Sandy Weill states that companies need to do more to wash their images from the recent scandals by spending more on philanthropy, both financially by spending more and by dedicating additional non-financial resources.
The best way to have a clean image from scandals is NOT to have any scandals. DO the right things and you won't have to worry about bribing with shareholders' funds to burnish the corporate image.
Companies should follow the letter and the spirit of the laws and of ethics, be efficient, be responsible to their employees, be responsible to the societies in which they work and maximize returns to shareholders over the long-term.
These are NOT in conflict! Only ethical companies will consistently generate maximum shareholder returns, without having to incur extraneous costs from unethical behavior, either in the form of fines, clean up costs or burnishing costs.
Philanthropy should come from the owners, that is, from the shareholders themselves and management should spend their own money.
When companies spend resources on philanthropy they are usually financing the egoes and reputations of their senior management without this management having to dig into their own pockets. Examples abound, Conrad Black (or should I say Lord Black, as he has bought one of those) and Hollinger, Dennis Kozlowski and Tyco, Kenneth Lay and Enron, and others.
This type of expenditure is rife with potential conflicts of interests and restrictions on related party transactions have never shown to have worked.
Leave the shareholders to spend their money on philanthropy and the management to their chores!
OAM
Related links:
Weill focuses on donations by companies (paid subscription required)
Committee to Encourage Corporate Philanthropy
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