Golden Parachutes Instead of Accountability
One of the most noticed photographs in the newspapers last week was that of a well-dressed Pakistani lawyer on the streets hurling back a tear gas canister toward the soldiers who were suppressing a demonstration by lawyers protesting the martial law (called "emergency rule") of Gen. Pervez Musharraf.
Can anyone remember anywhere in all of modern history, large numbers of lawyers leading the resistance as they did on the streets of Pakistani cities way ahead of the workers, peasants and even the university students?
Pakistani police and troops rounded up the mass protests of lawyers and pushed hundreds of them into trucks on the way to the prison. Lawyers were willing to go to prison and endure beatings, while demanding the re-establishment of the rule of law and the independence of judges right up to the Supreme Court, a rare display of professional courage and duty.
What about lawyers in the United States standing up to the Bush regime's regular violation of our Constitution, the imprisonment of thousands of people without charges and without attorneys, the assault on due process, probable cause, habeas corpus, the spying on Americans without court approval and the defiant, illegal use of torture?
No demonstrations yet. No resolutions by bar associations saying that Bush and Cheney should resign or be impeached.
Except some dozens of active civil liberties' lawyers, law professors and the former head of the American Bar Association, Michael Greco, the 800,000 or more practicing lawyers have been pursuing business as usual. Given their canons of ethics and their status as officers of the court, this looking the other way is not very professional behavior.
Professional behavior also has been in short supply on Wall Street. Once again, the accountants, the corporate lawyers, and the Boards of Directors of such giant companies as Merrill Lynch and Citigroup either were paid to go to sleep on the job or cared less.
Both Merrill Lynch and Citigroup have announced that thus far they are writing off a total of $20 billion on subprime mortgage paper in the housing sector. At the same time, the bosses of these companies, Stanley O'Neal and Charles O. Prince, have been fired and awarded vast golden parachutes totaling $360 million for their mismanagement in taking on reckless levels of risk for short term premiums.
But where were the highly paid watchdogs for these companies in the accounting and legal professions? Professionals are supposed to prevent trouble, not just profit from it. This looks like a repeat of the previous busts during the savings and loan scandals and the dot com collapses.
Once again, see the bitter fruit of de-regulation or non-regulation by the federal and state governments. It will happen again and again to worker pensions, small investors and the workers, who are laid off, until there is regulatory law and order and the investors are given more dedicated legal authority over the corporations which they own.
This week, a new book titled Corpocracy (Wiley Pub.) by veteran corporate governance champion, Robert Monks, will be released to shine a bright light on this lack of shareholder rights and the passivity of large institutional shareholders (like pension funds, trusts and university endowments) toward meeting their fiduciary duties.
The gross greed, power and unfairness of this whole rigged system of non-accountability for the top bosses, who mess up big time but leave with the riches of Kings, were the subject of a remarkably forthright article in Sunday's Washington Post by William S. Lerach-until recently, a very successful litigator against corporate scan artists.
Lerach pleaded guilty last month in federal court to a conspiracy charge regarding payments made to investor-plaintiffs in lawsuits brought against corporations claiming fraud and other misdeeds. For this behavior he will have to pay $8 million in fines and go to prison for at least one year.
Who was damaged by Lerach's crime? The court was misled because it was not told that monetary incentives were given to ready-to-sign-on plaintiffs in the race to the courtroom to become the lead law firm in such class action lawsuits.
Compare this violation with the trillion dollars looted or drained from millions of workers, investors and pension-holders by the corporate crime wave of the past ten years. Lerach and his firm recovered billions of dollars for defrauded investors over that same time span.
Lerach can be forgiven for wondering why so many reckless bosses were rewarded at the expense of shareholders and company profits. Especially, since these big bosses of the huge losses through their rubberstamp, selected boards of directors, essentially decide what to pay themselves while they are in their suites and when they leave.
Top mismanagement of many U.S. companies-consider the domestic auto manufacturers, for example-is rife with rewards for bad jobs done. Big rewards. In any fair system of corporate governance and SEC regulation, these bosses at least would have had to give up their undeserved pay and cancel their golden parachutes.
Even though O'Neal and Prince have admitted to "mistakes" and "flawed risk models," O'Neal leaves Merrill Lynch with $160 million in addition to over $100 million he received in pay for the past two years.
Reports have Prince leaving with $100 million along with the $100 million he was paid as Citi's CEO. Both companies' stock value has fallen sharply in recent weeks.
In his article, Lerach mused about how the "legal system is a lot tougher on shareholder lawyers than it appears to be on Wall Street executives."
During his time in prison, maybe the determined Lerach can plan his next moves to bring corporate crime, fraud and abuse against all too trusting individuals, institutions and government purchasers to systemic accountability.
Maybe he'll take his strategies to a level far beyond the occasional class action suits that get through all the interference that indentured legislators and conservative judges put in their way.
For if we the people do not have a say, we will continue to pay and pay.