Trials Shake Up Corporate Landscape
SCOTT SIMON, host:
Joe Nocera is our friend from the world of business and a columnist with the New York Times. He joins us from the studios of WFCR in Amherst.
Joe, thanks for being with us.
Mr. JOE NOCERA (New York Times): Thanks for having me, Scott.
SIMON: Any surprise for you in these verdicts?
Mr. NOCERA: Not really. If you remember the first trial that ended in a mistrial, there was really only one juror who was holding out even though that was a much more complicated and disorganized case by the prosecution. This time, the prosecution did a much better job of, you know, tightening the case and kind of getting rid of a lot of this extraneous stuff. And, you know, the jury took its time but the evidence, they just couldn't--they wanted to--they were trying to prove that the money they took had been approved by the board, but they didn't have any evidence to show it. So they really were in trouble from the start.
SIMON: The extraneous stuff you refer to, that's things like trying to--let me put it this way--exacerbate class feeling by talking about the $6,000 shower curtain, that sort of thing?
Mr. NOCERA: The fabled $6,000 shower curtain, the $2 million birthday party for his wife and so on and so forth, that's exactly right. And it was widely viewed the first time that this was a sideshow, and it offended some of the jurors. And this time, it was really a simple issue. You know, you had this 150 million and more that these guys took that they claimed were bonuses and that the prosecution said weren't bonuses at all. It was an act of theft. And then Kozlowski got on the stand, of course, and said, `Oh, by the way, I forgot to put $25 million on my tax return'...
Mr. NOCERA: ...which was, you know, a brutal admission and hurt him badly.
SIMON: I hate to treat you like one of Geraldo Rivera's legal guests, but why would a defense attorney put their client on the stand to say, `Oh, $25 million loan forgiveness, I forgot about it, should have listed that'? I mean...
Mr. NOCERA: I think he thought that Dennis Kozlowski would come across as a, you know, good guy who had a story to tell. You know, he wasn't born--well, see, he's, you know, he made a life for himself and he got to the top of this corporation by starting at the bottom. And I think they thought that that story would overwhelm the particulars of the case. And, of course, you know, they bet wrong.
SIMON: Joe, do you sense that this case, and perhaps others still pending, are going to exert any change in corporate culture?
Mr. NOCERA: Well, I think they already have. There's so much going on in the corporate world. Shareholders are much more less passive than they used to be. There's one case, the WorldCom case where the board was actually forced to pay money to settle a lawsuit out of their own pocket. Boy, does that make you pay attention. And so the answer is yes. Boards are much more alert now, and they're much more fearful of the companies that they're in charge of getting in trouble.
And I might add, Scott, this is not the end of the corporate trials. You have down in Alabama the Richard Scrushy trial where he's accused of leading an accounting fraud at HealthSouth. That jury's been out for about three weeks. In Houston, there's a little-watched case but actually fairly important about the Enron broadband division where they're on trial for basically creating a Potemkin village instead of an actual corporate division. And then, of course, next year, there's the big enchilada in 2006, and that's the trial of Jeffrey Skilling and Kenneth Lay, and everybody will be paying attention to that.
SIMON: Quick question: Tyco has reorganized. How's business?
Mr. NOCERA: Actually, it's not bad at all. Don't forget, this was not an accounting scandal. This was a company that all through this period, although the stock went as low as 8 from 60, it still had a series of businesses; those businesses still going, the stock is up in the 30s now, the CEO, from Motorola, named Edward Breen, who seems to be doing a pretty good job. And Tyco actually seems to be in pretty good shape through all of this.
SIMON: Joe Nocera of The New York Times, thanks very much.
Mr. NOCERA: Thanks a lot, Scott.