There is no such thing as corporate greed!

Inanimate objects are incapable of moral or immoral actions just as money or a brick is incapable of such actions. Corporations are directed by people which as we all know can have moral and immoral people. So to follow this line of logic Corporate Greed is a Corporate with Immoral directors and board members. Running your company into the ground then crying to the government to lend you a hand. (although that would be an extreme) Corporate greed is many things. 1. Hiring illegal worker because so you don't have to pay payroll taxes SSI, or minimum wage. 2. Scheduling an employee for 34.5 hours weekly (not 35) to get out of providing health insurance. 3. Pushing out unions 4. Moving some or all of your business of shore so you can pay somebody 6 bucks a week to bang out your product, or answer calls. 5. Lobbying the government to limit the spectrum of the EPA so you can continue to pollute the air and water instead of properly disposing of waste. 6. Borrowing against the pension plan 7. Falsely inflating stock prices. Most Corporations are here for one thing and one thing only. To make a profit. The exception being non-profit corporations. Although to say non-profits fail to rake in millions is false there are laws which limit how much nonprofit directors/employees can earn. What you might be referring to is the recent rash of bailout nonsense. It's anything but capitalism when a corporation ask/begs/insists that they be given money, from the taxpayers, to bail them out because they were bad businesspeople. It only does one thing. It bankrupts future generations of Americans including yourself because it results in having to raise taxes (you work longer just to pay your fair share) so we the people can pay off someone else's bad business practices (debts). If you truly want to change things you have to vote independent or third party because none of those candidates support the bankrupting of America anywhere near the degree that the Republicans and Democrats do. To fully understand how the business culture has acquired the greed mindset, a look at what a corporation is and defining corporate behavior becomes the starting point. First a corporation is defined as an association of individuals, created by law and having an existence apart from that of its members as well as distinct and inherent powers and liabilities (Webster Dictionary). Although made up of people, being separate or apart from its members also equals unaccountability. The question of who pays when a company goes under is at the forefront of discussions today. Corporations are developed to serve society, meet a need or provide a service. Over the years, however, the good intentioned corporation has evolved into a greed machine that has lost site of the community that it serves and the people employed who ultimately perform the work. The steady parade of top executives confessing to engage in price gouging, tax dodges, accounting shams, employee rip-offs, and other shady unacceptable acts are coming to light daily. Unethical and illegal practices are documented from the RJR Nabisco scandals in 1988 to todays Enron, WorldCom, Merrill Lynch, Arthur Anderson, Xerox, and endless other corporations. The world realizes now that corporate greed is not about one-bad company, but large companies in general that have adopted unacceptable guidelines for corporate behavior and an overall attitude that greed is acceptable.

