Mutual ownership in action

The John Lewis group, which owns the department stores and the Waitrose food supermarkets, had an excellent 2009 trading year with a 10% rise in profits. In consequence, every one of the workforce, even someone who joined only last week, will receive a 15% bonus, which is equivalent to eight weeks pay.

Note that the John Lewis group faces stiff competition on the high street, especially from food supermarket chains such as Tesco, Asda and Morrisons. John Lewis, the UK's favourite stores proves that mutual ownership beats the very best competition at its own game. The key ingredient is the company loyalty and dedication that mutual ownership confers. Something that the Wall-Mart owned Asda will never be able to offer, given its style of authoritarian management.

Arthur Andersen reprise

So, the demise of auditor Arthur Andersen almost 10 years ago, amid the Enron scandal, has not taught the audit profession anything. Thanks to the 2200 page report by bankruptcy examiner Anton Valukas, we now have a definitive account of the accounting tricks the led up to the collapse of Lehman Brothers in 2008. Lehman's collapse led, in turn, to the general collapse of the world's financial system.

The Anglo connection in this mess is quite clear. No law company in the US would certify the off-books financial manipulation employed by Lehman. Lehman then turned to its London based office to find a compliant lawyer in the "light touch" regulatory environment created by New Labour. Linklaters was the London law firm that provided the legal certification for the off-books transactions. Ernst and Young then relied on this legal opinion in auditing Lehman's books. In the process Ernst earned $100 million in fees over the four year period heading up to Lehman's collapse.

The role of Lehman's board of directors in this mess provides an interesting facet into the working of corporate America. The directors have a duty of care in overseeing the financial affairs of any corporation ( see Chapter 7 in Sabotaging America). However, the crucial point here is that the duty of care is to the corporation and not to the shareholders, who actually own the company.

The net result of this artificiality is that we have a self interested accountant providing advice to a mythical person (the US corporation), which is accountable to no one but itself. It is a world of cynical liars who have yet to be brought to justice for the evil they have wrought. I expect they never will be.

My next blog will give some good UK news about how things should be - but America is not interested.

The sabotage continues

As every day passes it becomes increasingly clear that the Washington centered project for sabotaging America continues apace. Most thinking citizens now despair for the future of their country. Narrow financial and ideological interests dominate all political debate. For example, Democrat abortion opponents hold hostage even the pathetic attempt at health care reform. The Republicans are determined to stop any legislation from passing however beneficial it might be to the country. Reform of the utterly corrupt financial system is now only a dream.

As usual, the media has been more concerned with distractions than with public duty to hold to account the politicians we pay for. The groveling apology that Tiger Woods felt obliged to make was totally in keeping with the warped values of the news media. In general, the public at large has been kept in woeful ignorance of the true state of the US position in the world.

The Press and Congress continue to let America down. One cannot be hopeful that anything will change for the better. Good luck one and all.