Once again Business Page comes from the United States of America and
covers a few significant and relevant items or matters reported in the US
press during the past week. As the week closed it was the unbelievable
retirement package paid by Exxon Mobil - parent company of the oil giant
Esso, one of the companies operating in Guyana - to its retiring Chairman
Lee R Raymond. What is particularly angering to the American public is that
the news comes on top of the US$36 billion profit - about 70 times the
national budget of Guyana - announced by the company recently.
They reason that such profits conflict with the oil companies'
explanation that the price surge at the pumps is due to supply factors. In
the past year the price at the US pump has jumped more than 20 per cent, and
there is a fear that US consumers will soon pay three US dollars per gallon,
prompting calls in this free market Mecca for government intervention!
But back to Mr Raymond's package, which is among the highest compensation
packages ever - though well short of Disney's Michael Eisner, the all-time
highest with a package of more than $550 million. The oil industry has
undergone further consolidation from the days when the 'seven sisters' -
five American, one British and one Dutch - manipulated prices, played
politics and controlled the world's oil wherever situated. Venezuela's
Chavez and Iran's Ahmadinejad notwithstanding, the oil companies'
stranglehold on the world's precious non-renewable resource has barely
diminished, and they regard any talk of the oil companies sharing the burden
of oil price hike brought about by any supply constraints as pure heresy.
Can anyone really be worth US$144,573 per day or US$6,000 per hour even as
President George Bush must be regretting his decision to quit his Texas
oil business for politics, which earned him and his wife in 2005 a mere
$619,000 before tax of just under $200,000, and a poor job rating from his
employers, the American people. He is unlikely to be a drawing card for
speaking engagements which are the main source of income for former
presidents. Maybe he will go back to oil.
Pardon the aside, but how can Guyana which for years has struggled to
raise per capita GDP to US$1,000 afford to exempt from taxes the income of
the President, top people in the judiciary, the Ministry of Finance, the
Revenue Authority, the Anti-Poverty Unit and a host of others? Clearly when
it comes to taxes, some are outside and above the law - the very antithesis
of the rule of law and the underpinning of our constitution.
Across the USA, hundreds of thousands of mainly Mexican immigrants have
taken to the streets as Washington grapples with how to deal with some
twelve million illegal immigrants whose contribution and cost to the US
economy is the subject of intense debate. Are they taking the work from the
30% of American high school students who fail to graduate and are barely
able to take up the declining number of blue collar jobs, or are they doing
the work that Americans and legal immigrants regard as too menial? With the
USA, Canada and Mexico in a free trade area (NAFTA), mass deportation is
clearly not an option, and many undocumented Guyanese in the USA must have
built their hopes on a package that included an amnesty and a generous guest
Part of the immigration reform under consideration is the construction of
a wall along the Mexican-US border while employers of the illegal immigrants
have expressed concerns that legalising the status of the undocumented
millions would embolden them to demand immediate improvement in their pay
And that poster child of corporate maladministration and greed, Enron, is
once again in the news with former Enron Chairman Ken Lay and CEO Jeffrey
Skilling taking the stand in the case US v Skilling and Lay. The trial pits
some of Lay and Skilling's former colleagues as witnesses in the case to
make the company's top brass pay for deceiving investors, including over
employees' pension funds, even as they made millions from dumping their own
holdings when they must have known that the company was in deep financial
trouble. These guys are nothing if not bold and one has to admire Skilling's
brass when he claimed that Enron's fundamentals were so strong there was no
need to engage in the kind of securities fraud that the prosecution is
The case is the culmination of years of painstaking work, in which the
prosecution built its case block by block and deal by deal with the lesser
executives of Enron, who in return for some clemency have agreed to testify
against their former bosses. The trial has been receiving wide coverage and
the press reports have been so severe, that had they taken place in Guyana
the lawyers for Lay and Skilling would be going to court daily for ex parte
injunctions against publishers and producers. And as for building any case
against corporate leaders, the DPP, the police and the Securities Council
would have been blocked by brazen lawyers demanding that they cease, desist
Going to jail for lying - no lie!
In sports, baseball great Barry Bonds is facing a grand jury looking into
a case of lying to officials during an investigation into possible steroid
use by athletes. A casual disregard for the truth is associated with so many
public figures, politicians, professionals and businesspersons in Guyana
that, were they speaking under oath, we would not have enough room in our
jails. Just think of the number of fake tax returns that are submitted each
year by persons and businesses who solemnly declare that their tax return is
'true, correct and complete in every respect, and fully discloses my income
from all sources' chargeable under the tax laws. And they get their
accountants to join them in the lies!
In a country often associated with serious wrongdoings by the rich and
the powerful, several leading politicians with close connections to the
White House have had to resign their positions and have either been
convicted or are facing criminal charges on corruption and political
financing improprieties. It makes one wonder why third world countries like
Guyana are so different, and whether their condition is the result of a
general state of lawlessness or vice-versa. Unless Guyana returns to the
rule of law, the road to recovery will not only be longer but much rockier.
The tax system in the fight against crime:
And speaking of taxation, I found out that it was the tax authorities
that helped to bring down Al Capone, one of America's most notorious
criminals and a symbol of the collapse of law and order in the United States
during the 1920s and '30s.
His was a leading role in the illegal activities that lent Chicago its
reputation as a lawless city. He controlled all kinds of businesses - bookie
joints, gambling houses, brothels, horse and race tracks, nightclubs and
distilleries and breweries with a reported income of $100,000,000 a year. He
owned a sizable interest in yes, a laundry operation in Chicago. Capone's
spy network, including newspaper boys and policemen, helped him to discover
and pre-empt plotters, while his skill at isolating and killing his enemies
guaranteed his success and survival. Ruthless as he was, Capone had another
side, and often treated people fairly and generously. He was the first to
open soup kitchens after the 1929 stock market crash and he ordered
merchants to give clothes and food to the needy at his expense.
But it was not his murderous exploits which led to his demise, nor was
his philanthropy able to save him in the end. It was the simple matter of
taxes, as the government used a 1927 Supreme Court ruling that illegal
profits were in fact taxable to indict Capone for income tax evasion. With
all his business done through front men and assets in the name of others, he
was a non-person for tax purposes.
But that did not deter Frank Wilson of the IRS's Special Intelligence
Unit, who was assigned the task of dealing with the Capone tax audit. Wilson
soon discovered a cash receipts ledger that not only showed the operation's
net profits for a gambling house, but also contained Capone's name. It was
more than the smoking gun that linked taxable income to Capone as this was
followed by the admission of his tax lawyer Lawrence P Mattingly in a letter
to the government that Capone indeed had an income.
The beginning of the end:
Wilson's ledger, Matt-ingly's letter, and the coercion of witnesses was
the basis of a 1931 indictment for income tax evasion for the years 1925-29.
The vinegar in the poisoned chalice was a charge of failure to file tax
returns for the years 1928 and 1929 and conspiracy to violate Prohibition
laws from 1922-31. Capone, hoping to make a plea bargain, pleaded guilty but
Judge James H. Wilkerson was neither intimidated nor generous. Capone
changed his pleas to not guilty hoping instead to bribe the jury. Again he
was outfoxed by Judge Wilkerson with some last-minute switch of the jury
Although only five of the twenty-three counts stuck, these were
sufficient for Judge Wilkerson to sentence Capone to a total of ten years in
federal prison and one year in the county jail. After serving the full term,
Capone came out from jail a broken man in poor health, and the life of one
of the US's most notorious criminals soon mercifully ended.
Is there a lesson for Guyana in all of this?
Have a happy Easter holiday!