Posts tagged ‘Jeff Skilling’

Why Is No One From MF Global in Jail?

Whether crimes were involved in the failures of Enron, Lehman, & Bear Stearns is still being debated.  All three essentially died in the same way (borrowing short and investing long, with a liquidity crisis emerging when questions about the quality of their long-term investments caused them not to be able to roll over their short term debt).  Just making bad business decisions isn't illegal (or shouldn't be), but there are questions at all three whether management lied to (essentially defrauded) investors by hiding emerging problems and risks.

All that being said, MF Global strikes me as an order of magnitude worse.  They had roughly the same problem - they were unable to make what can be thought of as margin calls on leveraged investments that were going bad.  However, before they went bankrupt, it is pretty clear that they stole over a billion dollars of their customers' money.  Now, in criticizing Wall Street, people are pretty sloppy in over-using the word "stole."  But in this case it applies.  Everyone agrees that customer brokerage accounts are sacrosanct.  No matter what other fraud was or was not committed in these other cases, nothing remotely similar occurred in these other bankruptcies.

A few folks are talking civil actions against MF Global, but why isn't anyone up for criminal charges?  Someone, probably Corzine, committed a crime far worse than anything Jeff Skilling or Ken Lay were even accused of, much less convicted.   This happens time and again in the financial system.  People whine that we don't have enough regulations, but the most fundamental laws we have in place already are not enforced.

Just Fooling, We Had No Idea What We Were Doing

California voters -- unskeptical, unrealistic, and gullible -- nevertheless trusted their elected and unelected technocrats in Sacramento to be telling them the truth when they agreed to a $9.95 billion bond issue for high speed rail.  It turns out, even according the HSR's most fervent supporters, that the numbers that were used to sell the bond issue were total crap, and they knew it at the time

In September, I was one of several journalists who interviewed top officials with the California High Speed Rail Authority. Here is board member Lynn Schenk’s response to my question about accountability:

Q: In 2008, this project was sold to voters with the claim that when it was done there would be 117 million annual riders, which is more than four times what Amtrak now has, and it operates in 46 states. It was sold with claims of a $100 round-trip ticket and many other claims that no one believes anymore. If we had known then what we know now, it might not have passed. So when do we get accountability?

SCHENK: This deserves as much of a direct answer as I can maybe possibly give. And that is about the first business plan and those early studies. These gentlemen were not there at the time. I was there. We had one professional and two half-professionals, who were constantly being furloughed because of the state budget issue. That first plan, much to the regret of many of us, was pulled together with Scotch tape and hairpins because we had to get something to the Legislature, but we didn’t have the money, the resources, the people to pull together, so there were a lot of errors. You’re right. But there were also things in there that still stand true today. And we have new studies, a new business plan coming out. The ridership study that we had it is not as bad as the opponents would say. But there are tweaks. And there are things that need to be adjusted and we are looking to do that.

Because the last thing a bureaucratic is ever going to say is "we don't know."   So they told they public the rail line would have 117 million annual riders, when even an estimate of 5 million is probably high.  Jeff Skilling is in jail for a far less substantial exaggeration of his business prospects.

Of course voters were idiots to accept these numbers, when 5 minutes of research would have shown them absurd (the media did nothing to help, of course).  One relevent factoid:

The current air passenger traffic between LAX and SFO is 2.7 million a year

But we are going to have tens of millions of rail customers.  Right.

A HUGE Government Benefit

I had not realized that some Federal employees did not have to participate in Social Security.  Intriguingly, this fact was raised by people who were defending government pay as not being excessive -- they said something like, "well, some workers don't even get Social Security."  Via Bryan Caplan

Some government employees don't participate in Social Security. How does that change the benefits picture?

[T]hat's irrelevant because they're neither paying nor receiving benefits. If you follow Social Security, you know it pays a low rate of return... [N]ot to participate in Social Security is actually a benefit, because they're keeping more.

