More Corporate Miscreants

Most Americans believe in capitalism because they know it offers the most opportunity and individual freedom. That, not class anger, is why regular folks hate corporate leaders who lie, cheat and steal.

I'm no different. But what really drives me nuts is the arrogance and stupidity of the corpo-thieves, something I noted in an earlier post.

Now, I come across the story of Gary Min who pleaded guilty to stealing an estimated $400 million in DuPont technology. There's no evidence that Min tried to transfer the information to anyone, but he faces up to 10 years in prison and a fine of $250,000. In contrast, pioneer corporate thief Michael Miliken emerged from two years in prison with $500 million in the bank. That's the dumb part.

Then there's the arrogance factor. According to The Wall Street Journal, prosecutors are considering filing criminal charges against former Broadcom CFO William Ruehle (photo above) who emailed a colleague:

"I VERY strongly recommend that these options be priced as of December 24."

As the newspaper noted: "Broadcom's share price rose 23% between the two dates. The pretense that the options had been granted on the earlier date made them extra valuable."

If nothing else, Ruehle should be convicted of being too lazy to pick up the phone.

Stupidity Is No Defense

The Wall Street Journal today chronicles the resignations of two more corporate executives who guaranteed themselves big profits by backdating options grants. This time it was Mark King, CEO of Affiliated Computer Services Inc., and Warren Edwards, the company's CFO.

Edwards lawyer says, "He engaged in no intentional misconduct and acted in good faith at all times in connection with the company's longstanding and historic options granting practices." King’s lawyer says, "He acted at all times in good faith and did not engage in any intentional misconduct."

These lads were running a $5.4 billion corporation. Now they declare they were too dumb or too naïve to understand that backdating option grants is illegal unless fully and promptly disclosed to shareholders.

The HP (Wrong) Way

Hewlett-Packard’s image as the Goody Two-shoes of corporate American is in ruins and the company is better for it.

A couple of generations of PR and marketing savants convinced investors, the news media and company employees that Bill and Dave’s management style and ethics, forged when the company was housed in a garage, remained the foundation of the company as it morphed into an $86-billion global behemoth.

The spin rate increased as the scandal developed.

Every time CEO Mark Hurd, former Chairman Patricia Dunn and other directors, executives and their hangers-on opened their mouths about the leak probe, they declared that stealing phone numbers, bugging reporters’ computers, and tailing people violated the lofty standards informing the legendary “HP Way.”

Next came denials they ordered or were aware of the nasty things done on their behalf (the Fifth Amendment of the powerful). Then they accepted ultimate responsibility using hackneyed phrases about ship captains and dollar bills. Finally, they sniffled, “I let the company down.”

Such formulaic and cynical responses demonstrated that the “HP Way” – whatever that was -- left the building long ago.

Now, Dunn says she was dismayed anyone connected with HP would employ allegedly illegal techniques. To date, she’s offered no evidence that she or anyone else referenced ethics and standards before or during the snooping. She fought like a tiger to remain on the board, probably because an unprompted resignation might indicate greater responsibility than she wanted to admit.

Hurd fumbled his response from the beginning. At first he said he was only vaguely aware of the investigation. Then he said he knew a little more than he let on initially but never read the report on the mess. That means he wants us to believe that as the CEO of an $86-billion global corporation he didn’t care much about the details of a probe into market-moving leaks from the boardroom. It's sort of a Ken Lay-lite defense.

The company’s top lawyer resigned and is invoking the Fifth. The company lawyer directly responsible for ethics resigned as has the person who supervised the investigations. HP’s chief outside counsel is hiding behind a PR blitz to position him as the eminence grise of Silicon Valley.

Somebody once or currently connected with HP likely will end up with a felony record. The legal sharks are hungry. All the senior managers and the directors are personally and properly embarrassed.

So what is good about this?

HP's true nature -- no better or worse than any other large organization -- has been revealed. No longer will it have an extra half-ounce of credibility on its side of the scales when problems or questions arise because that weight resulted from an image rather than substance. In short, it will have to work damn hard for a long time to earn the trust of its customers, employees and shareholders.

Which is what Dave and Bill did in the beginning.