Wednesday Night #1202

March 16, 2005

Bernard Ebbers
It seems only normal that Bernard Ebbers, former C.E.O. of WorldCom, be a topic at Wednesday Night, not so much because of the magnitude (eleven billion dollars) of the fraud, nor of the adverse effect on employees, pensioners and shareholders alike, but because of the exceptionally pertinent case study that it represents.
While it is the Chief Executive Officer who takes the lumps for fraud and/or mismanagement, what is the role of board members? Is their presence meant to represent a cheering section for management, is it to support the corporate structure and action, or is it to ensure the honesty, integrity and profitability of the enterprise? The WorldCom situation is, unfortunately, far from unique. The incestuous nature of board members may colour their view of reality. It appears that it is this process that needs to be rethought and reorganized.
Ebbers faces up to three quarters of a century or more in prison. While Wednesday Nighters agree with the gravity of his actions, they question the role of imprisonment, especially in this instance. If it is retribution, it represents an enormous expenditure of public money without attaining that aim; if it is punishment for his crime, would it not be better for the public to save the cost of retribution and profit financially by stripping him of every penny and all possessions that he has accumulated, thus forcing him to live among us in shame and poverty?

[Editor’s note: we received fascinating insight to the Ebbers’ jury’s deliberations a synopsis of which follows and would indicate that this jury was painstaking in its review of the process:
Several days into the deliberations, after ruling out Sullivan, being wary of Ebbers, the jury was still left with the “reasonable doubt” that Ebbers didn’t know that WorldCom’s books were being cooked…. So the jurors reexamined the judge’s instructions regarding what constitutes “conspiracy” and came to focus on a statement that willful ignorance of the wrongdoing was not the same as “innocence.” They then methodically listed the pros and cons of whether he should have known what was going on. Their conclusion? Either he knew the books were cooked, or, if he didn’t know, it was because he chose not to know and was protecting himself by remaining ignorant of circumstances that were his responsibility to understand.]

President Bush’s international outreach
Has democracy become the latest world religion, with its Mecca in Washington, D.C.? Is its army of salvation (not to be confused with an established religious organization with a similar title) prepared to march throughout the world to proselytize? The prospect of Paul Wolfowitz presiding over the World Bank sends chills up the spine of some Wednesday Nighters, along with New York Times columnist, Paul Krugman who writes that “Developing countries will distrust any economic advice Paul Wolfowitz might give as leader of the World Bank”, while others feel that he will be an agent of the Republicrats in propagating peaceful democracy throughout the planet. For the confused among us (and we are many!) WN suggests a careful reading of the March 17 piece in the Economist Global Agenda.

FOREIGNERS can be forgiven for not knowing what to make of George Bush in his second term. On one hand, he and his secretary of state, Condoleezza Rice, have made mollifying trips to Europe, trying to reassure America’s oldest allies that despite the Iraq war, it wants to remain friends. On the other hand … Last week he nominated John Bolton, one of the State Department’s leading hawks and an outspoken critic of the United Nations, to be America’s ambassador to the UN. With Europeans still scratching their heads about that choice, Mr. Bush has surprised them again by nominating Paul Wolfowitz, one of the chief architects of the Iraq war, to head the World Bank.

Finally, adding insult to injury for a number of Wednesday Nighters, as oil prices soared to a record high, the Senate voted to open Alaska’s Arctic National Wildlife Refuge (ANWR) to oil drilling. It’s not yet a done deal, but this is a major boost.

If it’s Spring, it must be time for politics
It is spring and at this time of year, just prior to the blooming of the crocuses, it is traditional for us to talk of elections at all levels of government, municipal, provincial (or in the case of Québec, “national”) and national (federal). Looking a year and a half ahead, the political survival of both Jean Charest and Paul Martin appears to be in doubt. In Ottawa, Martin has been a disappointment as Prime Minister, any support he does seem to enjoy apparently thanks to the ineffectiveness of the Leader of the Opposition. In Québec the disappointment in Jean Charest is evident and widespread, with very few potential leaders of any of the three parties as yet surfacing to succeed him. It is rumoured that the Conservative party is looking for a new leader to take them into the next election, with speculation focused on New Brunswick’s Bernard Lord and Québec’s Jean Charest; the electorates of both provinces appear eager to export their present premiers to Ottawa. If the speculation is accurate, it seems that for purely political motives, the Conservative Party would be eager to accept a fluently bilingual leader from Québec after 4 consecutive leaders from Alberta.
One of the issues that may just boost the fortunes of the Conservative party is the question of same-sex marriages. Curiously, on the part of the electorate, this appears to be a linguistic rather than religious issue as generally assumed, the majority reportedly supporting the concept, objecting only to the term “marriage,” but favouring other terminology such as civil union. There is no report on whether the term civil union between couples of the opposite sex, would also be acceptable to the majority. It seems unfortunate that the Canadian public’s insistence on the use of consistently correct grammar and context appears to be restricted to this single issue.
One thing that is apparent, the Conservative leader suffers from an inability to articulate his ideas to the public (perhaps the worst communicator that federal politics has seen?), and also gives an impression in the House of someone who is lacking in humour and flair. Some wonder whether Stephen Harper may be a more effective second-in-command than leader of the party.

