For any of those of you who thought that Enron, WorldCom and the rest were some kind of aberration, two on-going investigations are worth noting.
A key element of the antitrust settlement MicroSoft Corp. negotiated with the Bush administration isn’t working as effectively as hoped, the government and the trial judge acknowledged yesterday.The criticism comes just weeks before a U.S. appeals court considers tougher sanctions against the world’s largest software company.
U.S. District Judge Colleen Kollar-Kotelly urged government lawyers during a court hearing to investigate over the coming months why only nine companies so far have paid MicroSoft to license its Windows technology for their own software products.
One of the most important provisions of the landmark settlement compels MicroSoft to permit competitors to license parts of its technology to build products that seamlessly communicate with computers running Windows software.
“I think all of us had hoped for more agreements,” Kollar-Kotelly said. “I am interested in finding out why we don’t have more licensed products.”
Kollar-Kotelly, informed by her previous experiences with one of the most devious corporations on the planet, is asking exactly the right question: given their agreement and their omniscience, why aren’t there more licensing deals? It’s clear she suspects that MS might be pulling yet another of their underhanded tricks intended to void the agreement they reached with the govt while giving the appearance that they’re complying with it. And she’s probably right. Complaints have surfaced in the business news the last few months of companies charging that MS’ “new” licensing arrangement actually does nothing to change the pre-agreement status quo.
Based on MS’ previous history and performance, one can well believe it. Bill Gates isn’t just a consummate corporate thief (everything Windows has ever been was based on products developed by other companies that were then pirated by MicroSoft), he’s a consummate thief who hates to lose. When he can’t win by assaulting the front door, he’ll sneak in through the basement window. When MS was first charged with illegal practices, Gates was apoplectic. He saw the attempt to bring MS into line with the law as unconscionable interference with “free enterprise” (that’s what he calls corporate theft when it’s his corporation that’s doing it), and he said he was determined not to let it happen.
Years and a ton of bad publicity later, MS appeared to capitulate and signed the agreement. But that may very well have been nothing but a PR ploy to get the newspapers off their backs. Gates knows perfectly well (having done it for many years) what Karl Rove knows–that you can get away with a lot for a long time by fostering the illusion that you’re running a straight shop while, under the cover of inattention, you go right on doing what you’ve always done. Kollar-Kotelly wants some proof that MS is living up to their end of the deal.
Good for her.
Four money managers of Putnam Investments, including its head of international investing, are being forced out of their jobs for using their personal accounts in 2000 to rapidly trade in and out of mutual funds that they managed, despite company policies that forbid such market timing.The money managers, along with two other Putnam employees, made profits of approximately $700,000 on the prohibited trades, according to Putnam officials.
The disclosures, made yesterday in response to inquiries from the Globe, directly contradict statements by Putnam this week that the market-timing scandal that has engulfed the mutual fund industry has been limited to a “minimal” number of outside individual investors. Instead, the problems also appear to reach into the highest levels of the company itself.
What a shock.
As time goes by, the picture of callous theft, illegal maneuvering, and the utter disregard of both law and their own clients that was a hallmark of the Enron et al corporate scandals last year has been–and is being–revealed for what it really is: Business-As-Usual in an age when a radical right-wing govt is prone to give Get Out of Jail Free cards to any corporation that gets caught with its hand in the cookie jar. In this case, Putnam execs were stealing from their own customers:
Putnam, founded in 1937, is the fifth-largest fund company in the nation, and the second-largest in Boston after Fidelity Investments, managing $272 billion in assets for 12 million investors.Secretary of State William F. Galvin, who has led the investigation of Putnam, said he was “stunned” at the disclosure, calling the trading “fundamentally dishonest.” The managers, he said, violated their duty to protect the long-term interests of their funds’ investors. “They took advantage of, in effect, insider trading to do market timing to pick the pockets of their own customers. The profits they made didn’t come out of thin air; they came from the funds they were supposed to be protecting.”
It even appears that the company lawyers caught on to the swindle 3 years ago and may have stopped it. Good, right? But then they closed their discovery with the standard corporate response–a coverup:
Some of the trades were for [more] than $1 million, government and Putnam officials said, and were concentrated in Putnam’s international funds. The employees were told by Putnam senior managers in 2000 to stop such trading, after their activity was detected by monitoring systems the company established to catch market timers.”We considered what the people were doing at the time to be inconsistent with what we felt to be appropriate for employees to be doing in terms of trading a mutual fund,” said Putnam general counsel William H. Woolverton. “And you can call it market timing. You can call it excessive short term trading. Whatever you call it, it went through our screens and we detected it. We sat down with these people and said, `Look we don’t think this is the right thing for you to be doing, to be engaging in this type of activity.’ And they agreed, and they stopped doing it.”
But Galvin said that for Putnam to wait three years to disclose the trading activity undermines the company’s claim that it acted responsibly. “That the company protected them for three years, took no action and never sought to reimburse anybody for anything, until we caught them, suggests that the company’s culpable,” Galvin said. “It isn’t a few rogue managers who did this. The company’s responsible.”
It’s time we faced the fact that since Ronald Reagan started to take the govt out of the role of regulating corporate activities, corporations have been doing exactly what a lot of us said then that they would do: run rampant, steal everything they could, even from their own customers, and count on the Feds to turn a blind eye.
Which they did. Despite all the promises we heard after the Enron mess, the money managers aren’t being charged by the SEC but by the AG’s of 2 states: Spitzer in NY and Galvin in Mass.
Given that we now have proof that hundreds of millions of dollars were stolen by corporations who, in a deliberate and calculated way, took advantage of a political atmosphere which included the disemboweling of regulatory agencies intended to prevent them from doing just that, can we now begin at last to admit that these guys need to be watched? How many more corporate crimes are going to have to be uncovered, how many more $$Billions$$ have to be stolen before we start demanding accountability again?
As far as I’m concerned, the answer is: We should demand it NOW. Enough is enough.