Meg Whitman Week -- Wednesday: A Tawdry Episode

"Why did she risk the assault on her integrity and that of the company she has run so well? She certainly didn't need the money. Nor could she have been unaware of how unfair the practice is to small shareholders."

-- William G. Flanagan, Dirty Rotten CEOs, on Meg Whitman

"It's time to run California like a business."

-- Meg Whitman

Meg Whitman isn't the richest woman in California. She's only the fourth richest. In fact, she's barely the 897th richest person in the universe. And voters get that. That's what gives her that common touch you just wouldn't get from Queen Beatrix of the Netherlands.

And Meg Whitman earned her money herself. All $1.4 billion of it. It came from perseverance, patience and long hard honest work. Except for the $1.78 million from Goldman Sachs. Which she stole.

But she gave it back when they caught her. (Maybe there's a campaign slogan in that: "Whitman for Governor. If You Catch Me Stealing I'll Give it Back.") And the whole incident made her feel just awful.

She not only returned the cash, she emailed this note:

"The last 24 hours have been painful for me. There is nothing worse than having your integrity questioned under circumstances where you know that you did nothing wrong and followed all the rules. Given my experience yesterday, I plan to participate in the growing national debate about corporate governance and business ethics."

And since that day, her life has been charted by one lodestar and driven by one idea: The rules of corporate governance and business ethics must be loosened up.

But I'm getting ahead of myself.

It's like this:

Meg Whitman was the CEO of eBay. EBay's investment bankers were Goldman Sachs. EBay didn't have to hire Goldman Sachs to be their investment bankers, because this was a few years ago, when there were lots of banks, and not just the three we keep bailing out. Goldman Sachs was very grateful for eBay's business and they had a special way of showing their gratitude to eBay's executives. Goldman Sachs would let them buy shares in other companies whose initial public offerings they were underwriting. This was during the dot-com era and IPO companies often posted huge first-day gains. After Meg Whitman brought eBay's business to Goldman Sachs, she bought shares in 100 Goldman Sachs IPOs one day and sold them the next day. She made 1.78 million dollars.

It was a good day's work.

Don't think of it as a kickback. Think of it like Discover, the Card that Pays You Back.

Former SEC commissioner Steve Wallman had a less nice way to describe it:

"It's a black-and-white corporate bribery issue."

Who else was getting Goldman Sachs' insider trading frequent flier miles? People like the hardworking executives at WorldCom and Enron chairman Kenny Lay.

The process was called "spinning." Sorry, you're not allowed to do it anymore.

In 2002, a House Financial Services Committee found out about it. And so did eBay stockholders, who then sued their own executives for breaching their fiduciary responsibilities to the company by insider trading and not bringing enough for everyone.

Whitman and other eBay executives settled the suit by paying three million dollars, while denying that any of the allegations were true. Goldman Sachs kicked in another 300 grand.

By complete and total coincidence, Meg Whitman had been given a seat on the board of Goldman Sachs. She was forced to resign in disgrace. She'd been there 14 months. Which reminds me of my favorite line from Wall Street:

"You'll have the shortest executive career since that Pope that got poisoned."

It must have hurt. To a grade-grubbing ass-kissing resume-polisher like Meg Whitman it must have really, really hurt.

I think it's the whole reason she's running for governor. I think she doesn't just prattle on about cutting unfair regulations all the time because it's a Republican talking point. It's personal. She broke a rule. So the rules must be wrong.

I think what she really wants is vindication for her shame.

I don't think she wants to be governor for the fame or the power. And she's made it abundantly clear that she doesn't want the job so she can help anyone.

I think she thinks the people of California are the tools of her absolution.

Comments

[kburlz]

I wouldn't think California would be dumb enough to elect her, although, they did vote in the current guy based on his movie slogans.

[GrainOSand]

Whenever I have occasion to suggest the system is slanted unfairly towards a privileged few, some hypnotized, indoctrinated, limited vision due to self-serving blindness individual­...usually pipes in about how well they are doing and how the system is fair and how hard work pays off -- as if they are providing some sort of education. We all are Meg Whitman by such a person’s point of view. We all have the right to work hard and become successful and enjoy the spoils that come to those who reach the upper echelon of wealth creation.

This song ain’t never been about the rich or Meg Whitman in particular. It is always about the mechanics of a system that tilts favorably to a few. How those few came to be “the few” is as wide and varied as morality amongst all humans. How they function as one of the few to whom much has been given and much is expected, is also as wide and varied as human tendency to do right or wrong, good or evil. Money is not the root, greed is not the root, what is the root is a feeling of dissatisfaction with self that drives a tendency to be insatiable. How tortured of an existence that must be, to supposedly have it all, yet find that not to be enough, to the point where you scheme to get more due to the emptiness inside. This is America’s affliction, not Meg Whitman’s alone.

[WorkingClass]

I agree Grain-O. America's affliction is materialism. You can never get enough money to fill the hole where your soul should be.

[rgblue]

Sweet!

Is Whitman fooling anyone, except herself?

[BottomLine2008]

She'll never beat Jerry Brown.

[Adartist777]

This is a warning to the voters of California­....beware of Meg Whitman! If she gets elected, she'll run California as she ran eBay!

[thehuff]

Meg Whitman couldn't care less about the people of California; the only thing Meg Whitman cares about is her own pocketbook. Here's how I know:
From about 2001 to 2005 I was, a various times, either a Sliver, Gold, or Platinum Powerseller on eBay.
During that time period I wrote to Ms. Whitman on three seperate occassions. One letter was sent by regular first class mail, one by Fedex and the other was sent by Registered Mail (signature required). All three letters were the exact same letter and the content involved three ideas of how eBay could make itself a safer place for both sellers and buyers alike. eBay has always suffered matters of fraud, security and issues with conterfeit merchandise (it's no great secret the lawsuits that eBay has lost to LVMH and Hermes).
Being a Powerseller I felt as if I had first hand experience on many of these issues as I suffered them on a regular basis, unlike some Customer Service Rep sitting in a mini-cubicle at eBay who merely answers phones and has never actually sold anything on their site. My letter was short (3/4 page) and to the point. Quite honestly, I was simply trying to be helpful.
Meg Whitman never replied to any of those letters. No, not even a scripted form letter from some flunky.

[zanzig]

Can't wait to see what Thursday brings! This is a hoot.

[punkingale]

I sent this article to my friend in Huntington Beach.

[benalbanach]

It's all rather touching,the way the Rich look after each other. Brings tears to the eyes

[MrJoyboy]

It's proper and fitting that the male terminator be followed by the female terminator as Governor of California.

[unitron]

California needs money.

They should skip the election and auction off the governership on one of those internet auction thingies.

[bighat]

More people than just her. If I recall correctly even Tom Brokaw in the eighties was allowed in the preferential purchasing of IPOs of dot com companies. But no idea if he sold the nest day. Just one more reason why the rich and famous get richer.

[sufi66]

They gave us Ronnie and Arnold. two complete frauds, so why not her?

There's no limit to tastelessness.

[picard922]

Heheheheh another Meg Whitman "fan." Californians will rue the day they elect this woman.

[kevlar0076]

you know, we in California have been screwed enough by our Governor's, I thought Arnold was bad, if she wins I am moving. I dont think she has a chance, but then again, we have had some really bad Governor's in the past, so I am not ruling anything out...I hope she spends all of her money on the campaign and then loses

[sufi66]

Don'f forget the lunatic Reagan Ca. stupidly legitimized. Because of his "brilliant" idea that one could decrease taxes and INCREASE government revenue we are in the fix we have today.

Thanks California!