Look back at the highlights of the past year in business, and many of the images that come to mind suggest a police lineup.
Scandal topped the news in 2002 — from Adelphia to Worldcom, Tyco to Imclone. It swamped legendary companies, sunk top executives, reshaped the political agenda and triggered a crisis of credibility that drove many of the year's top business stories, as selected by U.S. newspaper and broadcast editors in a survey by The Associated Press.
They chose the implosion of Worldcom and other scandals as the biggest business story of 2002, with the nation's limping economy coming in a close second.
But a look farther down the list of top stories shows just how much corporate ethical lapses defined the business environment. Stories centering on scandals at Enron and Arthur Andersen also were near the top of the list, even though both began to unfold more than a year ago. The Sarbanes-Oxley Act, a mandate for reform passed by Congress in response to the corporate shenanigans, also was chosen as a top story.
Some of the year's top headlines were notably different from those chosen by editors last year, when the Sept. 11 attack on the World Trade Center and the resulting shutdown of the financial markets led the list and the government's antitrust pursuit of Microsoft was big news.
But many of last year's top stories — from airline woes to interest rates — are still attention-getters.
Here, according to the AP survey of editors, are the top 20 business stories of 2002:
- SCANDALS MOUNT: Some of the nation's premier companies were roiled by charges their executives lied to investors and abused their power. WorldCom filed the largest bankruptcy in U.S. history after $9 billion in improper accounting was exposed. Tyco's chairman was driven from office following reports of questionable stock deals, a sales tax dodge and wildly expensive purchases — including a $6,000 shower curtain — made with company funds. Members of Adelphia's founding family were charged with looting the cable firm.
- ECONOMIC UNCERTAINTY: As recessions go, the downturn of 2001 was short and limited in its damage. But rising unemployment, personal investments gone bad, the threat of war and terrorism, and sluggish growth left many recalling the 1990s boom as if it were a fairytale.
- DUBIOUS ACCOUNTING: A federal jury convicted Arthur Andersen LLP of obstruction of justice for destroying Enron documents. But the accounting crisis soon expanded beyond Andersen and Enron, raising troubling questions about financial honesty at numerous firms. The criticism prompted calls for a thorough restructuring of an accounting and consulting industry long resistant to change.
- ENRON AFTERMATH: The energy trading giant collapsed in 2001, but Enron remained in the news throughout the past year. It was the linchpin for a lengthy public debate on the risks of 401(k) plans, touched off criticism about excessive executive pay and inadequate corporate governance, and has fueled investigations of those who did business with Enron, including major banks accused of helping it mislead investors.
- STOCKS LANGUISH: As the markets near the finish a third consecutive losing year, whipsawed investors are still waiting to see if stocks have reached bottom. A modest rally this fall has done little to reassure a marketplace loath to shelve memories of the easy money of a few years ago.
- INTEREST RATES: After cutting rates 11 times last year, the Federal Reserve enacted a single cut in 2002. But that kept rates at their lowest level in more than 40 years, helping provide consumers with low-cost financing for homes and other major purchases.
- CONSUMER SPENDING: Their investments lost value, their employers cut jobs, talk of war filled Washington and scandal filled the business pages. But despite their worries, consumers kept reaching for their wallets. That was welcome news for an economy dependent on consumer spending for two-thirds of its power.
- ENERGY TRADING COLLAPSE: The fallout from Enron spread as questions emerged about the trading and accounting practices of its rivals, too. The industry's problems were compounded by lower prices for natural gas and power, and accusations by California officials that the traders engaged in price manipulation during the state's energy crisis.
- SARBANES-OXLEY: After months of debate over how strongly to respond to Enron and other scandals, Congress passed a bill in July, quickly signed by President Bush, toughening penalties for accounting and securities fraud, mandating a new oversight board for the accounting profession and requiring corporate executives to certify financial results.
- AIRLINE BANKRUPTCIES: The terrorist attacks devastated the air travel business, and the damage became clear as US Airways filed for bankruptcy protection in August and United Airlines followed in December, with the biggest industry filing ever.
- SEC Commissioner Harvey Pitt resigned following months of criticism for his handling of accounting scandals.
- A federal judge approved the government's antitrust settlement with Microsoft, but critics called the deal toothless.
- Kmart filed for bankruptcy, seeking a reprieve in its long-running battle with Wal-Mart.
- Brokerage firms came under fire for touting stocks to win investment banking business.
- California officials lambasted energy firms for price manipulation, and asked for $8.9 billion in refunds.
- An insider trading scandal brought down Imclone founder Samuel Waksal and threatened decorating diva Martha Stewart.
- A bitter labor dispute shut down West Coast ports, blocking supply lines to businesses and consumers.
- Auto sales, fueled by zero percent financing, remained remarkably strong despite weakness in overall economy.
- AOL Time Warner faced an angry Wall Street following disappointing earnings and an accounting investigation that raised questions about the media giant's merger.
- Hewlett Packard and Compaq merger was narrowly approved by shareholders after a lengthy battle.
By ADAM GELLER