Originally published on LinkedIn Pulse May 8/9, 2016 

By Brian E. Frydenborg (LinkedIn, Facebook, Twitter @bfry1981) May 8th/9th, 2016

Aaron Bernstein/Reuters

AMMAN — I must confess, in a race full of unprecedented behavior, I was still shocked that a distant second place candidate in the Republican presidential nomination race—one who was mathematically eliminated from winning a majority of delegates from the primary/caucus process, from winning the nomination on the first ballot at the Republican National Convention—would name a running-mate for the vice president slot with about one-third of the time still left in the contest and months before the convention, long before anyone else had ever done so during our modern nomination process.

Then again, since the chutzpah of both Ted Cruz and Carly Fiorina knows no bounds, I really should not have been surprised that either Cruz named Fiorina as his “running mate” even though he is not even close to being his party’s candidate, and that she, of all people, would accept.

Pride As a Vice

This amazing duo lasted one week—just one week exactly—before Cruz gave up his quest for the presidency.  After just seven days of existence, the Cruz-Fiorina ticket was no more, and Fiorina now has the record for the shortest vice presidential candidacy in U.S. history.

It is worth examining this exceptional piece of desperation political theater because it is truly a singularity in terms of its sheer absurdity and inanity.

Short-lived though the ticket was may be, the two are truly perfect for each other: along with Donald Trump, they are by far the most shameless, dishonest self-promoters of this election cycle.  In case you might be under the incorrect assumption that they are not the most shameless self-promoters out of over twenty candidates  in both parties (apart from Trump), a brief education is in order below.

Lyin’ Ted

Kevin Lamarque/Reuters

First up: Ted Cruz.

Full disclosure: I am not a fan of Trump and I view his candidacy as a historically dangerous one for democracy and for Western civilization, but his “Lyin’ Ted” nickname for Cruz he came up with is about as spot-on as you can get when it comes to that man, because he lies constantly and plays dirty and deceitful politics on the campaign trail.  Pulitzer Prize-winning PolitiFact has been checking statements by Cruz since 2012, and, as of today, nearly two-thirds (64%) of his statements that it checked were categorized as mostly false (31%) or worse: false (27%), (liar liar) “pants on fire”-false (6%); only 22% were rated positively: true (6%) or mostly true (16%).  His record ranks among the worst of all the candidates for this election, with only Dr. Ben Carson and Donald Trump having a higher portion of mostly-false statements or worse.

This is a man whom the recently-former Republican Speaker of the House John Boehner just referred to as “Lucifer in the flesh,” and Boehner noted in same statement that he has “never worked with a more miserable son of a bitch in…[his] life.”  Reflecting Boehner’s words, it is even a widely understood piece of political insider wisdom that Ted Cruz is the most hated man in the Washington, DC political establishment (especially in the Senate), an establishment he is extremely hostile to but is also, nevertheless, something of a member of since he is one of only 100 sitting U.S. Senators; he turns on friends, he turns on his own Republican Party, he feeds off and uses skillfully delivered and amplified misinformation in the way a Sith Lord feeds off anger, all in a quest for personal power for Ted Cruz, regardless of who or what he damages in pursuit of this power.  In fact, it all seems to actually be part of his plan, because he has always worn the hatred of those he deems “The Establishment” as a badge of honor, and has sold this as a badge of honor—even as part of his campaign platform—quite successfully to his supporters.

