Jim Hightower puts out a neat little newsletter every month called the Hightower Lowdown and recounts a sad tale about the problems of one of America’s great papers in the January issue. It’s about The Tribune Company, which owns a number of the country’s leading newspapers – the Chicago Tribune, the Los Angeles Times, the Baltimore Sun among others – plus 23 television stations. Oh yes, and the Chicago Cubs baseball club, too.
A year ago, Chicago real estate zillionaire Sam Zell bought the Tribune Company for more than $8 billion … that’s billion, with a “B”. Well, actually, he sort of bought it. Zell put up a relatively small amount of his own cash and borrowed the rest from the ever-helpful bankers.
But here’s the catch: As part of the deal, Zell talked The Tribune Company’s CEO into letting him use the employee pension fund as collateral.
Meanwhile, the Chicago Tribune newspaper was already getting squeezed. The economy had tightened, advertisers were cutting back, etcetera, etcetera. Ever the businessman, Zell went right to work. Newsroom staff was laid off, the paper reduced content and other cost cutting steps were taken.
But it wasn’t enough. The verable Chicago Tribune went bankrupt.
As usual, the little guys get screwed. Employees have lost their jobs and more will undoubtedly follow. And critical safety nets like severance pay and pensions are probably gone, too.
Zell lost some money, too, although for him it amounted to chump change because so much of the purchase price had been borrowed.
But, here's the kicker: According to Hightower, the CEO who helped Zell engineer that sweetheart deal got $40 million for his efforts. Citigroup and Merrill Lynch were a part of this and they got $36 million each for being "advisors." Morgan Stanley was paid $7.5 million for generating an "opinion" that sanctioned the deal.
These are the guys who got billions in bail out money from the Bushies. Makes you feel all warm and fuzzy, doesn't it?
1 comment:
In Canada, this is illegal. Pension money is paid every month to a government-regulated insurance company. The government regulators ensure that enough money is paid out to cover the pension obligations.
If the company goes bankrupt, the pension plans remain intact. The money belongs to the employees, not the company.
What you describe as happening in the USA, we here call "fraud." Company managers that tried to steal their employee's pension money would quickly find themselves in jail.
Post a Comment