When the CEO of Benton Oil & Gas (now Harvest) had trouble financing a luxury home he wanted to buy in Santa Barbara, California, the company’s board of directors decided to loan him the money so he wouldn’t have to sell his shares in the company. Apparently, it never occurred to them that there was another option (which would have almost certainly occurred to anyone making a living outside a corporate boardroom) — let him buy a cheaper house.

This mindset has been typical of the wildly affluent new corporate elite, whose members you might have heard boasting about how they’ve cracked the secret of wealth creation. And while they clearly understand the need for discipline and fiscal restraint on the part of workers and welfare recipients, they’ve never seen much need for these qualities in their own world.

Hence, CEO Alexander Benton was able to convince the board of the public company he’d founded to lend him $5.7 million, so he could also acquire a $4 million estate overlooking the Pacific Ocean, six cars (including a Jaguar and a Porsche), and 15 antique watches. (You never know when your first 14 antique watches might stop ticking and you’ll need a backup.)

Benton filed for bankruptcy last week, after his company finally demanded repayment. He now lives in a rented apartment and doesn’t own a single car. One imagines he’s even wearing a Timex.

In recent months, excessive compensation packages for executives have become a hot-button issue as angry investors and employees have been demanding to know why so many corporate treasuries are bare. One reason is that corporate directors behaved irresponsibly with the money they managed, doling out funds to senior executives with a sloppiness that would have enraged them in government bureaucrats.

The directors of now-bankrupt WorldCom approved personal loans for CEO Bernard Ebbers of more than $400 million, on the assumption that there’d be no problem collecting, since Ebbers owned $500 million worth of shares and assets.

The loans were approved “without much discussion,” according to sources quoted in the Wall Street Journal last week. Apparently it hadn’t occurred to the bright lights on the WorldCom board that shares could drop in value. Luckily for the public purse, these corporate director types weren’t interested in jobs running the public sector. One can imagine battered women’s shelters with panoramic ocean views and antique watches all around.

This loosey-goosey approach to managing corporate money was part of the culture of limitless greed, which has been widely celebrated in business circles and has only recently encountered image problems. Its promoters are now circling the wagons, trying to stave off attempts to bring back regulations by charging that such efforts are part of an anti-corporate campaign, or what National Post financial editor Terence Corcoran has called a “war on business.”

It’s striking how quickly these sorts of conspiracy theories are trotted out. In a recent column (reprinted online), Corcoran even accused American President George W. Bush of riding “along with the anti-corporate crusaders.”

Who can you trust these days?

Corporate boosters have insisted that the weakening of regulatory controls and the freeing up of corporate greed is all part of the dynamic of a bold, new, invigorated global capitalism that promises to lift the world to undreamed-of levels of prosperity.

Advocates of this new capitalism have not been shy in their claims. “The economic problem has been solved,” gushed Dinesh D’Souza in his recent book “The Culture Of Prosperity.” “We know how to create wealth … [T]here is only one way to do it, and that is the American way of technological capitalism.”

In fact, it turns out that much of the success giddily proclaimed by D’Souza and others has been an illusion — something that has presumably been clear to the growing number of desperately poor people around the world. But even here in the West we’re now seeing that some of the biggest success stories of the new era — Enron, WorldCom, Global Crossing, Adelphia — aren’t actually harbingers of a new age of material bounty.

The truth is that these companies aren’t actually successful — aren’t even solvent — once the accounting is done properly. The huge telecommunications industry that lies at the centre of the new economy has been revealed to be about as sturdy as a house built of toothpicks.

D’Souza’s cocky claims about the wonders of the new capitalism now sound not only bombastic, but also misleading. Let’s play that again: “We know how to create wealth … [T]here is only one way to do it.” What way would that be? — lying, cheating, cooking the books? Hopefully D’Souza will cover this angle in future editions of his book.

It now seems that we haven’t really unlocked the mysteries of ever-increasing wealth; we’ve just been celebrating a gigantic accounting scam.

Linda McQuaig

Journalist and best-selling author Linda McQuaig has developed a reputation for challenging the establishment. As a reporter for The Globe and Mail, she won a National Newspaper Award in 1989...