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"Although the big auditing firms may long for a tail-wagging puppy to be chairman of the new accounting standards board, the American public wants and deserves a much-needed watchdog." -- Warren Buffett In another embarrassing blow to America Online (AOL), major divisions of parent company AOL Time Warner are dumping AOL e-mail and switching to rival Microsoft Exchange/Outlook. Time Inc.'s 140 magazine titles--including Time, People, Sports Illustrated, and Entertainment Weekly--will stop using AOL e-mail in the coming weeks, according to an Oct. 1 memo to 15,000 employees obtained by BusinessWeek. They join AOL Time Warner's Book Group, Warner Music, HBO, and Warner Bros., which also are switching to Microsoft e-mail, the company confirms.

That leaves only 3 of 10 AOL Time Warner units still using AOL e-mail: Time Warner Cable, Interactive Video, and, of course, AOL itself.

As it turns out, AOL e-mail proved particularly unsuited to its own company. Following the merger in January, 2001, AOL Time Warner's 82,000 employees were asked to switch to a customized system using AOL technology, but it wasn't long before the complaints began. "The system didn't exactly work out the way we intended it to," admits company spokeswoman Tricia Primrose. Users couldn't send large attachments and were often kicked offline unexpectedly. E-mails were lost. Those problems prompted company execs earlier this year to announce that divisions could choose the system best suited to them. Evidently, it ain't AOL. Red-faced AFL-CIO officials are backpedaling hard after a recent visit to China by American union leaders. In late September, AFL-CIO Executive Council member Andy Stern and three other union officials accepted an invitation to meet with China's labor organization, the All-China Federation of Trade Unions (ACFTU). Chinese media hailed the encounter, the first between top U.S. and Chinese labor officials since China joined the World Trade Organization--and, indeed, in 20 years.

Problem is, the AFL-CIO, like virtually every other labor movement, views China's union as little more than an organ of the Communist Party. Its chairman, Wei Jianxing, is a senior government official, ranking sixth in the Politburo. That the meeting could signal a change in AFL-CIO policy triggered an outcry from prominent labor activist Han Dongfang, who lives in Hong Kong after being expelled from China for trying to form a real union. "What we are really concerned about is sending the wrong message to Chinese workers," he says.

To counter the effect, AFL-CIO International Affairs Director Barbara Shailor fired off a letter to Hong Kong's English-language South China Morning Post, noting that Stern, who heads one of the AFL-CIO's largest unions, the Service Employees, acted on his own: "The visit did not in any way represent a change in AFL-CIO policy. The ACFTU is not an independent trade union but rather part of Chinese government and party structure." Stern declined comment. Arnold Schwarzenegger is a big Hummer fan. Eleven years ago, he persuaded military contractor AM General to sell its Humvee to civilians under the name Hummer. After General Motors bought the rights to the Hummer in 1999 and started selling the hot H2 this summer, the company gave the actor, on his 55th birthday in July, one of the first vehicles off the line. So what will Arnold be driving in his next film, Terminator 3, next summer? A Toyota.

In a coup for Toyota (TM) and a slap to GM (GM), two of the Japanese carmaker's vehicles will be in the movie. Arnold will pursue android villain Terminatrix in a Toyota Tundra pickup--as she tears down Rodeo Drive in a Lexus SC 430 convertible. That could help Toyota prove its trucks are rugged yet cool.

Don't blame Arnold for this. Warner Bros. cut the deal, and Toyota paid handsomely for the placement, a GM source says. Hummer balked at matching the price, according to the source. Company officials admit that they couldn't produce H2s in time for the shoot anyway. When BMW rolled out its updated version of the classic British Mini last July, German execs were a little worried. Many Britons felt bitter about the Munich-based auto maker. "There were people in Britain saying, `These bloody Germans, they'll destroy our Mini,"' recalls BMW sales and marketing chief Michael Ganal.

Well, the bloody Germans saved the Mini instead. Across Europe and the U.S., orders are pouring in faster than BMW can churn out the retro-styled cars. BMW expects to sell 132,000 Minis worldwide this year, 30% above its original target, after adding a third shift at the Oxford Mini factory.

In the U.S., BMW has already racked up orders for double the 20,000, top-end Mini Cooper models (starting at $16,850) it had planned to sell this year. It whipped up the hype by hauling Minis into baseball stadiums and kept it up with irreverent ads proclaiming an "SUV backlash."

But for BMW, profits on a Mini are a fraction of those on its $68,500-plus 7 Series sedans. The answer: Tempt customers with a number of options, such as a $400 roof flag and $150 leather-bound steering wheel, that have added 20%, on average, to the Mini's sticker price. See, those German execs had no reason to worry after all. Whistle-blower hot lines will soon go mainstream. A little-noticed provision in the recently passed Sarbanes-Oxley Corporate Reform Act requires companies to set up confidential systems for the future Sherron Watkinses of the world--so they can raise red flags about suspect accounting and auditing practices. Publicly traded companies must comply by next April.

Various hot line services are out there, but one new company, Ethicspoint of Vancouver, Wash., has a twist: it's Web-based. "We're getting probably 20 to 25 inquiries a day," says Ethicspoint CEO David Childers. The system lets employees click an icon on their computers that anonymously--through cloaking technology--links them to Ethicspoint. There they can report everything from sexual harassment to accounting chicanery. Ethicspoint then alerts designated company execs or the audit committee.

Customers call the system a step up from 800-numbers. Having to phone in "might inhibit people," says Micheline Ellas, a senior vice-president and auditor at Southwest Bank of Texas, which signed with Ethicspoint on Oct. 7.

The upshot? Unsavory behavior is less likely to go unreported. Pity the poor paperwork processors next time you consider buying a house. With seemingly everyone jumping on the refinancing bandwagon, that has meant plenty of hours of overtime for the people who do the work on the other end. Mortgage processors are so stressed out, in fact, that one big company found a way to let them blow off steam: It created Dunk Day--as in "the boss," in one of those County Fair contraptions.

Cendant, which owns Century 21, Coldwell Banker, and ERA, let its top 40 loan processors dunk the honcho of their choice in August, in a tank set up in a company courtyard at offices in Mt. Laurel, N.J.

For a day at least, it helped employees forget they had been processing 400 loans a month, compared with 250 before the crush began. "It was definitely a stress reliever," says Christina Manuola, who claims she has poor aim but still managed to dunk her supervisor, Matt Egan, three times. Egan, a senior loan processor, was a popular choice among the dozens of dunked bosses, none more senior than vice-president. He didn't seem to mind: "They wanted to see me go down, and that was fine." So fine, in fact, that he favors holding Dunk Day every year.


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