February 9th 2002

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Articles from this issue:

Cover Story: Water - Australia's most urgent priority

Canberra Observed: Simon Crean faces a horrible year ahead

South Australia: Close contest looms in SA Election

A tale of two legacies

Straws in the Wind: Old crooks and new / Paying the piper

East Timor: Opposition warns of Fretilin power grab

MEDIA: ABC TV 'Media Watch' - Who polices the police?

Letters: Public servants defended

Letters: Population: asset or disaster?

Letters: Harris Scarfe retailing business

DEVELOPMENT: Privatisation and the national debt: what is to be done?

Comment: Terrorism, refugees and the the populist resurgence

The new Vietnam: Ho Chi Minh and The Colonel

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Straws in the Wind: Old crooks and new / Paying the piper

by Max Teichmann

News Weekly, February 9, 2002

Old crooks and new

Erratum: In the previous Straws, I appeared to be suggesting that the Bracks Government, in the course of its trashing Melbourne’s past, including renaming everything, might consider having a Squizzy Taylor Square, and a Snowy Cudmore Grove. As a token of recognition of the sufferings of Victoria’s criminals over the years; and Victorian Labor’s acute understanding of the workings of the criminal mind. But, of course, Snowy’s name was CUTMORE, a typographical error.

Although it is a baseless rumour that my father knew Lloyd George, he was in a way acquainted with Snowy and Squizzy, for he was a waiter, suitably dumb, at a café-restaurant, long since gone, in Lonsdale Street. These criminal gentlemen used to dine there regularly, along with their doxies. And so did two very senior Victorian police officers, with their companions. As the hours passed, and the other diners progressively left, the two tables would be brought together. An Entente Cordiale! Isn’t that an interesting piece of Melbourne history?

Of course those days are past. The police are no longer a power in the land - for good or ill. Their seats now being occupied by politicians, and those of Squizzy and Snowy, corporate figures and lawyers. But even at that time, the crims were mere dupes, like "Mac The Knife" in Brecht’s Threepenny Opera. Which is where we are now.

To move from old-fashioned crooks to the present variety and watch before our eyes the kind of corporate disaster which is unfolding for the US mega-corporation Enron and the exposure of the auditing practices and philosophy of one of the world’s Big Five auditing companies, Arthur Andersen, is to see stacking up a major moral crisis for American business. Embracing, as it does, corporate conduct, the behaviour of leading auditors and accountants, and the strangely permissive attitudes of American regulators.

This crash was followed by the collapse of the US K-Mart empire, and doubtless triggered Alan Greenspan’s unscheduled appearance to say that he thought he could see some light at the end, etc, etc, and things in America might be picking up. Maybe. Share prices - dictated by the big institutions immediately responded … a little. We’ll see.

The trouble is, these cheering announcements, the production of revered "experts" and flip-flops in share prices were features of the period leading up to the Great Crash, punctuated every now and then by the collapse of another icon. Each disaster was airily dismissed as one of those necessary casualties in the triumphant march of unregulated American capitalism.

There had been many criticisms and warnings earlier on concerning the conduct of our great international auditing firms and their major clients; of the curious methodology of the big accountants serving these clients viz. the corporations; and the invincible ignorance of the regulating agencies - both American and Australian.

To begin at the beginning. The account of a large corporation constitutes a great prize for auditing firms, in fierce competition, one with another. The client can pick or choose among auditors and will often go for the one most sensitive, most sympathetic to the way the organisation has organised its final accounts and conducted its business.

For many big clients, morally squeamish or professionally prudent auditors need not apply.

The same principle operates in the choice of accountants - he who presents the most creative accounts, in which many a sow’s ear becomes a silk purse, he who has the most ingenious schemes for avoiding tax … gets the engagement.

The only defence against this unhealthy and potentially dangerous situation is a vigilant and principled set of regulatory bodies, a genuinely independent Tax Office, and a Government which protects them both from outside harassment.

This state of affairs is becoming less-and-less attainable, so suffocating is the pressure on government, regulators, tax men and reasonably scrupulous auditors and accountant. Good people go quiet, and just hope the thing stays on the road.

Arthur Andersen, who incidentally supplied the auditing for HIH and the administrators for Ansett, could be a bit unlucky. The other members of the Big Five auditing giants all proceed along similar lines and have been similarly criticised for over-familiarity with clients. But they just haven’t had an Enron.

Yet another development breeding deceit and possible disaster is that auditors now provide a variety of services, of which final auditing is but one. These additional financial services, e.g., administrators, are sold to firms whom they subsequently go on to audit.

