As was certain to happen when he became a more prominent presidential candidate, Gov. Bill Richardson is drawing new scrutiny for his role in a corporation that collapsed in 2002 amid scandal.
An article detailing Richardson’s involvement in the collapse of the San Diego-based Peregrine Systems is prominently featured today on ABC News’ Web site. Richardson sat on the board of the company for more than a year prior to its collapse. Its top executives are accused of conspiring to falsely inflate its revenue by more than $500 million. Eleven have pleaded guilty, and four others are awaiting trial after pleading not guilty.
The scam, according to ABC News, cost investors an estimated $4 billion and cost thousands of people their jobs.
Richardson joined the board in 2001 after being invited by his wife’s brother-in-law, Peregrine CEO Stephen Gardner, who is now a convicted felon. The governor resigned after the scandal broke.
With the influence Corporate America has on government today, Richardson isn’t alone in having a corporate scandal in his past. In recent weeks the three Democratic frontrunners for president, Hillary Clinton, Barack Obama and John Edwards, have all been criticized for roles in corporations or ties to questionable corporate executives.
Richardson says he didn’t know about the criminal activity at the company, and claims he missed a lot of board meetings and didn’t read all the company’s reports and paperwork he was given. He says he called for a probe once he suspected wrongdoing. But the situation with Peregrine is quite serious, and it’s bound to come under increasing scrutiny if Richardson continues to rise in the polls.
ABC News quoted an official from a corporate governance group as saying Richardson should have known better.
“It’s the job of the board of directors to know what’s going on,” Nell Minow of the Corporate Executive Board told ABC News. “When you’re a director, it’s no better to be a schnook than a crook.”
Richardson joined the board after leaving the Clinton Administration. Minow said former public officials rarely make good corporate directors.
“Government officials aren’t good at what they don’t know,” she told ABC News. “They forget how to ask questions.”
In March, the Republican Party of New Mexico sent out a news release calling attention to Richardson’s role in the scandal and highlighting an article in the San Diego Reader that was highly critical of the governor.
Richardson’s weakness here is going to be that he was paid to be a director and know what was going on. There’s a compelling argument to be made that he either knew what was going on and was, therefore, culpable, or he didn’t know and was derelict in his duty.
The first would obviously kill his presidential campaign. The second raises an obvious question: If he couldn’t properly oversee one company, how would he be able to oversee the federal government and handle the other duties of the president?
Richardson campaign spokesman Pahl Shipley didn’t answer many of the questions raised by Republicans in the news release when I asked for a response in March, but did release this statement:
“This is a slimy partisan attack that is blatantly false. The truth is when the governor learned of potential financial irregularities he immediately wrote the company and requested an independent investigation,” he said. “Governor Richardson was instrumental in firing the accounting firm of Arthur Andersen and replacing them with KPMG, the firm that uncovered the financial mess at Peregrine.”
“The governor was an outside director for just 16 months and attended a limited number of board meetings. He has not participated in any legal action in relation to the company’s problems,” Shipley said. “The Republican Party obviously should concentrate on working to help New Mexicans instead of continuing their endless quest to score political points through lies and gratuitous attacks on the governor.”
The campaign gave similar answers to ABC News’ questions. Expect the campaign to have to discuss this further in the future.
Richardson’s upcoming schedule
Meanwhile, the governor will continue traveling around the nation at a quick pace as he seeks gains in the polls. He spent the weekend campaigning in South Carolina, and today is scheduled to attend fundraisers in New Mexico.
He plans to spend Tuesday and part of Wednesday campaigning in Iowa before heading to Ohio and Michigan for evening fundraisers. He’ll then spend Thursday in Michigan attending an NAACP candidate forum.
He has a busy schedule Friday, opening a campaign office in Reno, Nev. before heading to Salt Lake City, Utah and then Burbank, Calif. for fundraisers. He’ll spend Saturday fundraising in New Mexico and Sunday attending a forum and fundraising in Illinois.
A week from today, Richardson will begin a two-day campaign trip to New Hampshire. On July 18, he has no events scheduled, and on July 19 he begins a three-day campaign trip to Iowa. He will then make a two-day trip to South Carolina that concludes with the DNC Presidential Debate on July 23.
He then plans to spend July 24 and 25 campaigning in Iowa.
Some video
Meanwhile, here’s video of Richardson speaking last week to a National Education Association convention in Philadelphia.
And here’s video of Richardson campaigning in New Hampshire on the Fourth of July.
As was certain to happen when he became a more prominent presidential candidate, Gov. Bill Richardson is drawing new scrutiny for his role in a corporation that collapsed in 2002 amid scandal.