Paying off pols is bad corporate policy

Morgan Stanley chief executive John Mack is working hard to raise money for presidential candidate Sen. Hillary Rodham Clinton, D-N.Y.
That is quite a flip-flop from 2004, when he was a big supporter of President Bush, raising the $200,000 necessary to become a “Bush Ranger.”
In an e-mail sent to his senior staff members inviting them to a fund-raiser for Ms. Clinton last week, Mr. Mack reportedly said: “When it comes to supporting political candidates, I have always looked beyond party labels to the person who I felt was best for the job and most able to lead the country forward.”
Change of heart
I am not completely buying it.
Before Mr. Bush was president, Mr. Mack wasn’t a big fan.
In 1999 and 2000, Mr. Mack gave just $250 to Mr. Bush, versus $1,000 to rival Sen. John McCain, R-Ariz. Mr. Mack also gave $1,000 to John Edwards, another Democratic presidential candidate and a former senator from North Carolina, as well as $1,000 to a legal fund for former vice president Al Gore.
But once Mr. Bush was in power, Mr. Mack became an ardent supporter.
Right now, Ms. Clinton looks as if she could well be the next president. And maybe Mr. Mack really does like her.
Or maybe he wants to get in good. Giving a bit of chump change to people in power is good business, after all.
It pays to be a faithful backer of the president of the United States, the ultimate boss of the Securities and Exchange Commission.
Mr. Mack knows well how handy this influence can be. In 2005, the same day it was reported that he was being considered for the top spot at New York-based Morgan Stanley, senior SEC enforcement officials began cooling to an insider-trading investigation involving Mr. Mack, according to the former lead investigator on the case.
That investigator, Gary Aguirre, blew the whistle, and a Senate committee has been looking into the matter.
To be sure, no interference from the White House has been alleged in the Mack case. The evidence shows that it is quite possible that senior SEC enforcers balked at the thought of fighting a big name at a big firm with equally big legal talent.
SEC officials say they found no evidence of wrongdoing.
But hey, being a high-profile supporter of the president can’t hurt, right? That is why Wall Street chiefs are good at ingratiating themselves with the Washington elite.
Merrill’s moves
E. Stanley O’Neal, Merrill Lynch & Co. Inc.’s chief executive, was also a Bush Ranger in the 2004 election cycle. He too put the squeeze on employees to cough up money.
In his recent e-mail, Mr. Mack said that the fund-raiser for Ms. Clinton was “purely voluntary” for Morgan executives. I don’t buy that, either.
When your boss invites you to fund-raisers and asks for donations, you never feel completely free to ignore the solicitations. With political money, where there is a business-related agenda at stake, the pressure is even greater.
This money-raising stuff can get pretty messy. At New York-based Merrill, after Mr. O’Neal hit up million-dollar producers for Mr. Bush, one broker complained.
The representative, Mitchell Slater, had previously gotten into some hot water for sending an e-mail about a Bruce Springsteen “Vote for Change” concert, a fund-raiser for liberal causes. Sending a political message was a violation of Merrill policy, apparently.
Mr. Slater claimed that if that was the case, Mr. O’Neal had violated company policy, as well. Such insolence was one reason Mr. Slater had to leave Merrill in 2005, but not before the firm dinged his U-5 termination report with an alleged customer complaint. An arbitration panel last year ordered that mark removed.
All this squeezing of employees for campaign cash should be stopped. It reeks too much of bribery, hypocrisy and extortion.
Paying off pols may be good business, but it is bad corporate policy.

Related Topics: Just Thinking