Richard Scrushy, founder and chief executive of HealthSouth, was fired amid allegations that he orchestrated a conspiracy to overstate the profits of the Birmingham health services firm by $2.5 billion since 1997. Five top HealthSouth executives pleaded guilty to criminal charges of participating in the fraud conspiracy. And the SEC said it would seek $700 million from Scrushy as part of a civil fraud action. Through his 15-member legal team, Scrushy denied any wrongdoing.
Philip Morris's Bill
More fallout from that $10.1 billion court judgment against Philip Morris for lying about the health benefits of "light" cigarettes. Unable to come up with the $12 billion bond to appeal the case, the company said it may be forced to file for bankruptcy. And Virginia and California, expecting tobacco-settlement payments from Philip Morris, were forced to cancel bond offerings in the face of ratings downgrades. Meanwhile, sister company Kraft Foods found itself unable to borrow money on the commercial paper market.
Looking Under the Table
The Justice Department confirmed it is investigating whether Mobil Oil, before its merger with Exxon, knowingly participated in a bribery scheme to win access to Kazakhstan's oil fields. The announcement came as the government indicted former Mobil consultant James Giffen for allegedly paying $78 million in bribes to two Kazakh officials, and J. Bryan Williams, a former Mobil executive, for evading taxes on a $2 million kickback he allegedly got from Giffen. Exxon Mobil said it had no knowledge of illegal payments.
While financial markets celebrated what was viewed as imminent U.S. victory in the Iraq war, signals from the real economy were decidedly less ebullient. Indexes from the Institute for Supply Management showed that the manufacturing and service sectors of the economy were both contracting last month, for the first time in more than a year. And the government reported that the number of payroll jobs fell by more than 100,000 last month, the fourth decline in five months.
Free, Clear Over the Bay?
For roughly $50,000, businesses can buy the right to tell motorists crossing the Chesapeake Bay Bridge on a Friday night that they've paid the $2.50 toll for them. Maryland officials hope the toll-free time period starting at 7 p.m. will reduce the traditional summer weekend crunch that can have lines stretching back 12 miles. Companies that sponsor the experimental program this June will have their generosity touted on a sign at the tollbooth that happy shore-bound motorists will see as they go cruising by.