"Do you understand what I'm trying to say?" demands John Francis Welch Jr. The embattled chairman of General Electric puts an arm around a visitor's shoulders and spreads out an improbable set of papers. One shows that GE, with 222,000 employees in 100 countries, has had only three criminal convictions in the 13 years that Welch has run the company. Another points out that the U.S. Justice Department, which has been hounding GE lately, has had 140 of its employees prosecuted for corruption or other on-the-job offenses just since 1992. Yet another shows that GE is headed for its most profitable year ever.
The reason for this public relations offensive is that Jack Welch, perhaps the most admired corporate manager in America, is suddenly fighting for his honor as GE faces embarrassments from its outpost on Wall Street to its half- century-old engine division in Evendale, Ohio. Chief among the problems is the mess at Kidder Peabody, GE's money-losing brokerage unit, where head government-bond trader Joseph Jett concocted $350 million of phony profits over a 29-month period before he was fired in April. Jett now claims to have been acting with the knowledge of his superiors. The scandal led Welch to sack the Kidder chairman, Michael Carpenter, whom he had installed in 1989, and triggered fresh speculation that GE was aching to unload the troubled Wall Street company.
Reports of ethical violations have also been clouding some of GE's traditional lines of business. In October the Connecticut-based company faces trial in federal court in Columbus, Ohio, on charges that it conspired with a unit of South Africa's De Beers mining company to fix the price of industrial diamonds. GE vigorously denies the Justice Department charges. Meanwhile, the FBI armed a GE whistle-blower with a hidden tape recorder last year to probe charges that the company had repeatedly ignored warnings about electrical problems that could compromise the safety of its aircraft engines. Not only has the whistle-blower brought a multimillion dollar suit against GE (the company calls the suit "frivolous and outrageous"), but the Justice Department is considering whether to bring its own charges as well.
On top of all this, GE is again engaged in widely reported talks to sell some or all of NBC, which it acquired in 1986 when it purchased RCA Corp. While NBC currently boasts such comedy hits as Frasier and Seinfeld and has been reporting improved profits this year, the network continues to run third behind CBS and ABC in daytime and prime-time ratings. Among its many blunders under GE was letting David Letterman jump to CBS last year; Letterman regularly clobbers NBC's Tonight Show with Jay Leno in the ratings and has propelled CBS's entire late-night lineup into the No. 1 position, ahead of NBC.