Archive for the ‘governance’ Category
Hmm… do you suppose W’s affection for Condi is a nostalgic throwback to his family’s slaveholding past just like the war in Iraq is a nostalgic throwback to Poppy’s failure to croak Saddam?
February 20, 2008The French establishment is even stronger and less accountable than the French unions; in any other economy (except maybe Zimbabwe) Daniel Bouton would be fired for losing $7 billion
February 18, 2008While the trader, Jérôme Kerviel, now jailed, wasn’t a graduate of a top school or a member of an elite group like the Club des Cent, Société Générale’s embattled chief executive, Daniel Bouton, is both. And the fact that Mr. Bouton and other top managers of the bank have kept their posts since the scandal erupted nearly a month ago has unleashed criticism here that the French elite is an ancien régime — playing by old rules (largely its own) and quick to shift blame to protect itself.
“Is there a tendency in France for the elites to be made in the same mold and close ranks?” asks Bernard-Henri Lévy, the French philosopher and social observer. “Yes, it’s an old French disease.”
In the United States, Britain or Germany, Mr. Lévy adds, “Daniel Bouton would not only have been relieved of his job, but he’d be in a judge’s office being questioned.”
Indeed, the controversy comes at a time of broader tension in both French business and politics, with a new generation fighting for power against an entrenched old guard, says Stéphane Fouks, executive co-chairman of Euro RSCG, one of the largest marketing and communications firms in France.
“At the moment, French capitalism is in a crisis, and it’s creating momentum for a change,” Mr. Fouks says. Within the traditional establishment, he says, “everybody was friends, very diplomatic, and it was a club where at the end of the day, it was always better to find an arrangement.”
Members of the elite make no secret of the rules of the game. “When you are part of a small group, it is difficult to have an attitude of antagonism toward someone else in the group,” says Valéry Giscard d’Estaing, the former president of France. “In a bigger group, there is less interference of personal considerations.”
Mr. Bouton was not available for comment. But Philippe Citerne, Société Générale’s co-chief executive and a member of its board of directors, said establishment connections have nothing to do with the fact that Mr. Bouton is staying on.
“The board of directors twice unanimously confirmed its confidence in Mr. Bouton,” he said. “There’s no way we could deliver services to 27 million customers in 82 countries if we were a small French club.”
AT least half of France’s 40 largest companies are run by graduates of just two schools, the École Polytechnique, which trains the country’s top engineers, and ENA, the national school of administration. That’s especially remarkable given that the two schools together produce only about 600 graduates a year, compared with a graduating class of 1,700 at Harvard.
“They behave like blood relations,” says Ghislaine Ottenheimer, a journalist and author who has written extensively about the French elite. “There is a sense of impunity because there is no sanction in the family.”
Nevertheless, l’affaire Kerviel and especially the fate of Mr. Bouton — even President Nicolas Sarkozy has suggested that Mr. Bouton should step down — have shaken the French establishment to its core and encouraged those, like Ms. Ottenheimer, who favor change.
“The old system is dying; this is its last gasp,” she says. “Bouton is part of a generation that will soon have to hand control of French capitalism to a more diverse elite.”
Perhaps. But it doesn’t appear that Mr. Bouton is facing an imminent slice of the guillotine — unlike American executives at Citigroup and Merrill Lynch, who were forced to step down last fall after their banks suffered huge losses from the subprime mortgage crisis.
While some analysts and business people expect Mr. Bouton to step down within a year, if not sooner, Mr. Bébéar of AXA says French chief executives have more staying power than their counterparts in the United States.
“In France the board does not fire a C.E.O. as easily as in the U.S.,” Mr. Bébéar says. “We think the C.E.O. is responsible, but to suddenly fire the C.E.O. is not the best way to improve things.”
Mr. Bébéar, who acquired broad experience in the United States with AXA’s purchase of well-known American companies like Equitable Life Insurance and Mutual of New York, also says that “sometimes, I feel like the C.E.O. is a scapegoat in your country.”
To reach Mr. Bébéar’s office, visitors walk through an ultramodern glass atrium off of one of Paris’s most fashionable streets, the Avenue Matignon, and enter a private mansion built in 1767. The high-tech hustle and bustle of the atrium quickly fades as they pass through the grand salon, which features a Louis XVI crystal chandelier, gilt-edged mirrors, and red and green chairs and settees.
