The Bush Administration may be unsure about how to get rid of Saddam Hussein, but it has already decided how to go after alleged evildoers in Big Business--with guns blazing. "If you're a CEO and you think you can fudge the books in order to make yourself look better, we're going to find you, we're going to arrest you and we're going to hold you to account," President Bush said last week in a speech in Charleston, S.C.
It didn't take long for the FBI to make good on that promise. A week after hauling in Adelphia Communication's frail, white-haired founder, John Rigas, and two of his sons as if they were armed and dangerous, FBI agents gave former WorldCom executives Scott Sullivan and David Myers the same star treatment, parading the handcuffed quarry in an early-morning perp walk and prompting Sullivan's lawyer to complain about "the unfair taint of the current political climate."
"We didn't have anything to do with it," a senior Administration official says of the high-profile collars. "But of course they're a big help. It means the system is working, and that helps with [investor] confidence." If so, that wasn't reflected in the stock market, which swooned on Thursday and Friday.
Arrests and indictments don't necessarily result in convictions--think back to the Wall Street scandals of the 1980s. But for now, with midterm congressional elections just a few months away and control of the House and Senate at issue, that's almost beside the point. Nor is the spectacle over. The House Energy and Commerce Committee in particular is contemplating more hearings this fall, with an invitation list that might include everyone from Global Crossing to ImClone, a committee source told Time. And as Democratic opponents seize on the White House's cozy links to corporate America--and especially to Harken Energy and Halliburton--the Bush Administration seems to believe that the best defense is a full-scale offensive.
Though by far the most visible, the WorldCom duo wasn't the only prey: telecom firm Qwest, already under investigation by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ), is close to restating the past three years of earnings by more than $1 billion; apparel maker Warnaco is now in the SEC's cross hairs; and prosecutors were driving a hard bargain in plea negotiations with ImClone's ex-CEO Samuel Waksal, insisting that he accept at least seven years in prison on insider-trading charges and declining to spare his family members from prosecution.