“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Thursday, December 10, 2009

Regarding Carly Fiorina & Lucent: Another Vintage Article

My prior post on this topic already attracted two comments.

"As a former HP person who worked mostly with AT&T and Lucent around the time of Carly's hiring by HP, I have heard a lot about this from many former Bell System people.

First of all, at the time I was told that Carly was quite likely about to be fired by Lucent. I was also told by numerous people - some of whom worked very closely with Carly - that she was "cooking the books" and had been caught."

"I really wish there was more solid evidence of Carly's knowledge and involvement in this scandal."

Searching on Nina Aversano, the key whistleblower in the case, I located this Fortune article from the period. The piece, by respected writer Carol Loomis, dates from a few years after the scandal- 2003, to be exact.

In it, she wrote,

"It is now 2 1/2 years later, and no one has donned stripes or even been indicted. Until the Aversano-Plunkett news came along, no one had even seemed about to be nailed by the SEC, which, though it cannot bring criminal charges against wrongdoers, can make their lives miserable with civil sanctions, such as forever barring them from big jobs in public companies. Even the matter of Aversano the Whistleblower has vaporized, culminating early this year in a settlement with deeply secret terms.

Meanwhile, Lucent's stock has been destroyed. From the peak of $258 billion, hit in December 1999, the company's market value has calamitously gone to $15.6 billion. (Included in that figure is $6.8 billion of current value for two companies that Lucent recently spun off, Avaya and Agere Systems.) And to people like Lucent's erstwhile chairman, Henry Schacht, that anemic $15.6 billion figure, reflecting a $2.13 share price for Lucent, looks almost thrilling: The company's shares got down to roughly a quarter of that in 2002."

In effect, Loomis notes that nobody really was ever held accountable for the fraud. Further, Lucent as much as admitted guilt by settling with Aversano, but on terms so strict that nobody's ever going to hear from her exactly what happened. Nor, one suspects, ever see the evidence, probably in the form of emails and memos, which Aversano held over Lucent's head.

One can muse about the potential for her to escape the terms, now that Lucent disappeared into Alcatel. But I wouldn't hold my breath, were I pursuing the truth behind this story.

For the purposes of this and the prior linked post, the question of Carly Fiorina's involvement in the scandal, these paragraphs in Loomis' article are germane,

"Chronologically, except for skullduggery not yet uncovered, the first move was Aversano's. Now 58, Aversano was a longtime Bell employee whom McGinn in May 2000 had made president of North American sales to the "service provider" companies--including the regional Bells and their many upstart competitors. In that important job, in this company that has been way above average in putting women into high-ranking spots, Aversano reported to executive vice president Patricia Russo.

Aversano, says a former Lucent financial executive, was a hard-charger who reminded him of still another woman, Carly Fiorina, who'd left Lucent in 1999 to become CEO of Hewlett-Packard. After Aversano was promoted, she oversaw about 3,000 people bringing in 25% of Lucent's revenues. Counting 100,000 options given her in early 2000, Lucent figured her pay for the year, so Aversano testified, at a handsome $4.5 million."

Loomis' timeline is what makes the second reader's comment remain true. Because Fiorina was technically out of Lucent and safely at HP when this story actually broke, it's always been assumed, I guess, that she was innocent.

Yet, from comments I've heard from a person who was on the scene before Carly beat it out of Dodge, so to speak, I believe that the entire sales mis-statement game was already underway before Aversano was promoted. The other reader's comments suggest similar sentiments from other Lucent employees at the time of the events.

But it's precisely because Fiorina was gone by 2000, and so much attention was paid to the Aversano-McGinn fracas, and the subsequent settlement sealed records, that any compelling evidence of her involvement would have to be unearthed as a result of concerted efforts.

Since this is about politics, what I'm saying is that any of Fiorina's rivals for the California Senate seat would probably have to do their own digging. They'd need to interview former Lucent employees to learn who was doing what, when, and then go find them to ascertain, independently, if there were any reason to implicate Fiorina in the earliest stages of the sales forecasting and reporting scandal.

Given the timeframe of this story being a decade ago, it's unlikely that more of the truth will ever be revealed, unless it happens during this Senate campaign. Absent that, it will probably recede into the past, forever undisturbed again.

1 comment:

Ragooman said...

I worked at Lucent until the massive layoffs in '02. I watched as the stocks tumbled to a paltry few dollars. I saw and observed closely online on the CNN financial website how the various Lucent executives were exercising their stock options before the stock price dived a few weeks later. They obviously knew something was amiss and practicall y all of us were oblivious to this fiasco. There were thousands and thousands of us that were let go as a result. I think Carly and all the Lucent executives should've been put behind bars !