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Taming the Transnational Tentacles

By jeep in Internet
Thu Jul 12, 2001 at 02:53:12 PM EST
Tags: Freedom (all tags)
Freedom

In this brief article I explore how Internet Voting could empower reform in corporate accountability and the role of shareholders in public companies.

This relates to the issues being raised by campaigners and protestors such as those at the Seattle WTO protests and Gothenberg EU protests.


Corporate governance is neither sexy nor particularly exciting, which would explain why many people don't give much thought for it. That's not to say that there aren't some people considering the implications of who has a say in what a company does. In fact this issue is of growing importance mainly due to the fact that corporations that cross borders are becoming less controllable by any one nation's laws. The result has been that multi-nationals are becoming known as transnationals - companies of no-nation that cross boundaries. Organisations such as Greenpeace have realised the power these corporate phenomena wield and have begun to buy shares in them to try and exert influence at AGMs. These actions are symptomatic of the weakened national powers - to enforce positive environmental changes activists no longer push government, they lobby shareholders.

The first signs of real, hard, influence are showing. In the UK pension funds are now obliged to reveal what criteria (social, economic, environmental etc.) they judge investments on. This newfound transparency is the first indication that pension fund consumers (the vast majority of the working world) and thus fund managers will begin to wield their buying power to influence the behaviour of publicly traded companies.

But which companies you invest in is only a part of the control you can exert as a financial consumer. Owning many types of shares gives you the right to vote on key issues regarding the company's future direction. There are caveats, not all kinds of shares and not all kinds of dealing will allow you to directly vote on matters - but countless do. Yet how many of us who own shares wield this right effectively, if at all?

As a progressively widening cross-section of society gets initiated into the right of share ownership now is the time to organise and vote on corporate issues with our mind and conscience. But voting isn't always that easy: You need to be registered before you can get the right paperwork. Then you need the correct annual reports, voting papers etc. etc. If your dealer nominally owns the shares then getting all these can be rather more complicated than it need be.

Companies could be more accountable to shareholders on a more regular basis if they adopted electronic voting. The hassle and cost involved in polling their owners would be significantly reduced and the results would be almost instant. Now this technology alone isn't going to solve all the problems - chief executives would need to be tempted into a cultural change from the current situation where they try to avoid putting issues to the shareholders like the plague. Furthermore there's no denying the fact that pension funds own huge chunks of shares making them far more powerful than you or I, however as the ultimate consumers of these funds' handiwork I believe we have right to exert more influence on them too.

There is hope, what with pension funds having to put their social and green credentials on full display while ordinary shareholders can club together on issues via the Internet - without ever having to go through the arduous lobbying and direct mail efforts older shareholder actions had to. I can see a future where the needs of quick business decisions are balanced against accountability and deference to shareholders' wishes.

This isn't going to happen overnight, but if publicly owned companies can be tempted into cutting costs through adopting electronic voting for decisions that already have to go to the shareholders then perhaps the activist community along with the social businesspeople out there can slowly, but subtly, institute a culture of participation and accountability in our companies' macho chief executives. Then we might begin to see the transnational tentacles tamed.


About the Author

Jason Kitcat is founder and co-ordinator or the FREE e-democracy project who, with the support of the Free Software Foundation, develop the GNU.FREE Internet Voting system which is released under the GNU GPL. He is co-founder and Head of Production at Swing Digital a digital consultancy.

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Taming the Transnational Tentacles | 24 comments (14 topical, 10 editorial, 0 hidden)
Why would they expose themselves... (3.50 / 2) (#3)
by benzilla on Thu Jul 12, 2001 at 07:56:28 AM EST

to that level of democratic control, and would it make any difference anyway. Pension Funds are the biggest share owners in almost any company, their block vote is enough to swing any decision. AFAIK there has not been many (if any) instances of a pension company votng against a company for ethical reasons as their remit is to maxmise their profit.

__________

*BenZilla*


Forget about democracy... (3.33 / 3) (#7)
by Alias on Thu Jul 12, 2001 at 09:17:58 AM EST

In my opinion, there is no way a lambda individual can have any chance to influence a big (or even medium sized) company.

To even have a vote requires an investment of several hundred dollars -- if not thousands. And then you need considerably more than that. Think millions.

I see the whole subject of corporate governance, with respect to small shareholders, as a joke. Big players will always control big companies. All small shareholders can hope for is a couple dividends here and there. And many are ready to throw ethics to the wind to reap those meager benefits.

