Saturday, December 27, 2008

The Culture of Secrecy

AIG is a huge insurance company (too big to fail, by some reckonings).

It's not a household name, or at least, it wasn't until two things happened. First, it received an enormous bailout from the federal government, even after other big financial firms like Lehman Brothers were allowed to go belly-up. And second, it sent some of its corporate executives to a lavish, all-expenses-paid meeting at a luxurious resort, a week after getting its taxpayer-financed $85 billion bailout. Talk about embarrassing!

So what lesson did AIG take away from the scathing press on this story. I can tell you what lessons they didn't learn. They didn't learn not to spend lavishly on executive retreats that look way more like vacations than business meetings. Nor did they learn to stand up and defend the meetings as a necessary part of doing business, appearances notwithstanding.

No, I'm afraid the lesson that AIG took away was this: Let's keep meeting, but let's not tell anyone. That's right... they learned that the best approach is to keep their meetings secret. Or at least, to try to. Hotel employees at the resort where AIG met were instructed to not even utter the letters, A.I.G.

The attempt at holding secret junkets begs the question: How could AIG management make such an idiotic decision? The answer, I'm afraid, is that there is such a deeply-ingrained culture of corporate secrecy throughout the world of business, that the thought of not keeping the meeting secret probably never crossed their minds.

Don't believe me? Consider GM's response when their executives got raked over the coals at Congressional hearings for flying their private corporate jets to Washington DC to plead for bailout money.

The company's response? Delist their jets in FAA's database, so that the GM jets' flight paths are now secret.

In a way, AIG's and GM's insistence on secrecy is a good thing. As these companies continue to make decisions that erode the small amount of public trust that still remains, they hasten the day when the deep-rooted culture of corporate secrecy is no longer deemed an acceptable way of doing business.

It can't come soon enough.

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