Corporate crime wave - Corporate Crime/Keynote

New Internationalist, July, 2003 by Richard Swift

Who even knows what this stuff is, to say nothing of how to price it or evaluate supply-and-demand curves? Enron used to claim that their main product was in fact markets.

Now I was on to something. The more I looked into it the more I realized that this 'market making' was fertile ground for all kinds of corporate shenanigans. It fitted neatly into all that deregulation and privatization stuff so dear to the hearts of free enterprisers and their political cheerleaders everywhere. It wasn't rocket science to figure out that the first one into a new market -- say, selling you the water you used to get as a public service -- made a killing. Take all this derivatives stuff, the futures market. It was making my head spin. How the hell was anyone even supposed to understand this crap with its 'puts' and 'calls', 'options' and 'swaps and 'swaptions' in currency, bonds, stocks and interest rates? They made up 25 to 30 new ones every year -- futures in everything from shipping charges to air pollution.

But what use was it to anybody? These guys were trading $142 trillion a year worth of nothing as far as I could see. They called it 'hedging risk'. But I thought the reason we let corporations run the damn economy was that they were such big risk-takers. It was all simply a playground for deception, a recipe for instability. But don't take my word for it. Even Warren Buffett, the cranky old investment guru, saw through it: 'weapons of financial mass destruction... that facilitated huge-scale frauds and near frauds,' muttered the Oracle of Omaha.

I started working the phones. I needed some stuff from the horse's mouth. But all I got were terse 'no comments' or bland reassurances that 'things were bad once but we've cleaned it all up now'. I wasn't buying it.

Then I thought of Jerry. He worked just off Wall Street as some kind of corporate consultant. I'd known him for a dog's age but a little bit of Jer went a long way. He was the kind of friend you get together with to catch a ball game or some music -- he always seems to get great seats. But stay away from politics. Jer made that redneck talk show host Rush Limbaugh sound liberal and polite. We met down at a steak place Jer likes, that specializes in three-pounders.

'What can I do for ya fella?' I told Jerry I was investigating corporate crime and I was in up to my neck. 'Corporate crime,' he snorted. 'There's no such thing. It's just business as usual. You bleeding hearts, you have your way we'd be rubbing two sticks together just to cook this meat. I know I like it rare but...' That's my Jer -- shallow as a wading pool. But he quickly warmed to the subject. 'Crime, let's see you try and prove it. Remember that big deal they made about Bhopal a few years back? Some gas escaped, something like that. Well, Warren Anderson was CEO of Carbide at the time. People were calling for his head on a platter. I did some work for the PR company on the Carbide account so I know. First it wasn't Carbide, it was Carbide's Indian subsidiary that controlled that pesticide factory. Carbide had certain profit targets the subsidiary was expected to meet. After all, this wasn't charity work. I guess maybe in order to meet the targets, a few corners got cut on safety... staff laid off... T urned off one of the refrigeration units, as I recall. It was all too bad, but you can hardly blame Anderson. He didn't personally lie about the storage or turn off the unit. Didn't even tell anyone else to. See what I mean? Even if it was a crime, there is no criminal. Just try and prove something against a CEO or other corporate exec. Plausible deniability, fella; plausible deniability.'