The underpinnings of our cities
“Out of sight, out of mind.” The universal deterioration of the infrastructure so important to continuing human existence in the twenty-first century represents a challenge and financial burden of incredible magnitude to future generations. Resurfacing roads and planting a few trees are far more aesthetic and visible and much less expensive gestures than programmed renewal of bridges, water and highway systems and the modernization of public transport. The lifespan of capital works, while limited, is infinitely greater than that of elected officials, but the issue will ultimately have to be faced if we wish to avoid returning to medieval methods of water distribution, waste and sewage disposal and public transportation. [Probably not worth thinking about Canada applying to the World Bank for aid as long as Mr. Wolfowitz is there.]Until Canada fully recognizes a distinct municipal level of government, rather than as an adjunct to the provinces, our cities will continue to be underfunded. Montreal public transit suffers immensely from this dependence on provincial “charity” and receives no contributions towards operating costs. When taking into account the problems recently discussed (Wednesday Night #1200) regarding Montreal’s allocation of medical resources, there may be good reason to think seriously about the suggestion of Montreal Gazette writer Henry Aubin that there is a need for a Bloc Montréalais, headed by Peter Trent.

The student strike
Strikes are normally perceived as the withdrawal of services in order to ameliorate working conditions by sensitizing the employer and the public to the importance and value of the striking employees. It is this that distinguishes the current student strikes from most others. The recent action by the government in converting 60% of bursaries to student loans is curious because university fees in Québec are much lower than they are in the other provinces, theoretically, in order to permit a greater percentage of young people from poor families to acquire a higher education. Our university fees are quite low and manageable and, except for students who have to leave their rural homes to come to the cities, quite affordable. These are the ones (curiously, those who are politically most important) who are most adversely affected by the new legislation, which is all the more incomprehensible because the resulting savings are but an insignificant fraction of the entire education budget.
As is normally the case, there is no shortage of multiple definitions of the problem by Wednesday Nighters and a plethora of conflicting solutions. Among some definitions as well as applicable solutions the following are offered:

– Reform teaching methods, which have remained unchanged for centuries (with the exception of class sizes and electronic aids).
– University graduates have difficulty finding jobs on graduation because they have not been prepared to face the real world, whereas there remain great earning opportunities for those properly trained in saleable skills. Offer courses that prepare graduates for the workforce.
– Trade schools serve the purpose of training students in the use of physical skills. It is the purpose of universities to train students in the use of intellectual skills that can help them provide their fellow humans with a continuing evolution of longer, richer life. It is the main purpose of the university to educate them to develop their own human potential.
– Medicare should be augmented with Educare, free education for competent students. We do not necessarily have to provide education, free or subsidized, for incompetent students.
– We should not provide cheap education to students who are more motivated to avoid working than to acquire knowledge. It is costly and the public must pay for it.
– If education is effective, successful graduates will more than repay the cost to the public of their education in enhanced earnings, hence enhanced income tax, as well as innovative ideas leading to an enriched lifestyle.
– However, this leads to a regressive tax system whereby the poor and middle class are bearing the burden of subsidizing free education
– In provinces that have increased their fees and bursaries simultaneously, there has been no exodus by students to other provinces in the search of a cheaper education.

[The scribe would like to add that in any educational system an unwavering fifty percent of students will graduate in the lower half of the class]

QUOTES of the EVENING

• There is an incestuous relationship between board members and presidents… more and more directors should be held to account … what about the audit committee
• One of the problems is that some directors have a fortune of their own, while other directors might be very good, but cannot take the risk. How can we find a pool of honest directors? We have to rethink this whole thing
• Bernie Ebbers will be a lot better looked after [in jail] than the 20,000 people who lost their jobs because of him
• Securities legislation lets banks to secure their debt; there should be provisions in the law to put workers ahead of secured creditors, because they can least afford to suffer their losses
• Infrastructure is not sexy
• Québec students have the best deal in the country. It is a classic case of cowardice. If you raise (both) tuition and bursaries, poor kids benefit
• Sometimes we live in a previous generation. We are sending kids to university to please the parents …
• We have to reverse what is done in university. Fundamentally universities have not changed for centuries … they are ineffective and obsolete, with the exceptions of institutions like the Open Air University in Great Britain, Athabaska
• Out of a class of 30, there will be 3 or 4 who are engaged, questioning, seeking knowledge; the rest are ‘floaters’ who will do whatever it takes to pass the course
• Flamboyance is really Paul Martin’s strong point, but he’s lacking in the panache department
• When did elections ever get fought over important things? It’s the unimportant things over which we’ll fight to the death
• The problem with education is that it has become an entitlement, in the past six years, it has become worse – babysitting at the primary and secondary level, job training at the university level. We have to change the way we think about what we consider an educated person