This is a man who led his followers to believe that he could use a government shutdown he personally orchestrated to (ostensibly) attempt to force a repeal of Obamacare, though this ignored basic constitutional and political realities, of which Senator Cruz is supposedly an expert.  No, the real reason he engaged in such a stunt—complete with reading Dr. Seuss’s “Green Eggs and Ham” in the Senate while on the taxpayer’s dime, all while blithely missing the irony in doing so—was for one reason and one reason only: to promote himself.  And in this, he wildly succeeded, even as he alienated himself even more so among his Congressional colleagues and caused a damaging government shutdown that risked the United States Government defaulting on its debts, damaged his political party’s brand, cost hundreds of thousands of federal employees and contractors (about 850,000 people) days to weeks of pay, and caused harmful economic spillover effects to the tune of $24 billion nationally and 0.6% in national GDP growth, economic effects felt especially in Washington, DC, Virginia, and Maryland.  Moreover, this shutdown occurred even as, embarrassingly, the Syrian government was able to fully operate in the regions of Syria it controlled in the midst of a full-scale civil war.  Yes, all these were acceptable casualties in Cruz’s quest to elevate himself to maximize his exposure and thus his chances for his presidential bid.  If there is any doubt as to how calculated all this was, consider that Cruz was the first major candidate in either party to officially announce his candidacy in a field that would swell to over twenty individuals.  He had clearly been planning for some time, and he would hardly have been unaware of the fact that the government shutdown is that for which he is most known by the American public; he sure isn’t known for his record as a legislator in the Senate, where he by far makes more noise than actually engaging in the normal tasks of being a U.S. Senator.

This is a man who has engaged in the ultimate deception on one of his signature issues: Cruz constructed what is possibly the most masterful lie in the history of American politics on immigration policy, positioning himself exquisitely carefully to be able to play both sides of the issue depending on which way the political winds blew in what may very well be the most planned (and one of the longest-running) series of political lies in American campaign history.  That he did lie many, many times and manipulate over an extended period of time on this issue is not in doubt and has been meticulously documented by William Saletan at Slate.

Then there is the infamous episode I wrote about some time ago, where Cruz was booed off the stage at an even highlighting the plight of Middle Eastern Christians.  Most of them are Arab, and Ted Cruz chose to open his remarks by insisting that Middle Eastern Christians first and foremost need to stick up for the Israeli state, even as it illegally occupies millions of Arab Palestinians, Christian and Muslim alike, and denies them basic human rights.  Middle Eastern Christians living under forces hostile to Israel—including ISIS—would be risking their very lives speaking out in favor of Israel.  This does not mean that Cruz does not have a point in the sense that as a minority in a region that generally treats minorities awfully, Christians there have a plight in common with Jews in a general historical sense, and that many anti-Israeli forces go way too far and veer into anti-Semitism, but this is not the main issue facing Christians in the Middle East at a forum dedicated to their suffering, not that of Israeli Jews and Cruz’s approach was certainly not appropriate, especially leading off with that, at that particular event.  Encouraging what he encouraged was not a way to help persecuted Middle Eastern Christians, and was, in fact, asking them to needlessly expose themselves to danger, up to and including death.

Ted Cruz is not stupid.  Ted Cruz knows this.  Ted Cruz didn’t care about Middle Eastern Christians. Ted Cruz knew that much of the Republican evangelical base is fervently pro-Israel to the point of being apologists for Israel’s (self-)destructive and illegal nearly-half-century occupation of Palestinian territory.  Ted Cruz knew he was doing this was elevate himself in the eyes of the very people in America whose votes he needed to win in order to win his party’s nomination for the presidency.  Ted Cruz was perfectly willing to use Middle Eastern Christians as a prop to help himself.

This is a man who routinely engages in dangerous demagoguery when it comes to issues related to terrorism, Muslims (including Muslims-Americans), and Islam, in a dangerous way that preys on fears and creates more division, suspicion, mistrust, and hostility than is necessary, but this has been largely overlooked to a degree because of the Trump phenomenon.   Yet from to ISIS to Palestinians, from San Bernardino to the Iran nuclear deal (which Cruz has outrageously claimed makes “the Obama administration the world’s leading financier of radical Islamic terrorism”), Cruz has played a game of risky rhetorical hyperbole that deals in misleading demonization of vulnerable minorities to win political chips in order to elevate himself politically.

The lies and deceptions and destructive, selfish behavior do not begin or end here, but they are major points of a highlight reel.

This is the real Ted Cruz.

