Sunday, August 14, 2005
Every Street Is Paved With Fool's Gold
In a splendid find today by the Literary Saloon, the Asia Times reports on the Literary Crimes of the Daewoo Chief:
Surely this deserves a place on the shelf next to Al Dunlap's 1996 masterpiece of modest entrepenurial dignity, Mean Business: How I Save Bad Companies and Make Good Companies Great. To my amazement, Amazon lists this book as still in print.
For those who weren't paying attention in Fraud 101, here's what Dunlap was doing in the very year that his book came out. Because he stood to earn millions from stock options, he was pumping up the price of the Sunbeam Corporation stock through some of the oldest accounting tricks in the book -- including, at one point, shipping out millions of dollars worth of barbecue grills to a distributor and immediately counting that as revenue, even though all the grills were returned at the end of the quarter. By 1998 the scam was up, Sunbeam stock tanked, and the company plunged into bankruptcy.
Mr. Dunlap was known in the press as Chainsaw Al. I've always wondered about this. Who actually called him that in day-to-day life? I mean, really? Did his wife? His doctor? Or was it just his publicist and hack business writers? But I will give him this much: it was an apt name, if you think of a chainsaw as being a big tool that recoils and mutilates anyone next to it.
After five years and eight months in exile as a laxly pursued fugitive, Kim Woo-choong returned to the motherland in June to face charges of political payoffs, illegal loans and accounting fraud. There is one charge that is missing from the list, and that is being a literary fraud.
In 1989, Kim penned a book in Korean called The World Is Big and There's Lots to Do. It was required reading for all employees of the Daewoo empire. It was the company Koran, the chaebol bible, and in 1992 it was translated into English and published as, Every Street is Paved with Gold: The Real Road to Success.... Early in his book, Kim writes, "Business is more than making money; losing less money is sometimes important, too." He also wrote, "In business, you can't just add one and one and get two. You have to see one turning into 10, and 10 turning into 50. That's the way to count in business." He is believed to be responsible for the largest accounting fraud in history, bigger than Enron and WorldCom. When Daewoo tanked with $80 billion in debt, Kim fled the country.
Surely this deserves a place on the shelf next to Al Dunlap's 1996 masterpiece of modest entrepenurial dignity, Mean Business: How I Save Bad Companies and Make Good Companies Great. To my amazement, Amazon lists this book as still in print.
For those who weren't paying attention in Fraud 101, here's what Dunlap was doing in the very year that his book came out. Because he stood to earn millions from stock options, he was pumping up the price of the Sunbeam Corporation stock through some of the oldest accounting tricks in the book -- including, at one point, shipping out millions of dollars worth of barbecue grills to a distributor and immediately counting that as revenue, even though all the grills were returned at the end of the quarter. By 1998 the scam was up, Sunbeam stock tanked, and the company plunged into bankruptcy.
Mr. Dunlap was known in the press as Chainsaw Al. I've always wondered about this. Who actually called him that in day-to-day life? I mean, really? Did his wife? His doctor? Or was it just his publicist and hack business writers? But I will give him this much: it was an apt name, if you think of a chainsaw as being a big tool that recoils and mutilates anyone next to it.
