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CNN Live Saturday

Interview With Matthew Bishop

Aired June 14, 2003 - 12:22   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


FREDRICKA WHITFIELD, CNN ANCHOR: Until the Waksal case, many suspected crooked CEOs managed to avoid prosecution and conviction, but with his Waksal's conviction, things are likely to change. To assess the strength of the case against former CEOs, Martha Stewart and others, we turn now to Matthew Bishop, business editor at the "Economist" magazine and he's in New York.
Good to see you.

MATTHEW BISHOP, BUSINESS EDITOR, "ECONOMIST" MAGAZINE: Good to see you.

WHITFIELD: All right, well, is the message being sent loud and clear that the federal government is going to come down hard on corporate criminals?

BISHOP: Well, I think they are, the federal government is going to come down as hard as it can. The Waksal case -- the punishment for someone who actually cooperated in the end with authorities was extremely harsh and the going after Martha Stewart, even though it doesn't seem they have been able to prosecute her for the crime for which she was first questioned, now, also suggests that they want to get some big names behind bars.

WHITFIELD: Well, do you see, then, that Waksal is the fall guy.

BISHOP: Well, I think he's being treated harshly, I mean, he did, obviously, commit a very serious crime, but I thing, this is the hardest possible sentence he could have got for the crimes that he actually pled guilty to in the end. So, that is indicative that no one's going to get off lightly, no one's going to be given the benefit of the doubt, because it's their first offense, if they are a CEO that was in the news.

WHITFIELD: Well, the same may be said, in terms of a harsh crime, allegedly being committed for Bernie Ebbers of WorldCom or even Ken Lay of Enron, but not even they are facing any kind of criminal charges, as of yet.

BISHOP: Yes, I thing both Sam Waksal and also, to an extent, Martha Stewart, there's a very narrow crime, its very focused, it's this one incident of shares being sold at a particular time of 19 -- 2001.

With all these bigger crimes involving Ebbers and Enron people and so forth, the crimes are much more complicated, they're involving accounting issues over many years, they're involving all sorts of layers of management of a company, and so it's hard to actually quickly work out who knew what and who is guilty of what. And I thing what's happening at the moment is that the federal authorities are basically going after the lower level people who were clearly involved in doing the accounting treatment and then saying, okay, if you don't help us, we are going to have to deal with you and then trying to turn those people to bring the higher, to bring the bigger fish in, so their all bait to bring the bigger fish in and it takes a hell of a long time to do that.

WHITFIELD: Let's talk about high-profile Martha Stewart, now. Waksal has not talked about his friend -- longtime friend and business associate, he's not giving up any details. What does the federal government lose? What do they have at stake if, indeed, they're unable to find a conviction against Martha Stewart or even use her as an example by pursuing alleged crooked corporate leaders.

BISHOP: Well, in some ways, I think they've taken a bit of a chance with Martha Stewart, because it's not clear to me that they're going to win this case and the charges are slightly tenuous, and it will be a setback if someone like her is seen to walk away innocent. On the other hand, I think that the government has passed a number of legal changes in the past year that create enormous power in the Justice Department to go after all sorts of corporate criminals, and, I think, a lot of people in the Justice Department feel they're going to make their name by hooking a few big fish. So, I don't think, even if they lose the Martha Stewart case, that this will stop what is now a very powerful momentum to change behavior and punish senior executives in corporate America.

WHITFIELD: All right, Matthew Bishop of the "Economist," thanks very much for joining us this afternoon.

BISHOP: Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired June 14, 2003 - 12:22   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: Until the Waksal case, many suspected crooked CEOs managed to avoid prosecution and conviction, but with his Waksal's conviction, things are likely to change. To assess the strength of the case against former CEOs, Martha Stewart and others, we turn now to Matthew Bishop, business editor at the "Economist" magazine and he's in New York.
Good to see you.

MATTHEW BISHOP, BUSINESS EDITOR, "ECONOMIST" MAGAZINE: Good to see you.

WHITFIELD: All right, well, is the message being sent loud and clear that the federal government is going to come down hard on corporate criminals?

BISHOP: Well, I think they are, the federal government is going to come down as hard as it can. The Waksal case -- the punishment for someone who actually cooperated in the end with authorities was extremely harsh and the going after Martha Stewart, even though it doesn't seem they have been able to prosecute her for the crime for which she was first questioned, now, also suggests that they want to get some big names behind bars.

WHITFIELD: Well, do you see, then, that Waksal is the fall guy.

BISHOP: Well, I think he's being treated harshly, I mean, he did, obviously, commit a very serious crime, but I thing, this is the hardest possible sentence he could have got for the crimes that he actually pled guilty to in the end. So, that is indicative that no one's going to get off lightly, no one's going to be given the benefit of the doubt, because it's their first offense, if they are a CEO that was in the news.

WHITFIELD: Well, the same may be said, in terms of a harsh crime, allegedly being committed for Bernie Ebbers of WorldCom or even Ken Lay of Enron, but not even they are facing any kind of criminal charges, as of yet.

BISHOP: Yes, I thing both Sam Waksal and also, to an extent, Martha Stewart, there's a very narrow crime, its very focused, it's this one incident of shares being sold at a particular time of 19 -- 2001.

With all these bigger crimes involving Ebbers and Enron people and so forth, the crimes are much more complicated, they're involving accounting issues over many years, they're involving all sorts of layers of management of a company, and so it's hard to actually quickly work out who knew what and who is guilty of what. And I thing what's happening at the moment is that the federal authorities are basically going after the lower level people who were clearly involved in doing the accounting treatment and then saying, okay, if you don't help us, we are going to have to deal with you and then trying to turn those people to bring the higher, to bring the bigger fish in, so their all bait to bring the bigger fish in and it takes a hell of a long time to do that.

WHITFIELD: Let's talk about high-profile Martha Stewart, now. Waksal has not talked about his friend -- longtime friend and business associate, he's not giving up any details. What does the federal government lose? What do they have at stake if, indeed, they're unable to find a conviction against Martha Stewart or even use her as an example by pursuing alleged crooked corporate leaders.

BISHOP: Well, in some ways, I think they've taken a bit of a chance with Martha Stewart, because it's not clear to me that they're going to win this case and the charges are slightly tenuous, and it will be a setback if someone like her is seen to walk away innocent. On the other hand, I think that the government has passed a number of legal changes in the past year that create enormous power in the Justice Department to go after all sorts of corporate criminals, and, I think, a lot of people in the Justice Department feel they're going to make their name by hooking a few big fish. So, I don't think, even if they lose the Martha Stewart case, that this will stop what is now a very powerful momentum to change behavior and punish senior executives in corporate America.

WHITFIELD: All right, Matthew Bishop of the "Economist," thanks very much for joining us this afternoon.

BISHOP: Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com