other research services relating to bankrupt and distressed companies, and New Generation Advisers, Inc., a registered investment adviser which provides advice to private funds specializing in investments in such companies. . . .

Eli Shapiro. Dr. Shapiro, age 78, is the Alfred P. Sloan Professor of Management, Emeritus at the Alfred P. Sloan School of Management . . . Dr. Shapiro currently serves as a Director of Nomura Dividend Income Fund, Inc, a privately-held registered investment company managed by Putnam. He is also a past Director of many companies, including . . . Connecticut Bank and Trust Co, the Federal Home Loan Bank of Boston . . . Travelers’ Corporation, an insurance company . . .

A.J.C. Smith. Mr. Smith, age 60, is the Chairman and CEO of Marsh & McLennan Companies, Inc. . . . Mr. Smith is a Director of the Trident Corp, and also serves as a Trustee of the Carnegie Hall Society, the Central Park Conservancy and The American Institute for Chartered Property Underwriters . . .

* * *

Some connections . . .

• Marsh & McLennan is Bishop Estate’s insurance broker.

• Marsh & McLennan was the 2^nd largest investor in Underwriters Capital (Merritt) Bermuda.

• Citigroup is the 3^rd largest institutional investor in Marsh & McLennan.

• Citigroup is the 3^rd largest institutional investor in Chubb Group (Federal Insurance Co., etc.)

• Citigroup is the 10^th largest institutional investor in American International Group.

• Putnam is the 2^nd largest institutional investor in Chubb Group.

• Putnam is the 6^th largest institutional investor in Citigroup.

• Putnam is the 5^th largest institutional investor in AXA Financial.

• Putnam is the 3^rd largest institutional investor in Starwood Hotels.

• Goldman Sachs is the 10^th largest institutional investor in Starwood Hotels.

• Wellington Management Co. is the 9^th largest institutional investor in Starwood Hotels.

• Wellington Management Co. is the #1 institutional investor in Marsh & McLennan.

• Putnam is the #1 institutional investor in Harrah’s Enterprises.

• Putnam is the 6^th largest institutional investor in Isle of Capri Casinos.

• Goldman Sachs is the 3^rd largest institutional investor in Isle of Capri Casinos.

• etc., etc., etc.

Quantum Fund - From Free Republic, 2/12/98, posted by Stefan Lemieszewski: The Secret Financial Network Behind ‘Wizard’ George Soros -

This is another post in the series along the theme that: “Corrupt elites prosper at the people’s expense of the IMF, World Bank and ‘shock therapy’ policies of Western advisors under the guise of free-trade or democratic or market-reforms.”

In his article, “Communique of American-Ukrainian Advisory Committee,” ... Eugene M. Iwanciw wrote: “The American-Ukrainian Advisory Committee met in New York on Nov 17-18, 1995 and reiterated its strong conviction that a resilient Ukraine is in the interest of European stability and thus also American security.” . . .

The American participants of the AUAC sponsored by the Center for Strategic and International Studies (CSIS) included:

Zbigniew Brzezinski (CSIS counselor); Richard Burt (chairman, International Equity Partners); Frank Carlucci (chairman, Carlyle Group); Gen. John Galvin (dean, Fletcher School of International Law and Diplomacy); Michael Jordan (chairman and CEO, Westinghouse Electric Corp); Henry Kissinger (chairman, Kissinger Associates) and George Soros (chairman, Soros Foundation).

Previous American advisers of AUAC included Malcolm Steve Forbes, Jr. (editor-in-chief, Forbes magazine) ... and Dwayne Orville Andreas (chairman and CEO, Archer Daniels Midland Co. ), whose company pleaded guilty last month for anti-trust and price-fixing violations and agreed to pay a $100 million fine– the largest fine on its kind ever.

Also in a previous post it was indicated that at least six of the current seven American members of AUAC are also members of the Council of Foreign Relations (CFR), including George Soros. . . .

It has also been reported that Soros has contributed $15 million to groups advocating an array of alternatives to the Clinton administration’s “War on Drugs,” including a personal donation of $350,000 to fund a “medical marijuana” ballot initiative in California and a personal donation of $100,000 for a similar ballot initiative in Arizona. . . .

The following Nov 1, 1996 article by the Executive Intelligence Review provides additional background information on George Soros . . .

The Secret Financial Network Behind “Wizard” George Soros, by William Engdahl . . .

Time magazine has characterized financier George Soros as a “modern-day Robin Hood,” who robs from the rich to give to the poor countries of eastern Europe and Russia. It claimed that Soros makes huge financial gains by speculating against western central banks, in order to use his profits to help the emerging post-communist economies of eastern Europe and former Soviet Union, to assist them to create what he calls and “Open Society.”

The Times statement is entirely accurate in the first part, and entirely inaccurate in the second. He robs from rich western countries, and uses his profits to rob even more savagely from the East, under the cloak of “philanthropy.” His goal is to loot wherever and however he can. Soros has been called the master manipulator of “hit-and-run capitalism.”

As we shall see, what Soros means by “open,” is a society that allows him and his financial predator friends to loot the resources and precious assets of former Warsaw Pact economies. By bringing people like Jeffrey Sachs or Sweden’s Anders Aslund and their economic shock therapy into these economies, Soros lays the groundwork for buying up the assets of whole regions of the world at dirt-cheap prices. . . .

The Secret of the Quantum Fund NV.

Soros is the visible side of a vast and nasty secret network of private financial interests, controlled by the leading aristocratic and royal families of Europe, centered in the British House of Windsor. This network, called by its members the Club of Isles, was built upon the wreckage of the British Empire after World War II.

Rather than use the powers of the state to achieve their geopolitical goals, a secret, cross-linked holding of private financial interests, tied to the old aristocratic oligarchy of western Europe, was developed. . . . Soros is one of what in medieval days were called Hofjuden, the “Court Jews,” who were deployed by the aristocratic families.

The most important of such “Jews who are not Jews,” are the Rothchilds, who launched Soros’s career. They are members of the Club of the Isles and retainers of the British royal family. This has been true since Amschel Rothschild sold the British Hessian troops to fight against George Washington during the American Revolution.

Soros is American only in his passport. He is a global financial operator, who happens to be in New York, simply because “that’s where the money is,” as the bank robber Willy Sutton once quipped, when asked why he always robbed banks.

Soros speculates in world financial markets through his offshore company, Quantum Fund NV, a private investment fund, or “hedge fund.” His hedge fund reportedly manages some $11-14 billion of funds on behalf of its clients, or investors– one of the most prominent of whom is, according to Soros, Britain’s Queen Elizabeth, the wealthiest person in Europe.

The Quantum fund is registered in the tax haven of Netherlands Antilles, in the Caribbean. This is to avoid paying taxes, as well as to hide the true nature of his investors and what he does with their money.

In order to avoid U.S. government supervision of his financial activities ... Soros moved his legal headquarters to the Caribbean tax haven of Curacao. The Netherlands Antilles has repeatedly been cited by the Task Force on Money Laundering of the Organization for Economic Cooperation and Development (OECD) as one of the world’s most important centers for laundering illegal proceeds of the Latin American cocaine and other drug traffic. . . .

Soros has taken care that none of the 99 individual investors who participate in his various funds is an American national. By U.S. securities law, a hedge fund is limited to no more than 99 highly wealth individuals, so-called “sophisticated investors.” By structuring his investment company as an offshore hedge fund, Soros avoids public scrutiny.

Soros himself is not even on the board of Quantum Fund. Instead, for legal reasons, he serves the Quantum Fund as official “investment adviser,” through another company, Soros Fund Management, of New York City. If any demand were to be made of Soros to reveal the details of Quantum Fund’s operations, he is able to claim he is “merely its investment adviser.” Any competent police investigator looking at the complex legal structure of Soros’s businesses would conclude that there is prima facie evidence of either vast money laundering of illicit funds, or massive illegal tax evasion. Both may be true. . . .

George Soros is part of a tightly knit financial mafia– “mafia,” in the sense of a closed masonic-like fraternity of families pursuing common aims. Anyone who dares to criticize Soros or any of his associates, is immediately hit with the charge of being “anti-Semitic”– a criticism which often silences or intimidates genuine critics of Soros’s unscrupulous operations. . . .

According to knowledgeable U.S. and European investigators, Soros’s circle includes indicted metals and commodity speculator and fugitive MARC RICH of Zug, Switzerland and Tel Aviv; secretive Israeli arms and commodity dealer Shaul Eisenberg, and “Dirty Rafi” Eytan, both linked to the financial side of the Israeli Mossad; and the family of Jacob Lord Rothschild. . . .

* * *

Comment on above article from navigator, 2/12/98: Soros is directly linked to Bill and Hillary. Along with Larry Lawrence (not really a wealthy man, rather a money launderer for organized crime) George Soros is one of the “legitimate” sources of Clinton campaign money and a financial director of the Elect Clinton campaign. The illegitimate sources being the PRC and money robbed from failed banks, etcetera.

Raytheon - One of the largest U.S. defense contractors.

Two of the largest institutional owners of Raytheon are Britain’s Barclays Bank and Citigroup.

Red Mafiya - From Red Mafiya: How the Russian Mob Has Invaded America: . . .

Blending financial sophistication with bone-crunching violence, the Russian mob has become the FBI’s most formidable criminal adversary, creating an international criminal colossus that has surpassed the Colombian cartels, the Japanese Yakuzas, the Chinese Triads, and the Italian Mafia in wealth and weaponry. . . .

With activities in countries ranging from Malaysia to Great Britain, Russian mobsters now operate in more than 50 nations. They smuggle heroin from Southeast Asia, traffic in weapons all over the globe, and seem to have a special knack for large-scale extortion. The Russian mob has plundered the fabulously rich gold and diamond mines in war-torn Sierra Leone, built dazzling casinos in Costa Rica with John Gotti Jr., and through its control of more than 80 percent of Russia’s banks, siphoned billions of dollars of Western government loans and aid, thereby exacerbating a global financial crisis that toppled Wall Street’s historic bull market in August 1998. . . .

