Marconi crash

Chris Burford cburford at gn.apc.org
Thu Jan 17 23:14:26 PST 2002


The former finance director of Marconi (formerly GEC) in the UK has broken his silence and is the lead story on the front page of the Financial Times.

Among various self-serving remarks directed against other board members especially the new CEO, he suggests no scandal, but a major liquidity problem in the spring of last year:


>"What is not widely realised is that the US acquisitions had to be made
>for cash, as GEC was not compliant with the US Foreign Corrupt Practices
>Act and so could not list in the US," Mr Mayo said.

{in the way Enron was duly compliant - ho ho!]

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3PM3P0LWC&live=true&useoverridetemplate=ZZZ99ZVV70C&tagid=IXLB0PYY8CC

Whereas other companies in the US buying substantial stakes or taking over at the time, when the market was high, were able to buy using other shares as collateral, Marconi for the reasons stated had to pay cash. When the share price fell this left them with a major loss of credit.

The picture is consistent with the marxist theory of capitalist crises, that suddenly a shortage of capital becomes acute, and it is necessary for old capital, (in this case, Marconi) to be destroyed before the market can restabilise.

Chris Burford

London



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