Andy Fastow compares Apple to Enron

“Enron has been pretty much synonymous with fraudulent accounting, scandal, and plain bad business since it went bankrupt in 2001,” Jen Wieczner reports for Fortune. “Apple, meanwhile, is not only the world’s most valuable company, it’s also No. 1 on Fortune’s list of World’s Most Admired Companies.”

“What do the two companies have in common? More than you might think, at least according to Andy Fastow, Enron’s former CFO who was convicted and went to jail for fraud, and now lectures at corporate events,” Wieczner reports. “Apple has been accused in the last few years of using its Irish subsidiaries to shelter profits offshore and evade paying taxes, most recently by the European Commission, which is investigating whether the company owes it billions of tax dollars.”

Wieczner reports, “Fastow’s point, at least according to according to Kase Capital hedge fund manager Whitney Tilson, who attended the talk, was that Apple ‘is engaged in tax dodging behavior that, while perhaps technically legal, is clearly designed to increase profits and inflate the stock by misleading and confusing regulators (and perhaps investors) via a massively complex web of entities.'”

Read more in the full article here.

MacDailyNews Take: Poppycock.

64 Comments

    1. Yes, taking actual profits and minimizing their tax exposure is not quite the same as hiding huge loses while pretending to have a profit.
      Enron was a company the pretended to be an “energy” company while actually engaging in a bunch of shell games while not producing anything of value.
      Apple is not “pretending” to be a cell phone OEM or computer OEM or software OEM. It actually makes stuff.

      1. Exactly. Enron didn’t generate anything of value; it only pretended to by moving around assets on paper, and playing a game to falsely inflate profits.

        Apple is the opposite of Enron; it produces real stuff with enormous real value. Apple does manage its assets wisely, and that does involve minimizing tax exposure in legal ways. But if you are going to compare Apple to an energy company, it would be something like Exxon Mobil: a company with real profits, derived from providing real stuff to the market.

        As usual, the Enron fraudster just makes stuff up to get headlines and try to remain relevant.

        1. Great point. Let’s also remember how they faked an entire trading floor to trick their financiers. A lot more than just ol andy and Jeffry were involved. It was a corrupted organization from top to bottom. No possible way to keep this quiet. Everyone who worked there is culpable.

      2. In addition, the accounting methods used by Apple includes any future tax liabilities (in accounting, tax rate of 26% is used instead of 12% they actually pay). So there is no accounting fraud either.

  1. Dumbass – you could substitute Google, Facebook and many other international companies, but the headline wouldn’t get so many hits.
    I don’t really like what these companies do because they are using tax loopholes to pay less tax. But until the politicians close those holes then Apple is doing the right thing.

    1. What tax loophole is Apple using to “pay less tax”? Whatever they’re doing clearly isn’t working since they pay about 26%, and the US corp average is about 20%.

        1. It it’s satire, it’s poorly conceived and tasteless. Effective satire requires an element of truth, an ironic sensibility grounded in current social mores, and humour. Two out of three won’t cut it.

          1. I don’t like it either, it’s childish, but it’s effective nonetheless. Largest company in the world making gobs and gobs of money from massive profit margins on iPhone and iPad sales, creating tons of jobs overseas, successfully reducing its tax burden… Technically everything he says is true. He/She is just jealous and wants Apple to look bad.

    1. Interesting that with that user name you are ignorant enough to come here and post that kind of worthless crap. Please explain how you differentiate Google, Facebook and any other number of tech companies from Apple regarding the goal/measurement of business success. Do you always troll Mac oriented websites looking to stir up crapola? It’s incredibly lame and childish. You should hang out at BGR. There is a big contingent of full-time trolls there who are almost exact copies of you. I promise you will feel right at home as you all stand in a circle and pull as fast and hard as you can.

    2. No Google for me, bro. Untrustwortthy. I avoid Google Search as much as possible and only use Gmail for web accounts that I know will generate junk mail I never will read.

    3. LOL, how ironic, the company with a motto “Do no evil”.

      As for who is fleecing whom. Apple is booking taxes of over 26%, with most of that going to the US taxman. The less you pay to foreign treasuries, the more you owe the US Treasury. However, you don’t have to book all that tax until you repatriate it.

      Of course, a quick way to see which companies are “fleecing”, just check their net effective tax rates. Apple’s is over 26%, and has been for years and years. Google’s is what? Last year, 19.4%, the year before 16% and the year before that 20%. Just so you know whom is fleecing whom. Clearly, Google is an expert. By the way, Google is going to get hammered by the EU as well.

