VICTIMS OF THEIR OWN GREED

Corporate corruption in the US has hit the

little people, says Charlotte Metcalf, but

they must share the blame

ENRON's bankruptcy was the biggest in corporate history. Its collapse was described as 'unthinkable' by the New York Times. Just a year later, colossal bankruptcies and corporate scandals are everyday reading in the American press. Corporations such as Xerox, WorldCom, Adelphia and indeed Enron were apparently invulnerable fortresses. Now, many have been revealed as castles in the air built on fantasy profits and fiddled accounts. Even the financial apparatus that had helped to prop them up was rotten. It wasn't long before major Wall Street institutions, such as Arthur Andersen, toppled.

Pig Out. shouts a New York Post headline over a photograph of Tyco's disgraced chief executive, Dennis Kozlowski. 'Filthy Rich' hisses a caption under 'piggies' John Rigas of Adelphia and Bernie Ebbers of WorldCom.

'This makes me want to vomit,' says Janine, an energy sales executive at Enron who was sacked without compensation when the company collapsed. Some employees lost everything, including their pension funds that were tied to Enron stock. Janine is standing outside the home of Andrew Fastow in Houston's exclusive River Oaks. Fastow, indicted for fraud this week, was chief financial officer at Enron. 'Doesn't look like he's run out of cash,' Janine sneers as workers add finishing touches to Fastow's drive. 'Shame on them,' she mutters. 'Bastards!'

Janine speaks for many. The current financial crisis has enraged Americans in a way that no other crash or bust has done. Jim Chanos, a shortseller who became a Wall Street celebrity for predicting Enron's crash, explains, 'One of the things until very recently that was great about the American capital system was that people understood that by risking their money they could either make a lot of money or lose a lot of money. Americans understood that; they're risk-takers. But what they always thought until recently was that the game was fair.'

'Commerce amongst nations should be fair and equitable, reads a plaque on the Department of Commerce building in Washington. Another reads, 'Let us raise a standard to which the wise and honest can repair.' The high-minded sentiments of America's founding fathers seem quaint, given the obscene amounts of money that have been pocketed fraudulently. Their trust in such sentiments shattered, Americans are turning increasingly to lawyers to win back their cash.

'I feel like a viper in the nest out here among all the Wall Street sharks,' chuckles lawyer Jake Zamansky. We are driving round the Hamptons, a helicopter hop from Wall Street, where the rich have their multimillion-dollar seaside retreats. With his oiled black hair and wolfish smirk it's easy to believe that Zamansky is a disturbing, venomous presence among these discreet clapboard monuments to wealth and power. He has become the scourge of Wall Street since suing Merrill Lynch's top analyst, Henry Blodgett, in a groundbreaking case. Blodgett lied to Zamansky's client about the value of stocks that emails later revealed he thought were 'pieces of junk'. Zamansky went on to hound Jack Grubman of Salomon Smith Barney, and now takes hundreds of calls from investors wanting their money back.

Later, eating muffins in his modest cottage in the unfashionable end of South Hampton, Zamansky becomes angry. 'The Wall Street firms are going to have to pay billions back to investors. There are many had people on Wall Street and in public companies. We need to ferret them out, ban them from the industry and put the fraudulent people in jail.'

Zamansky describes himself as David against Goliath and sees the battle in simple moral terms: the lone lawyer standing up for the small-time innocent investor against the greedy Wall Street colossus. Yet, paradoxically, it is ordinary Americans, 'the little guys' as Jim Chanos describes them, who have helped to create the corporate monsters and contributed to their hubris.

The New York writer Jay McInerney. whose novels have chronicled the rotting

underbelly of 1980s Wall Street, points out that after 1987 Americans saw the stock market rising and wanted to participate. 'By the mid-Nineties more than half of all Americans had invested in it. This is a big historical shift, and I think the average citizen was caught up in this greedfest,' says McInerney. At the same time, common corporate practice was encouraging Americans working for big corporations such as Enron to tie their retirement funds to company stock.

Once dotcom fever had taken hold in the Nineties, entrepreneurs straight out of college were becoming millionaires overnight and share prices on the stock market were soaring. Everyone wanted in. Kaleil Isaza Tuzman and his friend Tom Herman started an Internet business and were followed by a documentary crew for a Harvard Business School study. The rollercoaster rise and fall of their company and the strain that put on their friendship was compulsive viewing, and the study was released as a cult feature film, Startup.com.

Isaza Tuzman is sanguine about his own losses, but despairs of 'the blame game'. 'What we lived through in the economy was like a game of musical chairs. And when the music stopped and there weren't enough seats for everyone, everyone started pointing fingers and blaming each other for the absence of those seats when in reality we were all complicit in the game. It was about greed at every level,' he says. 'Not only in the executive suite, not only in the investment banker's riverside office, not only in an entrepreneur's garage; it was greed as well in the living-rooms of individual investors who were plonking down dollars because they wanted to make a quick buck. And it was Vegas. Everyone was in Vegas.'

Now, millions who plonked down dollars have lost. The game turned out to be fixed. Yet Isaza Tuzman is right to suggest that Americans should explore the role of their own greed in the current crisis. For all the dismal shenanigans and foul play, there is something disingenuous about the high moral tone that the commentators are adopting. It's not as if Americans were forced to gamble. Most were willing risk-takers, and their enthusiasm for the game was what made Wall Street the world's most resilient casino and supreme among global markets. Rightly, there is a backlash against fraud and the egregiously imperial levels of greed, but the belief that anyone has a right to wealth still nestles safely in the breast of American capitalism.

'We've burned a whole generation of investors, and it will take some time to entice the public back into the market,' drawls Jim Chanos, lounging in a yellow velvet armchair in the lavish Chinese drawing-room of his seaside mansion in the Hamptons. Then he smiles, 'But you can be sure it'll happen again at some point. Greed and fear are pretty strong emotions both ways.'

Charlotte Metcalf's film. Castles in the Air: The Trouble with Corporate America, was shown on 4 October on Channel 4.