[ObNationalRant] Besides, when I see what kind of "ethical" companies get into the Swiss WWF Ethos Fund, it really looks like a joke: Nestlé (advertises powder milk to third-world countries, despite having promised not to do so after several babies' deaths), Novartis (pharma group, also active in genetically-modified organisms), ABB (participates in the Three Gorges Dam in China), UBS (Swiss bank -- 'nuff said)...

Corporate governance? Thanks, but no thanks. At least, in democracy, every one has a one and only one vote.

---


Stéphane "Alias" Gallay -- Damn! My .sig is too lon
Corporate Ethics (3.66 / 3) (#9)
by jabber on Thu Jul 12, 2001 at 10:16:58 AM EST

Wha?? Corporations need to be ecologically responsible to a superlative level to be associated with an ecologically stamped organization/effort? Let him among you who is without sin cast the first stone... Do you belong to any organizations whose wholesomeness might object to some vices of yours?

Let's put it in three ways: First, are the cheritable efforts of the Boyscouts of America completely without value, because the Boyscouts discriminate against gays? Should all the parks they've cleaned, and all the soup kitchens they've volunteered at be shut down because they are tainted by their prejudice?

Second, a corporation has no ethics to begin with. It is a soul-less entity whose only responsibility is to it's shareholders. The people on the board of directors may have ethical foundations, but the only purpose of the corporation is to make money. You can not sit in moral judgement against a non-living entity because the next step is blaming guns for murders.

Third, why do people insist on seeing the world in black and white? Take Three Gorges for example. ABB is the single biggest contractor on what is the single biggest engineering project EVER. Bully for ABB! Do you think that the Chinese government would spend all that money, time and effort specifically to displace tens of thousands of it's own people, and to severely damage it's ecology in that region? There are tangible, necessary benefits to that project. That dam will provide badly needed energy. It's not that some Chinese beurocrat woke up one morning and decided, with help from a devious ABB executive, to screw Gaia over at the cost Billions of dollars and hundreds, if not thousands, of lives.. It's a trade off, and a great deal of thought went into making the decision to commit to that path. The selection of ABB as primary contractor also came after much consideration, and I assure you, ecological impact of involvement forecast by ABB was as much a criterion for their selection as the price of their labour.

[TINK5C] |"Is K5 my kapusta intellectual teddy bear?"| "Yes"
[ Parent ]

Re. Corporate Ethics (none / 0) (#10)
by Alias on Thu Jul 12, 2001 at 10:30:07 AM EST

I agree on one point: corporate ethics is an oxymoron. Corporations are out to make money and please their shareholders, period.

My rant (it was a rant, see...) was mostly about the hypocrisy of WWF Switzerland (of which I am a member) and their endorsement of this so-called ethical fund.

---


Stéphane "Alias" Gallay -- Damn! My .sig is too lon
[ Parent ]
Corporations are human constructs (4.00 / 1) (#12)
by jeep on Thu Jul 12, 2001 at 11:25:14 AM EST

I agree that we shouldn't look at these issues as being black & white.

However corporations are human constructs and they do not exist in some reality without humans. It is people who perform every action, voice every opinion and set every corporate policy.

The views expressed above simply perpetuate the fallacy that somehow we aren't human at work and that ethics, spirituality etc only reappear when we clock off. Corporations are collectives of humanity and if we appeal to that then corporate ethics are by no means an oxymoron!



--
The FREE e-democracy Project
Promoting Free Software in Government

[ Parent ]
Cars are made of parts (none / 0) (#14)
by jabber on Thu Jul 12, 2001 at 11:53:47 AM EST

Corporations are composed of people, sure, but only to the extent that there need to be three names in key positions for a corporation to exist as a legal entity. A corporation can be sued without any individual taking the brunt of the process - except as a representative of that corporation. Corporations exist as the people come in and out.. They last longer than the people of whom they are composed.

I've replaced my transmission and engine in the car. I've had the car painted. I've done various other repairs.. It's still the same car.

[TINK5C] |"Is K5 my kapusta intellectual teddy bear?"| "Yes"
[ Parent ]

and? (none / 0) (#24)
by Danse on Fri Jul 13, 2001 at 02:34:24 PM EST

Regardless of which particular people make up the corporation at any given time, it is still made up of people, correct? Why then should we not expect them to behave ethically?






