The Uses and Misuses of Politics: Karl Rove and the Bush Presidency by William G. Mayer

Author:William G. Mayer [Mayer, William G.]
Language: eng
Format: epub
ISBN: 9780700630530
Google: XgSYzQEACAAJ
Goodreads: 55560125
Publisher: University Press of Kansas
Published: 2021-03-29T00:00:00+00:00

WORLDCOM

When Enron sought chapter 11 protection in December 2001, it was, as measured by the company’s total assets, the largest bankruptcy filing in US history. Enron didn’t keep that title for long, however. In July 2002, WorldCom, a Mississippi-based telecommunications company with assets almost double those of Enron, also filed for bankruptcy.41 By that time, most of the accoutrements of scandal were already visible: the resignations of the company’s chief executive officer, its chief financial officer, and other top executives; a precipitous drop in share prices; and, most relevant to this discussion, allegations of shoddy and misleading accounting practices.

Much like Tyco, first reports of the WorldCom scandal seemed to indicate that the wrongdoing had taken place entirely during the Bush presidency. In late June 2002, WorldCom announced that it had overstated its cash flow during 2001 and the first quarter of 2002 by more than $3.8 billion. (Specifically: it had treated operating costs as capital investments, thus allowing the company to substantially reduce its reported expenses and inflate its profits.) Instead of a profit of more than $1.5 billion during those five quarters, WorldCom had actually lost money. Just as with Tyco, however, it soon became clear that WorldCom’s problems did not suddenly commence when George W. Bush entered the White House. In early August 2002, the corporation announced an additional $3.3 billion in improperly accounted expenses, this time beginning in 1999. In November, the Securities and Exchange Commission filed additional fraud charges against WorldCom, alleging $2 billion more in accounting manipulations, again beginning in 1999. In sum, WorldCom started cooking its books when there were still two years left in Clinton’s second term.42

Far from being an example of how corporations run wild whenever a Republican is in the White House, then, the corporate scandals of the early 2000s were really a symptom of the “irrational exuberance” that took hold of the American economy during Bill Clinton’s second term. Enron, Tyco, and WorldCom were all very successful companies at one point in their histories, which led their executives to believe that almost anything they touched would turn to gold. It also tempted them to cross a lot of ethical and legal boundaries they might have respected earlier in their careers.

None of this means that Bill Clinton is the real villain in all these scandals—though if one is determined to find some top government official to cast in that role, Clinton is a far more plausible candidate than George W. Bush. Corporate scandals were simply the downside of what otherwise was a time of remarkable economic prosperity. On the other hand, in studying the messes that developed at Enron, Tyco, and WorldCom, one never gets the sense that top executives were restrained by the fear of hypervigilant federal regulators and prosecutors. Had a profusion of corporate scandals taken place in 1993, at the beginning of the Clinton presidency, the major news media would almost certainly have interpreted them as just one more example of the “excesses” of the Reagan era. The

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