Failed Fiorina

Getty Images

Now, to pivot to Mrs. Fiorina.  Perhaps you are thinking she is better, but they are actually a match made in heaven (or hell, if you’re in Boehner’s camp).

Out of the political contenders this election cycle, only Dr. Carson, Trump, and Cruz have worse records on PolitiFact than Fiorina.  For Fiorina, 55% of her reviewed statements were at least mostly false (23%) or worse: false (23%), (liar liar) “pants on fire”-false (9%); only 28% were rated at least mostly true (14%) or true (14%).  Math might have eliminated them from getting a majority of delegates from the voting contests, but it sure makes them close in terms of lying.

In fact, as I have noted before, most of the two pillars that are together the entire premise of her presidential campaign (all of one and part of another) are based on falsehoods. 

For one thing, she has the gall to run on her record as a corporate executive at Lucent and as the first female CEO of a Fortune 20 company at Hewlett Packard (HP), but she was instrumental in destroying both companies, facts which do not stop her from spinning her record to absurd lengths to shamefully duck from her clear responsibility in both historic business collapses.  As I wrote of her time at Lucent, she was either too stupid to know what was going on, which is unforgivable, or complicit in illegal and/or highly risky, highly-irresponsible business practices, which would be highly unethical and immoral.  The implosion of a company ensued, costing over 100,000 people their jobs, but Carly managed to use the deceptively ostensibly false posted “success” to land her the top job at HP, leaving just before Lucent came tumbling down.  With HP, she was actually in charge and helped to severely weaken the company from the most powerful position within it, for which she was fired after destroying much of the company’s value and shedding thousands of jobs.  She has been noted as one of the worst CEOs in modern history repeatedly.  And in each case, she made sure that her harmful business activities would be rewarded to the tunes of many millions of dollars, even as the companies she guided lost many millions of dollars in business and value.  One thing (perhaps the only thing) she excelled at during her time at both Lucent and HP was self-promotion.

The other pillar of her campaign is that she is a female secretary-to-CEO success story, but this is only partially true: yes, she achieved historic success as a woman, but only worked as a secretary while she was attending college and law school, dropping out of the latter.  When she later went to business school and earned her MBA, she began right after graduation at AT&T (later her section became Lucent) on a fast-track executive-level path to senior management.  That is a pretty normal narrative—to work while in school in temporary administrative positions to help cover expenses/tuition while after you earn your degree you hardly start at the bottom—and is hardly the direct path from secretary to CEO that she misleadingly makes it out to be.

No wonder when Carly Fiorina ran for a U.S. Senate seat in California on the basis of her deplorable business record that voters there resoundingly rejected her.

But if having her campaign’s premises be less than truthful isn’t enough for you to put her in league with Cruz, like Cruz, she has had some of the most spectacular lies of this campaign season and has refused to back down from them despite being repeatedly confronted with overwhelming evidence that he claims have been false.  I am talking especially about her despicable falsehoods she has repeatedly perpetuated regarding the women’s healthcare advocate and provider Planned Parenthood, whereby Fiorina claimed that Planned Parenthood was, in her words, utilizing “a fully formed fetus on the table, its heart beating, its legs kicking while someone says we have to keep it alive to harvest its brain” in video she had seen with her own eyes (so she claimed), that Planned Parenthood sells dead baby organs for profit to some kind of baby organ trafficking network.  In reality, no such video exists actually linking Planned Parenthood to any such activity, she grossly mischaracterizes the video in question that according to all expert review does not seem to either be of an abortion or at a Planned Parenthood clinic, and there is zero evidence Planned Parenthood engages in the trade of fetal organs/tissue; in fact, a grand jury convened to consider charges against Planned Parenthood for illegal activity only found the activists targeting Planned Parenthood worthy of criminal investigations, not Planned Parenthood itself).

She has also levied vicious, quite mean-spirited, and grossly unfair attacks against Hillary Clinton, perhaps thinking that because she is a woman she could get away with such abuse more easily than if she were a man.  In fact, apart from spinning her own business record and lying about Planned Parenthood, aside from a few debates where she “shone” by delivering one-liners with a degree of competence, and other than mixing it up with Donald Trump, hyperbolically attacking Clinton is what most characterized her short-lived presidential campaign.

