Kate Jennings remembers hypocrisy on Wall Street
Kate Jennings laments the corporate deception and investment banking hypocrisy in which she used to play a part
Published: May 9 2002 19:54 | Last Updated: May 9 2002 20:52
Financial Times
news.ft.com
Last month was the season for annual reports and shareholder meetings, with corporations reassuring one and all of their commitment to integrity, leadership, discipline, accountability, respect, excellence.
Yet newspapers are crammed with accounts of lapses in these very same "core values". The discrepancy brings to mind George Orwell's observation: "When there is a gap between one's real and one's declared aims, one turns as it were instinctively to long words and exhausted idioms, like a cuttlefish squirting out ink."
During the boom years of the 1990s, I was a corporate cuttlefish: a speechwriter at Wall Street investment banks. Looking back, I am hard-pressed to think of anything I wrote that was not riddled with through-the-looking-glass illogicality, evasion, exaggeration or lies.
As long as my laboured locutions were aggressively optimistic, everyone was satisfied. To be sure, cynics joked about jargon. "Add value", we said, was code for "fire half the work force and boost the option price". But, hey, banks were minting money, investors were rolling in it, city coffers were full, pockets were stuffed with bonuses.
Now, as the extent of the audacity is revealed, not only at cowboy companies but also at blue-chips and big banks, it is no longer funny. Executives proclaimed integrity while manipulating their numbers and cashing in their options.
They made a show of being "responsible corporate citizens" while paying no taxes. They bandied about phrases such as "client focus" and "trusted adviser" while demolishing Chinese walls and creating conflicts of interest.
Not all executives did so, of course. And I have no problem with corporations as such, only with hypocrisy. Hypocrisy in normal, human amounts is fine too - but we are experiencing a tidal wave of it. It is undermining faith not only in those who think corporate governance is for sissies but also in business people who take seriously their obligations to all who depend on them: customers, shareholders, employees, pensioners and society in general.
Despite everything, the corporate blustering continues unabated, bringing to mind more Orwellian wisdom: "If thought corrupts language, language can also corrupt thought." The lingo of stock analysts, currently having their 15 minutes of scrutiny, is a tiny but perfect example of this thought.
Once upon a time, when research was a drab occupation, analysts assigned buy, sell and hold recommendations to stocks. But as they metamorphosed into hotshots on CNBC, they expanded ratings to include meaningless and contradictory categories such as "accumulate", "market perform" and "reduced visibility". Filter perceptions through this kind of phraseology, back it up with handsome compensation, and core values quickly turn to mush.
After much foot-dragging, Merrill Lynch is proposing that its analysts return to the old three-tiered rating system. Why did it have to wait for Eliot Spitzer, the New York State attorney-general, to grab hold before doing so? Analysts may now go back to saying what they mean and even meaning what they say.
Come to think of it, we could ask this of every corporate executive. That is a remote likelihood, to judge by the shameless use of the words "integrity" and "excellence" in the annual reports of companies that are under investigation, or have been fined for wrongdoing.
Corporations seem to have forgotten that integrity and excellence were Enron values, engraved on Lucite gew-gaws and desk decorations. Such words need a long rest in the corporate world; they have been spoilt even for those companies that genuinely live by them.
These annual reports display an astonishing obliviousness to public feeling. It is more evidence of what prosecutors and management consultants advising on post-Enron branding have already discovered: many corporations do not get it.
Locked in their skyscraper fastnesses, armoured with arrogance, phalanxed with lawyers and lobbyists, their executives seem not to understand that we - customers, shareholders, employees, pensioners - are tired of the chasm between real and declared aims.
We are tired of disinformation and intimidation, petulance and condescension. We are tired of an ethos that gives lip service to "values" but routinely fudges the line separating the legal from the criminal. We are tired of corporations telling us that they do not need to be regulated, that they can police themselves, when all the evidence suggests the contrary.
We are tired of the "baseless accusation" defence issued automatically by press departments, followed by legal battles stretched to eternity. We are tired of palliative acts of good corporate citizenship. We are tired of insincere earnestness.
We do not buy the argument that the use of words such as "integrity" and "excellence" is valid in corporate communications because they are aspirations. We want them to be facts.
The writer used to work in investment banking. She is author of Moral Hazard, a novel about Wall Street |
