America - Andrew Stephen finds dishonesty everywhere

From the builder who diddles his subcontractors to the chief executive who inflates his company's pr

A few days ago, I took my car in to a nearby garage because the air-conditioning had stopped working - and with temperatures in the high, humid 90s here at the moment, I want my air-conditioning. The garage mechanics put dye into the system to check for leakage of fluid and told me to come back in a week. I did so. They said they had found the leak, repaired it, and refilled my car with the Freon-like liquid they use nowadays - for $185. It worked beautifully until the next day, when all the liquid had drained away again. I went back and asked them to fix it or give me my money back. But to no avail: it would cost a further $500 to fix it, they said, and I could like it or lump it.

Short of taking them to a small claims court, there was nothing I could do.

Likewise, I had dealings not long ago with a builder who had subcontracted various companies - from a lowly Mexican painter to major lumber suppliers - to do work on my house. The builder billed me for their services and I paid, but then he did not pass those payments on to the subcontractors. Tracking down who had been paid and who hadn't, what astonished me was the total lack of surprise among individuals and companies who had never received payment; it seemed completely normal in the American building industry for bills simply not to be paid if the people involved could get away with it.

I give these small, everyday examples of corruption because I think something profound happened in the greedy, grabby Clinton years of the 1990s: from the small-time mechanic to the highest-paid chief executives in the land, American business became infected with an insidious dishonesty. These days, one giant company after another is crashing in flames, shown to have been valuable only on paper and by false accounting. The latest, WorldCom - the second-largest long-distance phone carrier in the country - lied about its cash flow for last year and this year's first quarter, overstating it by as much as $3.9bn.

In fact, it suffered substantial losses rather than the claimed net income of $1.4bn last year and $130m for the first quarter this year; now 17,000 of its employees (21 per cent of the WorldCom workforce) have already lost their jobs, as it tries to fend off bankruptcy and charges of fraud. Its share price, $66 in 1999, was down to seven cents last Monday. Meanwhile, one of the world's top five accounting firms involved in the auditing and accounting of many of these cardboard companies, Arthur Andersen, has already been found guilty of illegally shredding incriminating documents.

We could even be heading for Cheneygate, too: the Securities and Exchange Commission has confirmed that it is investigating questionable practices by Halliburton, the Texan oil company headed by Dick Cheney until he joined George Bush as vice-presidential running mate in August 2000. Cheney had negotiated a "retention bonus" with the company, which would continually increase his income as long as he stayed there; when he left to join Bush, he then negotiated a technical "retirement", netting a cool $27m when he went. Last month, the head of the SEC, Harvey Pitt, said something that must have wiped the lopsided grin off Cheney's face: "I head an independent regulatory agency. We don't give anyone a pass."

The Platonic ideal that nobody in any community should earn more than five times the lowest-paid worker has long since been surpassed, and continues to race away at an ever-increasing rate. Last year, top chief executives made 411 times the pay of their average factory workers; in the past decade, average wages have risen by 36 per cent, while those of chief executives increased by 340 per cent. When another company, Global Crossing, crashed with debts of $12bn, its chief executive, Gary Winnick, had already walked off with $734m in his pocket.

Offering chief executives "stock options" - the right to buy stock in the company you run - was the supposedly bright idea of the Clinton "boom" years. What happened was that, instead of encouraging the executives to run their companies more profitably, the crooked ones simply used smoke, mirrors and downright fraud to inflate the share price. In Global Crossing's case, company insiders had cashed in $1.3bn in stock before it went down. Meanwhile, Merrill Lynch has settled a case in which it was accused of recommending stocks to customers that, in private e-mails, its analysts were describing as "crap".

Fiddling mechanics and builders, rapacious billionaire chief executives: there is a new strain of get-away- with-it-if-you-can dishonesty running through America. The dollar is now at its lowest since February last year; Nasdaq fell to a five-year low last Tuesday. Without 11 September as a diversion, the troubled administration of George Bush would be - to quote a favourite phrase of Bush Sr - in very deep doo-doo indeed.

Andrew Stephen was appointed US Editor of the New Statesman in 2001, having been its Washington correspondent and weekly columnist since 1998. He is a regular contributor to BBC news programs and to The Sunday Times Magazine. He has also written for a variety of US newspapers including The New York Times Op-Ed pages. He came to the US in 1989 to be Washington Bureau Chief of The Observer and in 1992 was made Foreign Correspondent of the Year by the American Overseas Press Club for his coverage.

This article first appeared in the 08 July 2002 issue of the New Statesman, The unlimited dream company