This campaign did not last more than the first two contests in Iowa and New Hampshire, where she finished in 7th place in both states with less than 2% and a little over 4% of the of the vote, respectively.

This is just a brief taste of the major highlights of the real Fiorina, but one that still gives you the real flavor.

Perfect for Each Other, Perfectly Unfit for Office

Robyn Beck/AFP/Getty Images

So, when you thinks about it, if Ted Cruz, who was just mathematically eliminated from winning a majority of delegates from voting contests, still fully intended to find a way to get party elites to hand him the nomination in a sheer disregard for the will of the primary/caucus participants, the idea that he would pick someone who came in 7th in two contests and then dropped out actually makes sense in Ted’s World.  And if Carly Fiorina was going be willing to try to use her historically bad record as a top business executive as a reason for voters to consider her to be a U.S. Senator or the Republican Party’s nominee for the presidency, then why not use her historically bad record as a political candidate for the Senate and the presidency as a reason for voters to consider her to be the Republican nominee for vice president on a ticket that would be inherently undemocratic in nature and a longshot (even at a contested convention, as I wrote earlier)? 

(On a quick aside, Marco Rubio, apparently, rejected such the same request from Cruz that Fiorina did not reject)

As with his behavior concerning the shutdown, Cruz was thinking about what was good for Ted Cruz, first and foremost; and it is telling that another person who thinks like he does—primarily about herself—would accept the offer to be the vice presidential nominee on an almost certainly doomed ticket, months before any ticket had ever been formed since the modern primary/caucus system was instituted.  The last time a move even remotely like this happened? Reagan’s failed, desperate attempt to edge out Gerald Ford in 1976 when he named a running mate at the end of July, three weeks before 1976 Republican convention (and three months later than Cruz, who made his move three months before this year’s convention!).  Reagan, though, unlike Cruz, was not mathematically eliminated from winning a majority of delegates from voting contests when he made his announcement.  Still, Reagan’s selfish gamble against an incumbent president when Ford was heavily favored helped to weaken Ford and hand the presidency over to Jimmy Carter and the Democratic Party.

Gary Settle/The New York Times

We don’t know who will win the White House in November, but we do know that both Cruz and Fiorina have developed a megalomaniacal, delusional sense of self-importance and a massively inflated views of their own records that, time and time again, has allowed them in their minds to put themselves ahead of the organizations for which they are ostensibly fighting.  If not mathematically, we must hope that morally and ethically this eliminates them forever from consideration for high national office, especially, but not limited to, the presidency. 

Again, I am not at all a fan of Trump, but at least Trump has a record of a moderately successful businessman (if hardly a perfect one) and of getting deals done and earning the respect of many of his colleagues; Cruz is hated in the Senate (fellow Republican Senator and former presidential aspirant Lindsey Graham said that “If you killed Ted Cruz on the floor of the Senate, and the trial was in the Senate, nobody would convict you,” and only 4 out of 53 fellow Republican senators have endorsed Cruz, 2 of them doing so very unenthusiastically), and Fiorina was fired as CEO of HP, with both Cruz and Fiorina having terrible records in their highest professional capacities as noted earlier. 

Having seemingly settled on Trump, the Republican Party and its voters deserve little credit for anything these days, and yet, at least in picking Trump, they can arguably said to not have picked the very worst out of seventeen candidates (even if he is still pretty awful); at least they had the sense to pick neither Cruz nor Fiorina, who have the dubious distinctions of being two of the only candidates that can be said to be worse than Donald Trump.

Goodbye Ted and Carly (For Now)

AP

Unfortunately, the shamelessness and egomaniacal delusion displayed by both Ted Cruz and Carly Fiorina means we would only be unbelievably fortunate for this failed ticket to be their political obituaries; no, their incredible narcissism that flies in the face of their terrible records is a strong indicator that we have, unfortunately, not seen the curtain call of their political theatrics in pursuit of offices for which they are most assuredly unfit.  And at least in that regard, they are in good company with many of their Republican colleagues, Trump included.

