International Periscope


Unseemly CEOs

More accustomed to being praised than pilloried, Jack Welch tried to make the uproar over his perks-for-life retirement deal go away last week. In effect, he decided to give it all back (though he'll keep his $9 million annual pension). He'll write GE a check every year for about $2.5 million for all the stuff he was getting for free--the $15 million Manhattan penthouse, the 737s, the helicopter, the limo.

But as it turns out, Welch is not the only former CEO getting perks for life. After he cut his deal with GE six years ago, compensation pros were quick to dig his new contract out of SEC documents shareholders rarely scrutinize. Soon CEOs were waving Welch's deal in front of their own boards, demanding similar treatment, pay consultants and corporate directors tell NEWSWEEK. While no CEO admits to mimicking Welch's contract, the executive elite began getting similar deals. IBM's then CEO Lou Gerstner renegotiated his contract to extend his perks for 20 years after retirement. Larry Bossidy, the former Honeywell CEO, cut a perks-for-life deal, which he says is much less generous than Welch's. Emerson Electric's former CEO Charles Knight--who approved Gerstner's deal as an IBM director--got his perks extended 15 years beyond retirement. "Jack's contract became the gold standard," says one pay consultant.

So will other CEOs now give up their perks, too? Gerstner declined to comment. Bossidy insisted to NEWSWEEK his perks are reasonable and "worth dramatically less than Jack's.'' Through a spokesman, Knight denies patterning his retirement on Welch's, and contends his deal is fair.

The SEC, which is investigating Welch's contract, is considering tougher disclosure rules for all retirement deals. But even if the SEC determines the Welch deal was legit--as Welch and GE insist--critics say it is still immoral. "It's like someone who goes to an all-you-can-eat buffet and stuffs their pockets, their pants and themselves," says Charles Elson, director of the Center for Corporate Governance at the University of Delaware. "It may be legal, but it's extremely rude." Given how many shareholders have lost their savings recently, some better manners might be in order.

Middle East

Arafat's Alamo

The noise of bulldozers tearing down walls crackled through the phone line as Nabil Abu Rdeneh, Yasir Arafat's chief aide, described the situation as "serious, difficult." This understatement came as the Israeli dismantling of the Palestinian Authority HQ stretched into a third day. Rdeneh told NEWSWEEK the Israeli objective "is to bring about the end of the Palestinian Authority."

What does Israel want? The immediate demand was for Arafat to turn over 20 "wanted men" holed up in the compound. He refused. It was thought his West Bank intelligence chief, Tawfik Tarawi, allegedly one of the principal figures behind the funding and training of guerrillas who carried out attacks on settlers in the West Bank, was among those he was protecting. But sources tell NEWSWEEK Tarawi fled the HQ hours after the Hamas suicide attack in Tel Aviv last Thursday.

A European diplomat who has been a key intermediary in past negotiations believes that the standoff could go on for weeks. If Arafat gives up the wanted men now, "it would destroy [his] image on the street," says the diplomat. So the familiar question is being asked again: will this be Arafat's last stand?

Korean Peninsula: The Forgotten Ones Not only Japanese were infuriated when North Korea apologized last week for the kidnapping of 13 Japanese citizens in the 1970s and 1980s. In South Korea, 486 people have allegedly been abducted by the North since the end of the Korean War, and families of the missing have never received an inkling of an apology from Pyongyang. Their anger isn't directed solely at Kim Jong Il's regime--it's aimed at their own leader, Kim Dae Jung, because he's never even asked for one.

Seoul publicly acknowledges that the victims were kidnapped for the same reason as the Japanese abductees--to train a cadre of North Korean agents capable of blending into other societies.(Much of this info came from spies who had been found out.) But the South has thus far been unwilling to broach the touchy subject with the North, and the families accuse Kim of worrying more about his "sunshine policy" of reconciliation with Pyongyang than about their loved ones. Last Thursday a dozen families who'd lost relatives wrestled with police to enter the National Unification Ministry in Seoul. It was a display of violent emotion, frustration from the sparse news they'd had on the fates of those they'd lost. With a letter of protest in hand, they demanded the issue be placed on the agenda in North-South talks. Officials countered that some of the families had actually been able to meet their relatives because of the rare reunions that have come out of the "sunshine policy" over the past two years. But to families of the lost, chance encounters along the DMZ are not reward enough.


Sidelined Contender

What makes a coup a coup? Ask a Turkish politician--after four of them over as many decades, they're experts on the subject. They might say (quietly) that the common denominator is the country's ultrasecularist and politically powerful military. So when the leading contender in November's parliamentary elections-former Islamist Recep Tayyip Erdogan--was banned from running last week, the obvious question was, has the Army struck again?

Three years ago, under the notorious catchall treason law, Article 312, Erdogan was imprisoned. His crime? Reciting a well-known poem with a religious theme during a public speech. The article also stipulates that those convicted are forbidden to hold political office for life. However, the law was abolished as part of an EU- inspired reform package passed this summer. Erdogan swiftly appealed to have his conviction struck from the record, stopped calling himself an Islamist and began his run to become Turkey's next prime minister.

Enter the judiciary, a vehemently conservative group, many members of which share the Army's secularist ideas--and suspicion of Islamists. Taking an uncompromising view of Turkey's half-reformed and often contradictory legislation, the Supreme Court ruled that Erdogan's conviction must stand, disqualifying him from public office--along with dozens of other Islamists and Kurdish activists.

If the intention was to hurt Erdogan, it's seriously backfired. "Night is always followed by bright morning," said a buoyant Erdogan in a nationwide television address, predicting that "we are coming to power" despite the ban. His AK party, which has Islamist roots, is already leading polls with 24 percent to the next rival's 16 percent--and early indications are that Erdogan's martyr status will only increase the party's popularity. Deputy leader Abdullah Gul could well become Turkey's next prime minister.

The big loser will likely be the country's EU hopes. Ankara has been trying to get the EU to set a date for accession talks at its Copenhagen summit in December--but one of the major criteria is that candidates be "functional democracies." In Turkey's case, dysfunctional may be a better word right now.


Tune In, Vote Out

A television network in Argentina has an answer for apathetic voters: change the channel. Next week, America TV begins its broadcast of "The People's Candidate," a democratic variation on the unending slew of reality programs. The winner of this game (or civic service) won't be taking home a million bucks, but rather a chance to win a post in the country's legislature as a representative from Buenos Aires. More than 1,000 people applied for slots, a number whittled down to the 16 who will appear on the show's late-September-to-December run. Viewers get to phone in votes for their favorite candidate, narrowing the field down to four finalists, one of whom will win a fully funded campaign.

Are they qualified for stints as local politicos? A team of expert judges (the station's own famous TV journalists) says yes. Not just anyone can apply. Candidates must meet the legal requirements: minimum age of 25 and residence in the capital. They must also present a practical platform. (Read: no far-out radicals bent on singlehandedly reshaping the pension system.)

What worries some cultural critics is that whoever ends up becoming "the people's candidate" has a fair shot at winning the election, scheduled for March 2003. Candidates need only around 125,000 votes to secure a seat in the house, equivalent to just 1 percent of a TV-ratings point. Even scarier, because the offices are filled by proportional representation, enough votes for the TV contestant--and thus the People's Party--means the winner could name other members of the house. (There are 12 seats up for grabs.)

The producers concede that if the show flops, the campaign of the wanna-be congressman goes with it. But if it's a hit, the voice of the people will be heard in the volume from their television sets.