Kautilyan alerts us to Michael France of Business Week and his opinion of Cheney:
Posted by DeLong at August 14, 2004 05:08 PM | TrackBack | | Other weblogs commenting on this postKautilyan: Business Week on Cheney: Business Week's Michael France is one of the few mainstream reporters that has has the courage to tell the truth about what the Halliburton accounting scandal says about Dick Cheney (See Billmon for a first rate analysis). As I said in a recent post just imagine if this was Al Gore when he was the sitting Veep. Here's an excerpt from BW:
The second most important political executive in our country claims to be ignorant of one of the key business decisions his company made during his tenure as CEO. It may well be that an underling was willing to make such an important call without telling Cheney, but make no mistake: This type of scenario would be very rare, even in pre-Sarbanes-Oxley Corporate America. "The thing executives care the most about is how they look in terms of the numbers," says University of Texas School of Law securities expert Henry T.C. Hu. "An accounting decision that is going to affect performance by nearly half is usually the type of thing the CFO would discuss with the head of the company."
Even if Cheney didn't know about the disclosure decision, he should have. CEOs are paid big bucks for a reason: to stay on top of the important events going on in their companies. When it comes to maneuvers that have such a critical -- and obvious -- impact on earnings, ignorance is no excuse.
While Cheney's lack of knowledge may well have kept him out of court, where proof of state of mind is critical, it should not spare him from the wrath of investors. Moreover, he would never get away with such a head-in-the-sand defense now that Sarbanes-Oxley is law. In fact, one of the main reasons the law was passed was to force CEOs to assume more responsibility for their companies' public statements.
Will the issue of what Cheney knew, and when he knew it, ever be resolved? So far as the feds are concerned, it already is. One source close to the case says that Cheney was not a hands-on operation manager. Instead, this source says, he was "more of a chairman than a CEO, flying around the world making nice to governments so that he could land these big contracts."
But because of the obvious political sensitivity surrounding Halliburton, the SEC's verdict probably won't be accepted by many -- at least until the underlying records in the case are released. Indeed, that's just what former Assistant Secretary of Defense John White, an informal adviser to the Kerry-Edwards campaign, was calling for on Aug. 4. "There are a lot of questions here that simply aren't being answered," he said in a press conference. "Why the secrecy?"
It will be a long time before the facts behind this case emerge, if ever. But it's hard to imagine any way in which Cheney will come out looking good. Even if the decision to hide the company's accounting change was made below his grade level, the Vice-President is likely go down in corporate history as yet another know-nothing CEO of the late 1990s -- hardly a distinguished group.
"Why Oh Why Are We Ruled by These [Fill-in-the-Blank]s?"
How about "Blanks"?
Posted by: ogmb on August 14, 2004 05:57 PMBrad, remember when Paul O'Neill tried to make CEOs responsible for what their companies do?
Sure looks interesting how that played out, doesn't it?
Posted by: praktike on August 14, 2004 06:16 PMSpeaking of shooting blanks, just as the Veep (almost) makes headlines for his uncovered past, the Second Lady gets recognized by, of all places, Nerve.com for her almost forgotten literary accomplishments. Seems Mrs. Cheney wrote a romance novel that is a bit on the Sapphic side. Registration required for the Nerve site, but further testimony can be found here:
http://www.amazon.com/exec/obidos/tg/detail/-/0451112040
and excerpts here:
http://www.livejournal.com/~lynnecheney
Posted by: ogmb on August 14, 2004 07:11 PMI'm surprised that no one has filed a civil suit against Cheney. There's a smoking gun there, somewhere.
Posted by: barry on August 14, 2004 08:21 PM> I'm surprised that no
> one has filed a civil suit
> against Cheney. There's a
> smoking gun there, somewhere.
Yes, the process of discovery would be entertaining, to say the least.
Posted by: Alan on August 14, 2004 08:36 PMhttp://www.compliancereporter.com/default.asp?page=1&SID=428076&ISS=10749
Posted by: ogmb on August 14, 2004 09:06 PMalthough the accounting fraud is interesting, what i've always been struck by about cheney and halliburton is the absolute failure of due diligence on dresser. It's not like asbestos liabilities were some big unknown problem.
It is in this failure to acknowledge potential problems that we see most clearly foreshadowed cheney's ways in the white house, best manifested, of course, in his famous answer to russert's "what if we aren't welcomed as liberators?" "I really believe that we will be."
Faith-based due diligence at its finest....
Posted by: howard on August 14, 2004 09:14 PMCheney really should have been more 'sensitive' to the needs of his shareholders.
Posted by: Kuas on August 15, 2004 12:08 AMI worked for a Dow industrial corp. for 30+ years. The one common characteristic of all the CEOs who came and went in that time was the remarkable attention they paid to the smallest operational details of the 150,000 man company.
Isn't it time for that Arthur Anderson video featuring a satisfied Dick Cheney to see the light of day?
Posted by: Bob H on August 15, 2004 05:30 AMI imagine Cheney's job was a sinecure based on his ability to chat up buddies in the Pentagon. It doesn't surprise me if he had little knowledge of business operations and took on projects like the Dresser acquistion capriciously.
Didn't Cheney famously admit in the 2000 debates that government "had everything to do" with why he was employed at all in the 90s, let alone had become very rich? Wait, no, he said exactly the opposite and Joe Lieberman--the weenie--let him get away with it.
Posted by: Paul Callahan on August 15, 2004 10:13 AMI conclude, from reading this post and comments, that none of you understand the difference between a CEO and a CFO.
Posted by: Patrick R. Sullivan on August 15, 2004 10:27 AMA (IIRC) 46% increase in reported earnings is only worthy of the CFO's time? Bullshit.
Posted by: Barry on August 15, 2004 10:33 AMPatrick, that has to be one of the silliest single remarks you have ever made, and that is saying something.
Posted by: howard on August 15, 2004 11:07 AMI must be missing something. So Halliburton changed their accounting practices making it seem like they were more profitable. Is the "official cover story" really that in addition to not telling shareholders about the change, no-one told the CEO?
All of a sudden the company he is running becomes more profitable and Cheney didn't notice? He never looked at where the profits were coming in to see if he could do more of what was "working"? I don't understand, who is supposed to be stupid enough to believe a story like this?
Posted by: Sus_Ano on August 15, 2004 01:16 PMSus_Ano, I would say 'Patrick Sullivan',
but I don't believe that he's that stupid.
howard: "Patrick, that has to be one of the silliest single remarks you have ever made, and that is saying something."
I disagree. His whole 'swallow TANG-boys but choke at decorated Vietnam Veteran war heroes' takes the cake for silliness.
Patrick,
A CEO is the guy who stands up in the meeting of all the senior executives, and says,
WHY THE FUCKING SHIT ARE WE MISSING THIS QUARTER BY TWO CENTS A SHARE. WHO IS RESPONSIBLE!?!? I WANT HIS ASS RIGHT NOW!!
A CFO is the guy who answers that question.
No one who has ever observed the workings of a publicly traded corporation will ever believe that a CEO did not know about an accounting change that represented 46% of reported earnings.
Posted by: John Casey on August 15, 2004 04:38 PMIsn't John White calling the kettle black? Why did Kerry/Edwards allow him on board as an "informal advisor" anyhow?
Posted by: kharris on August 16, 2004 04:48 AMkharris, your line is 'But Klintooon was wooooorrrrssseee!!!!!!!!'.
We'll never get this play on the road if the players can't remember their lines.
Posted by: Barry on August 16, 2004 05:23 AM