Here are many more articles by Brian E. Frydenborg.  If you think your site or another would be a good place for this content please do not hesitate to reach out to him! Feel free to share and repost on LinkedIn, Facebook, and Twitter (you can follow him there at @bfry1981)

Having examined Republican presidential candidate Carly Fiorina’s rise to the #3 spot in polls of Republican voters in the context of gender politics and the current state of the Republican Party, now it is time to look at Fiorina’s major premises of her campaign: that she is a self-made woman trailblazer as a secretary-to-CEO who became a global business leader with a record as a top executive that makes her the best option to run America from the White House. While there is no denying that she is articulate, intelligent, ambitious, and one of the first women in America to rise so high as a corporate executive, in this article it will be demonstrated that she was hardly self-made and hardly came up from the bottom; furthermore, it will be shown that her record as one of Lucent’s top executives in the 1990s—the highest position she held before becoming CEO of HP—was, upon close examination, a historic disaster of epic proportions. 

 Originally published on LinkedIn Pulse September 30, 2015

By Brian E. Frydenborg (LinkedIn, Facebook, Twitter @bfry1981) September 30th, 2015

Continued from Part I: Fiorina the Female: The Republican Party’s Desperation for a Viable Woman Candidate and the Lowering of the Bar

AMMAN — Even at the second main Republican presidential debate, most candidates, save for Donald Trump and Chris Christie, stayed away from attacking Carly Fiorina. That will likely change now that she poses more of a serious threat. And even after all the stage theatrics, her real vulnerability is about to be front and center, and is the main reason why her winning the nomination and especially the presidency is a longshot. I am talking, of course, about what is the main premise of her campaign and how Fiorina has defined herself for years: her narrative that she is an outsider trailblazing self-made secretary-to-CEO global business leader who could play hardball with the boys and lead major corporations to dazzling success.

The problem with this narrative is that one of its two pillars is blatantly false and the other is only partly true: she seems, by all reasonable metrics, to have been a terrible CEO and senior executive in her two big stints at that level, at AT&T/Lucent and Hewlett-Packard. See, campaigning that you can get to the top and win is demonstrating that you are good at self-promotion and advancing your own career; what really matters is what you do once you get to the top and how well you lead (King Robert Baratheon from Game of Thrones, anyone?) Between the two pillars, this is the much more important one and it may as well be the foundation, for without this pillar it is hard to see her candidacy as having a real shot; if this pillar crumbles, there is simply Carly the Self-Promoter, unfit to lead, and the whole foundation of her candidacy basically crumbles.

We will see that she was one of the top executives at Lucent when it embarked on a binge of major business deals that were some of the worst and ill-advised in business history, deals whose entire premises were nonsense and known by many to be so at the time, and this all the while the company took on more debt and engaged in accounting practices that were highly misleading and amoral but which would lead to hefty bonuses for Fiorina and her colleagues before crossing the into the realm of hard fraud just months after she left the company. She was complicit or active in all of these disasters, but made sure to jump ship just in time before Lucent had one of the most epic collapses in the history of business and just in time for her cash in on Lucent’s soon-to-be revealed house of cards of inflated numbers to bag the CEO spot at HP. In the wake of this destruction that was most certainly in large part a result of her leadership as one of the company’s leading executives, Fiorina managed to stay long enough at HP for her to explicitly and unequivocally be known as the main force in the ruining of HP, in contrast to her emerging relatively unscathed from Lucent.

NBC News

But, as in any tale, to really understand all this we must go back to the beginning.