Mr. Bébéar’s office is similarly resplendent, and appropriately enough, he sits at a desk carved in the era of Louis XIV, the Sun King. The regal status accorded celebrated American executives like John F. Welch Jr., the former chief of General Electric, pales in comparison to the standing enjoyed by the titans of French finance and industry.
“The C.E.O. of a French company is more of a monarch than in the United States,” Mr. Bébéar says. Expanding on that theme, he compares the French chief executive to Voltaire’s enlightened king, or monarque éclairé. Within France itself, Mr. Bébéar, 72, is considered to be as much a kingmaker as a king.
“The press sometimes calls him the godfather of French capitalism. He is emblematic,” says Philippe Favre, president of Invest in France, a government agency that encourages foreign companies to do business in France.
While Mr. Bébéar built AXA in the 1980s and 1990s through bold acquisitions, the power he now wields derives from the corporate boards on which he serves and the close friendships he has made through organizations like the Club des Cent — as well as hunting parties for which he is host at his estate near Orléans. And like other members of the establishment, he finds many close associates drawn into the Société Générale affair, one way or another.
For example, Jean-Martin Folz, the member of the Société Générale board who is heading up the company’s internal investigation of the losses, is also a board member at AXA. Mr. Bébéar, meanwhile, serves on the board of BNP Paribas, which is the biggest bank in France and is rumored to be preparing a bid for Société Générale. And the chairman of BNP Paribas, Michel Pébereau, is also an AXA board member. All three men also attended the same school, the École Polytechnique.
“It is a small universe,” acknowledges Jean-René Fourtou, the chairman of Vivendi, the French entertainment giant, who is a close friend of Mr. Bébéar and is an AXA board member.
Mr. Fourtou, who is also an École Polytechnique graduate and a Club des Cent member, recalls that Mr. Bébéar played a role in persuading him to take over as chief executive of Vivendi in 2002 after the company fell into deep financial distress after a dot-com-era acquisition spree.
“Initially, I refused to take the job,” Mr. Fourtou says. But over dinner at the Four Seasons Hotel George V, Mr. Bébéar and Mr. Giscard d’Estaing (another École Polytechnique alum) eventually persuaded him to lead Vivendi. He quickly turned around the company, making it one of France’s biggest business success stories of recent years.
“They said I had to go,” he recalls of the push he received to run Vivendi. “I felt obliged.”
As for the current crisis at Société Générale, Mr. Fourtou says he doesn’t think Mr. Bouton should step down right away. But he says he takes that stance not because he is an acquaintance of Mr. Bouton, or because of their intersections at the Club des Cent or any other establishment ties.
“If you change the C.E.O. immediately, you add confusion to a problem which is localized,” he says. He also says he thinks that Société Générale’s support for Mr. Bouton makes sense: “The board took the right decision, and not because of networks.”
WHILE dining and discoursing at Michelin-starred restaurants might seem the epitome of aristocratic living — at each lunch, one Club des Cent member, designated the week’s “Brigadier,” makes a presentation about the selection of food and wine while another critiques the meal — many members come from relatively humble backgrounds.
Mr. Fourtou, for example, was raised in the Basque region of Spain by his grandfather, who did not attend college, and he briefly ran a newspaper and book kiosk on the side to help support his wife’s family after graduation from the École Polytechnique.
“I grew up not rich, not poor,” Mr. Fourtou says. “My father was a professor of mathematics.” Similarly, Mr. Bébéar’s parents were teachers in the Dordogne region in southwest France.
Rather than a rigid class system, it was Mr. Fourtou’s and Mr. Bébéar’s admission into the École Polytechnique that assured their place in the elite. And that is one of the great ironies of the French establishment: while it enjoys the privileges associated with the elites of the United States, entry is, if anything, much more rigorously meritocratic, based on exams and ever-narrowing selection from an early age.
Indeed, getting into Harvard, which accepted 9 percent of its applicants last year, is a breeze compared with getting into the École Polytechnique.
Out of 130,000 students who focus on math and science in French high schools each year, roughly 15 percent do well enough on their exams to qualify for the two- to three-year preparation course required by the elite universities. Of those who make it through that, 5,000 apply to École Polytechnique, which is commonly called simply “X,” and just 400 are admitted from France.
Admission is based strictly on exam grades; there isn’t even an essay requirement or interview. And there are no legacy admissions, sports scholarships or other American-style shortcuts for getting into X.
