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Bush Tough on Corporate Criminals — Except His Pals
Published on Thursday, May 15, 2003 by the The Herald-Times (Bloomington, Indiana)
Bush Tough on Corporate Criminals — Except His Pals
by Mike Leonard
 

It's a good thing that President Bush borrowed an elliptical trainer from an Indianapolis business this week so that he could get in a workout during his stay at the downtown Westin hotel.

In his Tuesday speech at the Indiana State Fairgrounds, the president vowed to track down the killers from the bombing attack in Saudi Arabia this week.

He's previously pledged to hunt down Saddam Hussein, Osama bin Laden, everyone associated with al-Qaida and anyone who assists or harbors terrorists.

No one seems to be asking why he hasn't delivered on Saddam, Osama or the al-Qaida bombers that proved they're still alive and well and operating in Saudi Arabia, where the Sept. 11 terrorists came from in the first place.

At this rate, it only seems to be a matter of time before the president joins O.J. Simpson on the golf course in his pursuit of the real killer of Nicole.

Let's just say that the president talks a better game than he delivers. For example, during his Indianapolis speech, he said, "Some CEOs around our country forgot what it meant to be responsible in their jobs. They didn't tell the truth to employees and shareholders alike. They will learn a lesson, that we expect people to be responsible in positions of authority. They will be held to account."

He said this with a great appearance of earnestness, minutes after praising his outgoing cabinet member, Mitch Daniels, who recently announced that he will give up his post as budget director to return to Indiana, ostensibly to run for governor.

Just last week, the Indianapolis Star reported that Daniels was one of 32 prominent Indianapolis businessmen subpoenaed by the Indiana Securities Division in a major insider trading investigation involving the sale of IPALCO Enterprises, the former Indianapolis Power and Light, to AES Corp.

Daniels was a member of the IPALCO board of directors at the time of the transaction in early 2001. Just before the sale was completed, Daniels sold his shares in IPALCO for $1.45 million.

Over the course of the next year, IPALCO shares plummeted from nearly $50 a share to under $1. Employees lost an estimated $179 million in the devaluation of the 401(k)-styled "Thrift Plan" that the employees were encouraged to invest in.

A class action lawsuit on behalf of the employees, alleging corporate malfeasance, is pending. A second legal action, alleging the defrauding of shareholders, is the one that brought in the securities investigators.

The amount that shareholders lost is still difficult to calculate, says John R. Price, one of several attorneys involved in the legal claims. "One of the major issues in both cases is the incredible fact that at the same time the officers and directors were unanimously recommending to shareholders they vote for the transaction, they were themselves dumping $71 million of their own shares," says Price, a former Republican candidate for governor.

"Part of our allegation is that AES had never paid a dividend. Never in its history," Price said this week. "They had a high debt ratio. They were not a good partner for IPALCO."

Price went on to explain that the IPALCO board turned down a cash offer from AES and negotiated a stock swap that enabled them to dump their shares at a significant profit. "Everybody unloaded," Price said. "It was like a stampede to the door.

"I think there are a lot of parallels to Enron," the Indianapolis attorney went on. "One, for example, is that we have an affidavit from one of the office maintenance supervisors who has sworn that cartload after cartload of accounting records and minutes were hauled down to an alley behind the IPALCO building and shredded in a mobile shredding truck, day after day, for 40 days."

Another parallel is that Enron CEO Ken "Kenny Boy" Lay and IPALCO director Mitch "My Man Mitch" Daniels are close friends of a President who lashes out at corporate irresponsibility while praising the players in the scandals.

Price was a contender for the 2000 GOP nomination for governor and came within a whisker of becoming the Republican nominee for U.S. Senate in a tight, three-way race in 1998. He said he has no problem going after the former IPALCO board, which includes such prominent Republicans as Daniels, former CEO John Hodowal, former Speaker of the Indiana House Paul Mannweiler and former state GOP chairman Rex Early.

"I am a conservative Republican and I'm a big believer in the free market, and if a person believes in the free market, he also has to believe the free market only works when it's an honest free market and the people deal honestly with their employees, their shareholders, their suppliers and creditors," he explained. "Any time you have a perversion or permutation of ethical standards it warps the outcome of the free market."

In the coming months, Price will have the opportunity to depose Daniels, Hodowal and company, and the public will no doubt get a better idea of how "Indiana's Enron" went down and why the entire IPALCO board saw fit to dump stock during a sale it recommended to shareholders.

Daniels has offered the explanation that he needed to do so because he was joining President Bush's cabinet. This is not true. If he had ethical concerns over what interests might intersect with his, as budget director, he simply could have established a blind trust to manage his money.

The reality that all IPALCO board members cashed in suggests a different motivation, one that clearly does not jibe with the corporate responsibility that the president claims to advocate.

© 1997 - 2003 Hoosiertimes.com

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