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Last Updated: Sep 5, 2008 - 10:43:57 AM |
The date has been set for what will surely be one of America's trials
of the decade. Last week, a New York judge ruled that on May 4, 2009 -
more than two years after he was indicted - David A. Stockman will go
to trial on charges of fraudulent accounting and of misleading banks
and shareholders.
Along with former colleagues who are now co-defendants, Stockman will
be accused of overseeing the ruination of Collins and Aikman Corp - a
Detroit-based supplier of components to the automotive industry which
was founded in 1891 and supported 15,000 jobs worldwide. The sum total
of the defendants' alleged malfeasance is $1.35bn.
That is a breathtaking figure even by the standards of Enron and Conrad
Black. But David Stockman's trial will be uniquely fascinating
because, in many ways, he is an even more emblematic figure of our age
than Enron's Kenneth Lay or Hollinger's Lord Black of Crossharbour.
The greedy yuppie culture of the 1980s, the credit-fuelled property
boom of the last 10 years and, especially, the neo-conservative
'trickle-down' economic ambitions of a succession of Republican
presidents, have all been embodied in this slight, earnest, dome-headed
figure with his big, harvest mouse eyes and even bigger spectacles.
Now, by the most acute paradox, as he stands awaiting trial, Stockman
has become the living incarnation of the credit crunch and the
impending crash of the Western world's economy.
>From 1981-1985, David Stockman was President Reagan's budget director,
the 20th century's youngest member of the US Cabinet. With his
notorious "black books" of economic accounting ever present under his
arm, Stockman was Washington's keeper of the holy scriptures of "the
Reagan Revolution" which promised to reduce taxes, cut federal
government spending and liberate the entrepreneurial spirit of American
capitalism.
A former theology student at Harvard who had dabbled in left-wing
student politics, he was the mastermind of Reagan's 'supply-side'
policies, the theory drawn from Milton Friedman and Friedrich Hayek
that government spending inhibited economic growth and that monetary
control was the cure for inflation.
Not since Keynes was at the Treasury in the First World War had a more
committed economic ideologue occupied so senior a post at the heart of
a Western government. And nobody since Keynes has written more
revealingly about the clash between abstract economic principles and
the overriding demands of political expediency than Stockman did in his
own book, The Triumph of Politics. Following his self-confessed
failure to achieve the spending cuts and the balanced budget demanded
by his creed, Stockman wrote a hair-raisingly detailed study of the
Reagan government's fallibilities - including a merciless portrait of
the homely old President's economic illiteracy - which is indispensable
to the student of government.
After failing to liberate America's entrepreneurial spirit, Stockman
gave rein to his own. He took a job with the Wall St investment house
Salomon Brothers, founded a private equity firm and then a private
equity fund, Heartland Industrial Partners. He piled up tens of
millions of personal wealth and bought a huge estate outside Greenwich,
Connecticut.
Stockman wrote a hair-raisingly detailed study of the Reagan
government’s fallibilities
It was Heartland which raised the $9bn worth of debt financing from
Wall Street through which Stockman and his partners bought controlling
interests in failing businesses in America's rustbelt industries. And
it was that same debt-laden vehicle which acquired Collins and Aikman,
where Stockman installed himself as CEO in 2003.
Less than two years later, Collins and Aikman filed for Chapter 11
protection from its creditors and Stockman was ousted. The historic
company was liquidated last year.
Stockman and the others are now charged with falsifying Collins and
Aikman's accounts in order to defraud investors and creditors and with
siphoning millions of dollars from the ruined company in consultancy
fees to Heartland. His lawyer claims he suffered a personal loss of
$13m and says: "Here's a guy who was putting money in to keep the
company afloat." A jury will decide. The world will watch.
Source:Ocnus.net 2008
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