More ominously, U.S. intelligence officials worry that Russian gangsters will acquire weapons of mass destruction such as fissionable material or deadly, easily concealed pathogens such as the smallpox virus ... and sell these deadly wares to any number of terrorist groups or renegade states.

In North America alone, there are now 30 Russian crime syndicates operating in at least 17 U.S. cities, most notably New York, Miami, San Francisco, Los Angeles, and Denver. The Russians have already pulled off the largest jewelry heist and insurance and Medicare frauds in American history, with a net haul exceeding $1 billion. They have invaded North America’s financial markets, orchestrating complex stock scams, allegedly laundering billions of dollars through the Bank of New York, and coolly infiltrating the business and real estate worlds. . . .

“The Russians didn’t come here to enjoy the American dream,” New York State tax agent Roger Berger says glumly.

“They came here to steal it.” . . .

Reliance Insurance Group - Recommended Reading: Conspirators’ Hierarchy, by Dr. John Coleman.

Reliant Resources Inc. - Another energy trader (like Enron) you shouldn’t rely on.

May 29, 2002 - Reliant Resources Inc. has acknowledged that federal prosecutors have issued a subpoena for records relating to controversial energy trades. . . .

Riscorp Inc. - From Business Insurance - 9/22/97:

Chairman, four former officers of Riscorp indicted over donations

A federal grand jury has indicted the chairman and four former officers of workers compensation insurer Riscorp Inc for allegedly funneling $383,500 in illegal campaign contributions to more than 20 Florida politicians, including two state insurance commissioners. . . .

Named in a 27-count indictment last week were William D. Griffin, chairman of the Sarasota, Fla.-based insurer; James A. Malone, former Riscorp president; Thomas E. Danson Jr., former executive vp; Richard A. Halloy, former cfo, and Edward J. Hammel, former sr vp-finance. . . .

The five men, who were hoping to gain political favors, also solicited lawyers and consultants doing business with Riscorp to make contributions that Riscorp then would reimburse, disguising the payments as professional fees, prosecutors charge....

One of the main beneficiaries of Riscorp’s money was former Insurance Commissioner Tom Gallagher, who received about $57,000 in illegal contributions in his 1990 campaign for the commissioner’s job and another $48,000 in his unsuccessful 1994 run for governor ...

Riscorp had been a major provider of managed care workers comp insurance and services in Florida, North Carolina and several other states. However, it has drastically scaled back its operations after being battered by a variety of troubles since its 1996 initial public offering, including a pending civil racketeering suit by disgruntled policyholders and the delisting of its stock from the NASDAQ stock exchange.

* * *

News-Journal, 8/12/98: Judge Sentences Riscorp Founder to 5 Months . . . An insurance executive who admitted he conspired to funnel illegal contributions to scores of candidates paid $1.5 million to the U.S. government Tuesday and was sentenced to five months in federal custody.

William Griffin oversaw a scheme to distribute money to nearly 100 candidates, including Gov. Lawton Chiles and former Gov. Bob Martinez, through bogus bonuses given to employees of his Sarasota insurance company, Riscorp Inc., prosecutors said.

At his sentencing hearing, Griffin expressed remorse for the illegal contributions but also said he only did “what everyone else was doing.”

“You don’t have to chase down a politician,” Griffin told U.S. District Judge David Dowd. “They find you all hours of the day and night.”

Riscorp employees wrote some 800 checks worth about $382,000 to local, state and federal candidates between Jan 1990 and June 1996, according to federal prosecutors.

In exchange, the employees received more than $500,000 in “bonuses” to reimburse them for the donations and to compensate them for extra income tax they had to pay.

No candidates were accused of wrongdoing.

Griffin, who founded Riscorp in 1988 and ran it until last year, pleaded guilty in May to a felony charge of conspiracy and four other Riscorp executives pleaded guilty to lesser charges. A subsidiary of Riscorp also was fined $300,000. . . .

Four other executives pleaded guilty to the misdemeanor of giving a contribution in another’s name and received lesser sentences. They are James Anthony Malone of Atlanta; Thomas Edward Danson of Sarasota; Richard A. Halloy of Sarasota; and Edward J. Hammel of San Antonio, Texas. . . .

* * *

St. Petersburg Times, 10/8/98: Riscorp Ties Still Casting Shadow over Gallagher . . . No other politician has figured more prominently in the Riscorp campaign finance scandal than former Insurance Commissioner Tom Gallagher.

A longtime friend of Riscorp Insurance Company founder Bill Griffin, Gallagher received more illegal campaign contributions from the company than any other political candidate. . . .

Griffin testified during his sentencing hearing in August that he was solicited for contributions when Gallagher was seeking re-election as state Insurance Commissioner in 1990.

Griffin said he met with Gallagher’s campaign ... and agreed to pledge $100,000.

When fund-raisers didn’t get him to that figure, he got employees to write checks and then reimbursed them in the form of “bonuses”. Employees also could doctor their expense reports to get repaid, and the company would claim the reimbursements as business expenses on federal tax returns. . . .* * *

St. Petersburg Times, 8/14/98: Senator’s Campaign Linked to Riscorp - Records show ties between the insurer that gave illegal gifts and the 1994 Harris campaign. . . .

Like dozens of other politicians, state Sen. Katherine Harris, R-Sarasota, has distanced herself from a campaign finance scandal involving Riscorp Inc.

But federal court records show close links between Harris’ 1994 state Senate campaign and the Sarasota insurance company that schemed to give illegal contributions to candidates.

Harris is now a Republican candidate for SECRETARY OF STATE, FLORIDA’S CHIEF ELECTIONS OFFICER. . . .

* * *

CATBIRD COMMENTS: As you probably know if you watched the recent Florida on-and-off presidential vote recounts on TV, Katherine Harris won her race for Florida Secretary of State and was the Chief Elections Officer in the 2000 presidential election. The rest, as they say, is history.* * *

And did you know: One of the largest investors in Riscorp, Inc is U.K.’s Barclays Bank — a member of the Committee of 300.

* * *

Rockefeller Group - From a British Anti-Vivisection Association commentary on The Drug Story, by Hans Ruesch:

In the 30's, Morris A. Bealle, a former city editor of the old Washington Times and Herald, was running a county seat newspaper, in which the local power company bought a large advertisement every week. This account took quite a lot of worry off Bealles’ shoulders when the bills came due.

But according to Bealle’s own story, one day the paper took up the cudgels for some of its readers that were being given poor service from the power company, and Morris Bealle received the dressing down of his life from the advertising agency, which handled the power company’s account. They told him that any more such “stepping out of line” would result in the immediate cancellation not only of the advertising contract, but also of the gas company and the telephone company.

That’s when Bealle’s eyes were opened to the meaning of a “free press”, and he decided to get out of the newspaper business. He could afford to do that because he belonged to the landed gentry of Maryland, but not all newspaper editors are that lucky.

Bealle used his professional experience to do some deep digging into the freedom-of-the-press situation and came up with two shattering exposes - “The Drug Story”, and “The House of Rockefeller.” The fact is that in spite of his familiarity with the editorial world and many important personal contacts, he couldn’t get his revelations into print until he founded his own company, The Columbia Publishing House, Washington, D.C., in 1949 . . .

Although “The Drug Story” is one of the most important books on health and politics ever to appear in the USA, it has never been admitted to a major bookstore nor reviewed by any establishment paper, and was sold exclusively by mail. Nevertheless, when we first got to read it, in the 1970s, it was already in its 33^rd printing, under a different label - Biworld Publishers, Orem, Utah.

Examples.

As Bealle pointed out, a business which makes 6% on its invested capital is considered a sound money maker. Sterling Drug, Inc., the main cog and largest holding company in the Rockefeller Drug Empire and its 68 subsidiaries, showed operating profits in 1961 of $23,463,719 after taxes, on net assets of $43,108,106— a 54% profit. Squibb, another Rockefeller-controlled company, in 1945 made not 6% but 576% on the actual value of its property.

That was during the luscious war years when the Army Surgeon General’s Office and the Navy Bureau of Medicine and Surgery were not only acting as promoters for Drug Trust, but were actually forcing drug trust poisons into the blood streams of American soldiers, sailors and marines, to the tune of over 200 million “shots”.

Is it any wonder, asked Bealle, that the Rockefellers, and their stooges in the Food and Drug Administration, the U.S Public Health Service, the Federal Trade Commission, the Better Business Bureau, the Army Medical Corps, the Navy Bureau of Medicine, and thousands of health officers all over the country, should combine to put out of business all forms of therapy that discourage the use of drugs.

“The last annual report of the Rockefeller Foundation,” reported Bealle, “itemizes the gifts it has made to colleges and public agencies in the past 44 years, and they total somewhat over half a billion dollars. The colleges, of course, teach their students all the drug lore the Rockefeller houses want taught. . . .

And while “giving away” those huge sums to drug-propagandizing colleges, the Rockefeller interests were growing to a world-wide web that no one could entirely explore. Already well over 30 years ago it was large enough for Bealle to demonstrate that the Rockefeller interests had created, built up and developed the most far reaching industrial empire ever conceived in the mind of man. Standard Oil was of course the foundation upon which all of the other Rockefeller industries have been built.

The story of Old John D., as ruthless an industrial pirate as ever came down the pike, is well known, but is being today conveniently ignored. The keystone of this mammoth industrial empire was the Chase National Bank, now renamed the Chase Manhattan Bank..

Not the least of its holdings are in the drug business. The Rockefellers own the largest drug manufacturing combine in the world, and use all of their other interests to bring pressure to increase the sale of drugs. . . .

~ ~ ~

The Rockefeller Foundation was first set up in 1904 and called the General Education Fund.

An organization called the Rockefeller Foundation ... was formed in 1910 and through long finagling and lots of Rockefeller money got the New York legislature to issue a charter on May 14, 1913.

It is therefore not surprising that the House of Rockefeller has had its own “nominees” planted in all Federal agencies that have to do with health. . . .

Censorship.

