Wednesday, December 17, 2008

It must be the silly season!

It has to be the silly season – otherwise how can the extraordinary antics of so many ‘reputable’ people and companies be explained and how can they go so awry?

What on earth is going on in the financial world? How can anyone embezzle, defraud, steal – whatever, $75 billion dollars? $75 billion!! I am absolutely staggered. The mind boggles at the audacity, the effrontery of the person – Bernard Madoff. And more importantly why did the authorities not detect this man’s activities earlier. They first had warnings in 1999!

“ The chairman of the SEC, Christopher Cox, has issued a statement saying the commission has learned that "credible and specific allegations" regarding Mr Madoff's financial wrongdoing were repeatedly brought to the attention of SEC staff at least as early as 1999.
But no action was ever recommended to the SEC.
Mr Cox says he is gravely concerned by the apparent multiple failures to thoroughly look into the claims.”

Then there is the ongoing saga of James Hardie. How can the former chairwoman of James Hardie, Meredith Hellicar, claim that she never knew that the company could not meet all future payments to asbestos victims. I mean, what sort of leader is that? It was her job to know! That is what she was employed to do. To actually run the company – know what was going on in the company and make the appropriate decisions! She has appeared at a New South Wales Supreme Court hearing on charges that she and other company directors broke corporations law.

Meredith Hellicar is obviously in a state of denial about the lack of funding, to protect her backside. Despite the release (about the lack of funding) being the subject of media reports and James Hardie discussion papers, she denied any knowledge of the release until it appeared in a special commission report late in 2004.

Now, today, we have news of the Commonwealth Bank's handling of a $2 billion capital raising which has been labelled a debacle. The CBA has blamed the brokers Merrill Lynch for failing to correctly communicate the information. Australia’s second biggest bank and biggest mortgage lender no less. Oh dear, dear me!!

Last but certainly least is this beauty, from the press – “At a banquet in the Danish capital of Copenhagen late last month, accounting firm Ernst & Young feted a Danish software company for runaway growth under Stein Bagger, its dynamic chief executive.

About a thousand guests, including Denmark's tax minister and leading business people, were there to applaud.But Mr Bagger, the night's big winner, wasn't there to pick up the Entrepreneur of the Year accolade and two other awards. He was busy fleeing from what investigators now describe as Denmark's biggest business scam in decades.

Shortly before the banquet began, Mr Bagger, 41, vanished from a hotel in Dubai. He flew to New York, drove across the US and surrendered to police in Los Angeles. In the meantime, his award-winning company, IT Factory, declared bankruptcy.
A liquidator has taken over IT Factory and is sifting through its affairs.
Sent back to Denmark yesterday, Mr Bagger cried and pleaded guilty before a Danish court to charges of aggravated fraud and forgery, crimes that could land him in jail for eight years.

The gist of the allegations is that Mr Bagger used a web of phantom firms to get money from banks and then used these same companies to place big purchase orders for IT Factory software and services. He was buying from himself using other people's money.”

What do these people think they were doing? The web of deceit, of greed, gross ineptitude and of corruption in high places is almost beyond belief. Ethics, morals, virtue, values – treating others the way they would like to be treated – and just plain ordinary common sense is totally, totally absent. As is any concept of the law of cause and effect.

Then there are the accountants and auditors that would (should?) have prepared the financial records and had them checked! What were they doing? And the regulatory authorities, what were they doing?

These are just the one's the authorities know about - how many others scandals and frauds are out there, still to be discovered?

I think I will keep what money I have in a box under my bed!!

1 comment:

mellow yellow said...

i know the world is kinda in dire straits at the moment, lets hope 2009 is Better!