The astounding, disgusting run of huge corporate fraud scandals features nothing nastier than the accusations against Conrad Black. I can hardly bear to call him ‘Lord Black’, since the peerage was plainly and richly undeserved. But the cases all contained thick veins of Blackness. I define that as treating money which belongs to the company and thus its shareholders as if it were the sole possession of the greedy plutocrats involved.
Behind the greedy grabs there’s a deeper question: how has it all come to pass - so that non-proprietors can treat corporate funds their own property, stealing in phenomenal amounts measured in many million? This is the ultimate result of something I have been futilely railing against for decades - the inexorable rise of top corporate rewards from moderate to magnificent, and worse. There are no checks or balances, since all directors are sucked into the same web, politicians have neither the will, wit or means to interrupt the rise; and the whole process had irresistible momentum as each fat cat was spurred to greater heights of greed by the sight of the other rich felines doing better still.
My criticism was not primarily moral (although the ethics applied were non-existent. Rather, I fretted because the larger the riches available, the more inevitably CEOs and their cohorts turn their attention to ways of enriching themselves, rather than the shareholders. The best means of self-enrichment was to gear all decisions and actions to forcing up the share price. ‘Shareholder value’ sounded almost virtuous, but I was almost alone among commentators in pointing out that it just meant chasing up the share price - which is a ridiculous target for any serious management.
The most conspicuous absurdity is that the only way in which managements can bend the share price to their will is by being bent - using every means, licit and illicit, to get the price moving. These methods prevent anybody, including themselves, from seeing how the company is really performing.
Not that performance matters. As the regulation of corporate reward levels became so slack as to be non-existent, payments for non-performance became as grotesque as those for performance. Witness the gigantic pay-off received by the failed CEO of Hewlett-Packard.
Billionaire entrepreneurs, if honest, earn their fabulous rewards by creating new enterprise. Billionaire hired hands don’t earn their rewards. They just sign themselves fat cheques.