The bottom line, insatiable need for growth, amoral corporate behavior, expendable and exploitation of employees, and the corporate culture of classes have all led to the current issues of corporate greed that is running rampant throughout companies today (Corporate Power, retrieved April 26, 2003). The first rule of corporate behavior is the bottom line. Nothing else matters except the profit, it is above all else, the measure of whether or not the top executive is performing. Secondly, growth matters. Executive success is measured by how a company grows. Amoral corporate behavior is the third aspect of declining company culture. Employees are pitted against each other and compete in an atmosphere of just get the job done we dont care how. Companies have reduced themselves to dehumanizing and exploiting the worker as they adopt the attitude that the employee is an expendable commodity in their big machine. Although the worker gets paid a wage, the owner gets the benefit of their labors, plus the surplus profit that has been produced . The last aspect of corporate behavior that has contributed to the corporate greed mindset is the hierarchy structure of the company. Corporate culture is divided into classes, the haves and the have-nots. The haves have all the power, the exceedingly obscene salaries, the balloon parachutes, while the havenots do not reap any of those benefits and are subject to employee corporate downsizing whenever the numbers are at risk for a company. These behaviors have slowly deteriorated corporations and are present in those companies at the forefront of the news today. The underlying ethic of greed has surfaced to define corporate success, and is now the underlying catalyst for corporate failure. The RJR Nabisco $24 billion takeover shocked the nation and illustrates a perfect example of corporate greed. Chief Executive Officer, Ross Johnson, was the model of a modern business hero and is a perfect example of unethical corporate behavior. Hope Lampert (True Greed, 1990) exposes Johnson as a charismatic leader and the embodiment of the new non-company man, who focused strictly on the bottom line without sentimental attachment to people, products, or places. His behavior focused totally on ensuring that he came out on top. Johnson already had a history of profitably selling companies. In 1988 he proposed initially that RJR Nabisco sell for less than it was worth, all the while knowing that he stood to make $300 million on the deal (Lampert, 1990). Six weeks after his proposal, Johnson, who had been considered one of the most talented executives in America, became the epitome of true greed. The buy-out of this huge corporation exposed many executives that also fit the corporate greed definition. Possibly this was one of the first instances where the public became totally aware of the excesses of corporations. The production of a movie based on the buyout aided in the universal awareness of CEO wheeling and dealing behind the scenes. Today, the public furor over corporate greed and irresponsibility is at an all time high. It seems that companies are being exposed daily. Enron and WorldCom are two additional companies that are under public scrutiny and have further exposed the unreliability of corporations. Pick up any paper or business magazine today and Enron will be mentioned somewhere. It is the best example of a culture built on greed and deception to date and it will take years for the courts to determine who and what are to blame for the collapse. According to an article in Business Week, the off-balance-sheet, the mark-to-market accounting practices, and the money losing-badly run businesses around the world all led to the ultimate demise of Enron (Zellner, 2002). The unethical practices in these three areas of running a business all clearly point to corporate greed at its best. According to Zellner (2002), the off-balance-sheet financially aided Chief Financial Officer, Andrew S. Fastow and his cohorts while hiding Enrons deteriorating financial state. Add to that the easily manipulated mark-to-market accounting practices that let Enron book revenue upfront on a long-term deal instead of spreading it out over years and you have created a false stream of information that completely alters the state of the company (Zellner, 2002). Falsely reporting activities of the company is not only misleading to the stockholder, the public, and the employees that invest in the company, but in this case, it led to corporate disaster. The evidence of Enrons corporate greed has left the employees who lost their life savings and investments made in a company that they were led to believe was healthy, asking, Who will pay for this deception? Clearly the top CEOs were aware of the trouble and went to great lengths to cover it up. Follow-up questions are directed toward the accounting firms that are responsible for auditing the corporation. The unethical accounting practices should have been caught and disclosed by the accounting firms reviewing the books. These firms, Pricewaterhouse to name one, are under the spot light as well. Inappropriate financial reporting should have been obvious. As a result, the avalanche of corporate greed is headed for the accounting firms as well. After all, Arthur Anderson audited Enrons books, and Pricewaterhouse Cooper audited Tycos books (Byrnes, 2002). How does a company as reputable as PwC fail to catch the looting of $600 million by Chief Executive Officer C. Dennis Kozlowski and others from its investors? Additionally, how will Arthur Anderson explain their document shredding and the accounting practices of Enron? Exactly where the auditing firms stand in these business malpractice issues is