“You can be the president’s nephew and it won’t help you get in,” says Bernard Oppetit, a 1978 graduate of X who later worked for BNP Paribas before starting Centaurus Capital, a London investment fund with $4 billion under management.
The École Polytechnique was founded in 1794, during the French Revolution, to train the country’s military engineers, and it officially remains under the umbrella of the French ministry of defense. Not only is the school free, but students also receive a stipend from the government to cover their expenses.
“We call it l’élitisme démocratique,” says Pierre Tapie, dean of Essec, a leading French business school. “These are places where you meet extraordinary people who are there because they worked hard and are among the most brilliant of a generation.”
Although the school teaches high-end fare like physics, engineering, and computer sciences, its broader goal is to create a leadership cadre that shares an ordered, prioritized view of the world, says Xavier Michel, the president of the École Polytechnique and an active-duty general in the French armed forces.
In France, this is known as the Cartesian system, after the mathematician and philosopher René Descartes, and Mr. Michel says the school encourages its students “to modelize” the world. And when they eventually become chief executives, he says, “they understand what are the capabilities of their companies. They understand what they can do and what they can’t do.”
Until, of course, models run off the rails — as they so often do in the business and financial worlds, regardless of what country devises them.
Mr. Kerviel’s $7 billion loss couldn’t be predicted by any model, even one designed by Descartes himself. And this is one reason the story of Société Générale has been such a shock to the French establishment, which prides itself on the predictability and order that Mr. Michel instills in his students.
At the same time, among the French masses, the very different fates of Mr. Kerviel and Mr. Bouton reinforce skepticism of the free-market values increasingly espoused by the business establishment as well as the country’s most prominent political and economic maverick, President Sarkozy.
“It is certainly a shock,” says Pierre Gadonneix, an École Polytechnique graduate who is chief executive of EDF, the country’s biggest power company. “The population is upset with the management of the bank as a whole. I’m convinced the market economy is a way to create value, but not all the French are convinced.”
For all the recent criticism of the business establishment in France — or the predictions that its power will soon weaken — it has proved to be a remarkably durable institution.
Although a female candidate, Ségolène Royal, came within three percentage points of being elected president of France last year, women account for only 7 percent of board members of French companies, according to a recent study by Korn/Ferry International, the recruiting and consulting firm.
Rigid as it appears to outsiders, the system has its benefits, according to Olivier Le Fournier, a professor at the Lille School of Management. In particular, he cites the success of large French companies outside France, noting that CAC 40 companies, the Gallic equivalent of the Dow 30, typically generate more than two-thirds of their revenue abroad.
“The elite is more concentrated than in the U.S.,” he says. “But there is the solidarity of a common approach. I think it’s positive. It’s a good way for our companies to work together at the international level.”
France has always been known for luxury goods and fashion, but in recent years less glamorous industrial companies like Airbus and Total have been able to hold their own against American competitors like Boeing and Exxon Mobil. The hotel chain Accor, meanwhile, has successfully expanded into the United States as the owner of Motel 6, a brand that’s anything but haute.
And while the pace of change might seem glacial, academic and business leaders say that there are some notable differences between the elite of today and those of 20 years ago.
For example, much as 53-year-old President Sarkozy replaced Jacques Chirac, who retired at 74, younger executives are increasingly taking the helm of the biggest companies, according to Mr. Favre of Invest in France. Over the last five years, he estimates, the average age of a CAC 40 C.E.O. has dropped by about a decade, with business leaders now typically in their early 50s.
AT the same time, fewer top executives are going from École Polytechnique or ENA to high-level government jobs and then moving to the top ranks of private companies, a practice the French call “parachutage.”
Mr. Bouton, 57, “was a pure product of that approach,” says Mr. Favre, having joined Société Générale in 1991 after nearly two decades at the finance ministry and an education at ENA. The Grande Écoles, the top universities, are still the incubators of the elite, says Mr. Favre, himself an ENA graduate, but today’s aspiring chief executives are more likely to join a private company in their mid-20s and work their way up.
If Mr. Bouton is pushed from his pedestal, though, it’s likely that his replacement will have followed a similar trajectory to the top and be someone well acquainted with the members and the rituals of the establishment.
“The pool is simply smaller in France; there is not as much choice as in London or New York,” says Mr. Giscard d’Estaing.
