Full Text of Robert A.G. Monks Speech at ICGN

The full text of ValueEdge Advisors Chair Robert A.G. Monks’ speech to ICGN is online. A brief selection:

Corporate language and priorities have captured the American Republic. The allocation
of government resources is directed by the imperatives of short-term profit
maximization and by a vocabulary of cost/benefit rather than or concern for flesh and
blood citizens. While we watched, chief executive officers have acquired autocratic
control of the levers of corporate power, which in turn has given them accelerating
political power. They are accountable to no one as they direct lobbying and the “legal
corruption” of sponsoring political conventions, inaugurations, Presidential debates, and
congressional self-monuments, not to mention the “bread and butter” of political

More alarming still, these lobbying efforts are increasingly “off the books.” One might
take heart in the fact that the number of registered lobbyists in Washington, D.C., has
actually declined in recent years — until one realizes that the amount spent on lobbying
has grown dramatically thanks to an ever-expanding network of stealth lobbyists taking

advantage of ever-weakening lobbying regulations. This has been nowhere more true
than in the finance, insurance, and real-estate sector, which has spent somewhere
between $450 million and half a billion dollars annually on lobbying ever since the
finance-sector driven crisis of 2007-08. Not coincidentally, one suspects, not a single
high-ranking executive of any major finance firm has yet been prosecuted for
malfeasances that rocked the entire global financial structure, but that is the subject of
another discussion.

Suffice it for now to note that, while ownership has awakened to the challenge, CEO
accountability remains largely a myth. Shareholders can neither nominate, remove, nor
communicate with directors. The tendency is for the largest corporations to become
“drones” in the sense of having no effective owners – that is no owner with more than
ten percent of the total. What’s more, ownership increasingly is represented by index
and algorithm selection in which human decisions as to purchase and sale of particular
companies have no relevance. As one might expect, drone corporations on the whole
pay fewer taxes, incur larger criminal fines, reward their CEOs with higher
compensation, and externalize more liabilities on to society than do corporations having
effective owners. That latter point, by the way, includes externalizing onto shareholders
fines sometimes in the billions of dollars imposed in civil actions undertaken as the
direct result of management actions.

Eighty years ago, Adolphe A. Berle warned that granting management free rein brought
with it “the corresponding danger of a corporate oligarchy coupled with the probability
of an era of corporate plundering.” Today, this corporate “capture” has found its fullest
expression in the decision of the United States Supreme Court in Citizens United. That a
Supreme Court Justice could actually argue, as Anthony Kennedy did, that there exists
“little evidence of abuse that cannot be corrected by shareholders through the
procedures of corporate democracy” shows how far we have sunk into a Never-Never
Land of convenient “truths” and rosy shibboleths.