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Printed from the Charlotte Observer - www.CharlotteObserver.com
Posted: Friday, Oct. 10, 2008

On the public dole, but still partying

Published in: Fannie Flono

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So Wachovia was going to provide a junket for some of its executives too? Oh, excuse me, it was a business reward and incentive trip.

That's how the Los Angeles Times described it Thursday. Our own Charlotte-based Wachovia had planned to pick up the tab for an all-expenses-paid cruise to the Greek Isles on Saturday for up to 75 employees of brokerage A.G. Edwards, which the bank acquired last year. But the cruise was cancelled on Thursday.

This, of course, is occurring as Wells Fargo negotiates to acquire Wachovia after the bank teetered on financial implosion a couple of weeks ago. We, the taxpayers, may become part of the bank's rescue package too.

The Wachovia revelation follows a more mouth-gaping one about AIG, the mega-insurer that we taxpayers have already bailed out to the tune of $85 billion. Flush with our money, an AIG subsidiary underwrote a lavish $440,000 weeklong spa retreat recently for top sales agents. The breakdown?

$139,375.30 was spent on rooms.

$147,301.71 was spent on banquets.

$6,939.09 was spent on golf.

$23,000 was spent on spa services including manicures, pedicures and hairstyling.

Mad yet? Wait.

At the congressional hearing where this was revealed, another stunner was dropped: AIG executives apparently schemed to hide problems from auditors even as losses mounted so they could continue to reap bonuses and other rewards. Executives who helped tank the company received performance bonuses. Former CEO Martin J. Sullivan's was $5 million.

There's more.

AIG was still defending the spa retreat Wednesday, calling it a “business event” planned “months before” and hosted by a subsidiary for independent life insurance agents. No AIG executives attended, they say.

And AIG had plans to host an event at the swank Ritz-Carlton Resort in Half Moon Bay in California next week for 150 AIG brokers. The goal of the conference is “to motivate and educate” agents on selling insurance to high-end clients, officials said.

Despite all that, the Federal Reserve, using more of our money, agreed this week to lend American International Group Inc. another $37.8 billion.

Excuse me. @#$%&*#@!!

Somebody's not getting it. When you have your hand out for public money, it's a bit unseemly to spend any of it on extravagances like spa retreats. In truth, it's obscene.

New AIG head Edward Liddy at least is making noises like he understands that.

He recently replaced former CEO Robert Willumstad as a condition for getting the federal loan. Late Thursday, he cancelled the Half Moon Bay event AIG had planned for next week. And earlier, he wrote Treasury Secretary Henry Paulson that the company intends to reevaluate expenses. “We understand that our company is now facing very different challenges. We owe our employees and the American public new standards and approaches.”

Gee, it's finally sinking in after five years of perp walks by prominent executives?

At least 16 corporate executives have been sentenced to 20 years or more in prison since 2003. Former WorldCom Inc. Chairman Bernard Ebbers is serving 25 years for accounting fraud, and Enron Corp. ex-CEO Jeffrey Skilling got a 24-year term for the same crime. Bayou Group LLC's Samuel Israel was sentenced in April to 20 years for fraud.

Unfortunately, too many of these executives believe they're not like the rest of us. They don't reevaluate their actions when circumstances turn bad. They've worked out golden parachutes for themselves, and to heck with the rest of us.

Enough. We're holding the purse-strings now. The government, acting on our behalf, can put a stop to these excesses. There should be no parties on our dime.

Fannie Flono is an Observer associate editor. Write to her at the Observer, P.O. Box 30308, Charlotte, N.C. 28230-0308. E-mail: fflono@charlotteobserver.com.

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