another part of corporate greed. The accounting firm that accurately reports unethical accounting practices is possibly cutting off the hand that is paying them. Enrons corporate greed has been documented in several books. However, Googins analysis reported in Brian Cruvers book Anatomy of Greed clearly illustrates the position that the company finds itself in today. When the house of Enron came tumbling down, it exposed the worst of corporate greed, misbehavior and citizenship. Enron betrayed its employees, it betrayed its clients, and, by inflaming the publics widely perceived notion that corporations cannot be trusted to do anything other than serve their own ends and line their own pockets, Enron betrayed all of corporate America. (p. xii) Truly, the total disregard of ethical behavior is apparent in the activities of Enrons top executives. Another book, Power Failure by Mimi Swartz, address the activities that led to the collapse of Enron. Sherron Watkins is reported to be the catalyst that started the corporate tap-dancing to cover up inappropriate accounting practices. She was a vice president for Enron who interacted with all of the major players and reported to them discrepancies that she felt needed to be corrected. From 1993 to 2002, Enrons stock prices rose and fell like a roller coaster ride. Beginning in 1993 the price of one share was $12.50, and reached its highest price of $90 a share in 2000, before ultimately claiming bankruptcy (Swartz, 2003). At the heart of Enrons fall is Andy Fastow whose deal-making, trader-oriented culture ultimately changed Enrons finance department. Mimi reports Fastow transformed Enrons finance department into a profit center, creating a honeycomb of financial entities to bolster Enrons profits, while diverting tens of millions of dollars into his own pockets (Swartz, 2003). This is the clearest example of corporate greed and meets the definition exactly. Greed exists when executives knowingly disclose erroneous information that defrauds ordinary shareholders. Enron is not alone. Another corporate example is WorldCom. WorldCom was a true success story about a company that grew from a tiny business in Mississippi into a 20-million customer global telecom superpower. However, millions of people around the world wondered how a company where the stock value had skyrocketed 7,000 percent in the 1990s could fall so hard and so fast (Jeter, 2003, p. xxi). The answers were apparent as the accounting scandal became public. Top WorldCom executives were meeting behind doors, scrambling to justify improper journal entries that totaled nearly $4 billion. As the investigation progressed unsuspecting employees and investors in the company found out that the earnings in 2001 had been artificially boosted to impress shareholders and Wall Street. WorldCom filed the worlds largest bankruptcy claim in corporate history. The nations second largest long-distance provider, the largest competitive provider of local telephone services, the largest carrier of international traffic, and the worlds largest Internet carrier with operations in some 100 countries on six continents had spiraled to its financial death (Jeter, 2003). Greed was at the forefront of the decision making with this company also. Crafty account reporting helped to make the books look better. It was disclosed that one of the practices by WorldCom to make revenue look good was to record revenue from an account even it had fallen in arrears. WorldCom continued to book the revenues as if the customer had paid the debt. By 1999, WorldCom had accumulated more than $600 million in uncollectible receivables on its books (Jeter, 2003, p. 153). Deliberate falsifying of income skews the books and deceives the shareholder and the public into believing that the company is in better financial condition then it is, which translates to corporate greed. Here again, we clearly see an example of corporate greed where executives knowingly disclose erroneous information that defrauds people. Upton Sinclair hits the nail on the head so-to-speak in this quote, It is difficult to get a man to understand something when his salary depends on his not understanding it (Berenson, 2003). As the ongoing analysis of corporate America continues it is apparent that corporate greed is the common thread that connects companies like Enron, Tyco, WorldCom, and numerous others. The facts are that publicly traded companies report sales and profits to their shareholders and the public on a quarterly basis. The pressure for that report to be profitable is key to company success. Top executives have lost site of what is right and it has caused devastating results across corporate America. Alex Berenson has put the last three years of accounting fraud and corporate greed in context as he describes how the past decades of lax standards and shady practices have contributed to our current economic troubles (Berenson, 2003). Top chief executive officers that run these large companies are compensated well. As the quote at the beginning of the paragraph suggests, it is difficult to blow the whistle when your own pocketbook will be financially affected. An article retrieved from the Internet discloses that corporate executives in America were paid an average of $3.5 million each in 1981, and 12 years later, top CEOs are paid an average of $154 million . It is hard to accept that the work done warrants 43% higher pay for the services of a chief executive officer. Clear examples of corporate greed become obvious when newspapers report that thousands of employees lose their jobs but the chief executive officer has a golden parachute that has compensated him in the millions regardless of the