I agree. Not participating in Social Security is a huge benefit.  The implicit return on "premiums" paid by you and your employer is typically below zero.  In other words, if you took your social security taxes and stuffed them in a mattress, you would get a better return.  As I wrote in the link above

as a retirement program, [social security] is a really, really big RIPOFF.  Ever worker in this country is being raped by this retirement plan.  In fact, it is the worst retirement program in the whole country:

  • As we see above, it pays a negative rate of return
  • It is not optional "“ you go to prison if you choose not to participate
  • Unlike a private annuity contract, the government can rewrite your benefits level any time, and you have to take it.  In fact, my statement says "Your estimated benefits are based on current law.  Congress has made changes to the law in the past and can do so at any time.  The law governing benefit amounts may change because, by 2040, the payroll taxes collected will be enough to pay only about 74 percent of scheduled benefits."
  • There are no assets backing this annuity!!  An insurance company that wrote annuities without any invested assets backing them would be thrown in jail faster than Jeff Skilling.  The government has been doing it for decades.

Prosecuting Those With Bad PR

CEO's of companies struggling on the brink of failure often make happy, confident public statements that all is well.  Is that a crime?

Well, it depends on how you look at it.  It comes down to a CEO's fiduciary responsibility to the company's investors, and how that is regulated for public companies.  We think of fibbing to inflate the company stock poorly serves investors, but what about when the company is facing a liquidity crisis?  Isn't public optimism in a liquidity crisis exactly what is needed to serve shareholder's interests?  Consider Treasury Secretary Paulson, and his near criminal declaration of a financial crisis, and the effect these ill-considered statements have had on the economy.

It is hard for me nowadays not to think about Jeff Skilling, who sits in jail for making what the jury thought to be overly optimistic public statements about the company's financial health  (I know you are thinking that he was put in jail for all that off balance sheet accounting and gimmickry, but in fact the prosecution never chose to bring these charges in the trial).  Even Skilling's jury, which was pretty clearly predisposed to convict, seemed to acknowledge that he did not make these statements for personal gain.

So why is Skilling in jail and not, say GM CEO Rick Wagoner?  Wagoner was making a lot of happy-face statements just a few months before his company acknowledged they were facing chapter 11 if Congress did not bail him out.  For extra credit, Wagoner told Congress $15 billion would be enough of a bailout, when he had to have been pretty confident it was not going to come close to cover the hole he faced.

Tom Kirkendall asks some of  the same questions, and looking at the cases he cites, it seems fairly clear that the difference between prosecuted and un-prosecuted CEO's has more to do with their like-ability, celebrity status, and general PR position than their specific actions.

Postscript: I have actually been thinking about the Enron bankruptcy a bit lately for another reason.  Remember that massive natural gas shortage we had when Enron went bankrupt?  Neither do I.  That's because chapter 11 is a pretty well-oiled process in this country.  Enron shareholders, bondholders, and management lost most their investment (and their jobs) but Enron's productive assets and skilled employees didn't disappear.  Enron's assets were bought by other companies who hopefully will employ them more profitably and productively than Enron had.

The same goes for GM.  We have a well-understood and proven process for taking a company like GM through bankruptcy.  However, we are instead replacing this well-understood and practiced process with a new process, called something like "Congressionally-managed restructuring funded with taxpayer dollars."  Does anyone really think this new process is better than the one we have?  Its only advantage, at least to some, is that it may preserve some management jobs, and shareholder and bondholder value, at the expense of taxpayers and any real effort for long-term reform of how GM's assets are managed.

This Seems Kind of Obvious in Hindsight

Saul Hansell at the NY Times has an interesting article about why risk assessment programs in investment banks were not sounding the alarm coming into the recent turmoil.  The article contains this gem:

Ms. Rahl said that it was now clear that the computers needed to
assume extra risk in owning a newfangled security that had never been
seen before.

"New products, by definition, carry more risk," she said. The models
should penalize investments that are complex, hard to understand and
infrequently traded, she said. They didn't.

I continue to see parallels between recent problems and the meltdown at Enron.  In fact, in many ways events in the natural gas trading market were a dry run for events in the mortgage market.   One filmmaker coined the phrase "Smartest Guys in the Room" to describe the hubris of the guys who ran Enron.  To some extent the phrase was absolutely true - I knew Jeff Skilling at McKinsey and he was indeed the smartest guy in the room.  But everyone can be wrong, and sometimes the smartest guys can be spectacularly wrong as they overestimate their ability to predict and control complex events.  I think this is a fair description of what went on in Wall Street over the past several years.

Thinking about Jeff Skilling

I was thinking a bit about Jeff Skilling (former Enron CEO) today.  What must he be thinking as a series of large firms that were supposedly far more stable than Enron go down one after the other to liquidity crises much like that of Enron?  Bear Stearns and Lehman, two firms that should have been rock solid, go down in the blink of an eye in a credit crunch, and all we hear from the media is how the firms fell victim to larger forces beyond their control.  At least at Enron they were up-front with the market about their taking on large risks.  Now, the government is running around in the background trying to match-make these failing companies and helping to save at least a squidge of shareholder equity.  The only thing the government did in the Enron collapse was hound Skilling and others into jail.   

Sure, Skilling may have made some overly optimistic statements about his company as he was trying to stave off the crunch, but no more so that the happy-face statements issuing from Bear or Lehman in their final days.  Executives who find themselves in a credit crunch are in a nearly impossible position.  The best way they can serve equity holders is to downplay or even bury bad news to head off the looming crisis of confidence.  But if they do so, they face presecution for making false statements about the company, ironically under laws meant to protect equity holders.

We Don't Need To Turn Over No Stinking Evidence

A few days ago, I pointed to a Tom Kirkendall post where he reported that a large volume of evidence, including interview notes with star witness and Enron CFO Andy Fastow, was finally turned over to the Skilling defense team.  This is required by law to occur before the, you know, trial itself but in fact comes months and years after the trial.  Apparently, there are a lot of bombshells in the notes, including this one as described by Skilling's attorneys in a brief linked by Kirkendall: (citations omitted)

Task Force prosecutors called the "Global Galactic"  document "three pages of lies" and the "most incriminating document" in  Skilling's entire case. At trial, Fastow testified Skilling  knew about Global Galactic because Fastow "confirmed" it with him during a  spring 2001 meeting. Skilling denied knowing anything about Global Galactic.  To bolster Fastow's testimony and impeach Skilling's, the Task Force introduced a set of handwritten "talking points" that Fastow said he prepared in anticipation of his meeting with Skilling. At trial, Fastow swore he "went over" the talking points with Skilling, including the crucial point "Confirmation of Global Galactic list." Id. In closing, the Task Force relied heavily on this document to corroborate Fastow's testimony that he discussed Global Galactic with Skilling.

The raw notes of Fastow's interviews directly impeach Fastow's testimony and the Task Force's closing arguments. When shown and asked about the talking-points document in his pre-trial interview, Fastow told the Task Force he "doesn't think [he] discussed list w/ JS."

This obviously exculpatory statement was not included in the Task Force's "composite" Fastow 302s given to Skilling. Nor was it included in the "Fastow Binders" the Task Force assembled for the district court's in camera review of the raw notes. It is not possible that this omission was inadvertent. Fastow's statement is one of the most important pieces of evidence provided during all his countless hours of interviews. Moreover, in preparing both the composite 302s and Fastow binders, the Task Force extracted and included other"”relatively inconsequential"”statements from the same interview date and even the same page of notes. The Task Force's exclusion of this critical piece of evidence for over three years is inexcusable and, on its own, warrants a complete reversal of Skilling's convictions and other substantial relief.