      You also realize that the companies that do the most lobbying in Washington and Europe are the ones asking for the most breaks and benefits. Guess who has been #1 in lobbying for years? Yep, Google. They spend almost 10x the amount Apple spends.

      So, you go around looking down your nose at Apple, while Google is using you and everyone around you laughs.

  2. There is a well-known and accepted legal distinction between tax avoidance and tax evasion. Avoidance is legal; evasion is not. No one has suggested that Apple is doing anything other than avoidance. This is a non-story except for those seeking hits through the use of the Apple brand.

    1. Tax avoidance.

      Isn’t that what we all do, come tax season? Look for all the ways we can minimize our taxes owed, and if we over paid, get that money back?

      What makes it particularly immoral?

      What condition or situation is not tax avoidance and morally just, without being an ignorant tax payer?

      Just take my money govment and tell me what to eat and where to sleep.

      1. The issue is the wealthy can lobby congress for favors whereas the average citizen has no political influence to preserve his or her wealth. Apple has the advantage of access and lawyer while the common citizen is at the mercy of legislatures.

        1. Apple is notorious for NOT lobbying Washington, since Steve Jobs hated Washington’s meddling. Even now, Apple spends a pittance on lobbying, about 1/10th of what Google spends. Notice how Apple has gotten hammered by Washington for not playing its game, whether it is the DOJ e-book case, and now the FBI case.

            1. I think that proves my point. Apple has been notorious for NOT lobbying Washington since Steve hated DC’s meddling. Even now, Apple spends a pittance in comparison to what Google spends.

            2. Yep, Google spent 4x as much as Apple last year, and Apple’s lobbying spend doubled in the last 3 years, for obvious reasons. Historically, Apple’s lobbying spend has been 1/8th to 1/10th of Google’s.

      2. You are correct and I think tax avoidance starts at the beginning of the tax year, not the end. Companies and individuals look at the tax code and adjust their behavior or practice, so at the end of the year their tax liability will be minimized.

    2. Apple is not doing tax avoidance, they’re doing tax deferral. The less they owe European Treasuries, the more they owe the US Treasury. If they didn’t pay US tax on their foreign income, their net effective tax rate would be 12%, but Apple actually books 26%, because they’ve been booking US tax on most of their foreign income.

      1. They aren’t struggling, Derek. I thought it was common knowledge that Amazon’s long term strategy for corporate growth demands continual reinvestment of profits. Some of its divisions make money but they are diverted to other divisions or into R&D. They live on a cutting edge, and Wall Street likes that because of the huge potential upside. By constantly underselling competitors, they outlast them. Eventually, their competition is gone, and then, they adopt monopolistic practices and make a killing. All legal, and all understood by the shamans in the stock market.

        1. The monopolist angle is certainly the case. Every time I think of it I become cynical about Amazon: Out to ruin competition, which I consider to be the father of innovation.

          So perhaps I enjoy bashing on Amazon because I enjoy creativity and diversity, which is the opposite of the goal of Amazon.

          Any time people invest in self-destruction, it inspires my cynicism.

    1. What a set of balls on this guy. He’s a fraud. Enron NEVER generated cash, it was all lies fraud and none of it was legal. Guess he doesn’t know why he went to jail. I’d say send him back until he figures it out.

  3. Andy Fastow, Enron’s former CFO who was convicted and went to jail for fraud, and now lectures at corporate events

    HAHAHAHAHA! Someone PAYS that ass to say stuff!

    HAHAHAHAHAHAHAHA!!!!!!

    Apple Andy? No. You blithering idiot.

    But the world economy? That would be a YES. It’s now based on DEBT, which is promised money from the future. That’s exactly what Enron was based on, before it plowed into the planet like a meteor and spectacularly blew up in sucker’s faces. FSCK -U Andy Fastow.

  4. You just gotta love this country. A cheating scumbag like Andy Fastow gets a few years of jail time for defrauding investors of millions of dollars, then gets paid to lecture about his criminal schemes for top corporate dollar.

    1. Just think who many ons of millions Madoff could make if he ever got out of jail!

      Hate Fastow – common garden variety scummy criminal. That said, what Fastow is doing to generate income is common practice in Europe and the USA – those convicted of large scale financial crimes get a new chance to fleece the people who are supposed to be so economically savvy. If the morons will pay, why shouldn’t he take their money?

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.