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New Mexico governor Bill Richardson -- sometimes called "Dollar Bill" Richardson -- is running for president. It's not an ideal time. Richardson was on the board of San Diego's Peregrine Systems from February 2001 to June 2002 -- the period in which the directors were trying to put a lid on the billowing financial scandal that would ultimately send the company into bankruptcy and many of its executives into criminal proceedings. Now, as the Richardson campaign struggles to gather momentum, the U.S. attorney's case against four former executives and service providers begins on April 10 and should make headlines for many months.

This means Dollar Bill is going to have to sharpen his Peregrine alibis for a national audience. In 2002 when he ran for governor, he got away with some lame excuses that may have worked in New Mexico then but won't fly nationally now. For example, when his opponent noted his role in the fraud, Richardson replied that "I had no involvement because I was what was called an 'outside director.' " Today, post-Enron, post-WorldCom, people realize that so-called outside directors have a solemn responsibility to monitor what is going on inside a company. Indeed, the directors, including outside directors, rightly get the blame when sales figures are inflated, and that was Peregrine's primary sin: revenues were pumped up artificially by almost 40 percent.

In that gubernatorial campaign, Richardson's opponent put out ads saying, "A Richardson contributor pocketed half a billion dollars while 1400 people lost their jobs." That was a reference to John Moores, the San Diego real estate mogul and Richardson contributor who amassed $650 million bailing out of Peregrine stock before the company collapsed.

To isolate himself from Peregrine, Richardson said he missed some board meetings and "didn't have time" to read corporate reports. Nonetheless, he claimed he had fulfilled his duties as a director. That's impossible. If you don't have time to read corporate reports, you are a derelict director.

Records show that Richardson attended, in person or by phone, 15 board meetings. In those meetings, directors were hearing that the company might get caught cooking the books. For example, Richardson attended the meeting of July 18, 2001. The company's chief executive, Stephen Gardner (the brother-in-law of Richardson's wife), informed board members of a barter transaction that had occurred with Critical Path, a Bay Area company headed by a Rancho Santa Fe executive known around Peregrine as an FOJ (Friend of John [Moores]). In a barter transaction, two companies swap each other's products whether they need them or not and both fraudulently ring up the transaction as a sale. The directors were told that the Securities and Exchange Commission had questioned three Peregrine top executives and a national business magazine was on the story. Directors discussed how to spin it.

On March 13 of this year, Gardner pleaded guilty to conspiracy, securities fraud, and obstruction of justice. The government charged him with helping to rig company sales in a number of ways and making false and misleading testimony to the SEC over the Critical Path swap deal.

During Richardson's period on the board, Gardner was regularly telling directors that the Peregrine boat was sinking -- but the public knew nothing about it. The company was releasing official reports telling how revenue was soaring. The stock was roaring upward as the company was coming asunder, as civil suits reveal in graphic detail.

On October 15, 2001, Gardner told board members, including Richardson, that a report Gardner had given financial analysts 11 days earlier was already out of date; things were worsening. At year-end 2001 and in early 2002, Gardner told board members of cancers that had been shielded from the public. And so it went in the first part of 2002. In May, the company announced it had found accounting irregularities, the stock collapsed, and regulators began investigating. Richardson resigned in June. Before that, he had issued some eyebrow-arching statements. After the horse was out of the barn, he sent a letter to the board saying there should be an accounting investigation. Talk about ass-covering! Then he told New Mexico voters that he had helped to uncover the cooked books because he had voted to replace the accounting firm of Arthur Andersen with a new firm, KPMG.

But there were two things wrong with this claim: (1) Heaping the blame on Andersen was ridiculous, and (2) KPMG was fired after only two months on the job, and only then did it reveal the fraud. Richardson got away with his assertion in the New Mexico election. But Dollar Bill will have to hone his deception skills in the presidential campaign.

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