Celebrity CEO Series: Plausible Deniability – John Roth’s Shinola Factor
As I am presently going through the process of cleaning up the boxes upon bankers boxes of business records and materials I have collected over the years, I am routinely uncovering hidden treasures.
From the original steakhouse napkin where the terms of my multimillion dollar deal to sell my brainchild and passion revealed the furious scribbling associated with a fly by the seat of your pants negotiation over dinner and a few single malt scotches, to the recently uncovered interview I gave on the local Ottawa business radio station, it is as if I am to a certain extent reliving each moment anew.
In this re-awaking process of forgotten sentimentality I am at once surprised and perhaps even amazed at the degree of my recall and how the related experiences have served as a contextual reference point for many of my blog posts in the here and now.
One such example that immediately comes to mind is the plight of former Nortel CEO John Roth.
Roth, as reported in a December 17th, 2009 CBC News article, was being relentlessly pursued by former Nortel employees on both sides of the 49th Parallel for helping and encouraging participants in the company-sponsored investment plan to continue to invest in the company “despite the unsuitable nature of such an investment.”
Or to put it more succinctly, and as outlined in the class action suit, Roth and associates were “intimately familiar with the company’s ailing finances” yet kept selling their brand of corporate Kool-Aide to the employees. As it turns out, the employees weren’t the only ones swilling Roth’s toxic concoctions as countless investors in the general public also ended up with the short end of the stick while the retiring CEO was left to pursue his passion of rebuilding classic cars with the booty from his illicit take.
For me personally, the Roth story begins well before the true nature of his reputation tarnishing corporate avarice came to light. In fact, it was my discovery of a tape recording of the above mentioned interview in which I shared the broadcast airwaves with Roth and his then CFO Frank A. Dunn, that tweaked my recollection of what was unknown to me at the time, a gathering storm.
It was Monday, January 22nd, 2001 in which I was contacted by the station to give an interview on the recent acquisition of my company. The interview went well . . . remind me to play it for you sometime. However what stood out was the story at the top of the program in which Roth and Dunn were questioned as to the shifting realities of a market on the precipice of a catastrophic correction . . . a correction that ultimately came to be known as the dot.com bust.
I can vividly remember Roth’s assurances that even though the general market was poised to take a dive, Nortel’s future was still very bright suggesting that somehow he and his executive team had found a way to make the company bullet proof.
It was funny to hear such a pronouncement in the context of what was to become a tidal wave of collapsed dreams and lost riches, which struck a resounding chord with me when the truth about Nortel’s predicament started to surface just a few short months later.
One of the first thoughts that came to mind is that Roth and company were either crooks or just plain dumb. Think about it for a moment. Months earlier they had proclaimed Nortel to be invincible, immune if you will to the encroachment of the real world and the inevitable market correction that is the result of unbridled optimism based on little more than foo foo dust.
How could seasoned executives have missed the mark so badly I thought, as anyone in business knows that company financials serve as an early warning system for trouble on the distant horizon, let alone a just around the corner problem of such monumental proportion. It seems unthinkable that anyone, let alone the senior management team for a global enterprise could misread the numbers so badly. And if they did misread the numbers to the extent that they did, I could not help but wonder how they managed to rise through the ranks to assume the helm of a ship they were obviously incapable of steering.
With the increasing clarity afforded us through time, Roth I believe is more carpetbagger than klutz.
Not only do I believe that he was fully aware of the pending trouble, I also believe that Roth likely used the employees money to buoy Nortel’s share price long enough for him to abandon ship in a screw the women and children fashion and comfortably take a seat on his personal lifeboat the S.S. Golden Parachute.
What makes Roth’s conduct so detestable is that like a number of corporate executives I encountered during the heyday of the high tech boom in Ottawa, whose moral high ground and business acumen was little more than a facade for simply being in the right place at the right time, he held himself out to be a captain of industry when in reality he was little more than a snake oil salesman driven by nothing more complex than greed.
Let’s be honest here, would a Roth have ascended the heights of public adoration during any preceding era or for that matter the years since the period that came to be known as the dot.com boom and subsequent bust? Like the CEO of the company that acquired my software business who in a moment of reflective honesty admitted that one night he went to bed holding stock that was worth merely pennies a share, and woke up the next morning with holdings that put his personal wealth in the tens of millions of dollars . . . he had no idea how he got to where he was but the one thing he did know is that he wanted to stay there.
Unlike the true captains of industry who persevered through the inevitable trials and setbacks to plant their flag on the pinnacle of corporate achievement, the smarmy likes of Roth and the others like him grabbed what they could when they could realizing that their abilities and resulting accomplishments had a limited shelf life.
Next installment in the Celebrity CEO Series – The “been there, done that” tradition of Case (and Levin) continues with AOL today!