CORPORATE CRIME REPORTER
Looter: Black Kid With DVDs? Or Conrad Black with $400 Million?
19 Corporate Crime Reporter 40(3), October 12, 2005
Think looter.
What image does it raise?
Exactly.
The black kid with the shopping cart and the DVDs stuffed in his pockets wading
through the deluge in New Orleans.
Why not Conrad Black who, along with other executives, is subject of a criminal
investigation for allegedly plundering Hollinger International Inc. of $400
million?
That’s what Joe Loughran wants to know.
Loughran is a life-long Republican.
His resume: Princeton, Harvard Business School, United States Army, Goldman
Sachs, National Republican Congressional Committee, Capitol Hill – where
was on the team that investigated the Clinton White House Travel Office.
And yet, Loughran is more interested in “looters in their Gulfstreams
than looters on the Gulf coast.”
In particular, he’s not happy with the deferred prosecution deal granted
to KPMG by the Justice Department.
David Kelley, the just departed U.S. Attorney in New York – he’s
now a partner at Cahill Gordon – reportedly wanted to take KPMG to the
mat.
He wanted to bring a criminal indictment against the firm and make the charges
stick.
But he was overruled by Main Justice. (The Wall Street Journal reported
in June that Kelley recommended that KPMG be indicted, but that “KPMG
attorneys successfully appealed that decision to senior Justice Department officials
in Washington, who later directed the Manhattan prosecutors to return to the
bargaining table.”)
Loughran says that “clearly huge influence was brought to bear –
or bought – when the U.S. attorney's recommendation to indict KPMG was
overruled.”
“The Justice Department answered KPMG's decade-long pursuit of criminal
tax fraud, conspiracy, and obstruction with the $456 million E-Z Pass fine as
KPMG flew through federal toll gates,” Loughran wrote in a column published
this week in the Providence Journal.
“When you allow a firm which I believe is systematically criminal and
or incompetent in its work, to stay in operation, you are preventing the big
five, six, seven or eight accounting firms from rising to the top and doing
the work that the big four aren’t doing,” Loughran told Corporate
Crime Reporter. “You are preserving an oligopoly of firms that have failed
to do the job and preventing those who might do the job well from becoming acceptable
alternatives.”
“KPMG has proven far too many times as an auditor, as a creator of fraudulent
tax shelters, that it no longer has the integrity required to be worthy of the
public’s trust,” Loughran said.
Apparently, David Kelley felt the same way. But he was overruled by Main Justice.
By pulling its punches, the Justice Department is sending exactly the wrong
message.
“People who are intent in creating dynastic wealth for themselves are
just changing the game plan,” Loughran said. “Today we are reading
about Refco. How did it happen that a $430 million loan to a senior executive
at Refco was not even recognized by anybody in an IPO that happened two months
ago. The crooks know how to transact their crooked deals and hide them.”
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