From Volume 3, Issue Number 52 of EIR Online, Published Dec. 28, 2004

Is Key Social Security Privatizer Covering Up Huge Time Warner Scandal?
by L. Wolfe

Dec. 23 (EIRNS)—Last week, Time Warner CEO Richard Parsons, one of the key people pushing the privatization of Social Security, delivered an important address at the White House Economic Summit (see article, this page). Parsons, as co-chairman of the President's commission on Social Security "reform," will reportedly play a major role in drafting the legislation for the "Enron II" heist of the trillions in the Social Security Trust Fund.

As Parsons was speaking, a deal was being announced to let his company escape criminal fraud charges in a scandal which, various sources say, dwarfs Enron or Worldcom in financial corruption, one allegedly invovling the multi-hundred-billion-dollar merger of Time Warner and America Online (AOL), and the merger's aftermath. The scandal, sources indicate, is so large it may require the sacrifice of minor players to cover up the real story.

For now, Time Warner will pay a piddling $210 million to the Feds on the criminal charges—a sum which many Wall Street insiders view as "hush money." Perhaps another $300-$500 million could be paid out next year to hush up securities fraud charges.

The deal, such as it is, appears to be Bush Administration repayment for the role of Parsons, a close friend of Vice President Dick Cheney, in pushing Social Security privatization.

Parsons has a reputation as a "fixer" of thorny problems for the Wall Street cabal that backs privatization. He was reportedly given the CEO position in Time Warner to "work something out" to shut down several probes of the Time Warner/AOL merger. As this news service reported exclusively, Justice Department (DOJ) and Securities and Exchange Commission (SEC) investigators have believed for some time they have a case for massive overstating of the value of AOL, and hence the value of its stock, and that of the merged companies at the time of the 2000-01 merger. Some officials who reportedly knew it would all blow up, allegedly cashed in their stock and options right after the merger.

As a small portion of the fraud in overstatements leaked out, and as AOL's revenues started to fall, as its books were restated, the company's stock fell to a small fraction of its former worth—far less than the worth of either company prior to the merger. As a result, many of the tens of thousands of employees who held stock instead of pensions, took a beating; anyone who held Time Warner stock also took a hit.

What Did He Know?

Just how much Parsons knew before the merger is unclear. However, it is reported that, with several DOJ and SEC probes underway, and with AOL's headquarters in Northern Virginia having been raided by Federal agents and boxes of records carted away, Parsons is said to have told his friends in the Bush Administration that the scandal was so big, it could bring down the entire financial system—that the system could not tolerate another Enron or Worldcom involving the world's largest entertainment conglomerate.

Parsons is not said to be a target of any investigation, and the media play him up as "beyond corruption." He reportedly forced out two people who are targets—his former boss and Time Warner CEO Jerry Levin, and AOL "wunderkind" Steve Case.

Local sources report that honest Federal investigators are upset with what has come down, and are "pissed" at Parsons for having effectively stymied, with the help of his friends in the White House, their efforts to expose what one source called "the mother of all financial scandals." But, with the global financial system on the brink of collapse, such scandals might yet find their way into the spotlight, as one or another faction seeks to use them for leverage; in these circumstances, Parsons' friends might not be able to protect him or his company—and vice versa.

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