Magazine article The Spectator

Victims of Their Own Greed

Magazine article The Spectator

Victims of Their Own Greed

Article excerpt

ENRON's bankruptcy was the biggest in corporate history. Its collapse was described as 'unthinkable' by the New York Times. Just a year later, colossal bankruptcies and corporate scandals are everyday reading in the American press. Corporations such as Xerox, WorldCom, Adelphia and indeed Enron were apparently invulnerable fortresses. Now, many have been revealed as castles in the air built on fantasy profits and fiddled accounts. Even the financial apparatus that had helped to prop them up was rotten. It wasn't long before major Wall Street institutions, such as Arthur Andersen, toppled.

`Pig Out' shouts a New York Post headline over a photograph of Tyco's disgraced chief executive, Dennis Kozlowski. `Filthy Rich' hisses a caption under 'piggies' John Rigas of Adelphia and Bernie Ebbers of WorldCom.

`This makes me want to vomit,' says Janine, an energy sales executive at Enron who was sacked without compensation when the company collapsed. Some employees lost everything, including their pension funds that were tied to Enron stock. Janine is standing outside the home of Andrew Fastow in Houston's exclusive River Oaks. Fastow, indicted for fraud this week, was chief financial officer at Enron. `Doesn't look like he's run out of cash,' Janine sneers as workers add finishing touches to Fastow's drive. `Shame on them,' she mutters. `Bastards!'

Janine speaks for many. The current financial crisis has enraged Americans in a way that no other crash or bust has done. Jim Chanos, a shortseller who became a Wall Street celebrity for predicting Enron's crash, explains, `One of the things until very recently that was great about the American capital system was that people understood that by risking their money they could either make a lot of money or lose a lot of money. Americans understood that; they're risk-takers. But what they always thought until recently was that the game was fair.'

`Commerce amongst nations should be fair and equitable,' reads a plaque on the Department of Commerce building in Washington. Another reads, `Let us raise a standard to which the wise and honest can repair.' The high-minded sentiments of America's founding fathers seem quaint, given the obscene amounts of money that have been pocketed fraudulently. Their trust in such sentiments shattered, Americans are turning increasingly to lawyers to win back their cash.

'I feel like a viper in the nest out here among all the Wall Street sharks,' chuckles lawyer Jake Zamansky. We are driving round the Hamptons, a helicopter hop from Wall Street, where the rich have their multimillion-dollar seaside retreats. With his oiled black hair and wolfish smirk it's easy to believe that Zamansky is a disturbing, venomous presence among these discreet clapboard monuments to wealth and power. He has become the scourge of Wall Street since suing Merrill Lynch's top analyst, Henry Blodgett, in a groundbreaking case. Blodgett lied to Zamansky's client about the value of stocks that emails later revealed he thought were `pieces of junk', Zamansky went on to hound Jack Grubman of Salomon Smith Barney, and now takes hundreds of calls from investors wanting their money back.

Later, eating muffins in his modest cottage in the unfashionable end of South Hampton, Zamansky becomes angry. `The Wall Street firms are going to have to pay billions back to investors. There are many bad people on Wall Street and in public companies. We need to ferret them out, ban them from the industry and put the fraudulent people in jail. …

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