“Even the most independent newspapers are dependent on their press associations for their national news,” Bealle pointed out, “and there is no reason for a news editor to suspect that a story coming over the wires of the Associated Press, the United Press or the International News Service is censored when it concerns health matter. Yet this is what happens constantly.”

In fact in the 50's the Drug Trust had one of its directors on the directorate of the Associated Press. He was no less that Arthur Hays Sulzberger, publisher of the New York Times and as such one of the most powerful Associated Press directors....

America’s Medico-Drug Cartel.

The medico-drug cartel was summed up by J.W. Hodge, M.D., of Niagara Falls, N.Y., in these words:

“The medical monopoly or medical trust, euphemistically called the American Medical Association, is not merely the meanest monopoly ever organized, but the most arrogant, dangerous and despotic organization which ever managed a free people in this or any other age.

Any and all methods of healing the sick by means of safe, simple and natural remedies are sure to be assailed and denounced by the arrogant leaders of the AMA doctors’ trust as fakes, frauds and humbugs.”

Colonization.

Rockefeller’s various “educational” activities had proved so profitable in the U.S. that in 1927 the International Educational Board was launched, as Junior’s own, personal charity, and endowed with $21,000,000 for a starter, to be lavished on foreign universities and politicos, with all the usual strings attached. This Board undertook to export the “new” Rockefeller image as a benefactor of mankind, as well as his business practices. Nobody informed the beneficiaries that every penny the Rockefellers seemed to the throwing out the window would come back, bearing substantial interest, through the front door.

Rockefeller had always had a particular interest in China, where Standard Oil was almost the sole supplier of kerosene and oil “for the lamps of China”. So he put up money to establish the China Medical Board and to build the Peking Union Medical College, playing the role of the Great White Father who has come to dispense knowledge on his lowly children. The Rockefeller Foundation invested up to $45,000,000 into “westernizing” (read corrupting) Chinese medicine.

Medical colleges were instructed that if they wished to benefit from the Rockefeller largesse they had better convince 500 million Chinese to throw into the ashcan the safe and useful, but inexpensive, herbal remedies of their barefoot doctors, which had withstood the test of centuries, in favor of the expensive carcinogenic and teratogenic “miracle” drugs Made in USA— which had to be replaced constantly with new ones when the fatal side-effects could no longer be concealed; and if they couldn’t “demonstrate” through large-scale animal experiments the effectiveness of their ancient acupuncture, this could not be recognized as having any “scientific value”.

Its millenarian effectiveness proven on human beings was of no concern to the Western wizards.

But when the Communists came to power in China and it was no longer possible to trade, the Rockefellers suddenly lost interest in the health of the Chinese people and shifted their attention increasingly to Japan, India and Latin America.

The Image.

“No candid study of his career can lead to other conclusion than that he is victim of perhaps the ugliest of all passions, that for money, money as an end. It is not a pleasant picture ... this money-maniac secretly, patiently, eternally plotting how he may add to his wealth ... He has turned commerce to war, and honey-combed it with cruel and corrupt practices ... And he calls his great organization a benefaction, and points to his church-going and charities as proof of his righteousness. This is supreme wrong-doing cloaked by religion.

There is but one name for it — hypocrisy.”

This was the description Ida Tarbell made of John D. Rockefeller in her “History of the Standard Oil Company” serialized in 1905 in the widely circulated McClure’s Magazine.

And that was several years before the “Ludlow Massacre” . . .

But after World War II it would have been hard to read, in America or abroad, a single criticism of JDR, or of Junior’s four sons who all endeavored to emulate their illustrious forbears.

Today’s various encyclopedias extant in public libraries of the Western world have nothing but praise for the Family. How was this achieved?...

Ironically, two apparently most NEGATIVE events in the career of JDR brought about a huge POSITIVE change in his favor ...

To wit:

In the year when, according to the current Encyclopaedia Britannica (long become a Rockefeller property and transferred from Oxford to Chicago), Rockefeller had “retired from active business”, namely in 1911, he had been convicted by a U.S. court of illegal practices and ordered to dissolve the Standard Oil Trust, which comprised 40 corporations.

This imposed dissolution was to provide his Empire with added might, to a degree that was unprecedented in the history of modern business. Until then, the Trust had existed for all to see— an exposed target. After that, it went underground, and thereby its power was cloaked in secrecy, and could keep expanding unseen and therefore unopposed.

The second apparently negative experience was a certain 1914 event (“The Ludlow Massacre”) that persuaded JDR, until then utterly contemptuous of public opinion, to gloss over his own image.

(For the story of the Ludlow Massacre, see Workers of the World in Part III.)

Thorough Facelift

The worldwide revulsion that followed was such that JDR decided to hire the most talented press agent in the country, Ivy Lee, who got the tough assignment of whitewashing the tycoon’s bloodied image.

When Lee learned that the newly organized Rockefeller Foundation had $100 million lying around for promotional purposes without knowing what to do with it, he came up with a plan to donate large sums - none less than a million - to well-known colleges, hospitals, churches and benevolent organizations.

The plan was accepted. So were the millions.

And they made headlines all over the world, for in the days of the gold standard and the five cent cigar, there was a maxim in every newspaper office that a million dollars was always news.

That was the beginning of the cleverly worded medical reports on new “miracle” drugs and “just-around-the-corner” breakthroughs planted in the leading news offices and press associations that continue to this day.

And the flighty public soon forgot, or forgave, the massacre of foreign immigrants for the dazzling display of generosity and philanthropy financed by the ballooning Rockefeller fortune and going out, with thunderous press fanfare, to various “worthy” institutions.

The Purchase of Public Opinion

In the following years, not only newsmen, but whole newspapers were bought, financed or founded with Rockefeller money. So Time Magazine, which Henry Luce started in 1923, had been taken over by J.P. Morgan when the magazine got into financial difficulties. When Morgan died and his financial empire crumbled, the House of Rockefeller wasted no time in taking over this lush editorial plum also, together with its sisters Fortune and Life . . .

Rockefeller was also co-owner of Time’s “rival” magazine, Newsweek, which had been established in the early days of the New Deal with money put up by Rockefeller, Vincent Astor, the Harrimann family and other members and allies of the House.

The Intellectuals - A Bargain

For all his innate cynicism, JDR must have been himself surprised to discover how easily the so-called intellectuals could be bought. Indeed, they turned out to be among his best investments.

By founding and lavishly endowing his Education Boards at home and abroad, Rockefeller won control not only of the governments and politicos but also of the intellectual and scientific community, starting with the Medical Power - the organization that forms those priests of the New Religion that are the modern medicine men.

No Pulitzer or Nobel or any similar prize endowed with money and prestige has ever been awarded to a declared foe of the Rockefeller system.

Henry Luce, officially founder and editor of Time Magazine, but constantly dependent on House advertising, also distinguished himself in his adulation of his sponsors. JDR’s son had been responsible for the Ludlow massacre, and an obedient partner in his father’s most unsavory actions.

Nonetheless, in 1956 Henry Luce put Junior on the cover of Time, and the feature story, soberly titled “The Good Man”, included hyperboles like, “It is because John D. Rockefeller Jr.’s is a life of constructive social giving that he ranks as an authentic American hero, just as certainly as any general who ever won a victory for an American army or any statesman who triumphed in behalf of U.S. diplomacy.”

Clearly, Time’s editorial board wasn’t given the choice to change its tune even after the passing of Junior and Henry Luce, since it remained just as dependent of House of Rockefeller advertising.

Thus, when in 1979 one of Junior’s sons, Nelson A. Rockefeller died — who had been one of the loudest hawks in the Vietnam and other American wars, and was personally responsible for the massacre of prisoners and hostages at Attica prison — Time said of him in its obituary, without laughing:

“He was driven by a mission to serve, improve and uplift his country.” . . .

Round Table - Recommended Reading: Conspirators’ Hierarchy, by Dr. John Coleman.

Sanwa Bank - The Chicago branch of this Japanese bank played an interesting role in the Clinton - Rubin - Goldman Sachs - American International Group - Coral Reinsurance - and Arkansas Development Finance Authority (ADFA) shell game in 1987.

Watch carefully! Sanwa loaned $5 million to ADFA. ADFA then purchased slightly over $5 million in stock of Coral Reinsurance, the Barbados company founded by AIG. Coral then deposited the $5 million, along with $55 million in other investors’ funds, in Sanwa Bank.

Under which shell is ADFA’s $5 million??? Surprise! It never left Sanwa Bank (at least not until it found its way into some of the executives’ pockets).

This strange deal was the scheme of Goldman Sachs, headed at the time by Robert Rubin.

* * *

NAPLESnews.com, 02/16/98:

Japan’s Top Banks Implicated in Bribery Scandal

Two of Japan’s top commercial banks, Bank of Tokyo-Mitsubishi and Sumitomo Bank were implicated Monday in a widening bribery scandal that has shamed the powerful Finance Ministry. . .

The scandal centers on allegations that two senior ministry bureaucrats were wined and dined by financial institutions in exchange for tipping them off about ministry inspections. . . The two officials . . . were arrested last month on suspicion of taking bribes from Sanwa Bank Ltd, Asahi Bank Ltd, Dai-Ichi Kangyo Bank Ltd, and Hokkaido Takushoku Bank. . .

* * *

From Honolulu Star-Bulletin, 3/14/01:

19 Japanese Banks Placed on Credit Watch

Fitch IBCA’s Negative Rating Outlook Sends Worldwide Stock Markets Reeling and Pushes the Yen to a 20-Month Low Against the Dollar

After the close of today’s trading in Asia, Fitch IBCA placed 19 Japanese banks of “Rating Watch Negative” because of concern about their asset quality. . . .

Among the banks are Japan’s largest, including Bank of Tokyo Mitsubishi, Fuji Bank, Sumitomo Bank and Sanwa Bank. . . .

Much of Japan’s bad loan problem is related to the decreased value of land offered as collateral during the bubble economy of the 1980s. Although billions of dollars of taxpayer money have been funneled to help resolve the bad loans racked up by banks, problem loans still total a staggering 64 trillion yen ($331 billion) . . .

