In Business This Week: Headliner
Edward Whitacre Jr.: Showing Muscle in Long Distance
Chalk one up for Ed Whitacre. In mid-February, things looked dire for the SBC Communications chief's bid to enter the long-distance market. That's when the Justice Dept. said SBC's petition to provide long-distance service in Texas had problems. But on June 13, DOJ gave an unexpected O.K. to a revised SBC application detailing how it gives rival phone companies access to its network.
The approval signals the petition may also pass muster with the Federal Communications Commission. So Whitacre suddenly has gained clout against competitors such as AT&T. Since telecom laws were relaxed in 1996, he has spent billions on acquisitions and technology to turn SBC from a regional monopoly into a global player. Long distance was the final piece of his plan.
A charming but tough negotiator, Whitacre has been called a gunslinger by FCC officials for his efforts to keep rivals out of SBC territory. That he now grasps regulatory requirements suggests that SBC's bids for long-distance service in California and Kansas could come swiftly.By Roger O. Crockett in Chicago; Edited by Anne NewmanReturn to top
Chasing the Mob Down the Street
If you think the campaign against the mob on Wall Street has died down, guess again. On June 14, federal authorities in Manhattan announced the largest securities-fraud case in history, alleging $50 million in rip-offs from manipulation of thinly traded micro-cap securities. Among the 120 defendants were members and associates of all five New York Mafia families. The charges ranged from securities fraud to extortion and an alleged plot to kill a cooperating witness. The defendants included company executives and a New York City detective, who was accused of leaking information on mob probes. One sobering note: Some of the alleged scams took place in the past two years--well after the feds began their much-trumpeted campaign against stock fraud and organized crime on the Street.Edited by Anne NewmanReturn to top
Time Warner-EMI: Perfect Harmony?
Could Time Warner's $20 billion merger with British record company EMI Group hit some sour notes? On June 14, European Union trustbusters promised a thorough review lasting four more months. Such EU inquiries are reserved for the most complex cases. But the companies remain undaunted. Time Warner says it's confident of approval and expects to close the deal as expected by yearend. EMI contends the joint venture's share of the European recorded music market would be less than 30% and its share of the European music publishing market would be less than 15%.Edited by Anne NewmanReturn to top
Fessing Up to Funny Numbers
Are investigators closing in on former CUC International Chairman Walter Forbes? On June 14, three of his former employees, including Chief Financial Officer Cosmo Corigliano, pleaded guilty to fraudulent accounting. Begun in the late 1980s, the fraud inflated operating income by $500 million and was discovered after CUC merged with HFS to form Cendant. Corigliano blamed a culture "ingrained in us by our superiors." Cendant CEO Henry Silverman says those superiors were Forbes and his right-hand man, Kirk Shelton. Shelton's lawyer denies the allegation and Forbes's lawyer did not reply. Federal authorities say say they are continuing their probe.Edited by Anne NewmanReturn to top