Jail time unlikely for Enron, WorldCom executives

CITIZEN WORKS 8/25/03

Jail time unlikely for Enron, WorldCom executives; HealthSouth CEO buys a $3 million marina

A Bloomberg story looks at the progress of the case against Enron and WorldCom executives and concludes: "Bernard Ebbers, Kenneth Lay and Jeffrey Skilling may never face prosecution, according to former federal prosecutors and securities lawyers.

"Making any kind of fraud case is difficult for prosecutors because ?'the mission is to prove someone knew that there was some sort of fraudulent transaction going on and knew that they were doing wrong,' said the U.S. attorney in New York, James Comey, who is investigating WorldCom. ?'It's all about proving what is in their head.'"

See: "WorldCom, Enron execs elude charges," by David Rovella:
http://www.bayarea.com/mld/cctimes/6574458.htm
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Meanwhile, former HealthSouth CEO Richard Scrushy is still living large, according to a report in the Birmingham News. "In the past few weeks, his private company bought a $3 million marina in Orange Beach. Scrushy also entered his speedboat - named Monopoly - in a Gulf Coast race and vacationed with his family in the Bahamas," writes staff writer Michael Tomberilin.

See: "Scrushy continues to live the high life":
http://www.al.com/news/birminghamnews/index.ssf?/xml/story.ssf/html_standard.xsl?/base/news/106154413116120.xml
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Insider trading continues on Wall Street

A CNBC story suggests that insider trading is continuing on Wall Street, despite crackdowns:

"Despite a massive cleanup to stomp out the worst Wall Street corruption in decades, it looks like plenty of privileged insiders are still routinely swindling the little guy," writes Michael Brush. "This fleecing of everyday investors has nothing to do with the complex financial structuring found at twisted operations like Enron and WorldCom. It's just good, old-fashioned insider trading -- perhaps the hoariest and simplest Wall Street scam in the book.

"As the takeover market has warmed up over the past six months, time and again the shares of buyout targets have jumped on big volume before acquisition news. The unavoidable explanation: Individuals familiar with corporate dealings are trading on their privileged knowledge. The unfortunate result: Honest investors selling to crafty buyers-in-the-know during those rallies are getting cheated out of hefty gains that they could have enjoyed following the buyout news."

See: "Wall Street plays dirty despite cleanup effort"http://moneycentral.msn.com/content/P57052.asp
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Lucent faces investigation into Saudi bribery

The Department of Justice and the Securities and Exchange Commission are both investigating whether Lucent Technologies violated the Foreign Corrupt Practices Act in Saudi Arabia.

The telecommunications maker said it was cooperating with the investigation last week. The Foreign Corrupt Practices Act allows U.S. prosecutors to go after companies that engage in bribery and other corrupt practices in foreign countries.
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Excessive compensation
Director pay skyrockets

As directors spend more time paying attention to the companies they are supposed to be running in the wake of Sarbanes-Oxley, they are also demanding more pay.

According to Mercer Human Resource Consulting, director compensation at major companies is predicted to rise 15 percent this year after a 10 percent rise last year. Meanwhile, compensation consultant Pearl Meyer & Partners has predicted that board pay will rise 20 percent this year and 50 percent over the next few years.

Director salaries are now pushing $200,000 a year at many large corporations. Some observers have questioned whether directors making that kind of money will be likely to ask difficult questions.

For more, see: "In Corporate Reform, Directors Rake It In," by Martin Howell of Reuters:

http://reuters.com/newsArticle.jhtml?type=businessNews&storyID=3327282