Becoming Carly: Rags to Riches Ambitious Daughter of Privilege Achieves Success

As for how much the other pillar of her campaign is true, Fiorina’s tale is no rags-to-riches phenomenon, and her attempt to describe her beginnings as humble are an inaccurate exaggeration; she is the daughter of a prominent federal judge, Judge Joseph T. Sneed III, who was also a U.S. Deputy Attorney General and also the Dean of Duke Law School, while her mother was an artist (hardly a struggling childhood there). She grew up living in and traveling around the world and America, and studied history and philosophy at Stanford University. Her father at this time was the Dean at Duke Law, which meant that Duke paid most of her tuition. Still, while at Stanford, she temped to cover her living expenses, and one of her temping gigs was at Hewlett-Packard. After Stanford, she went to UCLA Law School under pressure from her father, but dropped out after one semester after hating the experience. She then worked as a receptionist at a small real estate brokerage firm, where she was eventually given more serious responsibilities than secretarial ones. After a year, she married her college boyfriend (the marriage did not last) and moved to Italy with her husband to teach English. She then applied to business school at the University of Maryland, but missed the application deadline. Undeterred, she showed up at the school and insisted to the dean that she be given special treatment and an opportunity even though her application was late; he was impressed, and she was accepted. 

After earning her MBA there, the dean recommended her to AT&T to be groomed for management, and she started there in 1980 in sales. Two years later, she had been promoted to a management position. She did well enough to be recommended by AT&T for one of the best management fellowships for mid-level executives in the world at MIT’s Sloan School of Management and AT&T covered all her related expenses. The experience was powerful for her and provided her with her second MBA, and when she returned to AT&T, she was assigned to a track for a senior management position.

Thus, she hardly entered AT&T as a secretary. When she worked as a secretary, she was temping while attending Stanford to pay for living expenses. Her other stint as a secretary after she gave up on law school was a short-term stepping-stone for someone who was intending to still go to graduate school. As a young Stanford graduate, she enjoyed a romantic adventure in Italy, then demanded special treatment when she failed to turn in her application to business school on time. The fact that she had such a powerful and prominent father would hardly have been ignored at the time, either. Thus, the idea of Fiorina as a self-made outsider woman is hardly an accurate story: she was a child or privilege, born into wealth and power and insider status, attended one of the great American universities, got special treatment to get into business school, and got recommended for a fast-track at AT&T by her school’s dean. Thus, she certainly had a lot of help and insider connections and certainly did not come from nobody and nowhere. 

Lucent’s Loss, Fiorina’s Gain

As Fiorina continued to rise at AT&T, the company decided that it wanted to spin part of itself (its equipment division, including the famous Bell Labs) off into a new company. AT&T put Fiorina in charge of the process, picking her over the largely male executive pool. The company would be born as Lucent in 1996 and it had the biggest IPO in American history at the time ($3 billion), and Fiorina would eventually head its largest division over a period of time that would see Lucent, in many ways, become the Enron of the telecommunications industry. 

One venture she oversaw was a joint project with Phillips that began in 1997; it was abandoned in 1998 after suffering $500 million in losses. She was also asked for her advice on a deal that went forward in January 1999 after a long buildup to buy Ascend Communications for somewhere between $20 to $24 billion—a significant portion of Lucent’s assets—that is one of the worst deals in business history; she carried a lot of weight at the time and failed to advise against this disaster. Within a year of the deal, most of Ascend’s “management and talent” had abandoned ship and left Lucent, creating difficulties for product designing and basically destroying the main rationale and premise for the entire deal. The Ascend people, used to a quick pace at a small company, found Lucent overly-procedural and stifling and not to their liking. This clash of cultures was being predicted even as the deal was being announced. But the deal was flawed in other ways, too; it was basically Lucent doubling down on Asynchronous Transfer Mode (ATM) telecommunications technology at a time when some analysts were already noting that it would soon be massively eclipsed by Internet Protocol (IP) technology (many computer users today are familiar at least vaguely with the acronym IP; with ATM, most people only think about cash machines and don’t know anything about Asynchronous Transfer Mode). Thus, the deal was questioned at the time as being too short-sighted as this was essentially Lucent backing what was soon to be an obsolete wrong horse. Even before the end of 1999, Lucent quickly realized that it had made a huge mistake in favoring and investing so heavily in ATM over IP and began moving to acquire more IP properties. In addition, one of Ascend’s specialties was in an area that Lucent has already spent over $1 billion acquiring a company that had that area covered. Overall, the massive deal turned out to be “virtually worthless.”  