Disclosure: I actually worked with Jeff Skilling briefly at McKinsey & Co.  From that experience, I have always thought it unlikely that this incredibly detail-oriented guy did not know about a number of these key Enron partnerships.  However, that presumption on my part in no way reduces my desire to see him get a fair trial, and I am becoming convinced that he did not.

Thoughts on Prosecutorial Abuse

With Eliot Spitzer going down for what shouldn't be a crime (paying for sex) rather than what should be (abuse of power), now is as good a time as ever to focus on prosecutorial abuse.  As in the case of Spitzer, the media seems to have little desire to investigate overly-aggressive prosecution tactics.  In fact, in most cities, the local media cheer-leads abusive law enforcement practices.  It makes heroes of these abusive officials, whether their abuses be against the wealthy (in the case of Spitzer) or the powerless (as is the case of our own Joe Arpaio here in Phoenix).

Tom Kirkendall continues to be on the case of the Enron prosecution team for their abuses, which have been ignored in the media during the general victory dance of putting Jeff Skilling in jail and running Arthur Anderson out of business.  But, guilty or innocent, Skilling increasingly appears to have solid grounds for a new trial.  In particular, the Enron prosecution team seems to have bent over backwards to deny the Skilling team exculpatory evidence.  One such tactic was to file charges against every possible Skilling witness, putting pressure on them not to testify for Skilling.  Another tactic was more traditional - simply refuse to turn over critical documents and destroy those that were the most problematic:

The controversy regarding what Fastow told
prosecutors and FBI agents who were investigating Enron became a big
issue in the Lay-Skilling prosecution when the prosecution took the
unusual step of providing the Lay-Skilling defense team a "composite
summary" of the Form 302 ("302's") interview reports that federal
agents prepared in connection with their interviews of Fastow. Those
composites claimed that the Fastow interviews provided no exculpatory
information for the Lay-Skilling defense, even though Fastow's later
testimony at trial indicated all sorts of inconsistencies

However,
I have spoken with several former federal prosecutors about this issue
and all believe that the government has a big problem in the Skilling
case on the way in which the information from the Fastow interviews was
provided to the Lay-Skilling defense team. None of these former
prosecutors ever prepared a composite 302 in one of their cases or ever
used such a composite in one of their cases. The process of taking all
the Fastow interview notes or draft 302's and creating a composite is
offensive in that it allowed the prosecution to mask inconsistencies
and changing stories that Fastow told investigators as he negotiated a
better plea deal from the prosecutors. 

Similarly,
the Enron Task Force's apparent destruction of all drafts of the
individual 302s of the Fastow interviews in connection with preparing
the final composite is equally troubling. Traditionally, federal agents
maintain their rough notes and destroy draft 302s. However, in regard
to the Fastow interviews, my sense is that the draft 302s were not
drafts in the traditional sense. They were probably finished 302's that
were deemed "drafts" when the Enron Task Force decided to prepare a
composite summary of the 302's.

Note that showing how a person's story has changed over time is a key prosecution tactic, but one that is being illegally denied to Skilling.  Apparently Skilling's team has now seen the actual interview notes, and believe they have found "a sledgehammer that destroys Fastow's testimony" against Skilling.  Stay tuned, a new trial may be on the horizon.

The State and Local Government Meltdown

I have written before that the government story of the next decade will be the financial meltdown that will ensue as state and local governments are forced to face up to the enormous unfunded pension and medical liabilities they have assumed for their state employees.  Largely, these liabilities are currently well-hidden and off the books, a trick even Jeff Skilling was unable to pull off at Enron. 

My previous prediction that the liabilities probably total over a trillion dollars now seems way low.  Just one state, Illinois, may have over $100 billion in such off-the-books liabilities, and this does not even include liabilities of local authorities like the city of Chicago:

The study puts the state's pension debt at $10 billion, its unfunded
pension costs at $46 billion, its unfunded employee health care costs
at $48 billion, and its unpaid Medicaid bills at $2 billion. The total
costs that will be pushed onto tomorrow's taxpayers without reforms is
an enormous $106 billion, or $8,800 per every person in the state of
Illinois.

