No smoke without fire

In the 1990s Wall Street had a culture of pushing the rules as far as possible

By Stephen Evans BBC North America business correspondent

Nobody said business had to be dull and grey, exactly - but does it have to be quite this colourful?

After years of confinement to the business pages, it has now hit the front pages of the American tabloids with a vengeance.

There is much personal tragedy... There is also much questioning about how all the glitter could so suddenly disappear

Here in New York, the Daily News whacked onto the streets on Friday with a bold, brash headline - "Crook Street," it said, referring to Wall Street's difficulties.

And if the tabloids are treating it like that, then you know that corporate corruption is starting to permeate the public imagination.

Permeating the public imagination with colourful vignettes.

Icon undone

There is Martha Stewart, for example, a national treasure, an icon through her immensely popular TV show about how to make your home a little more tasteful.

Even the likes of Martha Stewart are being investigated

She is, according to the papers, the "princess of pot-pourri", the "diva of design" or the "home-making diva", according to your penchant for the tabloid bon-mot.

She is also now the subject of an investigation into insider-dealing, and keeping a somewhat lower profile of late.

The allegation is that she off-loaded her shares in a company called ImClone for the odd $227,824 just before the price collapsed.

She, it turns out, is a big friend of ImClone's chief executive, and he had learnt that a drug the firm was developing was not going to get official approval.

Keeping silent

Now, the "princess of pot-pourri" is not saying much, though her lawyers say it was just a routine transaction.

All the same, it has taken the whole issue into millions of homes - everybody in this country has heard of Martha Stewart and pretty well everybody in this country has now heard of the investigation.

The ripples from scandals like WorldCom keep spreading

It has led to the price of shares in Martha Stewart Living Omnimedia slumping somewhat amid the uncertainty.

Apparently it has not led to any slump in the audience for her show. Needless to say, the media moguls are watching closely but say they do not spy any viewer revolt.

The Daily News quotes an executive from Sioux Falls with some relish. The general manager of the KELO station there is quoted as saying he would only worry "when", as he puts it, "she gets walked with an orange suit".

"The first time they see her in handcuffs, they might get a little concerned in Sioux Falls," the executive confides to the mass-circulation tabloid.

We are, though, a long way from that.

This is, after all, only an investigation, merely an allegation which may turn out to be groundless - but we live in feverish times.

Art scandal

It has been said over centuries that rumour gets half way round the world before truth can put its shoes on - and that was way before the internet, and the ability to send rumour sprinting at the click of a mouse.

Or what about this vignette - Case 63, indictment 3418, before Supreme Court Judge Arlene Goldberg in New York.

The defendant was not quite like all the others, the hustlers and the hoodlums and the petty and not-so-petty criminals that throng courts the world over.

This defendant was better groomed, wearing a smart blue suit and earned a cool $332m in the last three years.

L Dennis Kozlowski, the former head of the conglomerate Tyco is accused of avoiding taxes. The allegation is that he bought works of art - a very nice Monet among other things - and hung them on the walls of his duplex in Manhattan.

The snag was that Manhattan is subject to New York State sales tax. So what he is alleged to have done is sent empty boxes, devoid of the said old master, to his office in Connecticut, where there is no relevant sales tax.

It has to be said that Mr Kozlowski protests his innocence and a jury will eventually decide. All the same, the very fact of the charge is remarkable - unthinkable in headier days.

It is clear that in the late 1990s, there was a culture of pushing the rules as far as they would go, and, for some companies - perhaps a few, perhaps a lot - of pushing the rules beyond the proper or even the legal limit.

Suicide

At the very least, there was hubris as bubbles grew bigger and bigger, taking salaries soaring with them. Rules were for wimps.

Accounting had to be "creative", as the euphemism put it. Then the euphemism got toughened a little - "aggressive accounting" became the vogue phrase. Aggressive accounting that is now ending in tears.

There is one final vignette - that of Cliff Baxter, an Enron executive, a husband and a father of two young children.

On 25 January he sat in his Mercedes in Houston, pointed a gun at himself and pulled the trigger.

His suicide note read: "I feel I just can't go on. I've always tried to do the right thing, but where there was once great pride, now it's gone".

There is much personal tragedy. There is also much questioning about how all the glitter could so suddenly disappear.