Fiorina herself took over the division at Lucent (the company’s largest) that would sell equipment to the booming and emerging service provider companies laying fiber-optic cables, wireless networks, and other infrastructure that would lead to the Internet as we know it today. Lucent’s sales along these lines went from $15.7 billion in 1997 to $19.1 billion in 1998 (when Fortune named her the most powerful woman in business) to $23.6 billion in 1999. But there was a big bubble happening here, and in the process Lucent even made loans to these companies so they could afford to buy even more equipment, far more equipment than they actually needed to create far more infrastructure than was needed. In what can only be described as a pretty crooked accounting scheme, money from the loans to these clients was counted as revenue for Lucent, the debt being actually categorized a firm asset. In its reports to the S.E.C., Lucent used the excuse “but everybody else was doing it.” 

Fiorina personally orchestrated a deal for a client company named PathNet in which Lucent agreed to lend PathNet more money than the worth of the equipment it was buying from Lucent. That meant PathNet would not be putting any money down for the Lucent equipment up front and that PathNet would even get extra money from Lucent in the loan. Using “generous” accounting, PathNet had roughly $100 million in equity (stock holdings); it also owned $350 million in junk bonds that were supposed to pay out 12.25% interest. On top of this, Lucent was loaning it $440 million (expanding to as much as $2.1 billion [!] in the future). This gave it a leverage ratio—the ratio of debt to equity—of 8 / 1, or 8.0, and that was if Lucent did not loan PathNet any additional money; if general, if this number is higher than 2.0, the investment is considered risky. So, yeah, Lucent’s loan was creating a situation at PathNet where the company was a risk was four times greater than what was generally considered acceptable. The company also just had about 100 employees and only $1.6 million in yearly revenue…

Knowing all this, Fiorina went full speed ahead.

Such deals did not begin or end with PathNet. Just after Fiorina left Lucent in 1999, the company filed reports to the S.E.C. that stated it had guaranteed some $7 billion in loans to companies—many of them brand-new, with few assets, and structured financially in risky ways similar to PathNet—and had already given out $1.6 billion of that $7 billion. If any of this sounds familiar, these financial dealings are similar to the antics of the sub-prime mortgage loaning schemes that caused the 2008 Global Financial Crisis and the Great Recession. Soon, the bubble burst, the industry imploded, and PathNet filed for bankruptcy in 2001. Shortly after Fiorina left Lucent in July 1999, Lucent collapsed: by early in the fourth quarter of 2000, Lucent’s stock was already down 70% and its was CEO fired; its stock would tumble even further, to less than $1 a share; just in 2001 some 50,000 employees were laid off, and over 120,000 were laid offthroughout the collapse, which saw the company lose about 80% of its employees; it chose to settle with the S.E.C. in 2004 on charges that it committed over $1.1 billion in accounting fraud in 2000, when much of the direction of Lucent would still have been a product of Fiorina, who had chaired the company’s biggest division only months earlier, and though she was not tied directly to any of the fraud, some of the people who were fined were her close associates, promoted and supported by her and definitely raising serious issues about her judgment. At its peak, the company was valued at a quarter of a trillion dollars, and today Lucent’s value has just recently been valued at $10 billion and that after the merger with a larger company (Lucent merged into larger Alcatel in 2006, with Lucent becoming the second, not the first, name in a hyphenated pair as the junior partner, and Alcatel-Lucent is currently in the process of being acquired by Nokia for about $17 billion, incidentally, the biggest deal in the industry since Lucent’s ill-fated Ascend acquisition).

