Saturday, January 10, 2009


Santa Rosa's Press GAZETTE

The difference between pirate captains of old and modern-day corporate bosses is that pirates had ethics. They fairly shared their loot, for example, with the entire crew.

Contrast that with the rip-off of employees by the bosses and bankers involved in the recent tribulations of the Tribune Company. This media conglomerate, which owns some of America's top newspapers and television stations, was bought a year ago by a Chicago real estate baron named Sam Zell.

This fellow didn't have anywhere near enough money to pay the $8.2 billion purchase price, but, hey, that's no problem for a striver. Zell simply got the company's CEO to let him use the employees’ pension fund as collateral for bank loans to buy the Tribune. Even though their money was put at risk, the employees had no say in the deal, nor in how the company was run. It was run badly. Less than a year after Zell's takeover, the Tribune has had to declare bankruptcy, and employees are likely to lose jobs, severance payments, and pensions.

Those who pulled off this heist, however, have been much more fortunate. The former CEO was given more than $40 million when Zell took charge. Citigroup and Merrill Lynch were paid about $36 million each for being "advisors" on the deal. Another Wall Street bank, Morgan Stanley, got $7.5 million just for writing a "fairness opinion," stating that Zell's use of the pension fund was kosher.

And Zell? He had put up less than 4 percent of the purchase price to get control of the company, and while he might lose some of that, he cut the deal in a way that makes him a secured creditor. This means that if the Tribune's assets have to be distributed to creditors as a result of the bankruptcy, Zell will be first in line to get his - standing in front of the employees whose company and pensions he wrecked.

No pirate would do that to his crew.

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