The Gilded Age of Fish Riot


I suggest the epitaph for this entire era should be, “The fish rots from the head down.†The latest round of corporate scandals—Hollinger, the growing mutual fund mess, and the foreign exchange dealers who ripped off their own companies—provide an elegant summary of the pattern.

Hollinger International, a media company owned by Lord Conrad Black, reported a relatively measly total profit of $23 million from 1998 to 2002. During the same period, the company paid Black and his close associates over $200 million in salary, management fees, and non-compete payments, according to published reports. The company also featured the usual insider dealing—including a $2.5 million investment in Hollinger board member Richard Perle’s company, Trireme. That would be the same Richard Perle who is still on the Pentagon’s Defense Advisory Board, despite having had to resign as chairman earlier because of other business conflicts of interest.

So far, every business scandal starting with Enron has displayed the same features—investors ripped off, pension-holders ripped off, employees often left with nothing, and executives walking away with millions. Those at the top of large corporations who screw up completely and create total disasters walk away with millions under golden parachute arrangements. Just for example, Treasury Secretary John Snow, formerly head of CSX railroad company, presided over a 53-percent drop in the company’s stock while raising his own pay by 69 percent. He also slashed both health care and life insurance benefits for CSX retirees.

Corporations themselves have become entities set up to avoid taxation. It’s really quite extraordinary. Theoretically, the corporate income tax is 35 percent, but no self-respecting corporation would actually pay that. The Bermuda Loophole is just the beginning of the games corporations play—and don’t think for a minute that the corporate alternative minimum tax is making them cough up. Many of the country’s most profitable corporations are so good at tax games, the government owes them tax rebates.

What happens sooner or later when there is rot at the top—what economists call “control fraudâ€â€”is that the little fish get into the act, too. Hey, if the guys at the top are ripping people off right and left, why shouldn’t some of the peons play the same game at their own level? And that’s when you get things like the foreign exchange traders and even some of the mutual fund rip-off artists. The rot does spread downward.

Now, being of the liberal persuasion, I believe the ways to stop corporate rip-offs and harm caused to the public by greed is government regulation and suing the bastards. But let’s suppose for a moment here that we try The Wall Street Journal’s preferred methods for fixing all this—transparency, accountability, and responsibility. And let us apply these methods to the Bush Administration, which proudly bills itself as the CEO administration. It is certainly an administration of CEOs. After the unspeakable Harvey Pitt was forced to resign as head of the Securities and Exchange Commission, Bush brought in Bill Donaldson as corporate watchdog, the CEO of a huge Wall Street firm, Donaldson Lufkin & Jenrette, currently under investigation by the SEC for fraud. Ooops. Transparency: We started with Dick Cheney’s secret energy task force, then Bush decided neither his father’s presidential papers nor Reagan’s could be made public, then we got the PATRIOT Act, and everything went to hell. We couldn’t find out who had been “detained†when, where, why or for how long, with no lawyers and no family notification. And secret phone taps, wiretaps, sweeps, etc., all on “suspicion.â€

Accountability: What does it take to get fired by this administration? Outing a CIA agent for petty political revenge? Completely contravening administration policy with jackass statements about Islam, like Gen. Boykin, while you’re the head of a sensitive Pentagon department on the subject?

Obviously, you can get fired for standing up for the environment—or at least not lying down quickly enough for those who are busy trashing it. RIP, Christine Todd Whitman. And for standing up and saying something populist, like the IRS should quit going after working poor people and try nailing a few rich tax cheats, as former Treasury Secretary Paul O’Neill did. Responsibility: Have you ever heard this administration admit it has made a mistake? It won’t even take responsibility for dumb stuff like the “Mission Accomplished†sign, much less admit it had no idea what it was doing in Iraq after Saddam fell. Even now, administration folks keep trying to wiggle out of their own … I don’t know whether it was lies or misinformation—there was no nuclear weapons program, there were no weapons of mass destruction, and there were no ties between Saddam and Osama bin Laden. But there they come again, with some leaked list of questionable intelligence trying to prove what isn’t true.

This country boasts a multitude of people who are real heroes: The extraordinary book Mountains Beyond Mountains about Dr. Paul Farmer should not be missed. But at the top of the corporate and economic worlds, ethical standards seem to be rotting out—greed, self-righteousness, fatal certitude. And, of course, beware of those with no humor.

Molly Ivins is a nationally syndicated columnist. Her new book with Lou Dubose is Bushwhacked: Life in George W. Bush’s America (Random House).