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They had it all – money, prestige, and power – but it ended in tears. Read how six of the business world's most powerful men were asked to step aside.
August 1, 2010 2:09 by Samuel Potter
Outgoing BP CEO Tony Hayward “would have liked to remain in his job, but is leaving after a firestorm over his handling of the US oil spill because of his ‘love’ for the British firm,” the Economic Times reported. Meanwhile the oil giant is moving forward with plans to install its first American CEO, Robert Dudley, as replacement.
The soon-to-be-former CEO of BP told the Wall Street Journal that he has been unfairly vilified for his handling of the spill, the worst environmental disaster in American history. Hayward's departure follows the largest quarterly loss ever for the British oil giant, a record $17bn, which includes $32bn to cover the costs of the spill. Hayward will exit his post by mutual consent, having said he felt that once oil had stopped spilling from the compromised Macondo well, it was the right time to leave his post.
In the wake of the spill caused by a drilling platform explosion that claimed eleven lives, Hayward was roundly criticized for a series of public relations missteps that enraged local citizens of the affected Gulf coast, as well as US lawmakers.
In an interview with the Guardian in May, Hayward reportedly announced "The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume." A few days later, in an interview with Sky News, Hayward told reporters ""But everything we can see at the moment suggests that the overall environmental impact of this will be very, very modest." Later in May, Hayward told reporters, "There's no one who wants this over more than I do. I would like my life back."
He may be able to recoup his life yet, as the harried CEO is set to exit his post a very wealthy man. The 53-year old former chief will receive a year's salary plus benefits, together valued at more than £1m. He will also reportedly retain his rights to draw a yearly pension of £600,000, once he reaches the age of 55, the BBC reported. All totaled, "Mr Hayward's pension pot is valued at about £11m and he will keep his rights to shares under a long-term performance scheme which could - depending on BP's stock market recovery - eventually be worth several million pounds," the report added.
He told a US Congressional panel that he would wonder “until they put me in the ground “why the US government failed to rescue his firm – Lehman Brothers – the 158-year old investment bank that has been called one of Wall Street’s most venerated businesses. Many observers warned that a failure to rescue the firm would spark “fresh contagion” among investors. And analysts continue to debate the wisdom of letting Lehman collapse, while the government rescued others. But Fuld’s many critics contend that his arrogance was his downfall. A former Lehman vice president authored a book on the firm’s collapse, titled, "A Colossal Failure of Common Sense.” He charges Fuld with arrogance and irresponsibility.
"Fuld has a bunker mentality. He blamed the markets, blamed the short-sellers. The truth is, qualified people warned him several times and he wouldn't listen," McDonald said in an interview with Reuters. There remains, toward Fuld, "a lot of anger in the community out there," he added.
Dick Fuld went down hard following the 2008 collapse of Lehman, losing an estimated $1 billion as Lehman's shares tanked. A slew of legal actions ensued for the former executive, as cities and pension funds brought suits alleging the former chief and others at the firm advised them to make poor investments. Fuld has been subpoenaed by several US grand jury investigations, charged with investigating the firm’s demise.
He and his wife Kathy have reportedly unloaded millions in expensive property and art, maintained a low profile, and dropped off boards of committees and philanthropic organizations.
"He got such negative press – they made him out to be this devil," ABC News quoted one of Fuld’s past associates. "So I think he's embarrassed to be seen in public, afraid someone is going to throw a pie in his face."
But Fuld maintains he’s been vilified and scapegoated, and blames abusive short selling, false rumors, and loss of confidence for the firm’s collapse. The facts speak for themselves, he says, but no one wants to hear them. "You know what? The anniversary's coming up," he said in an ABC interview last year. "I've been pummeled, I've been dumped on, and it's all going to happen again. I can handle it. You know what, let them line up."
Odd as it sounds, America's top commander in Afghanistan was sacked following comments made by McChrystal and staff members in an interview with Rolling Stone magazine. The group denigrated US vice president Biden, presidential envoy Richard Holbrooke, and Karl Eikenberry, the U.S. ambassador to Afghanistan. In one Rolling Stone story, one of McChrystal's advisors called national security advisor James Jones a "clown." One of McChrystal's aides reportedly joked, "Biden? Did you say: 'Bite me'?"