Apparently Chelsea Clinton and I Have Something in Common

Apparently Chelsea Clinton will start work soon as a McKinsey associate.  However, she doesn't seem to have had to solve eight or ten business case studies in real-time during interviews as I had to, nor am I guessing that she will spend her first year working 80-hour weeks buried in spreadsheets and charts.  As a aside, the first partner I worked with at McKinsey was Jeff Skilling, of Enron fame, one of the brightest people I ever worked with.

Enron Verdicts Starting to Unravel

Tom Kirkendall has an update on the various Enron cases, starting with the Nigerian barge case where  the conviction of four Merrill Lynch executives was vacated by the Fifth Circuit.  In fact, the appeals court ruling was so damning that the DOJ has decided not to retry the executives, and the case may well be a leading indicator that other Enron-related prosecutions are in jeopardy.

Although expected, the DOJ's decision in the Nigerian Barge case
reverberates through several other pending Enron-related cases. The DOJ
can retry three of the four former Merrill Lynch executives, but that
would be petty by even the DOJ's standards given the eviscerated nature
of the original charges and the fact that each of the defendants has
already spent a year of their lives in prison based on a prosecution
that was based more on resentment than on true criminal conduct. The
Fifth Circuit's now final decision in the barge case casts doubt (see also here) on a substantial number of the charges upon which former Enron CEO Jeff Skilling was convicted, and dispositively blows away over 80% of the case against former Enron Broadband executive Kevin Howard. In addition, the re-trials of Howard's former co-defendants from the disaster that was the first Enron Broadband case are now in various states of disarray, as is the pressured plea deal of former mid-level Enron executive, Chris Calger. And don't forget the mess that is the DOJ's case against the NatWest Three (see also here).

California Gets A Mulligan

There is no doubt that electricity markets are a mess.  Electric utilities have been regulated for so long and in so many ways, and new capacity is so hard to add, the deregulation experiments tend to fail over short time periods for any number of reasons.  In California, what was called "deregulation" never really was such, since pricing signals were never passed on to consumers and therefore never really influenced demand.  In Texas, the areas where my company operates still struggle with deregulation, and we have seen few price or customer service benefits. 

This is not that surprising when you consider other major industries that have been so thoroughly regulated.   Railroads come to mind, for example.  Deregulation occurred thirty years ago and we are only recently starting to see a renaissance in that industry.  Pre-deregulation airline incumbents (e.g. Delta, United, American) are still struggling with open markets.

Mike Gibberson links a pair of court decisions that may set back any progress made in deregulating at least the wholesale electricity markets.  In a series of suits, the State of California is seeking a mulligan, asking the court to rule that wholesale electricity contracts it entered into in 2000-2001 should be voided because the price was too high and FERC did not have the authority to allow blanket market-based rather than cost-based electricity pricing.  And the judges seem to agree:

The panel held that prices set in those bilateral transactions pursuant
to FERC's market-based program enjoyed no presumption of legality.

I don't think there is anything more depressing to a good anarcho-capitalist like myself than seeing the government rule that a price negotiated at arms length by the free will of consenting, and in this case well-informed adults enjoys "no presumption of legality."  If not, then what does?  Is that where we are heading, to a world where no voluntary actions enjoy a presumption of legality?

