And those resposible for helping to defraud investors in the Enron scandal took another hit:
Canadian Imperial Bank of Commerce has agreed to pay $2.4 billion to settle investors’ claims it helped hide losses at the fallen energy trader Enron Corp. through a massive accounting fraud.
The settlement announced Tuesday with the Toronto-based bank — Canada’s fifth-largest financial institution and the operator of the securities firm CIBC World Markets — was the biggest individual payout so far in the long-running debacle.
Combined with similar agreements with Citigroup, JPMorgan Chase & Co. and others, the settlements have now reached more than $7 billion, said lawyers for the investors who lost tens of billions of dollars in Enron’s 2001 collapse.
Some 50,000 Enron stock and bond holders led by the University of California’s board of regents filed claims as part of the lawsuit. Investors claim a number of global banks and brokerages helped Houston-based Enron continue to operate and raise money even as the company was imploding.
Good, although until it is too expensive for these companies to engage in these practices, this will be considered all a part of doing business.
matt
hey John, hey everyone, shitty day in Iraq cnn.com/2005/WORLD/meast/08/03/iraq.main/index.html
commentary with such news, even condolences, seems awkward and inadequate. thoughts and prayers all around.
DougJ
I’m so sick of hearing about Enron. Frankly, I think the whole “scandal” has been overblown. It’s got about 10 times the coverage of Tyco and Worldcom put together. I think it is probably because the media thought they could link Ken Lay to George Bush. Nothing I’ve heard convinces me that Enron did anything all that wrong or all that different than what lots of other companies do.
ET
Too bad it can’t be taken out the pockebooks of the actual Enron perpetrators like Skilling, Lawy and Fastow. Then it would hit them where it hurt.
Steve
Making the individuals contribute towards the settlement actually goes a long way towards real accountability. In the Worldcom settlement, for example, one of the principals in the fraud is giving up a home he’s building in Florida, among other things.
SeesThroughIt
I fully agree. If we really want to deter stuff like this, hold the bosses personally accountable. If they engage in Enron-style fraud, then every single penny of their assets should be liquidated and distributed among those who were defrauded. If a CEO faces losing literally everything he/she owns due to fraud, there will be a whole shitload less “I dont recall, I wasn’t aware, I plead the Fifth” bullshit going on.
By the way, the media didn’t have to connect Bush and Lay–they already were connected. Now go ahead and spin your wheels for our amusement, Dougie.
jcricket
This is what’s happening in the Worldcom case. Bernie Ebbers is forfeiting all his assets, and another SVP, as part of the plea agreement, is giving up his house in “land seizure-proof Florida”.
I think John hits the nail on the head when he says:
Microsoft operates this way. With profits of $10 billion per year they have figured out that it’s less expensive to periodically pay settlements than to actually comply with the law. All the while they continue to expand their monopoly.
This is why I think we should think twice before enacting “tort reform” that limits the amount of damages an individual can receive in a law suit. If major corporations think they only answer to shareholders then they would actively do as little as possible to ensure consumer safety if they knew the maximum damages were capped at (to them) very small amounts. The whole game would basically be doing “just enough” to avoid bad publicity, and nothing more (to avoid incurring any “unnecessary” expenses).
The classic example is the McDonald’s “hot coffee” law suit Most people use that as an example of civil lawsuits run amuk, when in fact the jury awarded such a large payout to the victim because McDonald’s was guilty, ignored multiple warnings, treated the victim poorly, and as a large corporation, only a large fine will get them to change their ways.
jcricket
BTW Doug – Enron most certainly did wrong. Their traders were caught, on tape, joking about their illegal activities.
And given that Bush had a personal nickname for “Kenny Boy” Lay, I don’t think it’s a stretch to think there might be some connection between the Bush administration’s zeal for “energy de-regulation” and the lax compliance with the law at a place like Enron.
But that’s besides the point. Not a single lawsuit that Enron has lost has hinged on any connection between the crooks at Enron and Bush.
Sherard
There is no such thing as:
[blockquote]…too expensive for these companies…[/blockquote]
these settltements are essentially a “cost of doing business” that will simply be passed along to the consumer. That is why punitive damage settlements do not really affect corporate behavior.
Stormy70
Please, Bush bashers. Enron, like all corporations played the political field. Enron was helped by Clinton to get a $3 billion plant built in India, played golf with Clinton, and gave $100,000 to the DNC after the deal was done. Enron committed crimes on its own, and I don’t think blaming Bush or Clinton is going to win anyone any points. Just looks like the same old partisan BS.
neil
It wasn’t until Bush took the reins of the FERC that Enron started to rape and pillage California. And that raping sent them straight into Arnold’s swollen, waiting arms.
Waiting? Well, I don’t know exactly what the subject of the meeting between Schwarzenegger and Lay during May 2001 was about, but I don’t think they were talking nutritional supplements.
Marcus Wellby
So should Bush and Clinton both be let off the hook? I am sorry, but just because Person A did something wrong, does that excuse Person B should he do the same wrong? This goes to what I said in an earlier post — corporations can easily buy our government — our country — because partisans of both sides our willing to look at corruption as an issue that only effects the “other” side.
Meanwhile, someone like Delay can get away with any backroom deals, because somehere, sometime, the Dems did it too. Not only that, but his supporters are gleeful that he does it so brazenly. Yet when Clinton pardoned Mark Rich the same pundits that worship Delay were foaming at the mouth with rage.*
*I use this as one example, I am sure there are numerous examples of corruption with each party. But corps like Enron get away with it because people rather point fingers at others than address the real issues.
ra
Hey DougJ, do you work for shrub, halliburton, or what? Because you’re obviously O.K. with fraud.
Just because it’s no different behaviour from other corrupt companies doesn’t make it proper. You obviously didn’t live in California where utility bills skyrocketed during Enron’s defrauding of the public!
Public Utilities should be just that, public. Conning the constituents into privatization “because they’ll save money”, was the first step in the plan to defraud the public coffers.
Don’t think the same would happen with Social Security? Just you wait.
Stormy70
I hold Enron responsible for their fraud, they are the ones who committed illegal acts, and are being prosecuted for it. But look at Neil, spinning the latest conspiracy theory again, he’s got a million of them.
Sojourner
And Stormy will forgive any sin, any crime perpetrated by this administration because, according to her, they don’t commit any. Eyes tightly closed, hands firmly clasping ears.
Jess
Okay, both the Dems and the GOP have jumped into bed with the slimiest corporate toads on a fairly regular basis. But the reason why team Bush is getting attacked on this one is because they are dominated by this sort of corporate mentality to a point at which it becomes dangerously myopic. I am not entirely anti-corporate–I think corporations have their uses–but the corporate philosophy is not a good platform from which to run a country. It is, however, an excellent platform from which to gain a sh**load of power over one’s opponants, which is a big reason why the Dems have lost so much traction. I highly recommend the documentary film “The Corporation”–especially to those of you who are sure you’ll hate it. Even if you disagree with it, it is interesting food for thought.