Sunday, September 17, 2006
Tom Kean's Corporate Wizardry
Former N.J. Governor Tom Kean, who served as a producer on ABC's prevaricating docudrama "The Path To 9-11", is exposed here as a your typically crooked political type:
(Kean's) chief occupation is sitting on various corporate boards, including major financial firms such as CIT Group and Franklin Resources, Pepsico and the huge insurance firm known as United Health Group. He has sat on United Health's board since 1993 -- where he seems to have filled the same role of useful idiot that he played for the ABC producers.
For the past several months, the Securities and Exchange Commission has been investigating the conduct of United Health's management and directors. So have the Internal Revenue Service and prosecutors in the U.S. attorney's office for the Southern District of New York, who have subpoenaed documents from the company. The investigations came to light after a series of probing stories in the Wall Street Journal last May, which exposed the apparent backdating of hundreds of millions of dollars' worth of stock options by United Health management.
Those alleged manipulations, inflating the value of options granted to the company's management, evidently occurred with the connivance of the directors, including Kean, who sat on the company's compensation committee during three crucial years, according to the Journal.
Whether the backdating of the United Health options was legal or not, the failure to disclose those actions to stockholders and the public was probably illegal. The company has since been forced to restate its earnings by nearly $300 million, causing a plunge in the stock's value, and the directors have announced an internal investigation of the scandal. Meanwhile, major shareholders have filed lawsuits accusing Kean and the other directors of failing in their fiduciary duty.
Was Kean gullible, irresponsible, stupid or negligent? Perhaps we will learn when he is put under oath. As financial journalist Andy Serwer said on CNN when the Journal story broke, "These guys just sort of look crooked." Kean never seems to have noticed, and it is worth mentioning that his own compensation as a United Health director in 2004 reached $650,000 -- much higher than average for corporate directors, especially since he missed nearly a quarter of that year's meetings.
Kean doesn't quite seem to comprehend how badly he has compromised himself at United Health, since he continues to behave inappropriately. Last month the Journal reported that several top United Health executives and their spouses donated more than $20,000 to Kean Jr.'s Senate campaign at a fundraiser in Minnesota last May -- held on the same day that Kean Sr. and the other company directors met to consider how they would handle the burgeoning backdating scandal. When the Menendez campaign pointed out this gross conflict of interest, a Kean campaign spokeswoman claimed that the nexus of board meeting and fundraiser was only "a coincidence." The Keans' Republican supporters roared with outrage that anyone would dare to question the former governor's honesty and judgment.