By DAVID MOON, Moon Capital
November 9, 2003
Two pictures from last week said volumes about the business problems in the
US. Two pictures, taken two years and thousands of miles apart.
Neither was taken in the US, but together they help explain our continuing saga
of scandal on Main Street and Wall Street.
Perhaps you saw the first picture. It was actually a video taken in
Spain during the June 2001 birthday party for Karen Mayo, the wife of then-Tyco
CEO, Dennis Kozlowski. There were models in togas. Roman gladiators
shooting flaming arrows into the night sky and delivering a cake, the size and
likeness of a nude woman. Jimmy Buffett flew in for a private
performance. Young women in diaphanous gowns (for those of you from
Alabama, 'diaphanous' means transparent) tossed rose petals into the swimming
pool. An ice sculpture depicting Michealangelo's David dispensed vodka
from his male appendage.
Tyco shareholders and US taxpayers paid for most of this party.
Don't get me wrong; in the right circumstance, I'm all for diaphanous
gowns. But not disguised as a lavish, tax deductible business trip.
The second picture was on the front page of the Financial Times.
Covering almost a quarter of the front page was a well-dressed grieving man, his
face mostly hidden as it slumped into his hands. He may have been crying;
he was unmistakably shaken and upset. He looked like a father, perhaps
grieving the loss of his wife or grandchild.
Instead, Sony CEO, Nobuyuki Idei, was announcing the elimination of 20,000
jobs in attempt to restructure the lackluster electronics company.
Idei was ashamed of the performance of Sony. It was, to him, a personal
failure. He didn't blame his competitors or a weak economic
environment. He didn't ask for a government bailout or subsidy. He
certainly didn't drink vodka from the genitals of an ice sculpture.
The difference between Koslowski and Idei isn't one of economic
structure. It is a difference of character. Remember, Koslowski's
first troubles were because he forged a bunch of documents to avoid paying sales
tax on some art he purchased. This is not a guy who stole money to feed
his kids or double his net worth. This is like a millionaire stealing a
dollar from the collection plate at church: he only does it because he thinks he
can get away with it. That's who he is.
The mutual fund managers who stand accused of stealing money from their own
clients are no different. These highly paid professionals didn't need the
relatively few dollars they pilfered. Richard Strong stands accused of
making $600,000 over five or ten years as a result of his improper
trading. His firm is worth almost a billion dollars. What difference
does a measly 600 thou make?
I bet Nobuyuki Idei understands the difference.
Although there are some structural problems with the mutual fund industry and
the New York Stock Exchange, no amount of regulation or oversight can change a
person's character. And there lies the problem.
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).