LIVE FROM THE HEADLINES
Interview With Roben Farzad On Status With Alleged Corrupt CEOs
Aired July 11, 2003 - 20:33 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDERSON COOPER, CNN ANCHOR: And you're looking at the Santa Monica pier in California. Welcome, LIVE FROM THE HEADLINES live from L.A. Our last night here. If Enron owes you some money. We hope you weren't expecting a big fat check. The company filed its bankruptcy reorganization plan today. And while most creditors will receive only about .14 to .18 cents on every dollar they were owed.
Enron actually owes its creditors an estimated $67 billion. So now that plenty of people have seen their money go down the drain what is happening to all the former CEOs accused, at least in the public's mind, of cheating the law, investors and employees? I'm joined now by Roben Farzad of "Smart Money" magazine. Roben, thanks for being with us.
ROBEN FARZAD, "SMART MONEY" MAGAZINE: Hi Anderson. How are you?
COOPER: I'm doing all right. I'm doing better than some of these guys are, I guess, at this point. It seems a lot have been convicted in the court of public opinion but even really pursued on criminal charges. Kenneth Lay (ph), for one, he's protested his innocence all along. What's happened to him?
FARZAD: He's hanging low. And the government is supposedly hot on his trail, but it is hard to get former colleagues of his, especially on the executive level to squeal. There is this one whistle-blower, Sharon Watkins, who is saying these guys are guilty, the likes of Ken Lay and Jeff Skilling, but it is hard to prove they knew exactly what was going on. And down the chain of command they signed off on these deals.
COOPER: And I guess some of these cases are very difficult. I guess the easiest case so far has been that of Sam Waksal who is obviously being convicted. He's going to go to prison. He had wanted to go to Eggland Air Force base, the prison often called club fed. I guess he didn't get his wish.
FARZAD: Well he got something close. He's getting a minimum security facility nestled in the hills of Pennsylvania. And certainly, I mean, this isn't society life. He's giving up his freedom. But at the end of the day, it ain't San Quentin either.
COOPER: Well, he's also -- I guess it's sort of like dorm living. I heard there is one room for the TV. It is a group room and he'll be not earning a great amount of money anymore, is that right?
FARZAD: No. 14 to 60 cents an hour. I'm sorry, cleaning utensils and gardening. It is supposed to be a slap in the face. But the truth is, this is a seven-year sentence. History proves if you look back at Michael Millken, Ivan Boskie, the last insider trading we've had. These guys don't end up serving their full terms. There going to be another bull market and people in three years will forget who the heck Sam Waksal is. And he'll be let out for good behavior.
COOPER: They come out to California and reinvent themselves and no one seems to have a very long memory on these things. Martha Stewart has been laying low or at least out of the media spotlight. What is she up to?
FARZAD: Her trial is forth coming. And there is evidence there. She claims that she had the sell order negotiated with her broker in advance but their phone records between her and Sam Waksal there is obviously trade records, there is all this evidence stacked against her. And you might see some sort of plea at the end and she might, you know, be able to negotiate something. But insider trading is a lot easier to prove than some of these other nebulous crimes, like other crimes like book cooking and corporate malfeasance.
COOPER: Dennis Kozlowski, former CEO, he has not actually been accused of accounting fraud but there has been so much in the public about the money he spent on things. We got some examples, $6,000 shower curtain, $15,000 dog umbrella stand, a $17,000 toiletry case. A lot of toiletries, I guess, for this gentleman. I he going to be walking into the courtroom anytime soon?
FARZAD: Yes, I think he will. And it is not, once again, it's not as nebulous as corporate malfeasance. A lot of people argue actually that Dennis Kozlowskie was a masterful CEO. And the forensic accounting at Tyco hasn't accounted that much in the way of book cooking. But what he did at the end of the day was like a Domino's pizza manager stealing money from the cash register to buy himself a speedboat. It's actually pretty low brow and it's easy to prove.
You know this money was used for a $2 million wedding in Sardinia, you mentioned the shower curtain. It's easy to prove. It was skimmed off the top over time. And either it's there or it's not there. You'll see something with Kozlowski.
COOPER: Alright, we'll be watching. Roben Farzad I appreciate you joining us. Interesting to hear your update on all these...
FARZAD: Thanks, have a good weekend.
COOPER: You too.
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