Haters gonna hate… But Harry Markopolos is more of a “revealer.” The whistleblower analyzes companies and calls out fraud — he did it with Bernie Madoff and Enron. Now he’s focused on GE, whipping up a 175-page report that took 7 months to research. Here are the highlights of what he handed to regulators about the 127-year-old, Schenectady-founded American icon:
- The number: $38B — That's how much fraud he's noticed. It's 40% of GE's entire value, and Harry's calling it just “the tip of the iceberg.”
- The culprit: Accounting problems with its oil and gas unit he thinks go back to 1995.
- The potential: Harry thinks it's enough to make GE "probably file for bankruptcy." Bold claim.
- Counter-point: GE 100% disagrees and says Harry's just trying to drop its stock.
Enron made history... The energy giant used to enjoy $63B in assets. Then some "accounting irregularities" showed up. Four months later in 2001, Enron filed for bankruptcy, becoming the biggest company to fall apart in American history — 21 execs were convicted, 4K lost jobs, and an entire accounting firm went down with it. Harry says GE is using the same "accounting tricks."
Not all turnarounds survive... GE's gone deep into self-care, trying to turn itself around for years — it hired its first non-GE-ish leader (an outsider CEO) and tried to sell off non-critical business lines (like its venture capital arm with hundreds of startup investments). But the stock still lost half its value in the last year and a half as the Eat-Pray-Love turnaround journey suffers. Harry's accusations reveal how deep a true turnaround sometimes has to go.