The shameless excesses of irresponsible corporations
“The world’s largest insurance company, AIG, spent $440,000 on a lavish corporate retreat at one of California’s top beachside resorts a few days after accepting an $85bn emergency loan from the US government to stave off bankruptcy.
Details of the week-long getaway enraged legislators at a congressional hearing yesterday where AIG’s former bosses were accused of spending taxpayers’ money on pedicures, golf games and cocktails.
Crippled by losses on financial insurance companies, AIG was bailed out by US taxpayers on September 17 to avert a collapse which risked causing further failures.
The bill shows that AIG spent $139,375 on rooms, $147,301 on “banquets”, $23,380 on spa treatments and $6,939 on golf at an eight-day company event which began on September 22.”
The Guardian, October 8th, 2008
There are moments when I wish I had nothing to do with big business at all. I should have just become a novelist and enjoyed myself making fun of the idiocy, excesses and hubris of large corporations. Perhaps I still will.
One of those moments came during last week’s congressional hearings when the absurdities of AIG, the crippled insurance giant, came to light. Before I go further, I should clarify that the ridiculous spending outlined in the excerpt has little to do with the Kenyan AIG businesses and should not be used to cast judgement on local executives.
But there is plenty of judgement to be cast on the people in America who failed to stop this retreat from taking place. Sure, the event was probably planned and booked much earlier. Yet it is sheer folly not to cancel it when you have just been saved by the US government taking a lot of money out of taxpayers’ pockets and putting it in yours. When you have been reduced to begging due to your own blunders, the last thing you do is to party in front of your saviours. But even this much common sense seems to be beyond the grasp of some corporate titans.
The titans themselves were being hauled over the coals by congress, and had little to say. They blamed the near-collapse of their huge company on a “financial tsunami” that swept all before it. Robert Willumstad, recently fired CEO, said he could not think of anything he should have done differently during his catastrophic tenure. Nothing at all, Mr Willumstad? How about not dabbling in toxic securities whose threat you didn’t understand? How about not playing with the investments of your thousands of customers as though they were chips you were tossing as the roulette wheel span?
The retreat itself was even justified by some on the grounds that it was necessary to keep key employees and agents in the company after the crisis. Well, that takes the biscuit. If employees require $500-dollar hotel rooms in 8-day jamborees in order to stick with you, then I say toss them all out.
It is difficult to believe just how out of touch the corporate executive can become, how divorced from everyday reality. That is the self-absorbed, grasping behaviour that has caused global contagion. Those who lead corporations seem to need basic lessons in responsibility, prudence and focus.