By the way, one has to remember that this is not a case of an impoverished high school drop-out in East St. Louis signing a high interest rate loan he didn't understand.  This is the case of highly paid electricity executives and government electricity officials signing electricity contracts.  It is as ridiculous to argue that they were somehow duped in buying the one and only item they ever buy for resale as to argue that Frito-Lay somehow shouldn't be held responsible for the price it negotiates for potatoes.  These electricity companies knew they had obligations to supply power at retail at certain rates and failed to lock up enough supply in advance.  Whether Jeff Skilling gamed the short-term spot market is irrelevant - the utility executives were at fault for finding themselves beholden to the spot market for so great a volume of electricity, and doubly at fault for taking this power at insane rates when other lower cost options were available to them (such as cutting off customers on interruptible contracts).

Lay and Skilling Convicted

Ken Lay and Jeff Skilling were convicted on numerous counts of fraud but were acquitted on most counts of insider training.  Professor Bainbridge has some quickie analysis.

I worked for Jeff Skilling for a brief period of time at McKinsey & Co.  Jeff was easily one of the smartest men I ever met, as well as the most detail-oriented.  It was this latter quality that forced me to concede that he was probably lying to Congress back when he said "I didn't know any of this stuff was going on in my organization."  Whatever else they did, Lay and Skilling will never be forgiven by my family for sucking in a couple of our family friends who were not business people (doctors and such) onto the Enron board, perhaps as dupes who had no hope of crying foul at the complex business machinations that were taken place.  Whatever the reason, our friends will spend the rest of their lives dealing with Enron lawsuits.

My only regret in this case is that I hate seeing some pretty scary prosecution practices get rewarded.  The guilt of Lay and Skilling does not change the fact that we need to start reigning in heavy-handed prosecutors, and disavowing the Thompson memo would be a good start. Update: Tom Kirkendall has much more on prosecutorial abuse in this case and possible appeal points.

Rising Price of "Justice"

In the next few weeks, Enron leaders Lay and Skilling will or will not be found guilty of various fraud-related charges (betting is that they will be).  You, in turn, may or may not agree with the verdict. (Disclosure:  I used to work with Skilling at McKinsey.  From my knowledge of his brilliant mind and his attention to detail, I thought that his Congressional testimony that he was unaware of the shenanigans in the SPE's was unconvincing, and so thought at the beginning of the trial he would be found guilty.  However, the prosecution's case has had surprisingly little to do with the SPE's and was weaker than I expected, so I am less sure now).

Wherever you are on guilt or innocence, you should be concerned about the increasingly aggressive tactics that prosecutors are getting away with in this and related cases.  Tom Kirkendall is all over this story, and reports:

the Enron Task Force refused Ken Lay and Jeff Skilling's request to
have the prosecution recommend to U.S. District Judge Sim Lake that
half-a-dozen former high-level Enron executives who have declined to
testify during the trial on Fifth Amendment grounds be granted immunity
from having their testimony used against them in a subsequent
prosecution.

Those witnesses -- several of whom have been mentioned prominently
in testimony during the trial -- would likely provide exculpatory
testimony for Lay and Skilling if they were to testify. The
Lay-Skilling defense team limited their immunity request to those six
witnesses even though the Task Force fingered the unprecedented number
of the Task Force identified over 100 former Enron executives
as unindicted co-conspirators in the case for the transparent purpose
of preventing the jury from hearing the full story of what happened at
Enron.

Another potential outcome may be the weakening of attorney-client privilege.

Are Prosecutors Going Too Far?

I have been following the Lay/Skilling Enron trial fairly closely, if only because in a past life I worked briefly with the principles, having worked with Jeff Skilling at McKinsey & Co. before he went to Enron.  By the way, if this causes you to assume this makes me particularly sympathetic to the gentlemen, think again.  Jeff Skilling is one of the brightest and most detail-oriented people I have ever worked with, giving me near certainty that his testimony before Congress where he imitated Sargent Shultz (I know nothing... NOTHING) was perjurous.   So I am not entirely neutral, but maybe not in the way you might imagine.