Cleese plays bumbling numbskulls but isn’t one himself; Bush plays President but is actually a bumbling numbskull
February 10, 2008
MONDAY, AUGUST 28, 2006
John Cleese’s Letter to America
To the citizens of the United States of AmericaIn light of your failure to elect a competent President of the USA and thus to govern yourselves, we hereby give notice of the revocation of your independence, effective immediately.Her Sovereign Majesty, Queen Elizabeth II, will resume monarchical duties over all states, commonwealths and other territories (except Kansas, which she does not fancy).Your new prime minister, Tony Blair, will appoint a governor for America without the need for further elections. Congress and the Senate will be disbanded. A questionnaire may be circulated next year to determine whether any of you noticed.To aid in the transition to a British Crown Dependency, the following rules are introduced with immediate effect:1. You should look up “revocation” in the Oxford English Dictionary. Then look up “aluminium,” and check the pronunciation guide. You will be amazed at just how wrongly you have been pronouncing it.2. The letter ‘U’ will be reinstated in words such as ‘colour’, ‘favour’ and ‘neighbour.’ Likewise, you will learn to spell ‘doughnut’ without skipping half the letters, and the suffix “ize” will be replaced by the suffix “ise.”3. You will learn that the suffix ‘burgh’ is pronounced ‘burra’; you may elect to respell Pittsburgh as ‘Pittsberg’ if you find you simply can’t cope with correct pronunciation.4. Generally, you will be expected to raise your vocabulary to acceptable levels (look up “vocabulary”). Using the same twenty-seven words interspersed with filler noises such as “like” and “you know” is unacceptable and inefficient form of communication.5.There is no such thing as “US English.” We will let Microsoft know on your behalf. The Microsoft spell-checker will be adjusted to take account of the reinstated letter ‘u’ and the elimination of “-ize.”6. You will relearn your original national anthem, “God Save The Queen”, but only after fully carrying out Task #1 (see above).7. July 4th will no longer be celebrated as a holiday. November 2nd will be a new national holiday, but to be celebrated only inEngland. It will be called “Come-Uppance Day.”8. You will learn to resolve personal issues without using guns, lawyers or therapists. The fact that you need so many lawyers and therapists shows that you’re not adult enough to be independent. Guns should only be handled by adults. If you’re not adult enough to sort things out without suing someone or speaking to a therapist then you’re not grown up enough to handle a gun.9. Therefore, you will no longer be allowed to own or carry anything more dangerous than a vegetable peeler. A permit will be required if you wish to carry a vegetable peeler in public.10. All American cars are hereby banned. They are crap and this is for your own good. When we show you German cars, you will understand what we mean.11. All intersections will be replaced with roundabouts, and you will start driving on the left with immediate effect. At the same time, you will go metric immediately and without the benefit of conversion tables. Both roundabouts and metrication will help you understand the British sense of humour.12. The Former USA will adopt UK prices on petrol (which you have been calling “gasoline”) -roughly $6/US gallon. Get used to it.13. You will learn to make real chips. Those things you call French fries are not real chips, and those things you insist on calling potato chips are properly called “crisps.” Real chips are thick cut, fried in animal fat, and dressed not with mayonnaise but with vinegar.14. Waiters and waitresses will be trained to be more aggressive with customers.15. The cold tasteless stuff you insist on calling beer is not actually beer at all. Henceforth, only proper British Bitter will be referred to as “beer,” and European brews of known and accepted provenance will be referred to as “Lager.” American brands will be referred to as “Near-Frozen Gnat’s Urine,” so that all can be sold without risk of further confusion.16. Hollywood will be required occasionally to cast English actors as good guys. Hollywood will also be required to cast English actors to play English characters. Watching Andie MacDowell attempt English dialogue in “Four Weddings and a Funeral” was an experience akin to having one’s ears removed with a cheese grater.17. You will cease playing American “football.” There is only one kind of proper football; you call it “soccer”. Those of you brave enough will, in time, will be allowed to play rugby (which has some similarities to American “football”, but does not involve stopping for a rest every twenty seconds or wearing full kevlar body armour like a bunch of nancies).18. Further, you will stop playing baseball. It is not reasonable to host an event called the “World Series” for a game which is not played outside of America. Since only 2.1% of you are aware that there is a world beyond your borders, your error is understandable.19. You must tell us who killed JFK. It’s been driving us mad.20. An internal revenue agent (i.e. tax collector) from Her Majesty’s Government will be with you shortly to ensure the acquisition of all monies due backdated to 1776.Thank you for your co-operation.John Cleese
How Bush, Cheney, Powell, Rumsfeld, Rice, et.al. played the war card with a marked deck
January 23, 2008The Center for Public Integrity has assembled a database that documents at least 935 false statements made by Bush, Cheney, Powell, Rumsfeld, Rice and two white house press secretaries about Iraq having weapons of mass destruction, links to Al Qaeda, or both. The database is at www.publicintegrity.com. This orchestrated lying was the justification for the war with Iraq.