companys income statement. Enrons chief executive office, Kenneth Lay, hid more than a billion dollars in debt from investors without going to jail (Corporate Americas, retrieved 2003, April 20). At WorldCom, 17,000 jobs were lost, profits were overstated by $3.8 billion, and their accounting fraud cost shareholders some $150 billion (Sanders, retrieved April 23,2003). The question of what to do about corporate greed is at the forefront of discussions today. Most likely it will become a campaign issue for those running for President in our upcoming election. Greed is excessive desire, and drawing the line between legitimate compensation and excessive is clearly confusing. Corporate greed then is the means by which the compensation earned has been achieved. It is the behavior that should be measured that will define excessive. Corporate greed occurs when lies, cheating, and stealing are done in the name of company progress. Financial success alone does not equal corporate greed, but when millions are generated falsely by fraud, that is greed and someone should pay for it. How has globalisation helped? In order to answer this rather controversial question, it is firstly necessary to define the notion of corporate greed. In doing so however, it should be conceded that it is a difficult one to pin down, as it will mean different things to varying audiences. So I acknowledge that the definition becomes in effect, fairly subjective. Common amongst the varying interpretations of the term, is a widely held belief that corporate greed is the pursuit of excessive wealth/income returns at the expense/to the detriment of others. This school of thought suggests that there is a subsequent knock on and adverse effect on primarily the following: labour/employment/household income, the distribution of wealth both within the business in question as well as within the economy as a whole and increasingly other socio-economic factors such as labour mobility, and career progression. The notion of corporate greed is a fairly new concept that has exploded into the public consciousness in recent years, ably assisted by the best efforts of the media. Circa ten years ago, it was a subject area that was almost remiss in it's absence. However the activity of mainly global corporations in the interim, has put paid to this. Capitalism has flourished through globalisation in the last thirty to fourty years. As many home/national markets have become more saturated, with others contracting and both providing fewer opportunities for growth, adventurous and competitive enterprises have made decisive moves in the direction of international markets. In choosing diversification, they have tapped into a wider market comprised of numerous groups of consumers, both within geographical proximity of the home market as well as further afield. The sheer volume of consumers has been responsible for propelling a number of businesses into the stratosphere in terms of revenue/income generation. Businesses that have been able to successfully adapt to competing on a global scale are primarily those that have been able to standardize their offering and deliver homogenized products. In effect concentrating on a portfolio of goods/services that can be successfully sold en masse, to the widest group of consumers. Examples of businesses that have successfully pioneered this approach are diverse and cross sectoral: Microsoft, Apple, Coca Cola, McDonalds. It is notable that all of them happen to produce a tangible end product. However, the other more distinct group are the banks and financial institutions: Standard Chartered, HSBC, Citibank and Barclays to name a few and it is to this group that we shift our attention.

Aided and abetted by the free trade areas and economic union of regions such as the EU and NAFTA, banks have been able to transform their national businesses into global entities. How? Primarily by taking advantage of one of the underlying principals of economic union: the free movement of capital. Statistics cite that over $1 trillion is traded each day in the City of London alone by banks that span the globe. The numbers are unprecedented. These banks have made deliberate strategic decisions to concentrate on growing their international businesses. As such this

has necessitated modifying their business models and joining up their business segments across international borders. In effect, a concerted move away from disparate, country specific products to standardized services.

