Corporate crime in the US is alive& well

CORPORATE CRIME ALIVE AND WELL: White collar crime prosecutors will remain busy because "fraud in the workplace is alive and well in the post-Enron era." The Association of Certified Fraud Examiners calculated the U.S. lost $638 billion from fraud in 2005. (Up from $600 billion in 2002.) PricewaterhouseCoopers found that since 2003, worldwide fraud losses have increased 50 percent. Its 2005 Global Economic Crime Study found that "since 2003, the number of companies reporting cases of corruption and bribery rose 71 percent; those reporting cases of money laundering were up 133 percent and reports of financial misrepresentation were up 140 percent." The Wall Street Journal's reporting on widespread options backdating -- a ploy in which companies "repeatedly granted options to top executives on days when stocks were at or near their low points for a quarter or year" -- has sparked criminal investigations into several U.S. companies, including Affiliated Computer Services. (While none of this has been proven yet, the Journal calculated the chances that one of these companies, KLA-Tencor, could have timed their options dates so perfectly at "around one in 20 million.") Former Refco CEO Phillip Bennett, whose company went public last year, "was indicted in November on eight felony counts, including conspiracy to commit securities fraud and false filings to the SEC" after investigators found he had hidden $430 million in debt. WIDESPREAD CORPORATE CONTRACT CORRUPTION: Corporate fraud goes beyond accounting chicanery; the federal government's contracting of services in Iraq and the Gulf Coast have been rife with fraud and abuse. Post-Katrina contracts, many of which were "awarded with limited or no competition," have been given to companies that are inflating prices. The inspectors general with the Departments of Homeland Security, Defense, and Army, testified last month that the four companies contracted to remove debris had "subcontracted their work to multiple tiers of subcontractors, resulting in markups between 17% to 47%. Similar price hikes were found in other services, including the placing of blue covers on damaged houses and the installation of temporary housing trailers." House Committee on Government Reform ranking member Henry Waxman (D-CA) found Katrina contractors "double-billed the government for debris removal, overstated mileage claims to get extra fees and inflated prices by improperly mixing debris." In Iraq, federal investigators uncovered instances where "American contractors swindled hundreds of millions of dollars in Iraqi funds," effectively turning the country into a "free-fraud zone." The Justice Department is also after pharmaceutical giant Abbott Laboratories, accusing the company vastly inflating prices of its drugs as part of a fraudulent billing scheme alleged to have cost government health programs more than $175 million over 10 years."