Household HSBC Watch

Ohio Rep. Michael Oxley, one of the two congressmen behind the Sarbanes-Oxley corporate reform legislation that was passed the same summer of the WorldCom debacle, said investors could be cheered by the Ebbers verdict. “Due process takes time, and the prosecutors are to be congratulated,” he said. “Every investor and everyone harmed by the WorldCom bankruptcy should take heart at today’s verdict in the Ebbers case.” WorldCom crashed in 2002.

In a related matter the Securities and Exchange Commission charged former Qwest Communications CEO Joseph Nacchio and six other executives with orchestrating a massive financial fraud at the telecommunications company that concealed the source of $3 billion in reported revenue. The charges say the fraud occurred between April 1999 and March 2002.

Top officers at Household International in 2002 were William Aldinger, CEO and David Schoenholz, CFO. Gary Gilmer had a hand in consumer lending. Testimony from Schoenholz would be interesting, and many see him as the first target in an investigation.

The day after WorldCom’s Ebbers was convicted, JPMorgan Chase & Co., the nation’s second largest financial institution, agreed to pay $2 billion to settle claims from investors who lost money in the collapse of WorldCom Inc.

HealthSouth former CEO Richard Scrushy is charged with conspiracy, fraud, money laundering, obstruction of justice and perjury. He also is accused of false corporate reporting in the first case of a CEO being accused of violating the Sarbanes-Oxley Act, passed in 2002.

By March 1, 2005, a federal judge Friday sentenced the chief executive officer of an Iowa shipping company to 33 months in prison for directing the illegal dumping of 442 tons of fuel-contaminated wheat from a freighter into the South China Sea. As the list goes on consumers hope Oxley is correct - that there is some action behind the scenes and justice will prevail, but it takes time. We are not saying or implying that Aldinger, Gilmer and Schoenholtz are, or were, involved in anything. That would be a job for regulators. However, insider input and investigative reporting combined with forensic accounting could prove extremely interesting.