The newest big fear on Wall Street is that Japan’s economic problems will cut into demand in that country for U.S. goods and services – leading to a further drop in American stock prices. . . .

Simon Worldwide, Inc. - Founded in 1976, this company has branch offices in Chicago, Atlanta, Toronto, London, Paris, Frankfurt, Munich, Hong Kong, Tokyo. Specializations: Kids and Family Marketing. Programs/Services: Strategic planning, game and contests, premium development and manufacturing, entertainment marketing, retail marketing.

Clients (and former clients): McDonald's, Chevron, Blockbuster, Disney, American Film Institute, Kraft, Toys "R" Us, Safeway, Old Navy, Hallmark, Saban, Warner Bros. Express.com, Coca Cola, Nestléé.

~ ~ ~

From American City Business Journals, July 6, 2001

Simon Worldwide Co-CEO and CFO Resign

Wakefield-based Simon Worldwide Inc., a diversified marketing and promotion agency said both co-chief executive officer Patrick D. Brady, and chief financial officer Dominic Mammola, have resigned.

Allan I. Brown, who has served as co-chief executive officer along with Brady since November 1999, has assumed all responsibilities for the chief executive officer position, the company said in a statement.

Brady joined the company in 1989 and was previously the director of mergers and acquisitions at BNY Associates Inc., the investment banking subsidiary of the Bank of New York.

The company said Mammola will remain a consultant to Simon to assist during a transition period. Paul Meade, the company's corporate controller since 1994, has been named interim chief accounting officer.

The company said the resignations are in line with previously announced plans to restructure Simon's operations. Charges related to the restructuring actions will be reflected in the second quarter 2001.

* * *

From Los Angeles Times, 08/22/01:

FBI Nabs Suspect ‘McMillionaires’

With countless McDonald’s french fries and sodas came the chance for riches: play our latest promotional game and walk away a McMillionaire.

There was just one problem: The games were rigged.

Acting on an informant’s tip, the FBI arrested eight people yesterday in connection with an elaborate scheme to allegedly plant big-money game cards in the hands of fake “winners,” who claimed the prizes and then split the proceeds with their recruiters.

Authorities alleged that the conspirators raked in about $13 million in fraudulent games dating back to 1995 . . .

At the center of the scam, officials said, was a Georgia man who worked for the Los Angeles-based marketing company that has run McDonald’s restaurants’ many promotional contests around the world in recent years.

Known as “Uncle Jerry” to the family and friends whom he allegedly brought into the con, 58-year-old Jerome Jacobson confiscated the most valuable game cards ... and passed them along to his associates before the cards could be randomly distributed at McDonald’s restaurants around the country . . .

FBI Acting Director Thomas Pickard said in announcing the eight arrests that federal agents first got a tip about a year ago from an unidentified informant who had information about a conspiracy surrounding the McDonald’s games and gave a rough sketch of how it worked.

The FBI was initially skeptical about the tip, saying that it sounded unreliable, and it was months before investigators began to penetrate the workings of the crime ring . . .

The FBI began looking for links among the people who had claimed the biggest McDonald’s prizes in the past few years, and the search eventually led to Jacobson in Georgia, the person in charge of security for Los Angeles-based Simon Marketing Inc.

McDonald’s immediately fired Simon Marketing – which handled virtually all of the restaurant chain’s promotions in recent years, from game giveaways to Happy Meals and the wildly popular Teenie Beanie Babies – from its promotional accounts, saying the company did not have adequate management oversight. . . .

* * *

Conversation between The Owl and The Catbird:

Owl: Who-o owns Simon Marketing?

Catbird: As of June 30, 2001, the number one institutional stockholder was Dimensional Fund Advisors, followed by Franklin Advisers and some old familiar nests: Mellon Bank, Northern Trust, Prudential, Goldman Sachs, Merrill Lynch, Barclays and Deutsche Bank.

See also: Merrill Lynch; Xerox

For more, GO TO > > > The Blackstone Group; A Nest on Shaky Ground; Predators in Paradise

W. R. Grace - Big, morally- and financially-bankrupt company.

December 12, 2001

Asbestos on the Brain

By Bill Mann (TMF Otter)

It's been a tough couple of months for Texas.

First, Houston's economy gets shelled due to the collapse of Enron (NYSE: ENE), replete with layoffs by the thousands, suddenly unneeded "in-process" real estate, and a loss of paper wealth among its citizens in the billions of dollars. Then Dallas-based oil services giant Halliburton (NYSE: HAL) suffered a 40% drop in share price after it disclosed that its asbestos litigation liability may be "materially more than previously expected." That 40% represented about $5 billion in market value.

Plus, the Houston Astros flailed in the baseball playoffs, the Dallas Cowboys can't beat anyone whose name doesn't rhyme with "Mashington Wedskins," and the University of Texas biffed a chance to play for the national championship in college football. When the fortunes in oil and football are going the wrong way in Texas, you know a lot of people there are not at all pleased.

Halliburton's woes are not, however, related to either oil or football. They are from litigation from asbestos, a flame retardant material that, as it turns out, causes amongst other things, mesothlioma, a deadly form of cancer. Asbestos use peaked in the U.S. in the 1970s, though some experts say deaths from asbestos-related illnesses are not expected to crest until 2010. Therein lies the beginning of the problem for Halliburton and other companies with asbestos litigation risk: With diseases that can take more than 20 years to develop after exposure, no one has any idea how much the eventual claims will be, or when they will stop.

Here's where it gets strange. As it turns out, Halliburton, which has in the last three months lost three court verdicts with liabilities at about $125 million, isn't and has never been involved in asbestos. Instead, Halliburton merged with a company, Dresser Industries, in 1998, more than a dozen years after Dresser had been involved with asbestos. However, Halliburton's merger with Dresser came with the assurance that Dresser's liability for claims was insured. But since the insurer has no means to cover claims, the responsibility to pay goes right back to Halliburton, which has money and assets to spare.

That's right. Halliburton is on the hook for potential asbestos litigation for being in the wrong place, and having a whole lot of money. It doesn't really seem fair, but then again, neither is it fair to the victims of nasty diseases brought upon by exposure to asbestos fibers. Aristotle called the law "reason free from passion," so really whether or not treatment of Halliburton is deemed fair by the general public matters not at all.

Why not sue the companies who produced the asbestos in the first place, you say? Well, for one thing, more than 25 companies, including USG (NYSE: USG), W.R. Grace, (NYSE: GRA), and Owens Corning (NYSE: OWC) have already filed for bankruptcy due to massive asbestos-related liabilities.

Other companies have some unknown asbestos liabilities as well. Sealed Air (NYSE: SEE) held a conference call to comfort investors that its asbestos liability has not changed and were inconsequential and that all cases against the company "are inactive pending the disposition of the Grace bankruptcy."

Sealed Air, like Halliburton, has never had any asbestos operations. In Sealed Air's case, it purchased a division of W. R. Grace. When Grace filed for Chapter 11, two committees representing asbestos-related claimants filed motions with courts to pursue Sealed Air as being successively liable. The company believes that the chances of this happening are slim, but admits that quantification of claims against it should its defense fail is impossible....

Walt Disney Corporation - Oh, no! Et tu, Pluto?

Disney: The Mouse Betrayed — When Walt Disney died in 1966, he left a company known as a bastion of family entertainment. Now, thirty years later, Disney has grown into a multi-national conglomerate selling pornography, violent song lyrics, and anti-Christian messages to your children. . . .

* * *

The Buying of the President (1996 ed): . . . Bill Clinton: The Telecommunications Companies -

Of course, the financial industry has not been the only business group to capitalize on the Clinton Washington bonanza. . . .

Of all the companies that will benefit from the new telecom laws, perhaps none has sought to become more “vertically integrated” than the Walt Disney Company. In the summer of 1995, Disney bought Capital Cities/ABC for $19 billion....

“Most significantly,” the New York Times reported, “the move concentrates power even further among a handful of men, who will control not just the movie and television businesses but also enhance their influence over broader popular culture through their dominance of theme parks, publishing, and emerging new forms of interactive home entertainment expected to blend films, computer services, and telecommunications.”

In 1992 ... four executives of Walt Disney Corp— Michael Eisner, Jeffrey Katzenberg (who has since left), John F. Cook, and the late Frank Wells— together contributed $158,672 to the DNC.

* * *

The Buying of the President 2000: . . . In late Oct 1995, Sally Aman, Tipper Gore’s chief press aid, telephoned John Cooke, then the executive vice-president of the Disney Channel, to ask for a favor. The Gores had no costumes for their annual Halloween costume party, she explained. Could Disney help them out?

Disney did just that. A team of costume makers in Los Angeles made a pair of outfits, based on the main characters in Disney’s motion picture version of “Beauty and the Beast,” to the Gores’ exact measurements. The day before the party, the costumes arrived in Washington, along with a makeup artist to apply the mask that the Vice President would wear.

The total tab for Disney’s end of the Gores’ Halloween party topped $8,600. But the Gores didn’t ask for a bill, and Disney didn’t bother to send one. At the time, Disney was awaiting approval for its $19 billion acquisition of American Broadcasting Company, Inc. from the Justice Department and the FCC., chaired by Gore’s longtime friend Reed Hundt.

When the Washington Post reported on the gift of the costumes, the Gores claimed they had no idea what the costumes were worth and blamed an unnamed staff member for not finding out whether the gifts were improper. Under the Ethics in Government Act, neither the President nor the Vice President may solicit gifts. After they got caught, the Gores announced that the costumes would be paid for— by the Democratic National Committee.

The FCC approved Disney’s acquisition of ABC in February 1996....

(To see how “accounting magic” made $18 billion disappear in the ABC acquisition, GO TO > > > What Price Waterhouse?

* * *

[John] Cooke isn’t the only Mouseketeer with a direct line to Gore. Michael Eisner, the company’s chairman and chief executive officer, has also been a big contributor to Gore and other Democratic candidates . . .