As evidenced by the turnover alone of these companies, the strategy has paid dividends (literally) to shareholders and boards of directors alike. To say that they have been successful is to underestimate their performance. Recent profit results show that in the midst of one of the most dire recessions on record, only eclipsed by the Great Depression of the 1930s, global financial institutions have been able to continue to generate vast profits. We are here talking about net profits of multi millions, after all operating costs and taxation have been allowed for. eg. Bank of America 3rd quarter 2011 net profits of USD 6.2 billion. The defence of these companies in response to criticism is robust. They are in the business to make money and are doing what their objectives say they should. They are tasked with selling more products to greater numbers of consumers/clients and increasing their competitiveness. The fact that they are ably achieving this, in the face of numerous obstacles, eg. saturated markets and recession, points to the fact that they are successfully attaining their goals. (Again, clearly evidenced by their annual accounts). Such companies are market leaders, setting the standard for others to follow and attempt to emulate. So the question is, with these performance records as evidence, why should they have any detractors? The Financial Services industry The truth of the matter is that the argument against the operations of these businesses does not relate to their pursuit of profit, but rather, how it is achieved and at what cost. Furthermore, a key concern is how the profit is eventually distributed. This is what is increasingly so 'offensive' (and I use the term advisedly) to growing numbers of people and their sensibilities. In respect of the former, there is mounting evidence that substantial increases in profit year in year out, is unsustainable, without major implications for the business structure and its employees.

Each year, the masters of the universe (boards of directors) will convene and set performance targets for growth and regardless of what may be happening in the wider economy, they will be adamant on achieving increases on prior year figures. Cost bases will be slashed, recruitment frozen and individuals leaving will not be replaced. In effect placing greater burdens on their remaining peers to pick up the slack, take on greater workloads and despite this, still succeed in achieving their own individual targets. This move towards streamlining businesses and ensuring that they are progressively leaner each year is understandable and in many respects, a natural strategy to pursue. Where it starts to become questionable is when these same boards are expecting outstanding performance and exponential growth whilst simultaneously removing resources. One of the key inputs here is labour. As these businesses have grown and acquired mass, the focus on economies of scale and reducing cost bases have become increasingly important. Many of the large financial institutions, particularly the banks undertake restructures on a regular basis in order to introduce further cost efficiences and as a means of enhancing shareholder returns. Pursuing such an approach highlights the stark discrepancy between their hypothetical corporate social responsibility policies and the actual decision making that is undertaken at board level. Clearly there appears to be little correlation between the two. The restructures tend to result in affected employees having to reapply for their positions, the displacement of unsuccessful staff and eventually, substantial losses in jobs. Typically, such exercises are announced before Christmas (in preparation for the new year) but given the symbolism of the holiday period, can and do have profoundly upsetting effects on the employees in question. Reduction in headcount is one of the primary strategies these businesses will implement in order to further streamline operations. This oft relied upon strategy has led to accusations that the boards of these businesses view people/employees as little more than expendable resources to be

cast aside once they are considered obsolete. During the height of the financial crisis in 2008 and up until present day, thousands of workers in financial services have lost their jobs. In the third quarter of 2008, the industry employed approximately 1.1 million people. By the end of March 2011, that figure was estimated to have dropped to circa 900,000 as financial institutions clamoured to reduce headcount in the face of greater regulation. This, despite the fact that a number of these businesses have either been beneficiaries of tax payer financial assistance, e.g. RBS, or have grown substantially and generated significant profits. In the case of businesses that have been recipients of financial bailouts, this hasn't precluded them from paying vast salaries, bonuses and benefits in kind to their boards and senior executives, whilst simultaneously declaring hardship. A notorious example of this being Sir Fred Goodwin (former CEO of RBS) who presided over the near decimation of the bank following its ill fated acquisition of ABN Amro in 2008, resulting in a 24.1 billion loss in that same year (The Financial Times, 27 July 2010). Despite the largest loss in UK corporate history, Goodwin was able to secure a golden parachute, i.e. a reward for failure of a GBP 16.9 million pension, whilst RBS was actively alluding to job losses of circa 20,000 in the UK to reduce costs.

