Kilroy Was Here
February 14, 2003
Corporate Weasel Watch: Sprint and Ernst and Young
Molly Ivins comments on a sad state of affairs at Sprint It seems as if the executives at Sprint used corporate money to pay auditors at Ernst and Young to set up tax shelters for them. According to the New York Times, Sprint's auditor, Ernst and Young, sold Sprint executives tax shelters so that they can avoid paying taxes on over $100 million dollars of income gained on stock options.
From the New York Times article:
In the transaction that Ernst & Young advised the two Sprint executives to invest in, Sprint may have given up certain tax advantages itself. That would harm investors, said Mark Gardy, a plaintiff-side securities lawyer at Abbey Gardy in New York. Lawyers at his firm are working to determine exactly what kind of lawsuit can be filed on behalf of Sprint shareholders and what damages they could claim, for the lost tax benefits, for harm to Sprint's reputation, or for the fees paid by the company for the tax advice to the executives. "I don't know if it's winnable," Mr. Gardy said of such a lawsuit. "But I'm really of a mind that it should be brought."
Molly Ivins expresses the outrage that's been hammering inside my head.
What is it with rich people that 60 percent of a $100 million is not enough? What kind of sickness is that? You make $100 million on stock options, do you honestly think you earned it? Did you work 10,000 times harder than a guy who gets $10,000 a year for digging ditches? Even a thousand times harder? A hundred? Ten?
Unfortunately for the unpatriotic and greedy William T. Esrey, Sprint's former chief executive, and Ronald T. LeMay, Sprint's former president, their tax dodge didn't work. Sprint fired them, and now they are facing bankruptcy.
So what do they do? The sue of course. They're suing Ernst and Young, they're suing their lawyers, and, most egregiously of all, they're suing Sprint! This has to be the height of hypocracy. It's like those carjackers you hear about suing their victims for accidentally running over them while the victim tries to escape.
Molly Ivins has the right idea.
If some Democratic presidential candidate really wanted to distinguish him or herself from the pack, he could try running on a platform of closing down offshore tax shelters and having everybody pay the taxes they owe. And be sure to use the word patriotism when you do it.
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