CORPORATE CRIME REPORTER
U.S. News & World Report and Altria? No Problem
19
Corporate Crime Reporter 39(3), October 6, 2005
Not too long ago, it would have been considered improper for a major news organization
to team up with a major tobacco company to sponsor a forum on corporate social
responsibility.
After all, tobacco companies are in the business of killing off their customers.
But now, there are consultants who make a good living setting up such public
meetings.
They happen all the time.
But even so, yesterday’s event at the National Press Club was a touch
surreal.
The event was titled “Corporate America and Congress: Has Sarbanes-Oxley
Restored Investor Confidence?”
It was hosted by U.S. News & World Report.
And sponsored by Altria – formerly known as Phillip Morris – the
maker of Marlboro and Virginia Slims cigarettes.
The consultant who set up this tobacco/U.S. News & World Report
event was James Long.
He said he makes a living hooking up corporations with mainstream magazines.
The company said it changed its name from Phillip Morris to Altria in 2003 to
clarify the relationships between the parent corporation and the operating companies.
But a group of public health advocates at the University of California San Francisco
have set up a web site www.altriameanstobacco.com
– that documents that in fact the company changed its name from Phillip
Morris to Altria “to hide the taint of tobacco and attempt to restore
a corporate image brought low by decades of deception and death.”
“For more than a decade, Philip Morris planned this renaming and restructuring
in order to distance itself from the ever-increasing liability of selling tobacco,
a product that kills more than a third of its long-term users,” the public
health advocates at altriameanstobacco.com say. “As part of this strategy,
Philip Morris hopes to be perceived as an outstanding corporate citizen by increasing
its philanthropy under the name of Altria. But don't be deceived. Don't allow
Philip Morris to win by corporate sleight of hand. Accepting gifts from Altria
is the same thing as accepting gifts from Philip Morris: it allows the company
to buy legitimacy and respectability while ignoring its starring role in the
deaths of millions worldwide every year – over 400,000 in the United States
alone.”
The panelists at the tobacco/U.S. News & World Report event were
Senator Chuck Hagel (R-Nebraska), William J. McDonough, the chairman of the
Public Company Accounting Oversight Board (PCAOB), John J. Castellini, president
of the Business Roundtable, and Alyssa Machold Ellsworth, managing director
of the Council of Institutional Investors.
The panel was moderated by Brian Kelly, executive editor of U.S. News &
World Report.
It wasn’t much of a debate.
The panelists all agreed that Sarbanes/Oxley was working, that while it might
take a bit of administrative tinkering, there should be and will be no legislative
fix.
Nothing to fix.
The corporate guys from both U.S. News & World Report and the tobacco
company didn’t mention the word tobacco during their introductions.
And none of the panelists mentioned the word tobacco during the discussion.
But during the question and answer, the question was asked:
“Senator Hagel said transparency is critical. What's the deal exactly
between U.S. News & World Report and Altria? What are the details
of the sponsorship? Members of the social responsibility community refuse to
invest in tobacco companies. Did you find it a little odd that a panel on corporate
responsibility is being sponsored by a tobacco company?”
Apparently, nobody found it a little bit odd.
From the back of the room, James Long, the consultant who set up the forum,
answered that the event was underwritten by the corporate sponsor and he would
give me details after the event.
After the event, he said that the forum was paid for with advertising dollars
paid by Altria to U.S. News &World Report – but he didn’t
give specific amounts.
“There's nothing unusual about it,” answered U.S. News &
World Report editor Brian Kelly. “We work with a variety of companies
in a number of different kinds of forums. We operate obviously as a magazine,
as a journalistic institution, but we also are a forum for advertisers. So there
are often events we do that are not directly related to our news coverage –
something like this, which we think has a public policy purpose. . .It's very
consistent with what we've done. Altria is a very large company that makes a
lot of products and has been an advertiser in the magazine in various capacities
so, you know, we don't see anything unusual about this.”
Alyssa Machold Ellsworth, managing director of the Council of Institutional
Investors, said that she too wasn’t uncomfortable at the event and didn’t
see anything unusual even though a number of her member pension funds refuse
to invest in tobacco companies.
Outgoing PCAOB chair McDonough ignored the question.
Things turned a bit more weird during the question period, when a reporter from
the Financial Times, Stephanie Kirchgaessner, asked McDonough about
whether given the level of fraud acknowledged by the KPMG recently, the deferred
prosecution deal cut with the firm was proper.
“Or do you think it's an acknowledgment by prosecutors or by the SEC that
some companies are too big to fail and that the accounting profession couldn't
handle just three accounting firms?” she asked.
McDonough started his answer this way:
“Well, my first observation is you look like such a nice young woman until
you asked that question.”
There was nervous laughter in a room where about half the attendees were women.
(Earlier, during the panel discussion, McDonough observed that he was sitting
“slightly to the right of my favorite United States Senator, Chuck Hagel,
and slightly to the left of this lovely lady, Alyssa” – referring
to the Council of Institutional Investors managing director Ellsworth.)
McDonough quickly straightened and answered the Financial Times reporter
directly:
“Do I think that the Justice Department or the SEC or the PCAOB or I personally
believe that there is an accounting firm too big to fail? The answer to that
is no, and it must be no. When I was a banking supervisor, I always said, there
is no such thing as a bank to big to fail. Why? As soon as the authorities say
there is something too big to fail, you've de facto nationalize it. Is there
a public interest in the continuation of four large accounting firms? Yes. We
all agree.”
What we all don’t agree on is whether such corporate sponsored events
are proper, or not.
Anna White of the Global Partnerships for Tobacco Control thinks not.
She has just returned from South America where in Uruguay, members of her group
observed the following:
Phillip Morris had dressed ten women in Marlboro costumes and sent them to a
nightclub in Montevideo, the capital.
The Marlboro women were signing up people at the nightclub to win a trip to
Italy – which has just banned smoking in workplaces nationwide.
White says that Phillip Morris does this around the world to get names and addresses
of smokers and potential smokers – so that they can direct market to them.
The tobacco company sponsored the U.S. News & World Report forum
for the same reason that it changed its name to Altria – to make it appear
altruistic.
But as the health advocates at altriameanstobacco.com point out – a genuinely
responsible company, faced with its role in the deaths of millions, would –
at minimum – stop marketing this addictive product that would not be allowed
on the market if introduced today.
Until then, maybe news outlets ought to shun the tobacco companies – whatever
their names.
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