An honest debate between Bush and Kerry
[ Parent ]
Where is your pension invested? (none / 0) (#20)
by cyberformer on Fri Jul 13, 2001 at 05:29:32 AM EST

"Corporations are out to make money and please their shareholders, period."

The whole point of the article seems to be that at the moment, corporations are focussed solely on the first of these and not the second. Most of us do have some sense of ethics, and aren't pleased that the companies in our retirement portfolios are destroying the environment or killing people in *our* name.

Shareholder democracy is no substitute for real democracy, but it can help to tame the worst corporate excesses. Of course, to really work, it needs to include the stock that many people own indirectly through pension funds. At present, most people don't even know where their pension is invested --- even deeply principled people, who would never dream of investing directly in oil or tobacco.

[ Parent ]

Corps (none / 0) (#22)
by scorchio on Fri Jul 13, 2001 at 09:52:45 AM EST

I agree on one point: corporate ethics is an oxymoron. Corporations are out to make money and please their shareholders, period.

Is, are... point, period. Corporations are out to increase shareholder value. If shareholders value ethical conduct, then corporations will happily fall into line.

[ Parent ]

What would you vote on? (3.50 / 2) (#11)
by The Larch on Thu Jul 12, 2001 at 11:06:39 AM EST

What kinds of issues would you expect to vote on? Who would buy shares in a company whose strategy is determined by the consensus of a hundred thousand small shareholders who are environmentally/politically sensitive and unlikely to be interested in maximising profits? How long would the company last? And would you really find even these people voting against profits once they found themselves actually holding the shares?

Accountability (none / 0) (#23)
by Danse on Fri Jul 13, 2001 at 02:23:24 PM EST

When you live in a city that is polluted and every day there's an "air quality warning," you just might decide that corporations polluting the environment to the point of harming your health isn't really something that they should profit from. By denying them the ability to profit from such abuses (in this case by simply not investing in environmentally unfriendly corps), perhaps they will be persuaded to pursue other routes to profit.

The problem is that it's always easier and more profitable to destroy the environment in order to get what you need to make a profit and leave the cleanup to someone else. Such things are always easier when you aren't held accountable for your actions. Corporations need to be held accountable for what they do. If I start pumping chemicals into the ground around my house, I would get in deep trouble. I would probably be financially ruined for life to pay for the cleanup. Seems that corporations can often get away with such things, or at least the shareholders and executives can. At worst the corporation takes a fall and some shareholders lose out. The high level execs seem to always make out like bandits though. That's lack of accountability for you.






An honest debate between Bush and Kerry
[ Parent ]
e-Voting... (3.66 / 3) (#13)
by ryry on Thu Jul 12, 2001 at 11:35:15 AM EST

e-Voting will never, ever work, because there's always going to be someone out there with the knowledge and motive (an affirmed political belief or corporate wish is a great motive) to hack the shit out of any system.



-ryry
--too lazy for a .sig--
why just e-voting? (none / 0) (#17)
by tew on Thu Jul 12, 2001 at 02:09:07 PM EST

Seems to me that any kind of voting system will have at least one flaw that a dedicated attacker will be able to find and exploit. For instance, here in Chicago, dead people have been known to vote, early and often. Go ask some black Floridians if our current voting system is 'hackable'. (Or heck, go get some advice on hacking it from the Republicans down in Florida, or the Democrats here in Chicago.) Preventing citizens from registering and/or even reaching a polling place is a DOS attack that doesn't even touch the actual ballot. No system is perfect, not even the ones run by "impartial" election judges.

The idea is that e-voting will be more transparent and possible holes easier to see and close. I'm not sure I believe in this promise, but to dimiss the idea because it's 'exploitable' overlooks the history of election fraud in this country and every other.

[ Parent ]

Crypto (none / 0) (#21)
by scorchio on Fri Jul 13, 2001 at 09:49:20 AM EST

Not to repeat myself, but crypto, crypto, crypto.

Hardcore military-grade stuff. The Real Deal. None of your I-succumb-to-1-line-of-perl nonsense. Gigabit keys. Biometrics.

Of course, this leads to serious problems with secret ballots (or at least, it does as far as I know).

A practical problem for all of you math whizzes out there... it is possible to use hard crypto in an election without renouncing the democratic right to a secret ballot?

[ Parent ]

Taming the Transnational Tentacles | 24 comments (14 topical, 10 editorial, 0 hidden)
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