------------------------- Via Workers World News Service Reprinted from the Feb. 21, 2002 issue of Workers World newspaper -------------------------
LESSONS ON ENRON AND GLOBAL CROSSING: THERE'S A RULING CLASS, AND IT'S NOT US By Deirdre Griswold First it was Enron. Now it's Global Crossing. The more the glitzy layer of prosperity is peeled back from Corporate America, the more the inner workings reveal a brutal, class- divided society in which the workers, the majority, are ruthlessly plundered by a small minority. That is not the view of the U.S. economy given in textbooks. It's not what innocent schoolchildren learn on class trips to the New York Stock Exchange. They are told that there is no ruling class, that the majority of the people own the vast means of production through stock ownership, and that the system works for everyone. Indeed, in recent decades, as companies have pushed workers to accept stock options instead of pay raises, and 401(k) plans instead of company pensions, the percentage of the population owning stocks, either as individuals or through their pension plans, has risen markedly. As recently as last April, the Joint Economic Committee of Congress put out a study on "The Roots of Broadened Stock Ownership" that said nearly half of all U.S. households were stockholders. It concluded that this represents the "democratization of the stock market" and that "Mutual funds, IRAs and 401(k) plans have made the retirement tools of the upper class available to all." Tell that to the workers at Enron and Global Crossing. Corporate heads like Kenneth Lay of Enron and Gary Winnick of Global Crossing can walk away from bankrupt companies with hundreds of millions of dollars in their pockets, while the workers lose both their jobs and their retirement savings. NOT POWER--VULNERABILITY Doesn't this show that mere ownership of stocks does not empower the workers or the middle class? On the contrary, it leaves them immensely vulnerable to the ups and downs of the capitalist markets. In effect, these bosses have been flying high on deferred wages that they wheedled out of the workers. Now that the capitalist bust has come, they are hell-bent on preserving their ill-gotten gains--all perfectly legal, of course-- while those who had worked overtime, scrimping and saving for a lifetime so they could live a little in retirement, are crying in disbelief. Kenneth Lay is refusing to testify before Congress about what he did, but it is public knowledge that he cashed in his own stock in Enron--to the tune of at least $300 million- -while telling the employees of the company that everything was fine. When they began to find out it wasn't, they also found out that their pension funds were frozen. They couldn't sell their stock, even as they saw it plummet from over $80 a share to around 15 cents. Now it seems that Winnick, the chairman of Global Crossing, was doing the same thing as Lay--except that the shares he cashed in before the company declared bankruptcy were worth $734 million. That's three quarters of a billion dollars. ALUMNUS OF JUNK-BOND SCANDAL What is Global Crossing? It didn't exist before 1997, when Winnick created this communications conglomerate specializing in transoceanic fiber-optic cables. Winnick had earlier been an executive at the Wall Street firm of Drexel Burnham Lambert, infamous for its dealing in junk bonds. He was close to Michael Milken, who went to jail for his part in the scam. Yet even that huge scandal, which cost so many small investors their shirts and so many workers their jobs, didn't seem to tarnish Winnick. He sits on the National Advisory Board of Chase Manhattan Bank. Winnick is the kind of executive that the financial magazines speak of with fascination. His dubious past only adds to his charisma, in their eyes. They practically drool as they explain that he is believed to have paid more for a single-family house--$60 million--than anyone else, ever. DEMOCRATS, REPUBLICANS, BUSH, MCCAIN--EVERY PALM IS GREASED Winnick and the other executives of Global Crossing, like Lay of Enron, lavished contributions on key political figures. Winnick personally handed out $363,750 in campaign contributions in the 2000 elections. His former CEO, Leo Hindery Jr., rewarded his favorite politicians even more handsomely. He spent $591,902 on the campaigns. But hey, this kind of investment pays off. When the company wanted help from the Federal Communications Com mission, "Global Crossing's lobbying effort got a boost from someone best known for crusading against the corrupting influence of campaign finance: Senator John McCain. In March 1999, McCain wrote a letter urging the FCC to encourage the development of the company's cables. On the last day of that month, [co-chairman Lodwrick] Cook, Winnick, and other donors with ties to Global Crossing gave at least $23,000 to McCain's presidential campaign."(Michael Scherer writing in Mother Jones magazine, March 5, 2001) The elder George Bush is another recipient of Global Crossing's largesse. When the company announced it was laying a trans-Pacific cable in 1998, it got Bush to speak at the announcement. Bush's words are golden. He usually gets an $80,000 honorarium for his speeches. The company gave him stock instead, which a year later was worth $14.4 million. "Global Crossing's creditors may be lucky to get pennies on the dollar," reported the Feb. 11 New York Times. "Many employees lost significant parts of their 401(k) funds. And anyone still holding shares has a stock that closed at 7 cents on Friday [Feb. 8]." Here's a question: Does Bush Sr. still have his stock? Or did he, like Gary Winnick, cash it in early before the public knew that this company was heading for bankruptcy? Before you start feeling sorry for the Democrats, you should know that they made out just fine. Global Crossing, its affiliates and executives gave the Democratic Party $1,265,268 in the 2000 election cycle. In August 2000, Winnick paid for a luncheon for the National Democratic Institute attended by President Bill Clinton, Secretary of State Madeleine Albright, and a host of foreign dignitaries and big-time political donors. "When Albright got up to speak, Winnick adorned her with a baseball cap bearing the corporate logo of his telecommunications company, Global Crossing," wrote Scherer. Global Crossing, which raised over $20 billion in capital in a few years, was not a household name. But it should be. It shows in the starkest way what capitalism has in store for the workers. And it shows why workers can't rely on the capitalist parties or the courts to protect their rights. Paid agents of big business write the laws, so whatever the corporate criminals do, they can claim legality. It's the system itself that is the crime. - END - (Copyright Workers World Service: Everyone is permitted to copy and distribute verbatim copies of this document, but changing it is not allowed. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: [EMAIL PROTECTED] For subscription info send message to: [EMAIL PROTECTED] Web: http://www.workers.org) ------------------ This message is sent to you by Workers World News Service. To subscribe, E-mail to: <[EMAIL PROTECTED]> To unsubscribe, E-mail to: <[EMAIL PROTECTED]> To switch to the DIGEST mode, E-mail to <[EMAIL PROTECTED]> Send administrative queries to <[EMAIL PROTECTED]>
