|
||
|
|
|
 |
|
|
|
||
|
|
Issue No. 143 | 05 July 2002 |
|
||
|
||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
|
Bad Bosses
Interview: Media Magnet Bad Boss: Abbott's Heroes Technology: All in the Family International: New Labour's Cracks Economics: Virtuality Check History: Necessary Utopias Poetry: Let Me Bring Love Review: How Not To Get It Together Satire: NZ, UK Added to Australia�s Migration Zone
The Soapbox The Locker Room Bosswatch Week in Review
 Lessons from Air DisasterBuggering the BushThe Great GiveawayDown and OutWhy I hate Telstra
|
|
|
Bosswatch Capitalism in Crisis
World Beating Scam Corporate America suffered its biggest scandal with revelations that WorldCom, the telecommunications company founded by a devout Mississippi Christian, had lied about making $US3.85 billion in profits over 15 months. WorldCom, already crippled by nearly $US30 billion of debt, is now expected to go bust. The accounting problems at WorldCom were discovered during an internal investigation at the firm which led to the sacking of its chief financial officer. WorldCom founder, the cowboy-booted Bernie Ebbers, was ousted in May - but not before he gave himself a $US366 million personal loan from WorldCom's bank account. The company has now begun laying off 17,000 workers worldwide - with all 80,000 staff expected to be out of work soon. (Source: SMH) WorldCom Shocks World Markets The revelations sent shockwaves around the corporate world with most markets dipping and telecommunications and banking stock hit particularly hard. Investors, already unnerved by dubious accounting practices that led to last year's collapse of Enron, sent global equity markets into free-fall after the US telecom giant revealed an exaggerated cash flow for the past five financial quarters. In Australia., WorldCom's demise, is expected to harm the businesses of Telstra, SingTel and Telecom New Zealand in the short term, as all three have shareholder relationships with the troubled US carrier. The debacle has also brought renewed scrutiny of News Corp's accounting practices. Disgraced Andersen audited the media firm's books up until two months ago, when it was dumped in favour of Ernst & Young. Meanwhile, Ozemail, who WorldCom brought outright, is expected to end up on the market again with former owners including Malcolm Turnbull said to be eyeing a buy-back at a vastly reduced cost. (Various Sources) The End of the World? Economists, commentators and politicians are all interpreting the WorldCom collapse as a turning point for global capital. SMH's Ross Gittens writes that America's string of corporate scandals spells the end of the pretence that top executives do it all for the benefit of the company's owners. Gittens argues that the notion of Shareholder Value to justify everything from takeovers, downsizing, executive pay rises and issuing of share options, will be the first casualty of the collapse. Meanwhile, Treasurer Peter Costello says he will outline in August measures to improve auditor ethics and disclosure of information by companies to shareholders and investment markets. As for US President George Bush, he's vowed to jail corrupt executives who threaten "our entire free enterprise system". Mr Bush intends to travel to New York on July 9 to deliver the same message where it counts: on Wall Street. (Various Sources) Super Funds in the Red Closer to home, the faith that capitalism will automatically multiply retirement savings has taken its own battering with superannuation going backwards for the first time since 1981. The typical fund is down about 4.5 per cent for the year, largely thanks to a dismal year for world sharemarkets, says InTech Financial Services. Growth funds have been worst hit, losing an average of about 9 per cent, and even the conservative funds are ahead by only about 0.9 per cent - less than could be earned from cash savings. The September 11 terrorist attacks, the Enron collapse, and now the scandal over accounting fraud by the telecommunications giant WorldCom have all contributed to the losses on this year's statements, due out over the next week. (Source: SMH) ACCC Seeks Jail for Collusion Executives found guilty of anti-competitive behaviour could end up behind bars if the competition watchdog gets it way. The Australian Competition and Consumer Commission put its case for jailing executives in its submission to a review of the Trade Practices Act chaired by former High Court judge Sir Daryl Dawson. The ACCC wants big business executives who seriously breach the act's competition provisions jailed for up to seven years, a punishment already in place in the United States, Britain, Canada and Japan. The act currently imposes a maximum fine of $10 million for companies found guilty of anti-competitive behaviour, but does not allow the ACCC to refer matters to criminal courts. (Source: NineMSN) Integrity Tests for Finance Directors Directors and senior managers of some financial institutions will face integrity tests for the first time under a bill introduced to Federal Parliament. The bill introduces a fit and proper test for directors and senior managers of financial institutions authorised to take deposits and authorised non-operating holding companies. It also aims to improve the Australian Prudential Regulation Authority's (APRA)ability to monitor the financial sector through improved administration. Insurance companies will have to advise APRA of any prudential standard breach, including developments detrimental to their financial position. (Source: NineMSN) Company Directors Should Quit Boards Company directors holding several board posts will face pressure from shareholders to quit some of their directorships during the annual general meeting season later this year. The Australian Shareholders Association has released a guide for company directors which warns directors from spreading themselves too thinly across a range of companies The shareholder lobby group believes the maximum number of a person's directorships or equivalent positions should be limited to five, with a chairman's role counting as three directorships. And the ASA argues that if a director sits on the board of two or more poorly performing companies, they should not seek any further appointments. (Source: Nine MSN) Anderson: CEOs Both Over and Under Paid Departing BHP Billiton chief executive Paul Anderson believes Australian chief executive officers are overpaid in Australian - but "woefully underpaid" compared to their overseas counterparts. Anderson, who is returning to his native United States after running BHP for the last three-and-a-half years, says CEO salaries depend on perspective. "I think CEOs in Australia are overpaid but they are woefully underpaid relative to the rest of the world," he said. He's told ABC TV's Business Breakfast program that unless Australian CEOs are paid at a comparable level to their overseas counterparts, companies will struggle to attract management talent. He's also taken a swipe at some union leaders, who he claims call strikes simply to advance their political ambitions. (Source: ABC)
Enron Bankers Charged As for that other spectacular US collapse, the US Justice Department has charged three former British bankers with wire fraud in an alleged $US7.3 million scheme involving Enron. The three former employees of National Westminster Bank, Gary Mulgrew, Giles Darby and David John Bermingham, were charged in a criminal complaint filed in Houston. All three men were employed by the finance group of Greenwich NatWest, a division of NatWest with offices in Greenwich, Conn., and London. At the time, NatWest was considered a "Tier 1" bank by Enron, which meant it was among a small group of banks that did the most business with Enron and were given preferential treatment by the company. The Government's complaint also alleges that the three men recommended that an interest in an Enron-related partnership held by NatWest should be sold for $US1 million even as they schemed with Enron executives to purchase that interest for $250,000. (Source: The Australian)
|
| Search All Issues | Latest Issue | Previous Issues | Print Latest Issue |
|
© 1999-2002 Workers Online 
|
|
