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Corporate circus

Marvel as tearful Linda Lay laments her plight. Enjoy R.J. Reynold's wonders of tobacco show (the kids will love it!). Shop Abercrombie & Fitch for a t-shirt and a slur. Thrill to accountants and executives juggling the blame.

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By ROBERT TRIGAUX, Times Business Columnist

© St. Petersburg Times
published August 18, 2002


Hurry, hurry, hurry. Feast your eyes on the chowhounds who just sued the nation's biggest fast-food chains for -- yes! -- making them obese.

Come ogle Marriott International, which must now pay millions to the widow of a man who died from injuries sustained in a "sumo wrestling" football contest in Orlando. Be amazed by men who tattooed the logo of a radio station on their foreheads but were not paid the $150,000 allegedly promised by a disc jockey.

Welcome to the Carnival of Corporate Blunders. The Circus of Business Bloopers. The Bizarre Sideshow of What Were They Thinking?

Traditionally, we offer this feature once a year. But in 2002, the business bungling is just too abundant (Enron alone could fill this section). So we're delivering a midyear update. From hundreds of blunders, we've culled the top dozen plus one.

Loopy corporate decisions that backfired? We got 'em. Dumb and dumber consumers manipulated by corporate interests? Step right up. Simple business mistakes that ballooned into multimillion-dollar expenses? You came to the right place.

Laugh a little. Wince a lot. And learn the lessons from a baker's dozen of magnificent blunders:

* Sumo? So sue me. The widow of John Gioffre, a 25-year-old man who died from injuries sustained in a "sumo" contest, was awarded $11.8-million in June when she won a lawsuit against the Marriott Orlando World Trade Center. Hosting a sales convention on Super Bowl Sunday in 1995, the hotel held a contest in which participants played football while wearing thickly padded costumes that made them look like sumo wrestlers. Gioffre broke his neck, rendering him a quadriplegic, then died of complications in 1999. Marriott plans to appeal.

Lesson? With the deepest pockets, Marriott was the most attractive legal target. But Marriott personnel had been warned of the game's risks. And the hotel had considered the use of waivers by contestants but decided against them. Next time, organize a mean game of bridge. And get those waivers signed.

* We've lost everything. Poor Linda Lay. In a tearful interview on NBC's Today show early this year, the wife of ex-Enron chief executive Kenneth Lay tried to convince viewers that she and Kenny Boy were sympathetic figures on the verge of running out of money. "Everything we had was mostly in Enron stock. We are struggling for liquidity," she said.

Really? After selling more than $40-million worth of real estate and other investments, the Houston couple no longer claim they are financially ruined. In the spring, she opened a thrift store in Houston dubbed Jus' Stuff -- called Salvation Armani by one wag -- to unload excess family holdings, including a mahogany canopy bed, reproduction antique desk, picture frames, rugs and lamps.

Lesson? Shedding crocodile tears on national television while living in a 13,000-square-foot, $7.1-million Houston penthouse won't get you very far.

* Dial M for money: Mo' Money is a Pensacola business that manufactures and distributes promotional T-shirts, caps, gym bags and jackets. It was a quiet business until Mo' started getting as many as 8,000 extra toll-free phone calls a month from angry people.

Only they weren't angry at Mo' Money. In January 1999, someone at computer giant Gateway Inc. messed up by using the 800 prefix instead of 888 for the company's toll-free customer complaint line. Guess who got all those calls? Earlier this summer, Gateway was hit with a $3.6-million jury verdict for the wrong number that flooded Mo' Money's phone line.

Lesson? The devil is in the details. Double-check the accuracy of any consumer help phone number before sending it to your 275 retail stores, posting it on your Web site, listing it on Internet billings and adding it to a form distributed to more than 100,000 of your customers.

* Supersize that meal? "The fast food industry has wrecked my life," complained Caesar Barber, 56, after filing a lawsuit this summer naming McDonald's, Wendy's, Burger King and KFC for making him obese. "They said, "100 percent beef.' I thought that meant it was good for you," Barber, a 5-foot-10 maintenance worker who weighs 272 pounds, told New York newspapers.

Indeed. How would Barber and his fellow plaintiffs know that chowing down on a Big Mac, a Whopper, fries, onion rings, extra crispy chicken and a thick shake could make a person fat?

Burger King got jabbed twice. It hired blues legend B.B. King earlier this year to pitch its King Supreme double-beef burger with American cheese. But King is diabetic and in a separate ad campaign pitched a blood-sugar test kit for Johnson & Johnson's LifeScan.

Lesson? When it tastes good, never underestimate the gullibility and gall of the American consumer. The fast food industry is learning what the tobacco business was taught the hard way: Customers will buy unhealthy products but will plead ignorance if there's a chance of profit. Watch out, Krispy Kreme, Dunkin' Donuts, Ben and Jerry's and Pizza Hut. You may be next.

* Two heads, no brains. Disc jockey Ben Stone of radio station KORB-FM in Davenport, Iowa, allegedly told his listeners that anyone who got a permanent "93 Rock" tattoo on his or her forehead would receive $30,000 a year for five years. That's all David J. Winkleman and Richard C. Goddard Jr. needed to hear. They got the tattoos.