However, all that being said, Tom Kirkendall (whose blog is here and is doing a great job keeping up with the trial) has a very interesting post on the fairly scary tactics the Enron prosecution task force has brought to bear on a number of Enron and Enron-related defendants:

In an unprecedented move, the Task Force has named over 100 co-conspirators
in the case. So, the potential definitely exists for substantial
testimony about out-of-court statements going to the jury without the
defense ever having an opportunity to cross-examine the persons who
made the alleged statements. Moreover, fingering unindicted
co-conspirators is an equally effective technique for the Task Force to prevent testimony that is favorable to the defense
because persons named as unindicted co-conspirators are likely to the
assert their Fifth Amendment privilege against self-incrimination and
thus, not be defense witnesses during the trial. Thus, the Task Force's
liberal use of the co-conspirator tag has a double-whammy effect -- not
only does it allow the Task Force to use out-of-court statements
against defendants without having the declarant of the statements
subjected to cross-examination, it has also effectively prevented
previous Enron-related defendants from obtaining crucial exculpatory
testimony from alleged co-conspirators who have elected to take the
Fifth and declined to testify.

The co-conspirator tactic has had a huge impact on two of the previous Enron-related trials. During the Nigerian Barge trial,
the Task Force used out-of-court statements of co-conspirators
regarding the key factual issue in the case -- that is, what was said
during a conference call between several Merrill and Enron executives,
including former Enron CFO Andrew Fastow -- without ever having to put
a witness on the stand who actually participated in the call.
Similarly, none of the dozens of unindicted co-conspirators testified
on behalf of the defendants during that trial, so the Task Force's use
of the tactic effectively prevented the Merrill Lynch executives in
that case from providing the jury with exculpatory testimony. Not
surprisingly, the Task Force's liberal use of the co-conspirator tactic
has become a key appellate point for the Merrill executives in the appeal of their convictions.

Similarly, the importance of the co-conspirator issue on freezing
out exculpatory testimony was brought into full focus during the trial
of the Enron Broadband case last year. In a trial that, at the outset, appeared to be a sure-thing for the prosecution, the Task Force's case unraveled quickly as witnesses Lawrence Ciscon and Beth Stier
both testified to a riveted jury about how the Task Force's threats of
prosecution against them gave them second thoughts about providing the
exculpatory testimony that they gave during the trial. That trial ended
in a disastrous mix of acquittals and jury deadlock on the prosecution's charges.

The ability to face and cross-examine your accusers is a fundamental part of the American legal system.  Even well-intentioned relaxing of this principle has in the past led to innocent people going to jail.

Update:  Kirkendall writes that the same issue is being addressed on appeal in the Worldcom trial of Bernard Ebbers.

A Couple of Thoughts on John Bolton

I don't know John Bolton from Michael Bolton, so I can't comment on whether he is an appropriate choice for the UN.  Nevertheless, there are a couple of things I do know:

  1. Absolutely no one in the Senate gives a crap if Bolton has a temper or sometimes was tough on subordinates.  I am willing to wager about any figure you can name that many of the Senators commenting on Mr. Bolton are themselves strutting prima donnas who have blasted subordinates.  I remember that former CA Governor Gray (Grey?) Davis supposedly had some incredible temper tantrums with subordinates, but at the time that was not thought to be a disqualifier for office.  Why is it that stupid issues like this (or the immigration status of nannies) seem to dominate confirmation hearings rather than the person's qualifications and philosophy?
  2. I have worked for not one but two men who have been featured on that famous "Toughest Bosses in America" list.  Compared to some of my encounters with these two, the stuff being talked about with Bolton is a joke. 
  3. When you hear "the UN" when any senator is talking, substitute the word "Enron".  This is not quite appropriate, because in many ways, as referenced here, the UN scandals are much worse than Enron.  However, if this comparison is at all apt, why is it so inappropriate to send an ambassador who is openly skeptical of the UN in its current state?  When the feds sought out a prosecutor to oversee the Enron investigations, did they go looking for a person who had a high degree of respect and friendship for Ken Lay and Jeff Skilling?