On June 16, 1994, Gore accompanied Eisner to the Washington premier of “The Lion King.” At the time, Disney was seeking approval from the Interior Department, which oversees national parks, for its plans to build an amusement park called “Disney’s America” next to the site of the historic Battles of Bull Run, two of the bloodiest conflicts in the Civil War, in Manassas, Virginia. Eisner was in the nations’s capital to round up support for the project.

Eventually, public outrage led Disney to cancel its plans in late September 1994, but not before top officials of the Interior Department went on record as saying that the theme park could spark “a livable, vibrant community located between Disney’s America on the west and Manassas National Battlefield on the east.”

* * *

Corporate Predators: Michael Eisner vs. Vietnamese Laborers . . . As severe as the wage disparity is between U.S. workers, however, the differential between the executives and Third World workers, at whose expense they increasingly profit, is staggering.

Disney, to its everlasting shame, has in recent years outsourced production of Disney clothing and toys to sweatshops in Haiti, Burma, Vietnam, China and elsewhere.

Last year, the Asia Monitor Resource Center ... reported on operations of Keyhinge Toys, a factory based in Da Nang City, Vietnam that makes giveaway toys based on characters in Disney films which are distributed with McDonald’s Happy Meals.

According to the Center, the approximately 1,000 workers in the Keyhinge factory earn 6 to 8 cents an hour. . . . The workers— 90% of them young women 17-to-20 years old— are required to work mandatory overtime, with 9-to-10 hour shifts required seven days a week. In Feb 1997, a combination of exposure to toxic solvents, poor ventilation and exhaustion caused 200 workers to fall ill, and 25 to collapse. . . .

Less than 1/5 of Eisner’s pay— $100 million— would be enough to quintuple the wages of each of the 1,000 Keyhinge workers— giving them a still inadequate, but at least living wage— and to pay them for 100 years! That would leave Eisner with $465 million for 1997 alone. . . .

Globalization has wrought unprecedented and unconscionable gaps in income and wealth. . . .

* * *

A Catbird Comment: A little bird told me that Hawaii’s Bishop Estate stood to benefit financially — BIG TIME — in “Disney’s America.” It seems the estate has majority ownership interest in Lake Manassas, LP, a real-estate development project that just might be “a livable, vibrant community located between Disney’s America on the west and Manassas National Battlefield on the east”. The estate was also the developer and owner of nearby Robert Trent Jones Golf Club ... where Bill Clinton and Vernon Jordan like to play (and sometimes even golf).

* * *

For more GO TO > > > Dirty Money, Dirty Politics & Bishop Estate

Waste Management Inc. - An incorporated pile of garbage.

March 27, 2002

SEC Charges Former Waste Management
Officials with Fraud

Complaint alleges earnings inflated, shareholders duped

WASHINGTON (AP) - A half-dozen former executives of Waste Management Inc. were accused yesterday of an accounting-fraud scheme designed to enrich themselves and dupe shareholders.

Embattled auditing firm Arthur Andersen helped perpetrate the scheme, identifying 32 “must-do” steps to cover it up, the Securities and Exchange Commission said.

Waste Management’s founder and five other former top officers were named in the lawsuit. SEC officials alleged the executives engaged in “massive earnings management fraud” from 1992 to 1997 that ultimately cost shareholders more than $6 billion.

In yesterday’s civil complaint filed in U.S. District Court in Chicago, the SEC said Waste Management founder Dean L. Buntrock and five former top officers hid millions in expenses and assigned arbitrary salvage values to assets that previously had no value.

They also did not write off the costs of unsuccessful or abandoned landfill projects, the complaint said.

According to the SEC, officials received performance-based bonuses and valuable stock options based on inflated earnings, with several cashing in their stock before unfavorable earnings reports cut share prices.

In one instance, the SEC said, Buntrock received a tax benefit by donating inflated company stock to his college alma mater to fund a building in his name.

The SEC said the scheme unraveled in late 1997, after a new CEO ordered a review of accounting practices. In 1998, Waste Management restated its 1992-1997 earnings by $1.7 billion, the largest restatement in corporate history, the SEC said.

The news sent Waste Management’s stock value tumbling by more than one-third. Shareholders lost more than $6 billion in the market value of their shares, the SEC said.

Officials for the company ... noted yesterday that the alleged fraud took place before 1998, when Waste Management was acquired by a Houston company. With Buntrock gone, executives at the “new” Waste Management distanced themselves from the allegations. . . .

The SEC has been investigating Waste Management and Anderson for about four years.

Last November, Waste Management agreed to pay $457 million to settle a class-action suit alleging its executives misled investors about its finances two years ago to drive up the stock price.

Yesterday’s complaint identified Buntrock, who was chairman of the board of directors and chief executive officer during most of the period covered, as “the driving force behind the fraud.”

It also names former executives Phillip B. Rooney, James E. Koenig, Thomas C. Hau, Herbert Getz and Bruce D. Tobecksen.

Wesray Capital - From The Buying of the President 2000: . . . Wesray Capital all but invented the leveraged buyout.

The firm was started by William E. Simon, who was Treasury Secretary under President Gerald Ford, and Raymond G. Chambers, a tax accountant.

It made its first big killing in 1982 when it bought Gibson Greeting Cards, Inc. To buy the company, Wesray put down $1 million of its own money and borrowed another $80 million.

A year later Wesray arranged an initial public offering for Gibson, and sold it off for $290 million. Simon's personal profit was estimated at $66 million.

As for the $80 million in debt, that stayed with Gibson; the newly-public company had to repay the loan. . . .

~ ~ ~

In 1986, Wesray bought out Simmons Mattress Company ... for some $120 million.

Wesray sold off the company's overseas operations, slashed its workforce from its peak of 4,000 to 2,500 in 1988, and then sold it for $249 million to new investors.

The new investors were Simmons' own employees, most of whom were not even aware of the terms of the deal.

Wesray cancelled the workers 401(k) plan and put an employee stock ownership plan (ESOP) in its place. The ESOP then borrowed $249 million, mostly from banks, the proceeds of which ended up in the pockets of the Wesray investors.

The employees of Simmons, as the new owners of the company, would pay the debt off over ten years. In return for their retirement nest eggs and the debt they were taking on, the workers got shares in the new company valued at roughly $10 each. By 1990 the shares were worth about 50 cents apiece.

As it turned out, Wesray's dealmakers, to secure the $249 million purchase price, had painted an overly rosy scenario of the company's prospects. When Simmons failed to live up to the fine future Wesray had predicted, it defaulted on the first $15 million of debt repayments in 1990.

Irate workers, who only then learned of the bargain that Wesray had struck for them, sued the corporate raiders. In 1993 the suit was settled for $15 million. In the meantime, Merrill Lynch Capital Partners ... rescued the company. It paid $32 million for a 60 percent stake in Simmons-- $115 million less than Wesray had charged the ESOP for the same amount of stock.

Although Wesray still maintains an office in Morristown, New Jersey, the company and its once-famous buyout deals have faded along with so many of the other high-flying firms of the eighties.

By 1990, Simon had moved on to other investment endeavors, and Chandler began devoting most of his time to philanthropy. . . .

For more on William Simon, GO TO > > > Dirty Money, Dirty Politics and Bishop Estate

Westinghouse Corporation - From The Buying of the President (1996): . . .

In 1993, the Ex-Im Bank’s Advisory Committee was headed by Warren H. Hollinshead, CFO of the Westinghouse Electric Co.

During that same year, Ex-Im awarded $98,075,505 to Westinghouse.

Ex-Im also provided financing for and loan guarantees to the Westinghouse Corporation from 1993 through mid-1995 worth a total of $572,774,329.

Defense Dollars and Deal Making - Despite the president’s previous anti-war inclinations and his much-publicized avoidance of military service, President Clinton has consistently backed policies favorable to the defense industry. . . .

The administration has also pushed to relax export restrictions on high-tech equipment used to manufacture sophisticated weapons systems. Part of what has ingratiated the Clinton administration to weapons manufacturers has been the presence of William J. Perry, first as deputy secretary and later as secretary of defense. . . .

Perry is a former defense consultant who headed Technology Strategies and Alliances (TSA) between 1985-93. TSA’s clients included ... Westinghouse ... While Perry severed his ties with the company, he had amassed more than a million dollars in consulting fees from TSA clients.

Not long after he joined the Defense Department, Perry began going to bat for the industry. . . .

~ ~ ~

Or take the case of Vice President Al Gore and Export-Import Bank chairman Ken Brody, who in 1994 along with others in the administration urged the Czech Republic to award Westinghouse a contract to finish building a nuclear power plant.

The Czechs are funding the overhaul using a U.S.-backed [aka US taxpayers] loan worth $317 million from the Export-Import Bank. Gore, who as a senator wrote a best-selling environmentalist book entitled Earth in the Balance, supported the loan and contract, reasoning that if Westinghouse did not get the contract, it would have gone to a Western European firm instead. The contract caused some tensions, not only between the administration and environmentalists, but also with the government of Austria, which believed the facility, located roughly 100 miles upwind from Vienna, posed an environmental hazard.

Westinghouse contributed $140,000 to the Democratic party in 1991-1992 . . .

* * *

From No Contest by Ralph Nader and Wesley Smith:

THE CASE OF THE DEPOSED DICTATOR

It isn’t too often that the public gets to look behind the scenes of material blocked from view by pretrial orders. However, several years ago the curtain of secrecy was lifted in a case involving Westinghouse Electric Corporation and the Republic of the Philippines.

On Dec 1, 1988, the Philippine government of President Corazon Aquino filed a multimillion-dollar lawsuit against Westinghouse and the New Jersey engineering firm Burns and Roe Enterprises, Inc. ... The charges were serious, accusing Westinghouse and Burns and Roe of conspiring in mid-1970s to bribe former Philippine dictator Ferdinand Marcos in order to secure a contract to build a nuclear power plant.

The Philippine government contended that $17.2 million in sales commissions Westinghouse paid a Marcos crony named Herminio T. Disini, plus another $2.3 million Burns and Roe paid, were in fact bribes that were passed on to Marcos.