But the station never paid them, and they have been unable to obtain employment since getting the tattoos, according to a lawsuit filed against the disc jockey and his employer. The negligence suit says Stone "made the false promise as a practical joke, so that persons who responded to the announcement with the intention of receiving tattoos could be publicly scorned and ridiculed for their greed and lack of common good sense." Cumulus Broadcasting, which owns KORB, denies the allegations.

Lesson? Resist the lure of ratings at any cost and don't hire DJs who can't tell the difference between saying things that are amusing and those that are cruel and irresponsible.

* Shirt backlash. One Abercrombie & Fitch T-shirt featured a picture of two men with slanted eyes wearing triangular hats. The slogan: "Wong Brothers Laundry Service: Two Wongs can make it white." Another shirt featured Buddha and the words "Buddha Bash -- Get Your Buddha on the Floor."

While Abercrombie & Fitch thought it was a hip and clever clothing line, Asian-American groups complained the sophomoric slogans were offensive and reinforced negative stereotypes.

Abercrombie & Fitch caters to teens and young adults by trying to create edgy clothing. This one did not work, and the company pulled the clothing out of its stores.

Lesson? Sometimes it can be a fine line between pushing the envelope and becoming culturally insensitive. But this example was a no-brainer of bad taste.

* Next time, show up: David Godwin reportedly did not respond when a complaint arrived at his Miami home in April, alleging that he and his company, Dependable Telecom Services, committed fraud, negligent misrepresentation, fraudulent inducement and conversion.

Bad decision. In May, a federal judge in Miami issued a default judgment against Godwin and Dependable Telecom for the stunning amount of $363-million. Belatedly, a lawyer argued that Godwin had tried to respond. The judge did not believe him and, in July, upheld the judgment.

Lesson? Arrogance and ignorance get you nowhere in court.

* Pull over, buddy. Gee, any request by the Florida Highway Patrol to pull over is voluntary, right? Last month, FHP officers were used to direct randomly selected drivers off Interstate 4 near Lakeland so they could be surveyed by crews working for the state's high-speed rail system. Nazih Haddad, executive director of the Florida High-Speed Rail Authority, suggested the stops were "purely voluntary" and took no more than a couple of minutes for pollsters to ask motorists about their driving habits between Orlando and Tampa.

Lesson? What fool came up with the idea of using uniformed officers to coerce drivers off an interstate just to be surveyed? Perhaps the Florida High-Speed Rail Authority needs some remedial tutoring in basic civics and constitutional rights.

* When monopolists rule. Malcolm Glazer and his sons, owner and overseers of the Tampa Bay Bucs, seemed to go out of their way early this year to ineptly dismiss widely respected Bucs coach Tony Dungy. Then they became the laughingstock of the area -- no, of the entire National Football League -- with their vain efforts to recruit a replacement. Of course, now that new Bucs coach Jon Gruden has arrived and shown some tough love, Bucs fans may be quick to forget the sorry treatment shown his predecessor. Tony who?

Lesson? As businessmen, the Glazers enjoy the most attractive of area franchises: a monopoly pro sports franchise with a loyal fan base that plays to soldout stadiums. As long as that lasts, the Glazers can thumb their noses at just about anyone. And they do.

* More smoke and mirrors. If it vowed in a 1998 tobacco settlement to market solely to adults, why was R.J. Reynolds Tobacco Co. advertising heavily in magazines with big youth readerships such as Sports Illustrated and Rolling Stone? A California judge wondered the same thing, ruling in June that the company violated the 1998 agreement. The company was fined $20-million.

Lesson? Fool me once, shame on you. Fool me twice, shame on me. Is R.J. Reynolds credible? In 1999, the year after Reynolds signed the settlement, advertisements for Camel, the company's most popular brand, reached 88.5 percent of teenagers at least 22 times.

* Billions, schmillions. The U.S. accounting industry may have set an all-time record for self-destruction of its credibility in less than a year's time. Earlier this year, we learned Enron may have overstated the value of its assets and financial contracts by as much as $24-billion. WorldCom stunned the business world by restating billions in earnings this year -- then restating billions more a second time. Dozens of other companies are jumping in to revise their financial numbers to fit the more conservative tone of mid-2002.

Lesson? President George W. Bush, defending his role as director in an energy company years ago, was honest last month when he said: "All I can tell you is that in the corporate world, sometimes things aren't exactly black and white when it comes to accounting procedures." But now this country wants to make accounting black and white. That could prove a very painful process.

* Two out of three? What's in a name? The plaque was supposed to state, "Thank you James Earl Jones for keeping the dream alive" -- to honor the Tony Award-winning actor who's also the voice of Star Wars' Darth Vader, CNN and Verizon. The plaque was a gift from the Florida city of Lauderhill to Jones at this year's Martin Luther King Jr. celebration. But the plaque, in an unexplained mixup, instead said "Thank you James Earl Ray." Ray shot and killed King in 1968.

Lesson? Check, recheck and check again.

* It's a bad thing. America's homemaker empress, Martha Stewart, is living the hellish life of the tail wagging the dog. She is desperately fighting a losing battle against allegations of insider trading of shares in ImClone Systems. But the really devastating loss is the rapid disintegration of her name -- her billion-dollar brand name -- in the public mind.

Lesson? It's the little things that trip you up. By selling ImClone shares, Stewart netted a few hundred thousand dollars. Now she's losing more than that every day from the dropping stock of her own public company, Martha Stewart Living Omnimedia.

All this, and we're only halfway through the year.

-- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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