William Lazonick and Edward March

Several sources have her pushing aggressively for these client loaning deals and being very concerned about the press releases detailing them (some loyalists to her and Fiorina herself claim she tried to reign in the scale of these outsized deals, but that would still have her pushing for what would have been just slightly-less super-risky, super irresponsible moves). In any event, the press coverage and seeming miracles of the short-term numbers her company was putting up attracted the notice of tech giant Hewlett-Packard (HP), which gave her $65 million in restricted stock to partly compensate for some $85 million in Lucent stock she would leave behind to entice her to come on board; Fiorina likes to take credit taking $20 million less from HP than the value of her Lucent stocks, but value of her $85 million in Lucent holdings have been worth almost nothing not long after had she relinquished them.

At a generous best Fiorina was clueless and ignorant or unable to control or influence the people around her if we buy her and her defenders’ narrative; what seems more likely was that she was either actively engaging or complicit in obscenely irresponsible and unethical practices. This is the reality of Fiorina and her time at Lucent during its meteoric rise and just before its meteoric fall as she and Lucent failed to adjust to a dramatically but predictably changing landscape while all the while they engaged in wildly inappropriate and unethical accounting practices (the accounting practice used in the 1999 Ascend deal and other acquisitions was outlawed in 2001 by the Financial Accounting Standards Board). In fact, Lucent’s entire setup was a disaster that should have been obvious beforehand from the information anyone could see in its financial statements: in general, it is bad to have your inventory and your receivables (revenue from sales that a client does not pay out right away but promises to pay in the future) grow faster than your actual sales; for all of 1999, for example, Lucent had dramatically higher inventory and receivables growth than sales growth, with similar trends extending even further back. This meant that they were making/acquiring a lot of products that were sitting in warehouses, losing value, while the actual money they were bringing in was a lot less than amount included in promises made by companies—many of them unstable start-ups with few assets—saying they would pay in the future, promises that might not be (and in this case, often were not) kept. Thus, while these inventories and receivables were reported as assets and revenue, respectively, in reality, they might more accurately thought of as risky liabilities, as you cannot pay employees or invest with either. But the rewards for sales performance at Lucent—including for executives like Carly Fiorina—were based on numbers that included the promised receivables, further incentivizing the creation and scale of these poorly-structured, dishonestly reported deals. Too many people were making too much money off of these declared revenues, though, for people to be bothered to even look at the sales vs. inventory vs. receivables growth ratios, but all the information was right there in the public financial statements at the time. This was all also being done while the company was also taking on a massive amount of debt. In January 2000, only six months after Fiorina left, the company declared that its earnings would fall far short of expectations for the first quarter of 2000; it was a sign of much bigger problems to come. 

Fiorina was in the middle of all of this, either on the wrong side or not advocating for the right side, and thus bears a significant amount of responsibility as one of the company’s top executives, even if she was not the top executive. However, if HP had known in 1999 what was known later—that much of the “success” of Lucent at that point had to do with borderline (and soon to be) fraudulent and creative accounting rather than Fiorina’s leadership of its largest division—it is unlikely that HP would have tapped her to be CEO.

The final part of this series, fittingly, then, will look at Fiorina’s record at HP, and will conclude with an overall assessment of her career as a top executive at Lucent and as CEO of HP and what it means for her candidacy for the presidency.

Part III coming soon!

More Election 2016 coverage from this author:

Republican “Debate” Circus Round 2: Trump vs. Fiorina and Why the Kids’-Table Debate Was Better

Scott Walker’s Weak Wisconsin Record (and What His Candidacy Says About Today’s GOP)

The State of Illegal Immigration 2015: Reality vs. Republican Fantasy

The Republican Field & Debate: Substance vs. Style: What Trumps What?

Don’t Dismiss The Donald: 4 Reasons Why Trump Could Win GOP Nomination

All Hail Hillary! Her Political Nature Is Just What Washington Needs

If you think your site or another would be a good place for this content please do not hesitate to reach out to me! Please feel free to share and repost on LinkedIn, Facebook, and Twitter (you can follow me there at@bfry1981)