During the pretrial stage of the trial, the Philippines and Westinghouse lawyers agreed, at Westinghouse’s request, to a protective order granting Westinghouse the power to declare which documents turned over to discovery were to be confidential. That maneuver effectively kept the evidence regarding the allegations against Westinghouse out of the public eye.

But then Westinghouse lawyers filed a written motion for summary judgment ... The Philippines filed a brief opposing the motion. The judge, Dickinson Debevoise, heard oral arguments on the motion, and this hearing was open to the public. In arguing the motion, the lawyers quoted evidence from the court record.

On Sept 20, 1991, Judge Debevoise denied Westinghouse’s motion. Thereafter, Westinghouse asked the judge to seal the briefs and the documents ...

But by now the documents had been placed before a court as evidence. They concerned a matter of strong public interest— alleged bribery by Westinghouse, one of the United States’ most powerful defense contractors and business conglomerates, as well as relationships between the United States and the Philippines.

Two civic groups, Public Citizen and Essential Information, intervened in the lawsuit to seek public release of the documents. They requested a court order unsealing the records on the basis that the protective order was inconsistent with the long-established public right of access to judicial records, as well as with the First Amendment to the U.S. Constitution. Westinghouse appealed to the U.S. Third Circuit Court of Appeals. . . .

In Judge Debevoise’s decision granting the request to unseal the records of the motion he wrote:

“First, there is evidence that by decree President Marcos had placed NPC [National Power Company] directly under the control of his office.

Second, there is evidence that both Westinghouse and Burns & Roe believed that in order to obtain the PNPP contracts ... they would need the assistance of a powerful person having influence with President Marcos. Disini was the person they selected ...

Third, there is evidence that Disini communicated with President Marcos and obtained from him the authority to handle the PNPP contracts.

Fourth, it is undisputed that both Westinghouse and Burns & Roe entered into commission agreements with companies controlled by Disini pursuant to which millions of dollars were paid to those companies. . . .

Fifth, there is evidence that President Marcos personally intervened in the PNPP project to ensure that Burns & Roe and Westinghouse obtained the contracts ...

Sixth, there is evidence that both Westinghouse and Burns & Roe took steps to cover up the payments, suggesting guilty minds ... After 1977 reports in the press suggested that Westinghouse may have made improper payments to obtain the PNPP contract, Westinghouse burned the files in Manila relating to the procurement of the contract. Other records were destroyed and other efforts were made to avoid discovery of the ... agreement.” . . .

Writing for the appellate court, Judge Dolores Sloviter affirmed the strong public interest in ensuring that such proceedings are open to public scrutiny. “Certainly, the allegations of bribes by a major U.S. corporation to the leader of a foreign country is a matter of public interest, which could give rise to public debate.” Sloviter concluded that openness should be the general rule because “access to the judicial process reinforces the democratic ideals of our society.”

The judges had made the right decision.

Big corporations and their power lawyers cannot turn public courts into private domains simply because they are embarrassed about their own behavior. . . .

And in Part I: Ferdinand and Imelda Marcos

And in Part III: Philippines

Westport Advisers, Ltd. - From Honolulu Star-Bulletin, 4/14/99:

Embattled Empire

Larry Landry, former chief financial officer for the $4 billion John D. and Catherine T. MacArthur Foundation, which is a co-investor with the [Bishop] estate in a Boston-based investment fund and a Florida apartment complex, describes [Trustee Henry] Peters as a savvy and thorough investment manager. . . .

Deal promoters often approach large foundations and charitable trusts thinking they have deep pockets. But Peters brings a healthy skepticism to anyone who brings an investment to the estate, according to Landry. . . .

“Henry is extremely bright and has the right kind of conservative (investment) philosophy,” said Landry, who now serves as chief executive officer of Florida-based Westport Realty Advisers.

“He’s good at making sure that whoever they’re dealing with have their skins in the game.” . . .

In his review of the estate’s 1994-1996 accounts, court-appointed master Colbert Matsumoto and the accounting firm of Arthur Andersen said the estate — during Peters’ tenure as acting asset manager — generated an embarrassing return on investment of minus 1 percent.

During that period, the trust set aside more than $240 million in reserve for future losses. . . .

That woeful performance came as Wall Street was in the midst of a record bull run in which investors could have made double-digit returns just by putting their money in an index fund. . . .

For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court

World Bank - From And the Truth Shall Set You Free: . . . THE MONEY POLICE . . . After the Second World War, with the nations of Europe devastated by conflict and debt to the Elite’s bankers, the next stage in the global domination of money and credit was installed through groupings like the Organization for Economic Cooperation and Development (OECD), the World Bank, the International Monetary Fund (IMF), and the General Agreement on Tariffs and Trade (GATT).

The World Bank, IMF, and GATT were all agreed upon by British and American negotiators at a conference in Bretton Woods, New Hampshire, in 1944. Most influential in these agreements were the economist, Lord Keynes, from Britain, and the US Treasury Secretary, Harry Dexter White, who, with Alger Hiss, the secretary general at the launch of the United Nations, would later be exposed as communist spies.

The technical secretary at Bretton Woods was Virginius Frank Coe, an official of the US Treasury. He was appointed secretary of the new IMF until it was revealed in 1952 during congressional testimony that he was also a member of Dexter White’s communist ring!

These were the guys who created the IMF, World Bank, and GATT. . . .

The role of the World Bank (not to be confused with a world central bank) is to make loans to governments for large capital projects. These have been used, as intended, to finance projects in poor countries designed to meet the needs of the multinationals. These include policies forcing people from the land, thus destroying self-sufficient lifestyles and creating dependency on the Elite’s global economy.

Much of the destruction of the rainforests has been done with loans from the World Bank, which ... is always headed by appointees from the Committee on Foreign Relations, The Committee of 300, Bilderberg, establishment, and has eugenics as a key pillar of its policy. This subsidised environmental destruction has another plus for the Elite. It helps them to justify world control by the need to ‘save the planet’.

The role of the World Bank and other global economic “agencies” is to make a fortune for the multinational construction companies like the Bechtel Group. This is normally done by making loans to Third World countries for mega construction projects which are irrelevant, even disastrous, for the needs of the local people.

In April 1995, President Bill Clinton successfully nominated James Wolfensohn to be the president of the World Bank. Wolfensohn, an Australian-born, naturalized American, has the perfect background for the post. In the 1960s, he worked for the J. Henry Schroder Bank in London and went on to serve on the Rockefellers’ ‘population control’ organisation, The Population Council. . . . Add to that his position on the Council on Foreign Relations and Trilateral Commission, and you have the perfect man to head the Global Elite’s World Bank. . . .

In 1992, Wolfensohn joined forces with Lord Rothschild to form R. Rothschild, Wolfensohn, a ‘business advice consultancy’. As chairman, they appointed Paul Volcker, the former chairman of the Federal Reserve Board and leading member of the Council on Foreign Relations, Trilateral Commission, and Bilderberg Group. Volker was the man who launched the devastating economic policies in the United States and the UK in the 1980s which were fronted by Ronald Reagan and Margaret Thatcher. . . .

Every year vastly more wealth is transferred from poor countries to rich than goes the other way. We are bleeding them to death. And the overseas aid that is made available is not aimed at helping developing countries. It is used to bribe corrupt politicians, to build the infrastructure needed by the multinationals, or to subsidise industries in the rich countries, like Bechtel, who carry out the work as part of the aid deal. . . .

There is no need for starvation and horrific suffering in Africa, Asia and Latin America. It is not the result of ‘natural disasters’, but of coldly calculated design.

* * *

WorldNet Daily, 8/3/99, by Charles Smith: . . . Indonesians are struggling to pay American power producers for electricity that is not needed, and which they cannot afford. According to newly released documents from the U.S. Commerce Dept, 26 US-sponsored electric power projects are on the block because the Indonesian state power company, PLN, is bankrupt.

The crown jewel of electricity projects in Indonesia is the huge Mission Energy/GE PAITON coal-fired electric plant in East Java. In 1994, Mission Energy, part of the California Edison power consortium, put great faith in the Clinton administration and Ron Brown to reach Indonesian dictator Suharto. . . .

Paiton was billed as the first “private” electric plant in Indonesia. However, “private” ownership in Indonesia means owned and operated by the Suharto “First Family.” . . .

According to the Commerce Dept, “.75% of the Paiton project was reserved for Suharto’s daughter Prabowo.” Prabowo’s cut amounted to an instant $15 million. Her kickback, along with a cut for ‘brother-in-law’ Hashim and various other Suharto relatives was provided up front, in cash, in the form of a $50 million loan.

The $50 million loan was to be paid back by the profits (dividends) returned from the $2.6 billion Paiton project. Since there are no profits, there is no pay back.

According to the 1994 Commerce Dept documents, the Asian Development Bank (ADB) was “skittish” about providing a $50 million bribe to the Suharto family from the US taxpayers.

The reluctance to participate in an illegal pay-off, led GE and Mission Energy to seek Clinton help. ... Obviously asking questions would not be good for any project with a built-in $50 million kickback for the local dictator.

In 1999, the entire $2.6 billion project is on the brink of failure. The corrupt deals with the former dictator of Indonesia are collapsing faster than the Indonesian economy.

The good citizens of Indonesia have learned of the “First Family” take-over of their national resources and they do not approve. . . .

* * *

Washington Times, 8/20/98, by Adam Entous:

Corrupt Indonesian officials may have pocketed or diverted more than 20% of World Bank development funds to the world’s fourth most populous country, according to an internal World Bank document from 1997. The World Bank, which is investigating separate reports of corruption among its own staff, confirmed the contents of the year-old Indonesian memorandum yesterday. . . .

* * *

World Trade Organization - From If the God’s Had Meant Us to Vote ... They Would Have Given Us Candidates by Jim Hightower:

BLUE GOLD. ... Canadians have something we need, and I don’t mean hockey players. “Blue Gold,” it’s been dubbed by a Canadian newspaper, but it’s far more valuable than that implies, since the world can actually do without gold.