"As difficult as it is to lose Gen. McChrystal, I believe it is the right decision for our national security," the President said, announcing Army Gen. David Petraeus, who once led U.S. forces in Iraq, as successor.
"I welcome debate," Obama said, "but I won't tolerate division," he added.
Dismissed on grounds of insubordination, the White House maintained that the firing was the right decision for national security, and necessary to preserve civilian control of the military. The Los Angeles Times called McChrystal's firing the "most high profile firing since President Harry S. Truman fired Gen. Douglas MacArthur, who was leading international forces in the Korean War."
He is the former CEO of Hollinger International – Conrad Black, the Canadian-born newspaper baron that underwent a dramatic reversal of fortune when he was convicted in a Chicago courtroom in 2007 of fraud and obstruction of justice. Black received a six-and-a-half year prison term.
Black's fall from grace saw the flamboyant CEO convicted of stealing millions in unapproved, tax-free bonuses, orchestrated through newspaper sell-offs. In his prime, Black counted various high profile individuals as friends, including former US secretary of state Henry Kissinger. He presided over one of the world's largest media empires, with titles including the Daily Telegraph, the Chicago Sun-Times, and the Jerusalem Post.
But in his dramatic fall from grace, Black and his associates were accused of skimming around 60 million dollars from Hollinger, between 1999 and 2001. With Black sent to prison, Hollinger went belly up in 2009, and Hollinger shareholders watched their investments evaporate in short order. Famously known for his extravagant lifestyle, observers contend Black overspent with abandon.
"Despite his being a multi-millionaire, the couple's lavish lifestyle quickly outran even Black's deep pockets," the Independent reported.
"Unfortunately for Black, he was embracing the billionaire lifestyle just as his cash cow was about to run dry," the paper added.
Down on his luck these days, Black reportedly borrowed his $2 million bail money from a friend, New York financier Roger Hertog.
Born into poverty, the son of a minister, former CEO and chairman of bankrupt energy giant Enron, died in Aspen, Colorado in 2006 of a heart attack. He was awaiting sentencing after conviction on charges of conspiracy and fraud. Indicted on a laundry list of financial crimes, Lay faced up to 45 years in prison related to the collapse of his Houston-based company, Enron, in what amounted to one of the largest and most spectacular corporate financial scandals in US history.
Lay formed Enron in 1985 through the merger of two natural gas companies, and by 1992 Enron had become the largest natural gas vendor in North America. Lay and his cohorts were alleged to have hidden billions of dollars in debt from failed deals utilizing fraudulent accounting activities. They had the help of one of America’s “Big Five” accounting firms, Arthur Andersen, which later admitted in court that its staff destroyed documents related to the Enron investigation. Between mid-2000, Enron stock went from a share price high of $90, plummeting to less than $1 by the end of November 2001. When the company filed for bankruptcy in December of that year, with assets of more than $63 billion, it became the then largest-ever corporate bankruptcy in US history.
Business Insider lists him among the top 10 white collar criminals in jail. Canadian-born Bernard Ebbers, former head of telecoms giant WorldCom, “started out his professional life as a nightclub bouncer and milkman and later became a high school gym teacher,” the Times Online reported. “He moved into the world of business as a warehouse worker,” the report added.
As the US telecom sector plunged into the financial red, WorldCom continued to overstate its net income to the tune of around $9 billion over several years. The company’s fraudulent accounting practices kept share prices healthy for a time, as others in the sector watched their stock prices tumble. “By the time the company disclosed the fraud in late June 2002, its longtime chief executive, Bernard Ebbers, had been fired and its shares were trading for about $1,” Forbes reported.
When prosecutors caught up with Ebbers, they characterized his deceitful doings as a “perfect storm of corruption,” naming him the mastermind behind the financial deceptions that led to WorldCom’s multi-billion dollar bankruptcy. The former chief exec was indicted on securities fraud, conspiracy charges, and lying to the SEC. Convicted of false financial accounting and defrauding investors of $11 billion, Ebbers is currently serving a prison sentence in Louisiana. He is scheduled for release in 2028.
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