The Case of the Giants

2.TheCaseoftheGiants byJackUcciferri I nAprilof2007,StevenSpielbergwroteanopenletterurgingtheChinese CommunistPartytotakealeadershiproleinthenegotiationofanendtothegenocide inDarfur. “I believe,” Spielberg wrote, “there is no greater crime against humanity than genocide .Ifeelstronglythateverymemberoftheworldcommunityhasamoralandethical responsibility to act to prevent such crimes, to eliminate the conditions in which they are bredandtocombatthemwherevertheyexist.” ChinareactedbydispatchingahighlevelenvoytourgetheSudaneseleadershiptoaccept aninternationalpeacekeepingforce,butChinesestate-controlledcompaniescontinuedtodo businesswiththeSudanesegovernmentandthehumanitariancrisisisasdesperateasever. And so, ten months after writing that letter, Spielberg made international headlines and drew the ire of the Chinese government by resigning his post as artistic advisor to the 2008 OlympicGamesinBeijing,writingastatementsenttotheChineseambassadorthathis“consciencewillnotallowmetocontinuewithbusinessasusual .” Conscience—thecomplexofethicalandmoralprinciplesthatcontrol,inhibit,orguideactions —is again becoming a legitimate factor in economic decisions. Our society’s collective conscience knows that business as usual is not good enough when business as usual means supportinggenocide. TheDarfurdivestmentmovementisthelatestchapterofadecades-longmovementtoinject some minimal humanitarian standards into the international capital markets. As the genocide in Darfur, Sudan rages on, targeted divestment from companies whose operations support violent conditions in the Sudan region has emerged as one of the key strategies of peaceadvocates. The Sudan divestment movement—a coalition of committed celebrities, students, investors ,andreligiousgroups—hassuccessfullylobbiedabroadrangeofinvestorstoavoidinvesting in a small group of extremely problematic companies, most of which are Chinese owned. Theoretically,capitalmarketsexisttoefficientlyallocateinvestmentresources,butefficiencyinthiscontextisadynamicnotion .Abusinesspracticethatexploitsstakeholdersortheenvironmentiscalculatedasefficient —andrewardedaccordinglyinthecapitalmarkets—until oppositiontothepracticeraisestheassociatedcostsandrenderstheminefficient.Culturalresistancetobadcorporatebehaviordirectlyimpactsthepricingofcorporatesecurities . By urging (or shaming) prominent investors into divesting from certain companies, activistsleveragethepowerofcapitalmarketstosendamessagethatdoingbusinesswithcertain egregiouscompanieswillcomeatasocialcost.Throughlossofcustomersandbusinesspartnerships ,throughnegativemediaattention,risingcostofcapital,potentiallitigation,andthe prospect of stricter regulations, the costs of being linked to culturally unacceptable business practicesoftentranslateintosignificantimpactsonacompany’sbottomline.Capitalmarkets canbeandshouldbeharnessedtoachievebeneficialresultsforhumanity.Sociallicensetooperate is—and should be—a requisite consideration in the strategic planning that corporate boardsofdirectorshavethefiduciarydutytoundertake. ThemostprominenthistoricalexampleofasuccessfuldivestiturecampaignwasthecampaigntodivestfrominternationalcompaniesoperatinginSouthAfricaduringtheapartheid era.Thatcampaignpursuedastrategyofmethodicallyalteringtheculturallandscaperelated to apartheid and thereby altered the risk calculation of investing and doing business there. Thoughittookmanyyearstogaintractionamonglargeinvestors,assoonasinstitutionalU.S. investorsbegantowithdrawfinancialbackingfromcompaniesoperatingthere,majorcorporations perceived that their social license was at stake and they 32 T I K K U N W W W. T I K K U N . O R G J U LY / A U G U S T 2 0 0 8 (continued on page 73) In happier days Barry Bonds, seen carrying the Olympic Torch in 2002, was the face of the Giants, and MLB. Years of federal steroid investigations have produced questions regarding the legitimacy of his achievements, as well as criminal indictments on charges of perjury and obstruction . Besides an internal investigation led by a minority-owner, baseball’s management and ownership groups have faced little scrutiny for their role in the “Steroid Era.” AP PHOTO/BEN MARGOT TheMoralDimensionofSports politics_2.qxd:Politics 6/11/08 12:35 PM Page 32 prominent member of the Giants’ front office , he is also seen as having a crucial role insettingthestrategicdirectionofFranklin Templeton policy—such as, for instance, whether or not Franklin invests in companieswhoareassociatedwithgenocide .And thenthereisSueBurns,theSeniorGeneral PartneroftheGiants,whohasincreasingly steppedintothelimelightasthepublicface of the Giants ownership, following the death of her husband, Harmon Burns. Harmon joined Franklin Templeton in 1973 and “held many roles including overseeing technology and accounting and serving as chief operating officer in charge ofalladministrationandoperationsandas secretary and vice president of the company ” (San Mateo Daily Journal). Harmon, according to a Giants’ statement on their website, “was an integral part of the initial groupthatboughttheteamin1992.Withouthisparticipation ,itisverylikelythatthe Giants would have moved to Florida.” It seems likely that Sue Burns would be able toinfluencethefirm’spolicies,eitherinternallyorthroughdivestment . The Giants’ identification with China went as far as their hosting the start of the recent running of the Olympic torch throughSanFrancisco—theroutechanged atthelastminutetoavoidthoseprotesting China’s policies related to Tibet and Darfur . At the game later that day, Sue Burns proudly posed with the torch for photos, though none were released to the press, perhaps because San Francisco was not readyforsuchpartisanship. This raises some fundamental questions about the ethics of owning professional sports franchises. Should U.S. societyholdMajorLeagueBaseball(MLB) to some minimal ethical standard? As we recently witnessed during the steroid controversy —whenMLBwasforcedtoholdan internalinvestigation,ledbyformermajority leader of the U.S. Senate (and current Boston Red Sox minority owner) George Mitchell, spending millions of dollars beforecalmingthemediafrenzy —theanswer isclearly“yes.” “BaseballisasportthathasaspecialstatusunderlawspassedbyCongressbecause it’s our national pastime,” said Henry Waxman (D) of California in 2005 when congressional hearings were held J U LY / A U G U S T 2 0 0 8 W W W. T I K K U N . O R G T I K K U N 73 wereforcedtoexitSouthAfrica’sotherwise profitable market. The racist regime immediately initiated negotiations with Nelson Mandela. And the rest, as they say, is...