Fall of the House of Stewart

A summary of what's in the major U.S. newspapers.
March 6 2004 6:48 AM

Fall of the House of Stewart

Everybody leads with the felony convictions of Martha Stewart and her former broker. Stewart was found guilty of all four counts—obstruction of justice, conspiracy, and making false statements (twice)—arising from her sale of a biotech stock in 2001. (A fifth charge, securities fraud, was thrown out last week.) The broker, Peter Bacanovic, was found guilty of four counts—obstruction, conspiracy, making false statements, and perjury—and was cleared of making false documents. Both will appeal. They each face 20 years in prison at their June 17 sentencing, athough most experts think they will get about a year. The papers also front last month's nonexistent job growth.

Stewart betrayed no emotion, by most accounts, although the Associated Press says she "grimaced and her eyes widened slightly" as the verdict was read, and the Los Angeles Times says she "appeared stunned" as she left the courtroom. (Her daughter and one of her lawyers cried.) According to one juror, the most damning testimony was that of Stewart's personal assistant, who told the court that Stewart altered a voice mail and a computer log after the feds began investigating. Several jurors criticized Stewart's minimal defense—her lawyers called only one witness—and pointed to her experience as a stockbroker 30 years ago as proof of a sophisticated ability to deceive in 2001 and 2002.

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Stewart will "almost certainly" have to step down as a director of her company's board, according to the New York Times, although she can keep her majority stock ownership. (She resigned as CEO after her indictment.) The Post reminds readers that Stewart still faces civil stock-fraud charges brought by the Securities and Exchange Commission, as well as class-action lawsuits by shareholders. Everybody quotes Stewart's statement on her Web site that she is "obviously distressed by the jury's verdict" but is glad to have personal support and will "continue to fight to clear my name." (Only the LAT notices that an initial reference to her having "done nothing wrong" was deleted from the site.) None of the papers says whether the courts will rule on her appeal before she starts a prison sentence. The NYT's editors assail Stewart for her arrogant sense of privilege and for being "openly contemptuous of the government's right to police the integrity of the markets." (Click here for Slate's trial dispatches.)

Twenty-one thousand jobs were created in February, a gain offset by the Labor Department's reduced estimate (by 23,000) of job growth in December and January. The governmental sector—primarily schools, the LAT says—accounts for all the gains; the private sector added nothing. The economy has averaged 61,000 new jobs a month over the last half-year, the Post notes—about 75,000 to 100,000 a month less than population growth and about 150,000 a month less than what today's GDP expansion (about 5 percent annually) produced in the 1990s. For months now, the papers' employment coverage has featured nay-saying economists who see jobs just around the corner; those voices are absent today. Even President Bush, who usually works a spin on the monthly numbers into a stump speech, was silent. "At no other point since World War II," the NYT states, "has the economy grown for such a long period without adding jobs at a healthy pace." A news analysis teased on the NYT's front attributes the jobless recovery to the usual suspects—technology-induced productivity gains and overseas outsourcing—but also to "just-in-time hiring," in which companies hire in reaction to demand rather than in anticipation of it.

Everyone fronts yesterday's 11th-hour postponement of the signing of Iraq's temporary constitution (which establishes a power structure until national elections are held). After meeting with religious leader Grand Ayatollah Ali al-Sistani, five Shiites on the Governing Council refused to sign unless: 1) a clause giving Kurdish provinces veto power over a permanent constitution is eliminated and 2) a clause establishing Iraq's temporary executive power—a Shiite president checked by two strong Sunni and Kurdish vice presidents—is altered to allow for five presidents (three of them Shiites) and no vice presidents. Only the Post lays this out clearly. (The NYT mentions only the first of the two demands; the LAT has them both but buries them.) The other eight Shiites on the 25-member GC continue to support the existing document.

On the NYT op-ed page, a politics professor warns against  perceiving last week's Sunni Muslim attacks on Shiites (nearly 200 were killed in Pakistan and Iraq) as the work of isolated extremists:

Anti-Shiism is embedded in the ideology of Sunni militancy that has risen to prominence … in the last decade. … It is a network of Arabs and non-Arabs, South Asians and Middle Easterners, Wahhabis and non-Wahhabis. … What the United States is facing in Iraq is not just an al-Qaeda operation against American control, but the vanguard of a broad movement.

As part of its ongoing WMD confessional, Libya admitted to producing 23 tons of mustard gas in the 1980s. As the NYT reports inside, the country also bought and stored precursor chemicals to sarin and other nerve agents and produced bombs to deliver chemical weapons. The stockpiles were destroyed in the 1990s. Libyan dictator Moammar Gaddafi uses a front-page Post interview to give warm fuzzies to the U.S., announcing that his people "are enlightened and aware of new realities" and that he "[doesn't] want to involve God in questions of infrastructure and sewerage, technology and water."

Tragic Flaw: After watching their company's founder attain public ignominy and their company's shares loose a quarter of their value yesterday, the (law-abiding) directors of Martha Stewart Living Omnimedia Inc. released a statement, just to clarify things: "In spite of [today's] disappointment, it is important to recognize the significant contributions that Martha has made to advancing the domestic arts and improving the quality of life in and around our homes." A trademark specialist, quoted in the AP, perhaps put it more succinctly: "This is a terrible tragedy for a great brand."

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