Very often the returns from the extra services are far more lucrative than the auditing process and so, the pressure to, if necessary, fudge or even cook the final audit rather than lose or even kill the goose laying all those golden eggs, appears for some, to be irresistible. So the chances of getting another Enron scandal increase even further.

As a further complication: of the 248 Senators and members of the US House of Representatives, 212 receive donations from Enron.

It is unlikely that we are in a situation any better than the Americans. In some respects worse. The US Congress is clearly going to get to the bottom of Enron and follow the robbers into the depths of their caves, giving every indication of urgency.

Whereas the HIH, OneTel and Ansett collapse investigations tick-over slowly, with most of the principals involved going on as if nothing has occurred - nothing that has anything to do with them anyway.

Many are already busy on new schemes involving other people’s money even, hopefully, the taxpayers’. And what was the final wash-up after the four-year ASIC inquiry into the Coles-Myer/Yannon affair? Terry McCrann, almost a lone voice, is still asking.

Our current crop of corporate failures seem likely to finish the same way - never-never land.

Just bad luck for the creditors, employees and small shareholders. So our corporate cowboys, auditors, lawyers and accountants do not fear. This is not America; rather, the banana republic of Keating’s forecast. As Malcolm Fraser once said, better to keep your money under your bed.

Paying the piper

We would appear to have more front organisations in Australia than we have pubs - except that the licensing requirements for the latter are far more stringent. After all, the booze industry is more or less visible - even if not morally accountable to any degree. We know who runs it, who puts up the money, who makes the money (with the occasional hiccup).

We know none of this with our front organisations: for literally anyone can set up or be set-up with a committee of unknowns and a feel-good title together with a collection of incendiary demands to become a political actor.

Whether they have a government grant, whether they are privately bankrolled, whether they have any real membership, whether they fund their publications or someone else picks up the tab - or does it for them, no one knows.

The latest growth area for such mythical representations from Concerned Australians, is the world of snakeheads, and their clients being detained under Australian law, under policies recently re-endorsed in the election. Some of these fronts are new to me; others come with old acquaintances, who appear and re-appear in myriad situations and "crises" - on mischief bent. Funding is not a problem for them nor publicity. I might set out a list of such groups sometime. Immigration would know their lot, or should.

Media access

How potent (i.e., well-heeled) and backed by powerful groups the front is, can be gauged by the ease with which it can get its propaganda stories and fabrications on air. If a public media outlet will relegate its leading news stories or stories, often on matters of great seriousness - to make way for some front’s propaganda piece - and they do - then you have a powerful political actor.

Journos don’t waste their time with paupers or ordinary idealists. Left journalists certainly don’t.

For example: the International Socialists can rely on the welcome mat being put out at the ABC, no matter which cause they are promoting or coalition they’re in. There is now a Refugee Action Collective connected to the ISO.

As soon as this front opened up, I watched for the flare up of "incidents" in the refugee centres, and of course this has been occurring, and the usual agents of influence in our media started pushing and inflating the latest revolutionary affirmation of this faction, as they previously had its roles in anti-globalisation, wharfside demos, smashing of Pauline Hanson’s political meetings and so on. In fact, without constant media sponsorship, groups like these would be nowhere, and their ersatz demos even greater non-events than they are.

They do not represent the views or style of most Australians; but then neither do most of our journos. And in both cases, he who pays the piper calls the tune.

Australia Day

Australia Day came and went and we enjoyed it. We enjoyed it despite all the efforts of various small-time politicians to exploit the occasion for political party, or pressure group propaganda.

The lure of the captive audience is simply too much for public figures who can only draw voluntary listeners from staffers, people angling for a job, or cash for comment journos.

So something like Australia Day is ripe for exploitation; not celebration. The ugliest version of this is now centred around the naturalisation ceremonies, which are very special occasions for recipients and their families.

Just as university degree awarding occasions became hijacked by senior windbags and intellectual non-achievers - so is the act of becoming an Australian citizen, and renouncing your former life allegiances - a very complex and bitter sweet occasion for many ex-migrants... becoming flawed by the vulgar demagogy of listener-starved pollies, who’ve lost all sense of what is either fitting or proper.

Thus a Queensland Labor heavy, Jim Soorley, used his Naturalisation Ceremony speech to say, after the ceremony, "Ruddock, is now as fanatical as the Taliban", etc. etc.

We don’t need pub talk like this to demean such a solemn supposedly non-partisan coming together. Of course the audience cannot answer back, ask questions or walk out - they are pinned against the wall by the clown bullies. And an acolyte then passes this offensive rubbish to the journos, who report it as "news".

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