ECONOMICS REPORT - Jury Finds Martha Stewart Guilty; Michael

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ECONOMICS REPORT - Jury Finds Martha Stewart Guilty; Michael Eisner Faces Investors¹' Judgment²
By Mario Ritter

Broadcast: Friday, March 12, 2004

This is Bob Doughty³ with the VOA Special English Economics Report.

Last Friday, a jury in New York found that businesswoman Martha Stewart lied and tried to interfere⁴ with a federal investigation⁵. She is in the business of advice and products for home design. But the case did not involve Martha Stewart Living Omnimedia. She built that company and headed it until the charges last June.

The case involves her sale of shares of a biotechnology company, ImClone Systems. In December of two-thousand-one, Martha Stewart sold her shares for two-hundred-twenty-eight-thousand dollars. The next day, some bad news about ImClone caused the share price to drop. Government lawyers charged that she had illegally used inside information from a friend, the man who started ImClone. She denied any wrongdoing.

At the end of February, the judge cancelled a charge of insider trading. But the jury found her guilty of all four other charges. Her stock trader was found guilty of similar charges and also lying to the court.

Her lawyers have been preparing their appeal. Sentencing is set for June and could result in prison. Martha Stewart is one of a number of business leaders accused recently of crimes.

But last week another business leader faced a different kind of judgment. This came at a shareholders⁶ meeting of the Walt Disney Company. Investors had to vote yes or no to re-elect Michael Eisner as chairman and chief executive officer. Forty-three percent voted no.

The Disney board of directors answered within hours. It kept Mister Eisner as chief executive. But it made board member George Mitchell acting⁷ chairman. Mister Mitchell is a former Senate majority leader and diplomat⁸.

Many shareholders, including former directors Roy Disney and Stanley Gold, were not satisfied. They say Mister Eisner has done a poor job. He has led the company for twenty years. Critics also say Mister Mitchell is too much of his friend.

The Disney board also again rejected an offer by the cable television company Comcast to buy Disney. Last month, Comcast offered more than sixty-thousand-million dollars in stock and acceptance of debt. Since then, Disney shares have gone up; Comcast shares have gone down. Comcast chief executive Brian Roberts said this week that Disney was not a "must-have" for his company.

This VOA Special English Economics Report was written by Mario Ritter. This is Bob Doughty.