Water. That’s what Canada has that parts of our country and much of the world might literally kill for.

Hell, you say, water’s everywhere. 70 percent of the earth is covered in the stuff. Yes, but as Canada’s Maude Barlow points out to anyone who’ll listen, less than one-half of 1 percent of all the water on the globe is fresh water available to drink.

An author and agitator for common sense, Ms. Barlow heads the Council of Canadians and is founding chair for progressive politics and policies. “Worldwide, the consumption of water is doubling every 20 years,” she writes in a stunning report entitled “Blue Gold: The Global Water Crisis.” Barlow calculates that in a very short while, most of the world’s people will face shortages or absolute scarcity. . . .

Canada, on the other hand, has a blessing of agua fresca. . . . Some 20% of the world’s entire supply of fresh water is in the winding rivers and countless lakes splashed all across the vast land . . .

This is not a reality that has dawned on Canadians alone. Others are casting their eyes northward, thinking, “There’s gold in them thar hills.” But it’s not countries making invasion plans— it’s corporations.

To get their hands on the gold, the corporate grubbers first have to change the way the world’s supply of drinking water is managed. Instead of letting countries treat it as a resource to be held in common and allocated by the public for the general good, they want it to be considered as just another commodity to be held and traded by private investors strictly for their own profit.

Like oil or pork bellies . . . only this is your drinking water they want to privatize and commodify.

Will it surprise you to learn that those bratty globalization twins, NAFTA and the WTO, contain provisions that advance the commodity concept? Thought not. Both incorporate the bald assertion that “water, including ... ordinary natural water of all kinds (other than sea water)” are “goods” that are subject to the new rules of global trade.

We’re talking here about much more than bottled water— Perrier, Evian, Yellow Snow #5, and your other favorite boutique brands. We’re talking about bulk sales, including whole lakes and aquifers being bought and mined, the flow of rivers being siphoned off, the Great Lakes themselves being put on the market.

Maude Barlow and others report that corporations worldwide are already organized to do the deed, using super-tankers, pipelines, canals, the rerouting of rivers, and every other mammoth scheme known to humankind to shift the product from water-rich nations to those markets willing to pay top dollar for it: . . .

For more, GO TO > > > The WTO

Worldcom, Inc. - Busted nest of financial vultures.

March 16, 2005

Ex-CEO Guilty On All Counts

Jury: Ebbers responsible for accounting fraud that killed WorldCom

By Brooke A. Masters, The Washington Post

NEW YORK - Former WorldCom Inc. Chief Executive Bernard Ebbers was found guilty on all counts against him of conspiracy, securities fraud and false regulatory filings for his role in an accounting fraud that led to the downfall of the nation’s second largest telecommunications company and cost investors billions of dollars....

WorldCom filed for bankruptcy protection in July 2002, later announcing it had uncovered $11 billion in fraudulent accounting entries....

Ebbers ... is the fifth and highest-ranking WorldCom executive to be convicted in the fraud.

He faces a maximum of 85 years in prison and could spend much of the rest of his life behind bars...

The government alleged that Ebbers orchestrated a scheme to boost WorldCom’s share price because he was trying to protect his personal fortune, once valued at $1 billion, from banks that were calling in his loans as the company’s stock fell.

Assistant U.S. Attorney William Johnson, referred to the fraud as a “perfect storm of corruption,” combining money, power and personal pressure on Ebbers.

Ebbers’ former lieutenant, Scott Sullivan, WorldCom’s ousted financial chief, testified that he had told Ebbers that he was taking improper “shortcuts to earnings” and making “adjustments that weren’t right” to the way the company booked revenue and operating expenses known as line costs.

In the conversations, Sullivan said, Ebbers ordered him to commit the fraud by insisting that the company had to “hit the numbers” for revenue and earnings that Wall Street was expecting.

Three lower-level World-Com executives, who like Sullivan have pleaded guilty to fraud, explained how they had reclassified more than $2 billion in line costs - fees paid to other carriers for use of their networks - as capital expenditures....

How much time Ebbers might serve is somewhat unclear because the U.S. Supreme Court recently declared federal sentencing guidelines unconstitutional but said judges could use them as a guide.

If the guidelines were in force, Ebbers probably would receive at least 25 years, with a possible increase if Jones decides he lied on the stand. But she could give him reductions for his personal situation - he has a heart condition and has made more than $100 million in charitable gifts - or opt not to use the guidelines at all.

$ $ $

March 3, 2005

Another WorldCom Suit Settled

By Annalisa Burgis, Forbes

In the headlines this afternoon, Bank of America will pay $460.5 million to settle class-action lawsuits by former WorldCom shareholders.

The settlement is the second in the case brought against more than a dozen Wall Street firms, including J.P. Morgan Chase and Deutsche Bank. Last year Citigroup agreed to a $2.58 billion settlement.

Former WorldCom investors accused the No. 3 U.S. bank of hiding risks when it helped the long-distance company sell billions of dollars of bonds. WorldCom collapsed in 2002 amid an $11 billion accounting scandal. Former CEO Bernard Ebbers is currently on trial on charges he was involved in the fraud....

< < < FLASHBACK < < <

June 28, 2002

Judge bars WorldCom’s ex-CEO, Andersen
from destroying documents

MSNBC STAFF AND WIRE REPORTS

A judge issued a 10-day restraining order to make sure WorldCom’s former chief executive and former accountant Arthur Andersen LLP do not destroy documents related to the telecommunications company.

Meanwhile, President Bush, angered at relentless scandals in U.S. boardrooms, will use his Saturday radio address and a July 9 speech in New York to urge Congress to approve his plan for corporate responsibility, a senior administration official said Friday.

THE RESTRAINING ORDER from a Mississippi judge issued Thursday is in addition to one filed Wednesday by the Securities and Exchange Commission. The SEC order demands only that current WorldCom employees and affiliates preserve documents.

Federal investigators are scrutinizing WorldCom’s accounting practices after the telecom giant said it hid $3.8 billion in expenses, a disclosure that has propelled the former telecom giant toward bankruptcy.

The court document was delivered to officials at WorldCom’s Clinton headquarters along with notification for former chief executive Bernie Ebbers, although company officials have said Ebbers no longer works there. It’s unlikely either has received it yet.

The doors to Arthur Andersen’s downtown Jackson office were locked Thursday, preventing court officers from serving the papers, officials said.

“We have not hand delivered the order. We will continue to try to do so,” said David Blount, a spokesman for Mississippi Secretary of State Eric Clark.

Clark said his office, in conjunction with Attorney General Mike Moore’s office, would be “extremely aggressive” in ferreting out possible securities violations at WorldCom. The state offices are coordinating efforts with the SEC and the U.S. Attorney’s Office, Clark said.

Clark said he did not know if any documents had already been destroyed at WorldCom but he has not received any reports indicating they had.

WorldCom's alleged accounting fraud involved a fairly small shuffle of a very big number....

WORLDCOM’S CFO FIRED

WorldCom’s former chief financial officer Scott Sullivan, who was fired this week, was also named in the 10-day restraining order. The order also named current WorldCom directors, employees, agents and consultants, including current auditor KPMG LLP.

David Myers, a former senior vice president, was also named.

In a letter sent to Bush Thursday, WorldCom CEO John Sidgmore told Bush he was “surprised and outraged” by the accounting irregularities that could push the telephone company into bankruptcy and promised to cooperate with government investigators.

Sidgmore said the company was in “close consultation” with its banks to secure additional lines of credit so it can make interest payments on its $30 billion in “junk”-rated debt. “I am proud that our own people discovered these irregularities and had the courage and professionalism to act quickly,” Sidgmore said. “In that spirit, this letter reaffirms our commitment to working with you and the appropriate agencies to investigate this serious matter, and to set an example by accepting responsibility and taking decisive action,” he said.

BUSH PLANS SPEECH ON SCANDALS

In his speech Saturday, Bush will outline his already proposed plans that, if enacted, would ban corporate executives from profiting from erroneous financial statements. That was in response to the implosion last year of the Texas-based Enron Corp., one in what has become a string of recent corporate scandals.

He will then travel to New York on July 9 to stress the need for better governing at the top level of American businesses. He will also emphasize the importance of Congress approving better enforcement and rules to protect pensions, shareholders and employees.

The WorldCom debacle

“But it’s also a higher calling than just new laws and new rules,” said a senior official, speaking on condition of anonymity. “He’s going to call on corporate America to live up to the standards that has made our economic system the envy of the world. He will stress that fundamentally our economy is strong,” the official said.

In recent months, the ex-businessman Bush, as he reads the headlines detailing corporate scandals, has told friends and aides that he is “mad as hell at corporate America.”

“The president is not only very interested in this issue but increasingly outraged,” the official said.

THE COMPANY

Formed in 1985 as a second-tier long-distance carrier, WorldCom grew to become the embodiment of the go-for-broke New Economy as it drove an aggressive series of acquisitions and mergers, culminating in the $40 billion takeover of MCI in 1998.

WorldCom Inc. operates the nation’s second largest long-distance calling business and one of the world’s biggest “backbone” networks for Internet traffic and electronic commerce.

Headquarters: Jackson, Miss.

Number of employees: 85,000

2001 sales: $35.2 billion

Primary holdings: WorldCom consists of two main units:

WorldCom Group provides data and telephone service, Web access, and computer network management to large businesses and operates one of the world’s most extensive Internet proctocal networks

MCI Group provides long distance service as well as local phone service in some states.

Other holdings: WorldCom also owns a 94 percent voting stake in Digex Inc., a Web hosting firm that had sales last year of $214 million, and a 52 percent controlling stake in Brazilian long-distance carrier Embratel Participacoes S.A..

THE PLAYERS

Bernie Ebbers, former chief executive

A two-time college dropout, the Canadian native worked as a milkman and a bouncer before starting the Long Distance Discount Service in 1983. In 1995 the company was renamed WorldCom. His maverick management style – equal parts arrogant and folksy - and penchant for cowboy boots engendered media attention, but when WorldCom’s shares tanked in March 2002, his star began to fade. In April 2002 Ebbers resigned after an SEC probe revealed that WorldCom had loaned him $339.7 million to cover loans he took out to buy his own shares.