Consider, for example, these false public statements made in the run-up to war:
- On August 26, 2002, in an address to the national convention of the Veteran of Foreign Wars, Cheney flatly declared: “Simply stated, there is no doubt that Saddam Hussein now has weapons of mass destruction. There is no doubt he is amassing them to use against our friends, against our allies, and against us.” In fact, former CIA Director George Tenet later recalled, Cheney’s assertions went well beyond his agency’s assessments at the time. Another CIA official, referring to the same speech, told journalist Ron Suskind, “Our reaction was, ‘Where is he getting this stuff from?’ ”
- In the closing days of September 2002, with a congressional vote fast approaching on authorizing the use of military force in Iraq, Bush told the nation in his weekly radio address: “The Iraqi regime possesses biological and chemical weapons, is rebuilding the facilities to make more and, according to the British government, could launch a biological or chemical attack in as little as 45 minutes after the order is given. . . . This regime is seeking a nuclear bomb, and with fissile material could build one within a year.” A few days later, similar findings were also included in a much-hurried National Intelligence Estimate on Iraq’s weapons of mass destruction — an analysis that hadn’t been done in years, as the intelligence community had deemed it unnecessary and the White House hadn’t requested it.
- In July 2002, Rumsfeld had a one-word answer for reporters who asked whether Iraq had relationships with Al Qaeda terrorists: “Sure.” In fact, an assessment issued that same month by the Defense Intelligence Agency (and confirmed weeks later by CIA Director Tenet) found an absence of “compelling evidence demonstrating direct cooperation between the government of Iraq and Al Qaeda.” What’s more, an earlier DIA assessment said that “the nature of the regime’s relationship with Al Qaeda is unclear.”
- On May 29, 2003, in an interview with Polish TV, President Bush declared: “We found the weapons of mass destruction. We found biological laboratories.” But as journalist Bob Woodward reported in State of Denial, days earlier a team of civilian experts dispatched to examine the two mobile labs found in Iraq had concluded in a field report that the labs were not for biological weapons. The team’s final report, completed the following month, concluded that the labs had probably been used to manufacture hydrogen for weather balloons.
- On January 28, 2003, in his annual State of the Union address, Bush asserted: “The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa. Our intelligence sources tell us that he has attempted to purchase high-strength aluminum tubes suitable for nuclear weapons production.” Two weeks earlier, an analyst with the State Department’s Bureau of Intelligence and Research sent an email to colleagues in the intelligence community laying out why he believed the uranium-purchase agreement “probably is a hoax.”
- On February 5, 2003, in an address to the United Nations Security Council, Powell said: “What we’re giving you are facts and conclusions based on solid intelligence. I will cite some examples, and these are from human sources.” As it turned out, however, two of the main human sources to which Powell referred had provided false information. One was an Iraqi con artist, code-named “Curveball,” whom American intelligence officials were dubious about and in fact had never even spoken to. The other was an Al Qaeda detainee, Ibn al-Sheikh al-Libi, who had reportedly been sent to Eqypt by the CIA and tortured and who later recanted the information he had provided. Libi told the CIA in January 2004 that he had “decided he would fabricate any information interrogators wanted in order to gain better treatment and avoid being handed over to [a foreign government].”
The mission of the Center for Public Integrity is to produce original investigative journalism about significant public issues to make institutional power more transparent and accountable.
To pursue its mission, the Center:
- Generates high-quality, accessible investigative reports, databases and contextual analysis on issues of public importance.
- Disseminates work to journalists, policymakers, scholars and citizens using a combination of digital, electronic and print media.
- Educates, engages and empowers citizens with tools and skills they need to hold governments and other institutions accountable.
- Organizes and supports investigative journalists around the world who apply the Center’s goals and standards to cross-border projects.
- Remains independent by building a strong and sustainable financial base of support, including a community of committed individuals and foundations.
The Center is a nonprofit, nonpartisan, non-advocacy, independent journalism organization based in Washington, D.C.