Billionaires & Accounting Scandals
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He came to own most of the railroads in the West and laid fiber-optical cable along his rail lines, connecting them at central hubs in strategic locations in order to provide high-speed data and T1 services for businesses, according to Wikipedia. Qwest incorporated in 1996, then acquired LCI in 1997 and added residential and business long distance to their pallet of services.
And with all his success, he became the non-executive chairman of Qwest Communications International, Inc. after he stepped down as CEO in 2002. In 2002, the company he built also announced it had incorrectly accounted for optical-capacity revenue, between the years 1999 to 2001, to the amount of $3.8 billion, according to ComputerWire. This accounting scandal has not tainted his reputation.
George Soros is ranked 71st in Forbes’ The World’s Billionaires. In September 1986, George Soros was a very large investor in Harken Energy when it purchased Spectrum 7 that was our standing President George W. Bush’s ailing oil venture. Spectrum 7 specialized in selling limited partnerships, according to Wikipedia. In 1986, tax laws changed the tax status of these financial instruments that had generated liberal tax write-offs before the change.
George W. Bush was given an active membership on the Harken board and initially given an $80,000 yearly consulting contract that increased to $120,000 in 1989. Bush was given $500,000 in Harken stock and options valued at $131,250. According to Wikipedia, Bush acquired another $600,000 in Harken stock under the company’s Non-qualified Incentive Plan. Bush also received two loans, at below-market 5% interest, totaling $180,375. in 1986 and 1988. Harken stock was purchased with these loans and his Harken stock holdings were converted to stock options which Bush says were never exercised.
It was generally thought that Harken Energy was buying political influence by having George H.W. Bush’s son on their board, but this was confirmed by David Corn’s interview with George Soros. To Corn’s question, “…What was the deal with Harken buying up Spectrum 7,” Soros responded, “…We were buying political influence. That was it. He was not much of a businessman,” according to Wikipedia.
Carl Icahn is no.53 in Forbes’ The World’s Billionaires. He has earned his reputation as a corporate raider. He has been buying weak telecommunications companies and merging them into publicly held company XO Communications, of which he owns 61 percent, according to CorpWatch. In an odd transaction, XO Communications auctioned off their wireline businesses for $700 million to Carl Icahn, himself. Of the proceeds of the auction, $400 million will be used to retire the company’s long-term debt.
Some investors say that Icahn rigged the auction to start with and surprised everyone but himself when he emerged as the winning bidder. CorpWatch reports others are saying that Icahn may have lead the company into trouble in order to sweeten the deal for himself.
Andrew Bogen, an attorney for the minority XO shareholder R2 Investments, told CorpWatch, “It is inescapable that he used his dual position as debt holder and the guy who runs the company in a way that favors himself. We think Carl Icahn made all the important decisions about who was permitted to bid – and that he had full information on other bids when he made his.”