So this is what is increasingly observed of senior executives in major financial institutions. The description of them as masters of the universe is apt as they continue to evidence an attitude of disdain, verging closely on contempt for their own employees and public opinion. The inequity of profit distribution within these corporations is at times, nothing short of breath taking. When a significant number of these entities are publicly traded, it becomes a given that shareholder returns are paramount for their businesses and that strategies will be implemented which are aligned to this goal. Nevertheless, the pendulum appears to have swung so definitively in this direction, that very little thought is given to the individuals that make a business a success: its employees. As the financial crisis has meandered into 2012, there are more and frequently occurring examples of large financial institutions continuing to forget that age old adage: "a business' most valuable asset is its staff." Aviva Insurance slashed operations in Dublin in Q4 2011, axing almost half (950) of its total workforce there (2,000), despite recording a 21% increase in European profits in the first half of 2011. (Insurance Insight, 4 August 2011). HSBC Bank plc have undertaken three restructures in the last two years affecting staff nationally in the retail, commercial and wealth sectors and leading to large scale job losses of circa 700 in the UK. These job losses have astoundingly affected new hires too in the wealth management sector, in role for no more than three months. Against these events, shareholders have benefitted from consistently high returns with a half year net profit of 7.1 billion (per KPMG: UK Banks Performance Benchmarking Report: Half Year Results 2011). However, further jobs losses are anticipated. In conjunction with this, PWC and the CBI have forceast that more than 10,000 jobs will be lost in the financial services sector during Q1 2012 as a result of further cost cutting by businesses. So it appears, the strategy is set to continue with ever increasing job losses and resultant impacts on families and communities alike. In stark contrast to the cost efficiencies affecting employees within these businesses, senior executive pay has remarkably been untouched. According to a survey undertaken by Payscale.com in 2011 (an online salary database), finance ranks second behind oil mining and exploration in a list of UK top paying industries. This is borne out by the compensation packages

awarded to senior executives: HSBC CEO Stuart Gulliver was due to be awarded a salary deal in 2011 of 13.3 million each year for the next five years ( The Guardian, 2011). RBS CEO Stephen Hester received 3.27 million in salary/bonus in 2010, with a further 4.2 million in shares next year if incentive targets are met (Bloomberg, 9 Jan 2012). Lloyds CEO Antonio Horta-Osorio was offered a long term compensation package in 2011 worth in the region of 10 million. (Reuters, 30 March 2011). Both RBS and Lloyds are part nationalised with government holdings of 83% and 41% respectively. Furthermore, both have shed thousands of jobs as a means of mitigating financial losses primarily incurred by poor decision making at a strategic, i.e. board level. Conclusion These events go a great way towards answering the question posed at the outset of this piece. The facts are indisputable. Questionable strategy by boards and senior executives in global financial institutions aimed at generating ever greater profits were responsible for creating conditions and behaviours which led to the financial crisis of 2008. This in turn leading to contagion in the markets and a global recession which threatens to re-surface: We are already seeing a slowdown in economic growth of the world's powerhouse manufacturer, China and crisis in Europe with talk of the break up of the union and a reversion to national currencies. Despite the culpability of senior executives in bringing the industry and the world's economy to its knees, it appears to be business as usual for this group. Their appetite for greater profits is unceasing, especially given that they stand to benefit personally. Historical losses incurred by the industry are being mitigated by widespread and consistent job cuts affecting employees in a number of business areas. Even profitable business units are facing further streamlining. However, senior executives and their compensation packages, emerge unscathed and protected by their boards. Corporate greed is a condition that has to be tackled head on. It makes a mockery of the corporate social responsibility policies these businesses publish. The risks of doing nothing are too great. We cannot as a society afford to accept strategies which so clearly detriment large numbers of workers, whilst simultaneously and grotesquely rewarding managers for failure which damages our communities. Businesses were initially established for the greater good of the communities that they served. The Central Bank of Ireland recognise this. It has written to chief executives at the Bank of Ireland, EBS and Irish Life and Permanent advising it may undertake an investigation into the Irish banking crisis. As part of this, the Bank will appoint an independent arbitrator to review whether executives should remain in their jobs. The key question here is: why has the Bank of England not followed suit?