A Journal for Western Man
Activist shareholder resolutions are now common at annual corporate meetings. When Goldman Sachs gathers in New York City on March 31, however, the fireworks will come from an atypical source: the National Legal and Policy Center (a free-market public interest group) and Free Enterprise Action Fund (the first free-market shareholder activist mutual fund).
The organizations are asking shareholders to support efforts to determine whether the company and chairman/CEO Henry Paulson have violated company policies and fundamental principles governing ethics, corporate social responsibility, and conflicts of interest. By any fair and objective standard, recent actions raise serious questions.
How the shareholders respond will test whether supposed reforms – like Sarbanes-Oxley and the vaunted CSR movement – are more than merely air freshener to hide ugly odors.
The pervasive conflicts of interest arise out of Paulson’s family and organizational ties. In addition to his duties to the company and its shareholders, he is chairman of the board of The Nature Conservancy, the world’s wealthiest environmental activist group. His wife is a former TNC board member, and his daughter is on the board of the Wildlife Conservation Society, another activist group that works closely with TNC on programs outside the United States.
TNC was implicated by the Washington Post in questionable deals whereby the tax-exempt nonprofit acquired ecologically sensitive land (at times aided by government condemnation threats) – then transferred tracts at fire-sale prices to trustees and supporters. Other deals involved suspect tax write-offs and friendly arrangements with companies whose executives sat on the TNC board.
In early 2005, the radical Rainforest Action Network targeted Goldman Sachs as part of its campaign to pressure large banks not to finance energy, mineral, and other economic development projects that don’t conform to RAN’s self-serving definition of “the public interest.” Having also browbeaten the World Bank, Citigroup, Bank of America, and JP Morgan Chase to do likewise, RAN and its ecologically sensitive allies are doing their best to keep the Third World indigenous, energy-poor, and impoverished for generations to come.
Paulson has long been sympathetic to these unelected radicals’ vision of environmental ethics. By November 2005, he’d engineered an arrangement whereby the global investment banking and securities giant adopted a new “Environmental Policy” very similar to theirs.
The TNC, RAN, and GS policies all assert that: human emissions cause catastrophic climate change and must be reduced immediately; indigenous people must approve any development project; and logging must be conducted only in accord with criteria developed by eco-activists. Enshrining these assertions as Goldman Sachs policies is the antipathy of good stewardship.
Contrary to shrill headlines, climate chaos theory is not supported by empirical evidence or even the vast majority of computer models. Moreover, the Kyoto Protocol will at best keep global temperatures from rising 0.2 degrees less by 2050 than if we merely proceed with business and technological progress as usual. But this illusory solution will cost hundreds of billions of dollars a year, send energy and consumer prices soaring, and have especially heavy impacts on jobs and living standards in poor and minority communities. One study put the US price at 1.3 million minority jobs and $2,000 a year per black family.
Worse, misplaced climate concerns are used to justify activist and bank policies against funding fossil fuel electrical generating plants in developing countries where 2 billion people still have no electricity. Green opposition to hydroelectric and nuclear power stymies those options, as well. What the radicals are willing to accept – a few wind turbines and little solar panels on huts – are completely inadequate for modern hospitals, schools, shops, offices, factories, or wastewater treatment facilities.
The indigenous people formula invites Oxfam and other activists to stir up opposition within villages, as they have with oil and mining projects in Africa, Asia, and Latin America – giving Goldman an excuse to deny project financing.
However, when Paulson’s inner circle acquired a Rhode Island-sized tract of land in Chile – and promptly donated it to his daughter’s organization – it made no effort to seek the advice or consent of local people who were about to have a NO-development conservation easement forced on them. Nor did anyone assess the vast area’s potential value for timber, oil, or metals, so that locals and shareholders would at least know the true cost of the giveaway.
The logging criteria serve as a cash cow for activists, who insist that all lumber be certified only by their Forest Stewardship Council – and condemn alternative corporate or professional certifications. This often torpedoes operations that might benefit local communities and poor families – and forces many into illegal logging, to put food on the table. It’s also fosters corruption and the defamation of US companies like Newman Lumber of Mississippi, which are falsely accused of illegal activities, to promote shakedowns and fund-raising campaigns by the Natural Resource Defense Council and others.
All this might be just fine for the WCS, TNC, and their rich supporters. It’s not so wonderful for disenfranchised shareholders who have to wonder how all these shenanigans affect their stock values.
It’s far worse for the world’s poor. In what might be called an “all-natural final solution” to the over-population “problem,” they are denied technologies like electricity, biotech crops, insecticides, and drugs – and die young by the millions from lung and intestinal diseases, malnutrition, malaria, and other afflictions that today are unheard of in modern societies.
“Hank Paulson has cast his lot with radical greens and their crusade against the global economy,” said Free Enterprise Action Fund advisor Steven Milloy. “If he’s not careful, he’s going to match Rachel Carson’s record for spreading death and destruction in the developing world.”
Goldman Sachs shareholders should pass the resolution, demand a full examination and audit, and insist that Paulson pay restitution and resign his GS or TNC post. They should also seek revocation of the deal with RAN and implementation of environmental rules that foster policy and financial decisions based on full and open discussion with all parties – especially the real stakeholders: those who must live with the consequences of the bank’s decisions.
After all, basic principles of corporate social responsibility, ethics, fairness, honesty, transparency, and accountability ought to apply to the CEOs and directors of for-profit and not-for-profit corporations alike.
Paul Driessen is senior policy advisor for the Congress of Racial Equality and author of Eco-Imperialism: Green power ∙ Black death. As an investor in the Free Enterprise Action Fund, he is also a shareholder in Goldman Sachs.
This TRA feature has been edited in accordance with TRA’s Statement of Policy.
Read Mr. Stolyarov's new comprehensive treatise, A Rational Cosmology, explicating such terms as the universe, matter, space, time, sound, light, life, consciousness, and volition, at http://www.geocities.com/rational_argumentator/rc.html.