Dispatches > In Brief

In Brief

News highlights from around the world

Issue: "Summer Books 2002," July 7, 2002

Rite Aid, wrong tactics

Rite Aid is digesting a bitter pill. The nation's third-largest drugstore chain is yet another high-flying corporation to face an accounting scandal.

Fortune magazine in 1998 hailed Rite Aid as one of "America's Most Admired Companies." A year later, the company's stock sold for over $50 per share, compared to less than $13 four years earlier. Then the company revealed it had inflated its earnings in the late 1990s by $1.6 billion. By last month, shares went for under $3 each.

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Federal regulators say four former executives are to blame. The "portrayal of Rite Aid as a profitable company was a ruse and a mirage," according to a 37-count criminal indictment against the executives. "The deception was accomplished through massive accounting fraud, the deliberate falsification of its financial statements, and intentionally false filings."

Three former executives, Martin Grass, Franklin Brown, and Franklyn Bergonzi, face the most serious charges, including conspiracy to defraud, making false statements to the government, tampering with witnesses, and obstructing various investigations.

Still, Rite Aid survives. The company boasts annual revenues of over $15 billion and runs 3,500 stores in 28 states. "Rite Aid is a much stronger company today than it was two years ago," said current CEO Bob Miller.

Putting stock in an old sock

Would you buy a used car from a used sock? A financing company called 1-800-BAR NONE is betting that some car buyers will. The company acquired the rights to Pets.com's old sock-puppet mascot and plans to use it in ads this month to pitch car financing for people with bad credit. The puppet was a cult favorite in a series of TV ads that peaked with an appearance during Super Bowl 2000. Then the stock market bubble burst. Pets.com, once a Wall Street darling, fell into the penny stock category and went out of business in November 2000. "It is not often that a company will adopt the mascot of a defunct company," said Christina Duffney of The Direct Marketing Association. "Such a company runs the risk of being associated with a business that wasn't a success." But 1-800-BAR NONE is taking that risk. The new sponsor's message: Everyone deserves a second chance.

Survey says: Confused collegians

  • 37% of all college students said they would be "likely to try to evade the draft."
  • 71% disagree with the statement that U.S. values are superior to the values of other nations.
  • 57% believe the policies of the United States are "at least somewhat responsible" for the Sept. 11 terrorist attacks.
  • 79% believe the U.S. "has the right to overthrow" Saddam Hussein.
  • 60% believe "developing a better understanding of the values and history of other cultures and nations that dislike us is a better approach to preventing terrorism than investing in strong military and defense capabilities at home and abroad."
  • 79% do not believe Western culture is superior to Arab culture.
  • 61% say that they generally have a favorable opinion of Islam.

Unhappy campers

The "temporary" UN agency set up 50 years ago to administer Palestinian refugee camps is asking UN members to donate funds to rebuild camps damaged by Israeli military action and to close a funding gap. The United Nations Relief Works Agency (UNRWA) runs the Jenin camp, along with 58 others in Jordan, Lebanon, Syria, the West Bank, and Gaza. Those camps were set up more than 50 years ago when Jewish settlers displaced longtime Palestinian residents in newly designated Israeli territory. The camps are hotbeds of restive protest against Israel and-more recently-terrorist activity, including suicide bombing missions targeting Israelis and hatched largely in Jenin.

Rep. Eric Cantor (R-Va.) called the UNRWA request "brazen" while "buildings and warehouses under UNRWA's supervision are allegedly being used as storage areas for Palestinian ammunition and counterfeit currency factories." At the same time, the Kuwaiti daily newspaper, Al-Watan, reports that Palestinian Leader Yasser Arafat deposited into his personal bank account $5.1 million meant for humanitarian aid to Palestinian refugees. UNRWA's 2001 budget called for $311 million to administer 59 camps, which house a total of 1.2 million refugees. But the UN provided $285 million last year, leaving the agency with a $26 million shortfall. | Mindy Belz

Checkpoint China?

Beijing's once-serene, tree-lined embassy district is becoming the Berlin Wall of North and South Korea. Despite tight Chinese security, 23 North Koreans have managed to force their way into the South Korean consulate in China's capital. Two more took refuge in the Canadian embassy. A diplomatic furor erupted last month when Chinese police chased a South Korean man with false papers into the South Korean consulate and punched and kicked South Korean diplomats before dragging the man away. Amnesty International accuses China of rounding up 1,400 North Koreans from refuge in northeast China and sending them home. With starvation and political oppression at all-time highs inside North Korea, as many as 300,000 North Koreans have crossed the border into China illegally. The influx puts China in a dilemma over its small communist cohort: China has a treaty with North Korea requiring it to hand over illegal immigrants; but it also has an obligation under UN and other international standards to determine whether the illegals should receive political asylum. | Mindy Belz


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