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"Something's going on with ImClone, and I want to know what it is." -- Martha Stewart, in a phone call to a former ImClone secretary, per court testimony In a recent letter to the U.S. Securities & Exchange Commission, Wendy Gramm argues against a proposed rule to make it easier for shareholders to nominate directors. The rule, she says, fails to weed out conflicted or incompetent nominees.
Gramm, who chairs the regulatory studies program at George Mason University, speaks from experience. She resigned as an Enron director in 2002 after it became clear that the board was responsible for signing off on some of Enron's infamous off-balance-sheet partnerships. Moreover, Enron and Chairman Kenneth Lay gave $50,000 to George Mason. Gramm's husband, former Senator Phil Gramm (R-Tex.), received $80,000 in political contributions from Enron and its employees. "It's hardly appropriate for her to be lecturing shareholders," says William Patterson, director of the AFL-CIO's office of investment. "Enron was the case study for conflicts and disengagement."
Gramm wouldn't discuss her Dec. 22 letter but says Enron began giving to the school before she joined the faculty, and donations were less than 1% of the money raised. As for her husband, "Enron supported its two home state senators, which is hardly surprising." But Gramm's letter may raise eyebrows. A U.S. stock market listing was once de rigueur for ambitious overseas companies. No longer. Since 2002, Germany's Porsche, Japan's Daiwa Securities, and Fuji Photo Film (FUJIY
) have all nixed plans to list in the U.S. Aerospace powerhouse European Aeronautic Defense & Space -- owner of Airbus -- had drawn up plans to list in the U.S. but recently shelved them, according to sources close to the company. And French luxury goods giant LVMH Mo?t Hennessy Louis Vuitton delisted its NASDAQ-traded shares in late 2002. "This is becoming a real problem," says NASDAQ CEO Robert Greifeld. Last year, 19 non-American companies listed in the U.S., compared with 50 in 2000.
What's afoot? The Sarbanes-Oxley Act gets some blame since it forces foreign companies to meet more stringent reporting rules. And U.S. institutional investors are more comfortable with the euro, so they're buying shares directly on European exchanges. But the trend may not last: Analysts say European companies will soon face tougher corporate governance standards, thanks to Parmalat and other Euro-scandals. But it could be a while before companies such as LVMH see a U.S. listing as an affordable luxury. Sure, homeland security takes a toll on taxpayers. But who knew it burned a hole in travelers' pockets? Last year, harried passengers left $303,970 in loose change at airport metal detectors that U.S. Treasury officials scoop up daily. Los Angeles International Airport, the nation's fourth-busiest, raked in the most -- $16,857.65, says the Transportation Security Administration. The busiest airport, Atlanta's Hartsfield-Jackson, harvested only $4,551.54. Las Vegas' McCarran, thanks to its slot machines, was third with $14,709.06. Next time you forget your change, consider it a donation to help pay down the deficit. As the federal probe of Computer Associates International heats up, allies of the two men who ran the software company are pointing the finger of blame back and forth.
Current and former employees aligned with former Chief Executive Charles Wang say it was CEO Sanjay Kumar who oversaw sales and accounting -- areas where the feds say misdeeds were done from 1998 through 2000. Supporters of Kumar, however, say Wang had his hand in operations until mid-2002. But they say connecting Wang to any shenanigans may be difficult. Surprisingly, in Wang's 26 years with CA, he never used e-mail or left voice-mail messages. He preferred direct communications, says a former colleague. "The relationship has turned so ugly," says a former CA board member who supports Wang. "I wonder if they'll look to Charles [Wang] as a fall guy."
Once, Kumar and Wang were fast friends. But after Kumar was appointed chief executive in 2000, their relationship began to unravel as Kumar asserted his independence, according to a half-dozen insiders. BusinessWeek has learned that in 2001 Kumar asked the board to put pressure on Chairman Wang to resign, claiming that he was interfering with efforts to change CA's business model. The board opted to keep Wang, says a former board member. After two years of increasing awkwardness, Wang resigned in late 2002. Neither Wang nor Kumar would comment.
The split flared up on Jan. 13, when Wang's wife, Nancy Li, quit a CA unit she ran that sells Web software, complain-ing to Newsday that she had been treated badly. CA denies this. Li could not be reached for comment. In Federal probes, investigators often try to drive a wedge between people under scrutiny. They don't have a lot of work to do this time. You might say Corbin McNeill Jr. is a fissionary. A former commander in the U.S. Navy's nuclear fleet, McNeill became co-CEO of Exelon (EXC
), the nation's top atomic-powered utility, in 2000. But 18 months later, he was out of a job. John Rowe, his co-CEO, didn't share McNeill's vision of building a new generation of smaller, less-costly nukes.
McNeill, 63, hasn't given up. Today, he is angling to win a contract under the revived energy bill to build a $250 million reactor in Idaho that would produce electricity and hydrogen. The Energy Dept. aims to choose two finalists by yearend. McNeill says his gas-cooled prototype could generate power and nonpol-luting fuel for cars and trucks by 2010. He already has the Bush Administration and key senators in his camp.
McNeill, who retired to Jackson, Wyo., stays busy. He sits on Enron Corp.'s new board. And he pilots his own plane. But nuclear power is his passion. "I'm optimistic that nuclear power will come back," he says. Spoken like a true believer. Has the local bank become the latest target of the not-in-my-backyard crowd? At least seven Chicago area communities are enacting moratoriums or stringent restrictions on new branches in prime downtown locations.
The issue is money, no surprise. Municipalities would rather see choice spots go to restaurants or retailers -- businesses that, unlike banks, generate sales taxes for their towns.
The move by the Chicago Seven is bad news for banks: Half of the nation's new branches to be built in the next few years -- about 400 -- are slated for metro Chicago. The region is popular because the three biggest banks doing business there have only 30% of the market, compared with 60% for the top three in other big cities.
The say-no-to-banks trend could spread. Affluent Lake Forest, Ill., the first town to enact restrictions last summer, has received at least a dozen inquiries from other municipalities around Chicago and in Indiana. City Manager Robert Kiely Jr. was surprised by all the interest. But, he says, "A lot of communities nationwide are experiencing what we have: loss of retail sales tax dollars." His town has nine banks and 15 branches, all for 20,059 people. Meanwhile, sales taxes have fallen 13% over the past three years. A spokes-woman for the American Bankers Assn., Charlotte Birch, says it's "unlikely this is a trend that will take hold elsewhere." Not according to Kiely's phone log. UAL (UALAQ
) execs chose the last syllable of United -- "Ted" -- to name their new, low-fare carrier. But flight attendants can play the name game, too.
Last summer nearly 2,500 flight attendants retired early after being told they would keep health-care coverage with premiums as low as $10 a month. Now, UAL wants to hike premiums up to 500%. Attendants picketed in nine cities on Feb. 2, saying they're being "manipula-ted," "jil-ted," and "exploi-ted." The United Airlines' Association of Flight Attendants also plans print and billboard ads for Ted's Feb. 12 launch. "Ultimately," says Gregory Davidowitch, president of the union, "it's chea-ted."
Company wags have been even sharper. "Ted," goes one jab, is "United without U 'n' I." Another: "Ted is the end of United." Little did UAL's marketers guess that Ted would be so catchy.