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"You can expect to see some Wall Street investment bankers and stock analysts coming before our committee soon." -- Representative Diana DeGette (D-Colo.), a member of the main House subcommittee investigating Enron President Bush may complain that his mother-in-law took a hit on her Enron stock, but it seems his dad made a tidy profit on that other notorious bankruptcy, Global Crossing. In 1999 and 2000, the elder Bush pocketed more than $4.5 million by selling Global Crossing stock, according to Securities & Exchange Commission documents obtained by BusinessWeek. His last sale came just weeks before the once high-flying telecom's stock started tanking.

The elder Bush and his wife, Barbara, sold 100,000 Global Crossing shares on Nov. 16, 1999, for $4.45 million, according to the documents. Then, the Bushes notified the SEC they were selling an additional 1,000 shares on Mar. 13, 2000, for $55,000. The former First Family had acquired at least 100,000 shares of Global Crossing stock as a private investment on Apr. 21, 1998, the documents say. Those shares may have been payments for speeches the elder Bush gave at Global Crossing conferences in Tokyo and Barcelona, in lieu of his usual $80,000 speaking fee. Four months later, Global Crossing went public at $19 a share. (Global shares split two-for-one six months later.)

It's not clear whether Bush invested money on top of those shares. Neither Bush's spokesman nor the manager of his trust would comment. "I don't talk to the press about private clients," says Anthony Duke Jr., a managing director at Bessemer Trust, the Bushes' trustee.

During its meteoric rise and fall, Global Crossing spent lavishly to cultivate political influence. In addition to hiring various Washington heavyweights, it contributed $2.8 million to candidates and parties in the 2000 elections. If you want impressive earnings, hire your auditor as a consultant, too. That's what three business school professors found in studying more than 3,000 proxy statements from 2001. Their conclusion: The more consulting services a company bought from one of the Big Five auditors, the more likely its earnings met or beat Wall Street expectations.

Mere coincidence? Hardly, says the study by accounting professors Richard Frankel of the Massachusetts Institute of Technology, Marilyn Johnson of Michigan State University, and Karen Nelson of Stanford University. They found that companies using their auditors as consultants tend to "manage earnings"--maneuvers such as moving debt off the books into partnerships and booking gains in pension funds as income. A full 95% of companies paid their auditors for some consulting services. The study didn't name names, but Frankel confirms that Enron was among them. "Investors should be wary of the quality of a company's earnings if it hires its auditor as a consultant," he says.

The team also found that the more a company paid for consulting, compared with what it paid for auditing, the higher the likelihood of "managed earnings" on the balance sheet. Asked to rate various brands, consumers give these the highest quality ratings. Why do tools do well? Pollsters say it's mostly a matter of living up to expectations.

Online poll of 30,935 consumers, Oct. 31-Nov. 6

Data: Harris Interactive/EquiTrend The California governor's race may be eight months away, but it's already a neck-and-neck, heavy-money contest and potentially the most expensive in gubernatorial history. Incumbent Gray Davis, seeking reelection after a first term marred by last year's electricity crisis, has unleashed a barrage of attack ads costing more than $1 million a week. His target: former Los Angeles Mayor Richard Riordan, the strongest of three men seeking the GOP nod in the Mar. 5 primary.

A Los Angeles Times poll has Davis and Riordan in a dead heat. So Riordan is ramping up his own retaliation--highlighting Davis' campaign contributions from Enron. Davis has pulled in big money from Gallo winery, Hollywood heavyweights, and AOL Time Warner (AOL). In the end, the big winner may be California TV stations, which are suddenly raking in the cash in the midst of an advertising drought. Want a new booze experience? A South Korean maker of rice wine is giving away a chewable version at a Seoul pub it opened in January. The light-brown, jelly-like squares, served on salad and meant to be chewed and swallowed, have an alcohol content of 1%. If consumers like it, Kook Soon Dang Brewery plans to market it.

The midsize brewer is trying new gimmicks to lure women and younger drinkers to traditional Korean alcohols, which have tended to sting the throat and give a notorious hangover. It already makes yakju, a milder brew than the soju traditionally drunk by the older male generation. Yakju, with 13% alcohol, vs. 25% for soju, also has herbal additives said to curb hangovers. "Drinking has always been one of the most popular sports in Korea," says brewery manager Han Sa Hong. "But younger Koreans drink more for fun and less to get drunk." So it's also making "wine cooler" versions: pink cocktails called "Dusk Over the Hill" and brown ones named "Darkening Autumn River."

A 2001 World Health Organization report found South Koreans to be the second-heaviest drinkers in the world after Slovenians. Now, with milder and even chewable tipples, there's even more drink to choose from. This may just be the revenge of the Ginsu, the famous knife that's become synonymous with cheesy TV commercials. The big networks are hurting so badly for ad dollars that they've been selling prime time to those "1-800" advertisers usually relegated to cable channels in the middle of the night.

In one of the worst ad recessions in decades, so-called direct-response ads on network TV were up 40% in the last three months of 2001 over the same period in 2000, according to ad data provider Competitive Media Reporting. Direct marketers have been buying primo time at rates up to 25% less than what it costs in healthier times. Examples include the U.S. Mint selling coins, Hooked on Phonics hawking learning tools for kids, and 24-Hour Fitness selling club memberships using Magic Johnson and Cindy Crawford as spokesbodies.

Tiny companies can sometimes reach audiences 20 times bigger than on cable. Hooked on Phonics took 25 network ads in November-January and saw sales jump 8% from the year-earlier period, says general manager Lee Swanson. Adds 24-Hour Fitness' Valerie Constable: "We are getting great upgrades to higher-rated programs, like going from Entertainment Tonight to buying time on Friends."

Networks would rather rely on their usual stable of car and consumer products ads than on direct-response. "Once the economy turns around, this is the first money we will look to replace," says one sales exec. Until then, however, it's Ginsu time.


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