Monday, March 28, 2005

What’s Wrong with Business, part 295

In human history, evil and corruption have flourished in the dark, out of sight of the eyes of reasonable people who can tell wrong-doing when they see it.
So can blogging, by expanding our awareness of what’s going on, bring greater fairness to the world? I bet it can.

Just check out http://www.footnoted.org/, a blog from US freelance business journalist Michelle Leder in Peekskill, N.Y. “Footnoted” is her collection of embarrassing details and suspect deals lurking within the fine print of corporate filings in the U.S.
Her recent scoops include the rising costs of limos and drivers at American Express, and the US$80,000 paid to the CEO of Kerr McGee to encourage volunteer participating in community activities. Note that that’s not his total pay – just a little extra to thank him for joining the chamber of commerce.

But I really like today’s item (you may have to look for it in the Archives section, under March 28, 2005). She has busted John DelPonti, an Executive Vice President at IndyMac Bancorp. in Los Angeles. Seems his compensation includes a sweetheart house deal, in which he gets to rent a $2.5-million house bought for him from the bank for only $6,500 a month (about half the mortgage he would be paying if he was a normal working stiff like, say, his bank’s customers).

Better yet, if LA house prices fall, he doesn’t take the hit. But if they go up, he has the right to buy the house at the bank's purchase price!

Not an unusual deal for big guns in big business, of course. The irony here is that DelPonti’s title is Chief Risk Officer. Let’s hope he does as good a job managing risks for his bank as he does for himself.

(Leder savvily throws in one more barb: “Even more surprising is that DelPonti isn't even one of the top five executives at the company, which kind of makes you wonder what sorts of real estate deals IndyMac dished out to the top cheese.”

As I said, it’s good to know that people are watching out for these things – and that blogging is enabling them to get the message out.

1 comment:

Geoff said...

The only problem is that blogging has no checks and balances. Many people seem to blindly believe everything they read on the web. It is more important than ever to critically read every item and, if it feels wrong, do a little digging. The good thing about the web is that you can google almost anything!