• 11.30.02


Anne Let’s take an end-of-the-year poll. Which current business miscreant committed the worst sin: Kenneth Lay, Jack Grubman, Sandy Weill, Bernie Ebbers, or the Andersen accountants? Or someone else? And would anyone care if the Nasdaq were now at 7,000?

Anne Let’s take an end-of-the-year poll. Which current business miscreant committed the worst sin: Kenneth Lay, Jack Grubman, Sandy Weill, Bernie Ebbers, or the Andersen accountants? Or someone else? And would anyone care if the Nasdaq were now at 7,000?


Jim That’s a rogue’s gallery of choices. But the worst of the lot has to be Bernie Ebbers. For seven years, I had to listen to his bullshit about how he was the smartest telco man in the universe, only to discover that his company was one of the biggest frauds in the universe. And then I had to hear that he saw nothing and knew nothing about telco – his radical defense strategy! – and it was all some peon’s fault in the CFO’s position. Arrrghh! Some $9 billion in fraud and the CEO had nothing to do with it?

Kenny Lay is tougher, because during the days when Enron was run like the Lex Luthor version of a modern-day company, the CEO was Jeff Skilling. Like Ebbers, Skilling said that he didn’t understand what was happening at his own company, pleading that he wasn’t an accountant. I love it when the defense team asks us to believe that the smartest man in his class at Harvard Business School couldn’t understand credit-derivatives transactions that he could’ve done in his sleep.

A different kind of prize goes to Jack “Bean Stalk” Grubman, so named because he really believed that phone companies would grow to the sky. He may be the first person ever to try to commit crimes and then say that they weren’t crimes because he disclosed them! Best of luck, Jack. Keep believing in fairy tales.

Anne Speaking of fairy tales, what about the fantasy and special-effects realms of Messieurs Messier, Pittman, and Middelhoff? None of them are crooks, but they certainly were the poster boys of the glamorous CEO during the final years of the last bull market. Did they get screwed? Or did they buy into the CEO-as-rock-star glamour culture too much?

Jim When you’re an entertainment exec, it’s entirely possible to suspend all rigor and get away with it. That’s because journalists who write about you are busy sucking up to you, partly because they have hopes of getting their (eventual) screenplay produced and partly because they want the glamour to rub off on them. For example, the fact that Edgar Bronfman was able to turn billions into millions was often obscured by his patina of glamour. The fact that this guy didn’t even finish college was regarded as some sort of positive. Where I come from, it meant that he couldn’t cut it. The fact that he knew nothing about finance was viewed as a benefit. I bet the guy couldn’t read a spreadsheet. He lost money because he was a dope. But you won’t read that anywhere.

Jean-Marie Messier? He redefines wacky slapstick for the French, their own Jerry Lewis, an idiot who confused debt for equity. But he got fabulous press. Was it because he was well coiffed? To me, he was a guy who American bankers fleeced nine ways to Sunday. Yet he was taken seriously by the press. How about Tom Middelhoff? People say he was dumped because he wanted to take Bertelsmann public and the insiders didn’t want to be dragged into the 21st century. Six weeks after the dumping, the insiders were talking about fast-tracking the IPO. Middelhoff’s problems were a love affair with the Net long after most people soured on it, a congenital unwillingness to do homework – too nerdy – and a belief that it was impossible to overpay if you liked a property. Don’t get me started on Pittman. I have rules, and one of them is that if you lie to my face, I will come back and bury you repeatedly in every forum I have. Suffice it to say, I now think of Pittman exactly as a three-card-monte player.

Anne What, if anything, will be the practical outcome from this current miasma: better movies, cheaper oil, better telco customer service, or (as I suspect) nothing? Give me something tangible. What intrigues you when you go to the mall in New Jersey? And a little further out, what do you think will trigger the next investment mania, the next bubblelike moment, and when? Oh, and by the way, how exactly did Bob Pittman lie to your face?


Jim The take-away is that we will have a lot of nerds at the top of businesses who wish only to do a good job and shut up. It’s too early to say whether that will be good or bad for operations and earnings. It will certainly be less loathsome. My crystal ball is dark regarding the new products, which is why I think that tech stocks are doomed to more bog: no new applications, no new earnings.

Pittman? In an interview for, the Web site I started, he told me that online advertising was booming even when it was falling off a cliff. Not only did I feel completely inadequate, but I also told people to buy America Online. Now everybody hates me, not Pittman, for liking a stock that has seen the single most dramatic decrease in advertising of any Web business I know!

Anne The late-1990s bubble was about all of us merrily telling bald-faced lies to ourselves, pretending that the emperor had clothes and that Wall Street analysts could be objective. Maybe the reform that’s needed is just more candor – starting with candor about oneself to oneself.

Anne Kreamer ( is a media entrepreneur and consultant in New York. Jim Cramer, markets commentator at and cohost of Kudlow & Cramer on CNBC, is her column guest this month.