Jobs' premature exoneration questioned

IT IS STILL too soon to say if the head of Apple Steve Jobs is likely to survive a probe into the options backdating scandal.

Apple's SEC filing disclosing the outcome of its internal probe cleared Jobs and tried to shovel blame onto two others who have since left the company. Apple needs Jobs more than it needs the reputation of its ex-employees and its spinners seem keen to divert attention away from Jobs.

While the report named no-one, the scapegoats are likely to be former general counsel Nancy Heinen and former chief financial officer Fred Anderson. Both have denied everything.

CNN legal expert Roger Parloff said that there is going to be some "lively he-said, she-said colloquy" before federal regulators or prosecutors, before this is ironed out. Parloff says that despite what the internal report says, and the spin Apple is putting on it, Jobs is not off the hook.

The filing shows that Jobs received two big options grants. One was priced as of October 19, 2001, two months before the grant was actually finalised on December 18, 2001. During that time the share price had gone up by 15 per cent. To make matters worse the records were faked to make it look like a special board meeting had taken place to approve the grant. The investigation said that Jobs was aware or recommended the selection of some favourable grant dates, he did not receive or financially benefit from these grants or appreciate the accounting implications.

According to Parloff that does not make it all right. He paints only three possible scenarios for Jobs actions and thinks that the two most likely are illegal. The fact that Jobs didn't receive cash as a result of the scam is no defence either. According to Parloff if he was giving someone else backdated options, he could still be deceiving shareholders and the IRS.

In fact the only defence for Jobs is to plead that he was not aware of the implications of what he was doing. This is a good bet as the rules were fairly complex. However there is the small matter of faking a board meeting which even the dimmest of CEOs must have thought was a bit dodgy. The ignorance defence did not work that well for HP either.

This could be the reason why Jobs is hiring his own lawyer to deal with the case. Despite what Apple is trying to spin, things are going to get really messy this year. If it gets too much then Apple might have to do away with its Messiah and the unthinkable will happen again - Apple without Jobs.

More here. µ