Scott D. Sullivan, chief financial officer

WorldCom's chief financial officer since 1994 is credited with concocting the financial strategy that led to the 1998 $40 billion takeover of MCI, a company three times the size of WorldCom. Sullivan was fired on June 25, 2002 after it was discovered that the company's earnings were inflated by nearly $4 billion over the last five quarters.

John Sidgemore, chief executive officer

Sidgemore became CEO following the departure of Ebbers in April 2002. Between 1996 and 2002 Sidgemore served as vice chairman and chief operations officer.

THE HISTORY

1983 - Murray Waldron and William Rector sketch out a plan to create a discount long distance provider called LDDS.

1985 - Early investor Bernard Ebbers becomes CEO of LDDS.

1989-1996 - LDDS merges with or buys a series of other firms, in the process going public and changing its name to WorldCom.

1998 - WorldCom merges with MCI Communications, Brooks Fiber Properties and CompuServe Corp. The $40 billion merger with MCI was the largest in history at that time.

2000 - Regulators block a proposed merger with Sprint.

March 11, 2002 - The SEC asks WorldCom for information relating to accounting procedures and loans to officers, including Ebbers.

April 3, 2002 - WorldCom cuts 3,700 jobs.

April 22-23, 2002 - Standard & Poor’s, Moody’s and Fitch all cut WorldCom’s credit ratings.

April 30, 2002 - WorldCom Chief Executive Officer Bernard Ebbers resigns. Vice Chairman John Sidgmore becomes CEO.

May 9-10, 2002 - Moody’s and Standard & Poor’s both cut WorldCom’s rating to junk status.

May 13, 2002 - S&P 500 Index dumps WorldCom.

May 15-June 5, 2002 - While negotiating with lenders, WorldCom announces cost-cutting moves, including more job cuts.

June 25, 2002 - WorldCom fires its CFO after uncovering improper accounting of some $4 billion in expenses.

Xerox Corporation - The shrinking copier giant; a member of the Committee of 300.

April 24, 2002

XEROX DELAYS QUARTERLY REPORT

Xerox Corp. today delayed reporting details on first-quarter results, but said it was looking at a $64 million loss before the effects of changes in the way it records revenues from copier leases.

Xerox is paying a record $10 million civil penalty and revising financial statements back to 1997 to settle accounting fraud charges by the Securities and Exchange Commission.

Xerox is refiguring its earnings and paying the fine while neither admitting nor denying wrongdoing.

Xerox released a performance report instead of a traditional earnings report. It said the preliminary loss equaled about 9 cents per share.

* * *

June 28, 2002

Xerox improperly booked revenue

Copier firm reverses $1.9 billion in sales

THE WALL STREET JOURNAL

STAMFORD, Conn. — Xerox Corp. said it reversed about $1.9 billion of revenue that it recognized over previous years, a move that will reduce revenue 2% to $91 billion for the 1997-2001 period.

THE COMPANY said it reversed $6.4 billion of previously recorded equipment-sale revenue, which was offset by $5.1 billion of revenue that it recognized and reported during the same period as service, rental, document outsourcing and financing revenue. Also, Xerox reversed $600 million in lease revenue that it received before 1997, a company spokeswoman said.

Shares of Xerox slid 17%, or $1.39, to $6.61 in morning trading on the New York Stock Exchange.

The copier firm said it will file its 2001 annual report Friday to include these changes for the five-year period. The announcement comes after a new audit of the firm found that it improperly accelerated far more revenue during the past five years than the Securities and Exchange Commission had originally estimated in an April settlement with the company, according to people familiar with the matter. . . .

Originally, the SEC had estimated that the company improperly accelerated $3 billion in revenue for the four years from 1997 through 2000. But the latest audit, which also looked at 2001, found fresh accounting problems, according to people familiar with the matter. As a result, the total amount of improperly recorded revenue over that five-year period was expected to reach more than $6 billion.

Xerox also said Friday that its restatement includes a reduction of $368 million in pretax income due to what it called “the timing of the establishment and release of certain reserves ... and the timing of recognition of interest income on tax refunds.”

In its April complaint, the SEC had said that Xerox “pumped up its earnings” by improperly setting aside various reserves, then gradually adding them back into earnings to make up for profit shortfalls.

Xerox said that in total, it cut pretax income by $1.4 billion over the 1997-2001 period. Shareholder equity was reduced by $1.3 billion as of the end of 2001.

“Xerox [Friday] closes a difficult chapter in the company’s history. With the filing of the 2001 10-K, we will have resolved the company’s accounting issues with the SEC and completed the restatement,” Anne Mulcahy, Xerox’s chairman and chief executive, said in a prepared statement.

The SEC’s April complaint had accused Xerox of having “misled and betrayed investors” with a wide-ranging scheme to manipulate its earnings and enrich top executives. Most of the charges revolved around Xerox practices that improperly accelerated revenue from long-term leases of its copiers and other office equipment.

At that time, the SEC had estimated that Xerox’s accounting tricks accounted for as much as 37% of pretax earnings during certain quarters.

The agency said the accounting scheme helped keep Xerox’s stock price artificially high in the late 1990s, with the result that executives could cash in more than $5 million in performance-based compensation and more than $30 million from stock sales.

* * *

June 6, 2003

SIX FORMER XEROX EXECS
SETTLE SEC ACCUSATIONS

The Courier-Journal

The Securities and Exchange Commission yesterday charged former Xerox chief Paul Allaire and five other ex-Xerox Corp. executives with civil securities fraud over accounting methods that the regulatory agency said overstated earnings for the huge copier maker.

The six men settled the civil suit with a $22 million payment that includes penalties and forfeiting profits, the SEC announced.

They did not admit to or deny the allegations.

Others charged were G. Richard Thoman, former president and chief operating officer; Barry D. Romeril, former chief financial officer; Philip D. Fishbach, former controller; Daniel S. Marchibroda, former assistant controller; and Gregory B. Tayler, former director of accounting policy.

Xerox shares closed down 2 cents at $11.25.

* * *

Equity No. 2048 - Findings of Fact and Conclusions of Law - Petition For Removal of Trustee Marion Mae Lokelani Lindsey: . . .

In 1996, Xerox Corp paid for Trustee Lindsey and her husband’s airfare, lodging, and food to attend the Olympics in Atlanta, Georgia. . . .

At the time, Xerox was a Kamehameha Schools/Bishop Estate vendor...

For more, GO TO > > > The Xerox Conspiracy

Yakuza - From tripod.com: Yakuza Stretch Tentacles Overseas . . .

Like most growth-oriented enterprises, the yakuza have not confined their illegal — and legal — business activities to Japan. In the late 1960's the Japanese mob took advantage of the sharp rise in Japanese tourism and began organizing “sex tours” to various countries in Southeast Asia.

The yakuza also began to recruit — or, more probably, to coerce — women from the Philippines, Taiwan, South Korea and other Southeast Asia countries to work as “hostesses” in mob-controlled brothels in Japan. The overseas push proved similarly lucrative for drug trading — primarily of Korean, Taiwanese and other sources of methamphetamine (known as “speed” on U.S. streets).

Gunrunning also evolved into a profitable activity since the sale of guns is controlled so strictly in Japan that the black market price for handguns can be as much as $5,000 to $7,000.

Gangsters typically have bought the guns abroad, mostly from criminal elements in China, Taiwan, Hong Kong, the Philippines and the United States, and sold for exorbitant prices on the black market back home. . . .

American law enforcement officials maintain that until 1974 yakuza activities in the U.S. were relatively limited, both in nature and scope. Not surprisingly, given its geographic proximity and brisk tourist trade, Hawaii initially attracted Japanese gangsters. Their focus there was on fleecing their own countrymen on yakuza-organized tours that included patronizing yakuza-run bars, restaurants, brothels and other entertainment.

As the yakuza’s economic power has grown, however, they have focused greater attention on picking other fruits from the U.S. market. In this regard, mobsters found that, partly due to its heavy tourist traffic, the fiftieth state was a prime market for selling Asian-made methamphetamine (usually at a cut-rate price compared to U.S.-made speed) and/or trading these drugs for handguns. . . .

From its Hawaiian beachhead the Japanese mob has moved on to the mainland, stopping first in southern California but continuing its reach up the coast to such cities as San Francisco, Portland, and Seattle.

As the yakuza have cultivated ties with other organized crime groups operating in the United States, American law enforcement officials have observed the Japanese mob in gambling centers, such as Las Vegas and Atlantic City, as well as in Newark, New Jersey, New York City and Boston. . . .

While the primary focus of the yakuza’s dealings with other organized crime groups still appears to be the trafficking in drugs and handguns, U.S. officials, aware of the Japanese mob’s expanded activity in the “above-ground” business world in Japan, have become increasingly worried about the extent to which the yakuza have been able to commingle their illicit profits with legitimate Japanese investment in the United States. . . .

* * *

April 13, 1998

Yakuza, Inc.

by David Kaplan, U.S. News and World Report

U.S. investors are spending billions of dollars to snap up huge portfolios of bad loans from Japanese banks. What the local banks aren’t telling their new customers is that behind much of their economic woes stand Japan’s wily crime syndicates.

In the late 1980s, the yakuza became major players in the nation’s wildly speculative real-estate market. Japanese crime experts now believe that as much as 40 percent of the banking industry’s bad loans are tied to organized crime, representing a whopping $235 billion . . .

The gangs have played such havoc with efforts to clean up the banking mess that one former top Tokyo cop calls his nation’s economic crisis a “yakuza recession.”...

At the front lines of this crisis, suddenly, are American investors, among them a Who’s Who of equity funds, investment banks, and real estate trusts.

Over the next few years, U.S. financial companies hope to spend more than $20 billion on the bad-loan portfolios, according to real-estate specialists at Ernst & Young.