S U C K

"a fish, a barrel, and a smoking gun"
for 6 June 1997. Updated every WEEKDAY.
 
 
 
 
 

[Teaser for a Past Piece]

Business Plans for Dummies

 

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When the canary kicks, it's time

to leave the mine. But when the

canary commits suicide, it may

already be too late. As

everybody now knows, the Bre-X

mine was really a shaft. When

the news broke that the Canadian

mining company's Indonesian

panning operation had been

cunningly "salted with gold

dust," and contained no real

gold, nobody seemed more

surprised than the company

itself. John Felderhof, head of

the Indonesia operation,

immediately faxed the world from

his home in the sunny but

none-too-regulated Cayman

Islands, expressing "shock and

dismay."

 

Last March, however, when Michael

de Guzman, the company's

geologist, took a swan dive out

of a helicopter - immediately

after examining the mine - the

company took the news in stride,

and continued to sell shares to

Canadian and American investors -

lucky for Bre-X, there are

still more fools than gold.

 

What's most interesting about the

Bre-X scandal is not the

familiar tale of bilked

investors (c'mon - a gold

mine?), but the atmosphere in

which a fraud that investigators

modestly describe as "without

precedent in the history of

mining anywhere in the world"

could flourish. It's a world of

gag orders and vows of silence,

very much like our own. This is

supposed to be the age of

complete and instant

dissemination of data, but who

really wants information getting

out? Why do you think they

invented the nondisclosure

agreement? A little discretion

is key when you are, like Bre-X,

not quite ready to sell your

product, or like Mercury

Finance, not selling as much of

it as you'd like. Or, like the

average dummy company, not

selling anything at all.

 

[Hi.  This is a cartoon.  If I spent the time explaining 
what it looks like, you could have started a browser that views images.  So I won't bother]

Is there any greater example of

business innovation than the

dummy corporation? You'd think

an economy that has already

produced sweaters for dogs and

nude housecleaning would have

reached the dregs of

inventiveness, but the history

of front operations reveals

variety on a scale the

legitimate business world can't

hope to imitate. When Walt

Disney launched his real estate

Anschluss on central Florida, he

did it with a network of phony

corporations. Bogus companies

account for US$300 billion in

annual money laundering. The

Russian mob (whose org charts

could have been written by

Arthur Andersen) made a killing

in California with cloned

cellular-phone companies and

fake insurance operations. For

that matter, think of the

"alternative revenue streams"

nude house cleaners could

exploit.

 

Nonprofits provide even more

fertile ground for masquerading.

You may consider yourself hip if

you realize that the "National

Wetlands Coalition" is backed by

such tree huggers as British

Petroleum, Kerr-McGee, and

Occidental Chemical, or that the

check you send to "Californians

for Statewide Smoking

Restrictions" will be

sarcastically framed and hung in

the office of some suspendered

accountant at Philip Morris; but

what good does being hip do you?

In a game whose goal is

bamboozlement, knowing the score

isn't very sporting.

 

[Hi.  This is a cartoon.  If I spent the time explaining 
what it looks like, you could have started a browser that views images.  So I won't bother]

Sometimes it's smart to play

dumb, especially at the street

level, where you'll find a

variety of storefront husks so

obviously bogus they might as

well be marked with Tristero

trumpets. It's characteristic of

retail dummy corporations that

they don't try too hard to

appear legit. From the East

Village record store whose

inventory consists of a Haile

Selassie poster and a used Jimmy

Cliff album, to the "Web

development" company with the

black windows, to the barren

pizza place where you're

supposed to order a "raspberry

Coke," shell companies wear the

storefront equivalent of Groucho

glasses. Who is fooled?

 

Nobody, of course. But, having

gorged on Zima, Red Dog, and

Politix cigarettes, we know it's

uncouth to look under the rug.

After all, many of us really

want the services behind the

front. It's a lot easier to make

a quick stop at a friendly

record store than to hunker down

at the sock-scented apartment of

some mook you really don't like,

waiting for the polite moment to

mumble, "Um, you feel like

smokin' a bowl?"

 

So if dummy corporations serve

the public, operate efficiently,

and increase (at least

temporarily) shareholder value,

why can't we all get in on the

act? Maybe we can. Ralph

Tegtmeier's celebrated (and

long-suffering) TaxBomber Web

site provides everything you'll

need to get your small business

out of the limelight. Need an

offshore bank to hold the

profits from that Ponzi scheme

you made a bundle on? A Croatian

deposit account for overnight

repos on those Interamerican

Hard Currency Bonds? No problem.

You'll also want to pick up a

fake passport - or even a whole

new identity - for that day when

you too take your permanent

vacation in the Cayman Islands.

 

[Hi.  This is a cartoon.  If I spent the time explaining 
what it looks like, you could have started a browser that views images.  So I won't bother]

This is all fine for the

do-it-yourselfer, but why can't

the average investor get a piece

of the action? Couldn't Arthur

Levitt, who has already done

yeoman service in reinventing

the SEC for a newer, more

business-friendly era, approve a

few public offerings in the

booming market for dummy

companies? Imagine the red

herrings:

 

"Networking Solutions

(hereinafter referred to as The

Company) is the largest crack

wholesaler in the tri-state

area."

 

"Happy Flower Imports is a wholly

diversified retailer of 'deep

discount' electronic equipment.

The Company also has a

significant presence in the

'telemarketing' and 'insurance'

industries."

 

Since failed mining companies

have a history of lingering as

shell organizations, even

infamous Bre-X may have a cushy

second life as somebody's

exoskeleton. (So might the

deplaned de Guzman, whose

apparent suicide is now being

investigated as another possible

fraud.)

 

[Hi.  This is a cartoon.  If I spent the time explaining 
what it looks like, you could have started a browser that views images.  So I won't bother]

Full disclosure might reveal that

some of the most dynamic

dummying is done not by the

private sector but by the

supposedly inefficient

government. And in these

budget-cutting days, black-ops

budgets could use a Wall Street

infusion. What investor wouldn't

jump at the chance to buy some

of Uncle Sam's most innovative

(not to mention diversified!)

operations? A company that can

sell arms in Iran, combat

training in Nicaragua, and crack

in the USA? That's thinking

outside the box!

 
 
 
courtesy of BarTel D'Arcy
 
 
 

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