MONEY AND POLITICS
Candidates mean business
BY SETH GITELL
Treasurer Shannon O’Brien entered a hastily convened news conference at 3:10 p.m. Monday and promptly exited. This wasn’t a case of the jitters. O’Brien just needed to make sure she had everything in order before addressing the press. When she re-entered the room, she spoke loudly on a subject about which, until that day, she had been far too quiet: corporate responsibility. " The recent spate of corporate scandals involving Enron, WorldCom, Global Crossing, Tyco, and others — and the illegal behavior that has been exposed — has thrust the issue of corporate responsibility into the spotlight, " she declared.
A tense air permeated the room. Her campaign manager, Dwight Robson, stood in a corner, at times chewing his fingers. Until now, O’Brien — whose husband, Emmet Hayes, worked as a lobbyist for Enron until December 2000, long before the company collapsed — had been somewhat quiet about the now-bankrupt company, whose demise cost the state’s pension fund roughly $25 million. But finally the state’s highest financial official spoke out on the issue that had been dominating the front pages of the country’s newspapers. O’Brien announced her intention to convene a conference on financial standards and reminded those present of what she’d done to secure the state’s investments, such as pushing for an independent director on the board of Mattel and backing " good governance " measures under the auspices of the Council of Institutional Investors.
The only question for O’Brien is, what took so long? For a candidate running, in part, as a " fiscal watchdog, " she would have done better to get out in front of the corporate-responsibility issue long ago. Instead, her caution created an opening for Robert Reich, who is rapidly emerging as O’Brien’s toughest primary opponent. Hugely underfinanced, Reich is living off the land and exploiting hot issues, such as the national wave of recent business failures. While he avoided much direct criticism of O’Brien, Reich — the former head of the Department of Labor, which governs the nation’s pension funds — vowed in a speech delivered Monday at Harvard to " do everything possible to restore public confidence in American corporations and in our government’s capacity to keep them honest. "
In the same speech, Reich also recalled how as secretary of labor he had urged pension funds to use their power as stockholders to influence corporate behavior. It should be noted that his remarks followed those of former Watertown state senator Warren Tolman, who was the first candidate in the governor’s race to pounce on the issue by introducing a pension-protection plan last week.
Speaking downtown, Republican nominee Mitt Romney piled onto the issue later on Monday. His comments seemed an indirect critique of the treasurer’s handling of the pension fund. " Through our state pension fund, we are large stockholders, " he said. " To date, we have been passive investors. But we now must become activist champions to right the balance of power in corporate governance. " Taking this position poses risks for Romney. As a former management consultant and the head of Bain Capital, he may have opened himself to further attacks on his own business dealings. None of the Democratic candidates has found anything yet, but if anyone does, Romney better watch out.
Just Monday, Democrat Steve Grossman, the head of MassEnvelopePlus, sent out a fiery press release chiding Romney for his role as an investor in Ampad and challenging the Republican to release his full tax returns. In general, Grossman, the former chair of the Democratic National Committee, sent out a fiery press release on Monday decrying the " hypocrisy on corporate responsibility " exhibited by his opponents (except Tolman). Yet when asked by the Phoenix about the role played at Global Crossing by his successor as head of the DNC, Terry McAuliffe — who, according to a March 25 story in Business 2.0, made $18 million from a $100,000 investment in the company — the candidate clammed up. " I haven’t talked to Terry McAuliffe but once in the last two years, " said Grossman. " I’ve spent the last two years running for governor. Other than knowing that Global Crossing is a hurting company, I’m not sure I know what I could say that would be informed. "
As for Senate president Tom Birmingham, the purported working-man’s champion, his silence on this story has been mystifying. Grossman and others have criticized Birmingham for supporting legislation limiting the civil liability of accounting firms in cases of alleged illegal bookkeeping — a central component of the Enron and Global Crossing meltdowns. That said, Birmingham, who makes his living as a lawyer for organized labor, is the one candidate who has not leapt on the corporate-responsibility bandwagon. It’s hard to determine whether his passivity is motivated by reasoning or just plain inertia. If it’s just a missed opportunity, it’s one that Birmingham’s gubernatorial campaign can ill afford.
Issue Date: July 11 - 18, 2002
Back to the News and Features table of contents.