Andrew Allentuck

Saturday, July 26, 2003

Wheel, Deal, and Steal
by D. Quinn Mills
Prentice Hall
300 pages
ISBN 0-13-140804-6

The title neatly wraps up this conventional but very well written account of how investors were gored by dishonest accountants, greedy corporate grandees, and gullible journalists and stock analysts.

Mr. Mills is Professor of Business Administration at Harvard Business School. Much of his account has been said elsewhere. He weaves his tale of misdeeds very well. For example, he notes that CFO Magazine gave its excellence awards to Scot Sullivan, CFO of WorldCom, Andrew Fastow, CFO of Enron, and Mark Swartz, CFO of Tyco. Each is now under indictment. Fortune magazine, he adds, gave awards for most admired company to Enron and Citigroup, emphasizing that Enron was also lauded for innovation each year from 1996 to 2001.

There are interesting insights into the operations of the Fed and the Commodities Futures Trading Corporation, the regulator of that industry. Prof. Mills blames the Fed for reining in the chief of the CFTO, Brooksley Born, and telling her to keep hands off derivatives. At the same time, the Fed's chairman, Alan Greenspan, tended to defend doing nothing about the trade in derivatives.

Prof. Mills suggests that the next bubble will be hedge funds or funds of hedge funds, which pile up fees and which, to date, have unimpressive performance. He doesn't mention it, but the great impresario of funds of funds, the late Bernie Cornfeld, ran Investors Overseas Services' clients into the ground with insupportable fees. Robert Vesco then completed the goring by stealing what assets were left. At last report, Mr. Vesco is a prisoner of Fidel Castro who, one can guess, may have tired of the little crook's games when, as an arch capitalist, he took refuge in one of the last bastions of communism.

Wheel, Deal, and Steal is a great read. It's a fine summary of the fin de siècle mood of investors to go for broke and of the greed investment community that made sure many did just that.