The Fallen

Debt, financial chicanery, and bad decisions were among the ills in these corner offices

While trying to transform a French utility into a global media conglomerate, JEAN-MARIE MESSIER rarely passed up a chance for self-promotion. Most French chief executives prefer to lead discreet private lives; Messier hung out with rock stars and moved his family into a $17.5 million Park Avenue spread paid for by his company, Vivendi Universal (V ). Now, less than five months after his forced resignation, he has published a book, My True Diary, that blames a cabal of French business leaders for plotting against him.

Messier, 46, isn't paranoid--the French Establishment did turn on him. But it's also true that he created a mammoth mess. He pushed the company to the brink of collapse by running up $19 billion in debt from an acquisition spree and spooking investors with confusing financial communications, which are now under investigation by authorities in both the U.S. and France. Messier's ego, though, is intact: At a recent Paris press conference, he described his ouster as a setback for French capitalism.

With his thick New York accent and blunt manner, JOSEPH P. NACCHIO often came across as the Joe Pesci of the telecom world. The former CEO and chairman of Qwest Communications International Inc. (Q ) created one of the biggest players in the new wave of phone companies. But by early 2002, Qwest was staggering under $25 billion in debt. Nacchio was out by June. He later testified before a Congressional committee investigating alleged accounting chicanery. Nacchio maintains his innocence. But with a number of shareholder suits pending, his more than $150 million worth of stock sales and aggressive management style may come back to bite him.

He was once the heir apparent of the kingdom that would rule the media world. Now, ROBERT W. PITTMAN is known for his abrupt resignation as AOL Time Warner's (AOL ) chief operating officer in July--right before allegations of accounting misdeeds at the AOL unit surfaced. Although Pittman, 49, has not been implicated in the ongoing federal investigations, his luster had already dulled when he was passed over to succeed departing CEO Gerald M. Levin. As the troubles at the company mounted, Pittman kept offering wildly optimistic predictions of advertising revenues. That was just one reason why he became the target of Time Warner employees' growing resentment over their vaporized retirement portfolios.

As CEO of Andersen Worldwide, JOSEPH F. BERARDINO presided over the year's biggest accounting scandals and the implosion of a legendary partnership. Andersen auditors had stamped their approval on the dirty books of Enron, Global Crossing, Qwest Communications, and WorldCom, the single largest financial fraud of all time. A lifetime Andersen employee, Berardino, 53, had the chance to take a hard line on ethics and quality in the wake of earlier scandals at Waste Management (WMI ) and Sunbeam. Instead, insiders say, he put more emphasis on revenue growth. Berardino ultimately resigned in disgrace in March--unemployable in his profession. "I can sell hot dogs if I have to," he said.

Outgoing McDonald's Corp. (MCD ) CEO JACK M. GREENBERG leaves the burger chain with supersize problems: slow service, schizophrenic marketing, and its first-ever loss in the fourth quarter. Not all the company's troubles are Greenberg's doing, though. McDonald's is a growing target of global protest, and an Indonesian franchise was recently bombed by terrorists. In the courts, the company faces a lawsuit brought by parents of two teenagers who blame Big Macs and fries for their children's obesity. Still grasping for a recipe for profits, the company has lured former Vice-Chairman Jim Cantalupo back from retirement. He'll have a tough job shoring up the sagging arches.

CHARLES C. CONAWAY, 42, spent less than two years as chief executive of Kmart Corp. (KM ) But he left his mark on the 103-year-old discounter: Before his mid-March ouster, Conaway led Kmart into retailing's largest bankruptcy filing ever, in January. The energetic Conaway (he even bounded up the steps to bankruptcy court) wanted to improve the company's marketing, but most of what he tried flopped. Not all of the company's bad news was Conaway's fault, though. Kmart's strongest brand is Martha Stewart. Enough said.

History may rewrite the bum verdict on THOMAS MIDDELHOFF's tenure as chief executive of German media giant Bertelsmann. Middelhoff, who was pushed out in July, made deals that in a few years may look smart, such as the string of transactions that gave Bertelsmann control of RTL Group, Europe's biggest TV company. But like so many New Economy heroes, Middelhoff was transfixed by the Internet hype. His online ventures stumbled, most famously his quixotic attempt to legitimize the free music-swapping service Napster Inc. Still, it was Middelhoff who gave the former Bible publisher its global cachet.

RICHARD J. KOGAN never wanted to sell Schering-Plough Corp. (SGP ) And he won't: That job is likely to fall to his successor. The drugmaker's biggest problem is that even during the flush years of the 1990s, Kogan neglected its manufacturing operations: In 1999, the company shipped asthma inhalers that didn't contain any medicine. In May of this year, Schering agreed to pay a $500 million fine and hire outside experts to bring its operations up to standard.

But that's not the end of the matter. The U.S. Attorney's Office in New Jersey is investigating certain products made at a Schering plant in Puerto Rico. And the Securities & Exchange Commission began an inquiry into meetings Kogan had with big investors this fall to determine if he improperly disclosed material information. Kogan declined to comment. The question now is whether Kogan's successor (Pharmacia CEO Fred Hassan is the leading candidate) will try to remedy the company's ills or simply find a rich buyer.

Allegations of sham energy trades and accounting fraud. With Dynegy Inc. (DYN ) facing these charges, it was obvious that CHARLES L. WATSON, 52, wouldn't last long in his job as CEO. He resigned in May. Now, Dynegy is selling assets and dismantling its energy-trading business. Watson faces various investigations and lawsuits; he couldn't be reached for comment. But he has said that he may return to the industry. It's hard to think of any shareholder who would encourage that.

The biggest mistake Credit Suisse Group CEO LUKAS MUHLEMANN, 53, made was clinging too tightly to power. Shareholders wanted him to give up his role either as CEO or as chairman. But he resisted--and lost both.

His other mistakes included the $11.5 billion acquisition of Donaldson, Lufkin & Jenrette Inc. at the top of the market in 2000. And Credit Suisse First Boston (CSR ), the group's investment-banking division, continued to lose money. Now, Credit Suisse may have to spin off the investment bank. It's a big comedown from the days when the group was one of Europe's most dynamic and profitable financial-services companies.

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