For some, the rules of the game simply don’t apply: the wacky world of modern capitalism and its consequences
Optical equipment maker Olympus today announced that it would delay its earnings report due to the continuing investigation into its M&A practices. If you haven’t been following the Olympus melodrama, sit down and have a listen.
Olympus’s CEO Michael Woodford, a 30-year veteran of the company, who became the first non-Japanese chief executive, was dismissed by the board of directors of the company because, they said, he didn’t fit into the culture of the company.
The real problem, many feel, was the fact that Woodford had called attention to the massive fees the company had paid to consultants – $687 million – involved in the acquisition of Gyrus (as well as the $700 million that went to these consultants in other acquisitions).
The consulting company was based in – wait for it – the Cayman Islands.
So Woodford, who blew the whistle, is out.While the board claims that everything is kosher, the stock of the company has crumbled. Woodford, meanwhile, has cried foul to various agencies including the FBI and the UK Serious Fraud Office.
Faced with this mess, Olympus today said it would delay the release of its Q2 earnings report. The stock today fell another 6.8 percent.
In another corner of the world, Las Vegas, the copyright troll company Righthaven finds itself in a bit of trouble.
Righthaven, if you recall, has filed 276 lawsuits on behalf of the Las Vegas Review-Journal and the Denver Post claiming copyright infringement of material. But the courts have dismissed these suits and have ordered Righthaven to pay the attorney’s fees of the defendants.
“We do intend to use this, and any resources that we can bring to bear, in order to finally receive justice for our client,” Wired quotes the attorney who represents the claimants. “We certainly do not feel badly about how this might affect them.”
Copyright trolls, patent wars, corporate malfeasance – what is particularly distressing is the enormous amount of wealth and energy that is going into nonproductive activities today. With world economy teetering, the attention of the business world is not so much on growth and job creation but on activities not central to building businesses.
Yesterday GOP Senators killed provisions of the administration’s jobs bill that would have boosted transportation construction spending – a perfectly logical way to stimulate the economy. But to pay for this, the bill would have raised taxes very slightly on the wealthiest Americans. The GOP claimed it was a stunt by the Democrats, the Democrats say the GOP could care less about the economy. Believe who you will.
But in my some ten years as a publisher of B2B construction publications I learned a lot about the people who run major construction firms. In 1996, with a chance to elect a President who would support a major increase in highway spending, most execs chose to vote and support the candidate who they felt would keep their taxes lower. Luckily for them Clinton won reelection and a massive new transportation bill was approved leading to a new boom in their businesses.
When you have people in charge who care less about the health of their own businesses, or business in general, and are more concerned with their personal wealth, or gaming the system, the system fails. It goes almost without saying that there are huge consequences when this happens.