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...reason for this public relations offensive is that Jack Welch, perhaps the most admired corporate manager in America, is suddenly fighting for his honor as GE faces embarrassments from its outpost on Wall Street to its half- century-old engine division in Evendale, Ohio. Chief among the problems is the mess at Kidder Peabody, GE's money-losing brokerage unit, where head government-bond trader Joseph Jett concocted $350 million of phony profits over a 29-month period before he was fired in April. Jett now claims to have been acting with the knowledge of his superiors. The scandal...
Reports of ethical violations have also been clouding some of GE's traditional lines of business. In October the Connecticut-based company faces trial in federal court in Columbus, Ohio, on charges that it conspired with a unit of South Africa's De Beers mining company to fix the price of industrial diamonds. GE vigorously denies the Justice Department charges. Meanwhile, the FBI armed a GE whistle-blower with a hidden tape recorder last year to probe charges that the company had repeatedly ignored warnings about electrical problems that could compromise the safety of its aircraft engines. Not only...
...this, GE is again engaged in widely reported talks to sell some or all of NBC, which it acquired in 1986 when it purchased RCA Corp. While NBC currently boasts such comedy hits as Frasier and Seinfeld and has been reporting improved profits this year, the network continues to run third behind CBS and ABC in daytime and prime-time ratings. Among its many blunders under GE was letting David Letterman jump to CBS last year; Letterman regularly clobbers NBC's Tonight Show with Jay Leno in the ratings and has propelled CBS's entire late-night lineup into...
Welch also scoffs at the notion that his emphasis on winning might encourage employees to cheat or cut corners to meet corporate goals. "Joe Jett was thinking about GE's quarterly earnings sitting down there?" he asks rhetorically. "Anybody with an IQ over 70 would know that Joe Jett didn't , care about GE's earnings. He never thought about GE. He had a game going for himself." Besides, says Welch, he has no choice but to call upon his employees to push their limits. "How can you tell an organization, 'Run slower'?" he asks...
When it comes to Kidder, many Wall Street watchers insist that GE's 1987 purchase of that company was fated not to do well from the beginning. Acquired as a unit of GE Capital, a major provider of financial services, Kidder represented a plunge into brokerage and investment banking fields that GE knew little about. Scandal struck soon after the deal was completed when former Kidder merger whiz Martin Siegel pleaded guilty to illegal stock trading and tax evasion in a case that broke open Wall Street's most notorious insider- trading ring. This year Kidder has witnessed not only...