Randomly Noted

It’s not an economic story, except in the broadest sense that sports and entertainment are big parts of the U.S. economy.

Stilll, the potential lesson in the case of Roger Clemens, the former top-notch major legue baseball pitcher, resonates throughout the business and financial worlds.

That lesson is (assuming the perjury charges filed against Clemens hold up) that the questionable act is usually not what gets people in the biggest trouble, it’s the attempt to cover up that act.

 Clemens was indicted today, charged with making false statements to Congress when he declared under oath he never used performance-enhancing drugs.

“Prosecutors and the FBI have been gathering evidence in the steroids probe since Mr. Clemens testified before a House committee in 2008,” The Wall Street Journal reported. The Journal also reported Clemens’s lawyer wasn’t immediately available to comment.

It wasn’ t a legal matter like this, but allegations of a certain type of cover up are what reportedly prompted the Hewlett-Packard board just recently to push out Chief Executive Mark Hurd. There was the Martha Stewart case, and on and on.

But no one seems to get the message.

Sometimes, directors of  public companies have to make decisions they know will cause them grief. It comes with the job, and if boards of directors are to more generally live up to expectations to be vigilant guardians of shareholder interests, those no-win decisions should come with greater frequency.

Such a decision faced the directors of Hewlett-Packard Co. when they unanimously accepted the resignation of   Chief Executive Mark Hurd in the now-famous case of fudged expenses allegedly done to hide a personal relationship with an outside contractor.

The details of that relationship are  murky to the public. Presumably, the board knows what it needs to, in part courtesy of an investigation that cleared Hurd of a sexual harassment charges.

Continue reading…

The press releases come regularly, announcing the Securities and Exchange Commission taking action against this alleged scam and that one.

Good news. The SEC certainly is interested in being seen on top of things enforcement-wise, especially after the spectacular failure to detect the supreme scamster, Bernard Madoff, for so many years.

It’s depressing in that humankind seems endlessly capable of launching new schmes to defraud. It’s depressing in that a certain sector of humankind seems endlessly susceptible to scams.

Whatever the SEC and other watchdogs are up to and capable of detecting, caveat emptor has to still be the standard for investors. At a minimum, the bad guys are only caught by the securities cops after they’ve done some hoodwinking.

Continue reading…

After a work-induced (too much of it!) hiatus, I’m back blogging and want to re-launch myself by pointing out a memorable piece by WSJ editorialist Daniel Schwammenthal, that has nothing to do with the world of finance. It’s about the plight of the tiny Jewish community of Malmo, Sweden, in an increasingly intolerant Europe. Have a look. Also, randomly, I met an opera singer at a Maplewood, N.J., sandwich shop over the weekend. A fellow with startlingly blue eyes was poring over a thick musical score while my husband and I ate lunch at a nearby table.  Bursting with curiosity, I asked what he was up to. Mark Showalter introduced himself and explained he was prepping to understudy a role in an upcoming Metropolitan Opera production of Mozart’s “Magic Flute.” Enjoy this gallery of costumed opera stars, including Showalter himself.

Microsoft CEO Steve Ballmer, in a speech in Houston today, compared China’s censorship of the internet to Europe’s Nazi hate crime laws and the U.S.’s anti-child porn laws. This comes a week after rival Google stood up to China, putting at risk its business future in that country. Needless to say, what Beijing does to stifle the free flow of information (and much else) cannot be compared with European post-WWII anti-hate laws and American prohibitions on child pornography. Colleague Angel Gonzalez covered Ballmer’s appearance before an audience of Texas oil and gas executives. Angel writes that Ballmer told the group “most countries exert some sort of control over information; in France, it’s illegal to trade Nazi paraphernalia, for example, and the U.S. has strict laws to curb child pornography. ‘We have to take our cue here from the U.S. government,’ he said.” Granted, many Western companies find ways to comply with distasteful Chinese laws without (completely) compromising their morals and standards. But simply put, Ballmer might have found a way to describe the nature of this quandary without so blatantly appeasing Chinese officialdom.

A should-read column in a recent Economist magazine rebukes business leaders for letting the cultural argument go against them without putting up much of a fight.

Click On Above Cover Image For Link To The Article

The reasons for the anti-business deluge in much of the world are easy enough to find. In a simple, if not entirely accurate way, business people are the ones who have brought us the credit crisis and near global recession while continuing to pay themselves enormous sums.

The “Schumpeter” column in the Dec. 19, 2009, Economist lists some good things brought to us by business. A generalized prosperity unknown in times past, examples of true cooperation and creativity, and even a counterweight against too-powerful government.

I would add a couple more that are perhaps cousins of these concepts but not enunciated in the column. Modern businesses are settings for success based on merit and therefore the most effective vehicles for social mobility.

Continue reading…

The cynic in me says it’s blather from a rock star. The optimistic “Happy New Year” me says: What a delight! Have a look.

Colleague Maria Abi-Habib reports that the Gulf News has told reporters to avoid using the terms “default” and “bailout” when reporting on Dubai default and bailout news. Gulf News is the biggest English-language daily in the United Arab Emirates. The paper’s ban – characterized as a “style guide” by its editor-at-large – comes as Dubai’s pooh-bahs have taken to rhetorically flogging (and in one case, confiscating) the international press for problems of their own creation.  It’s a sign of moral decay that should give those considering investing in Dubai’s beaten-down assets a great deal of pause.

My 11-year-old son adores and admires Tiger Woods. Now, what do I tell him? Answer: I’ll most certainly say nothing about today’s admission that Woods cheated on his wife and betrayed his family. I’ll refer you to an Oct. 2 blog, “What Is It With Men”?, which I wrote when David Letterman disclosed his philandering. The first sentence of that blog read like this: “I could fill this blog with the names of prominent philandering men in business, politics, entertainment and big-time sports. David Letterman’s just the latest. There will be more.” Sigh.

Beazer Homes USA’s accounting mess is coming back to haunt it. We’re reporting that Beazer’s CEO, Ian J. McCarthy, has received a Wells notice from the Securities and Exchange Commission. This means SEC may bring an enforcement action against McCarthy “to collect certain incentive compensation and other amounts allegedly due.” It’s not clear how much McCarthy may have to forfeit, or whether other Beazer execs will have to fork up money as well. There’s precedent for this type of action: One other company, CSK Auto Corp., was previously targeted by the SEC under the Sarbanes-Oxley law’s clawback provision, colleague Dawn Wotapka reports. In that case, CSK’s former CEO had to repay the company $4 million in bonuses and stock-sale profits. In Beazer’s case, the homebuilder understated its income from 2000 to 2005 by setting aside a rainy-day fund for land development and home construction costs.

Continue reading…