Shining a light into the murk euphemistically described by the Wall Street Journal as “self-dealing”, detail has started to emerge from the embattled Adephia cable TV company of the 'benefits' mined by its controlling shareholders, the Rigas family.
According to the WSJ, a filing with the Securities & Exchange Commission reveals that hundreds of millions of dollars found their way from the company’s coffers to the clan’s wallets to pay for such essentials to survival as as fifty autos, massive stock purchases and two Manhattan apartments.
John J Rigas and his kin, who control 60% of the shareholder votes [although only 20% of the equity – thanks to a preferential voting system], used a special Adelphia cash fund to finance a number of private ventures, including cable companies, share purchases and margin calls on privately held stock.
The filing cited an example in which the family used company funds to pay $174 million for margin calls on their stock. Adelphia avers that none of the transactions were fully approved or even disclosed to the board.
Another instance shows the purchase of fifty vehicles in 2001 from Preston Motors, an auto dealership in which Rigas père had a beneficial ownership. Many other such examples were filed.
According to Adelphia, the family “refused to review or provide information” for the filing; also that “certain other current and former officers, executives and employees of the company have been unavailable to review and provide information.”
Meantime, the Rigases have quit the sinking ship [WAMN: 24-May-02] as Adelphia's outside board assumes control of the company and struggles to avoid a debt default or bankruptcy filing. The group is under investigation by the SEC and two federal grand juries in New York and Pennsylvania.
The Rigas family, via its attorney, has zipped lips.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff