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Last updated: May 11, 2009 11:12 pm
The UK parliament has been humiliated by an expenses scandal of Augean stench, prompting Martin Bell, an anti-sleaze campaigner, to suggest such abuses could never occur in the business world. “If our cabinet ministers worked for a private company or public corporation, half of them would be out of a job this morning,” he said. “They would have been shown the door. Their employers might then call in the police.” Sadly, he is wrong. Shareholders are taken for a far bigger ride by their C-suites than UK taxpayers are by their MPs.
Shareholders have little insight into the perquisites enjoyed by executives: the jets, country club memberships and season tickets are never disclosed in remuneration reports. Every so often, daylight reveals shocking shareholder-funded extravagance. Ex-Tyco boss Dennis Kozlowski, for example, supplied himself with a $15,000 umbrella stand, a $17,000 “travelling toilette box” and $2,200 wastebasket. More recently, opponents of John Thain leaked to the media that the one-time chief executive of Merrill Lynch had treated himself to a $1.2m office makeover, with $87,000 rugs, $25,000 pedestal table and $68,000 credenza. But for every case that makes headlines, thousands do not. Which accounts department queries the spa treatment in the boss’s hotel bill or questions helicopter trips to far-off golf courses?
C-suites around the world are, with few exceptions, hypocritical in the extreme, demanding austerity from workforces while living high on the hog themselves. There is a way this could perhaps change for the better. Organisations that want to crack down on such profligacy could institute a system of 360 degree internal transparency. Every quarter, listed companies could publish, for internal consumption, a department by department account of the expenses of the employees making the 10 largest claims. That would make a dent in the corporate AmEx bill.
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