McKesson's Former CEO Indicted
By Bill Mann (TMF Otter) extraordinarily
June 5, 2003
One sharp criticism of the nation's prosecutors is their inability to convict large numbers of corporate executives who have lied, cheated, and stolen millions from shareholders.
Enron's top dog, Ken Lay, roams free, as do the folks who brought ruin upon Sunbeam, Cendant (NYSE: CD), Qwest (NYSE: Q), and so on. Yesterday we saw the high-profile indictment of Martha Stewart, CEO of Martha Stewart Living Omnimedia (NYSE: MSO), not for corporate misdeeds at her own company, but rather for her part in an insider trading scandal at ImClone (Nasdaq: IMCLE).
With all the hullabaloo over Martha, the indictment handed down to former McKesson (NYSE: MCK) CEO Charles McCall slid by unnoticed. Four years ago McKesson, then known as McKesson HBOC, fabricated revenues and then tried to cover up the scheme, all in a drive to show better profits and drive up the company's stock price. Once the plot was discovered and $9 billion of the company's market cap evaporated, McCall was out on his rear end, awaiting the results of an investigation into his role.
And it took four years.
Which stinks, of course. But the McCall case is telling -- this wasn't even a particularly sophisticated fraud, and it still took investigators four years to pin the top guy. Convicting individuals on corporate fraud is extraordinarily difficult. People wondering why frontier justice hasn't been delivered upon Ken Lay, Dennis Kozlowski, Bernie Ebbers, and other members of the coven of thieves need to recognize this. Further, under the U.S. legal system, you only get one bite at that particular apple.
These folks remaining free has nothing to do with a lack of desire to bring them to justice. McCall hung out on beaches for several years before he was finally hauled in. Some of these cases are so difficult that they will never be strong enough to bring charges on people who are obviously guilty.
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