I used to think China produced the world's worst State-owned enterprise (SOE) bosses, whose leadership failure brought one factory after another to collapse in the market-oriented reform in the 1990s.
I used to think China also produced the least competent county-level bureaucrats who were good at nothing but wasting public funds on banquets.
But I realized I was wrong after learning about the US$440,000 party bill of some AIG executives at a posh resort just days after they received a hefty US$85 billion bailout package from the US federal government, after piling up net losses of US$18.5 billion in the last three quarters.
Rightly, even the White House called the incident "despicable" last week. White House press secretary Dana Perino added that "the president did not want to move forward on this rescue package to help anybody in the top positions in Wall Street."
AIG top management was quick to change by announcing an internal policy, in which its new CEO Ed Liddy ordered the immediate cancellation of all outside meetings, conferences, and recognition events across the company, except those required by law or deemed absolutely critical to sustain the ongoing business needs.
Events that were canceled reportedly included another expensive party, scheduled for this week at a Ritz-Carlton resort, according to company sources.
The web is full of taxpayers' ridicule and condemnation of the AIG party. A search of "AIG, party" on Google news gets as many as 4,455 results. But as recipient of the largest federal bailout package so far, and perhaps the largest SOE in the world, how the company would use its funds should be a concern of not just the US taxpayers, but also of all creditors to the US financial system - along with all the international clients of AIG's service.
During the Chinese SOE reform, although a lot of money was wasted and in no way to be recovered, there were also some once-arrogant and wasteful executives who were brought to trial and ended in prison.
Foreigners cannot interfere with the US law. But at least they deserve to see some mechanism out there working against the excesses, in party bills as well as in executive bonuses, in the companies that they help rescue - directly and indirectly.
Continuous waste on the corporate level is also a serious damper on the public confidence. If imagination lingers on among the executives that an extravagant lifestyle can be so easily sustained - either by repackaging worthless bonds or by holding the government treasury in hostage - how could anyone hope to see a turnaround in their future performance?
With many governments getting more and more deeply involved in their financial rescue missions, a cruel fact facing the world is that, all of a sudden, we are coming to an unprecedented age of national banks and financial institutions, or an age of financial SOEs.
But this time, the definition of nationalization is different from that in the past. Nationalized banks and financial institutions have to protect their national interests, but they can hardly be expected to work single-mindedly to maximize their national interests to the extent as to neglect the global market.
In fact, national financial security can only be best protected by working with other partners towards a more stable global network.
As people can see nowadays, in a time of globalization, the whole world depends on just one general pool of liquidity. Money does not have a motherland. Since all national banks and financial institutions are just parts of the one and same chain of services, they bear an international responsibility at the same time.
Their nationalization should facilitate them working with each other, rather than the other way round.
This being the case, it would be no exaggeration to say that taxpayers of all countries are financers of all national banks and financial institutions in the world. They have a shared interest in monitoring the performance and behavior of their executives. I wish that all national banks and financial institutions will soon begin to cover those in their worldwide corporate responsibility reports.
E-mail: younuo@chinadaily.com.cn
(China Daily 10/13/2008 page4)
