Think Tanks or in the Tank?
In well publicized run-ins with the Securities and Exchange Commission and the former Attorney General of New York, Maurice “Hank” Greenberg became an avatar of the corporate movement to overturn Sarbanes-Oxley and to promote so-called tort reform. The SEC’s investigation of AIG had prompted the corporation to ease Greenberg out of the top slot.
Spitzer's charges addressed Greenberg’s administration of the estate of C.V. Starr, the founder of American International Group, the insurance behemoth that Greenberg also ran. According to the AG, Greenberg and partners as executors of the state has sold Starr assets to a firm he controlled at allegedly less than the market rate. Since the estate was meant to benefit the Starr Foundation, which Greenberg chaired, the AG charged that Starr has shortchanged his own foundation several billion dollars.
Starr didn’t take the accusations kindly, launching an all-out crusade against Sarbanes-Oxley-type oversight of corporate accountability and against the sullying of his reputation. Part of it seems to have been a massive amount of Starr Foundation grants to the National Chamber Foundation, an “educational” arm of the U.S. Chamber of Commerce addressing issues of government oversight and tort reform (Greenberg notoriously has referred to tort lawyers as “terrorists”). No surprise, but the Chamber and its CEO, Tom Donohue, have been supportive of AIG and Greenberg personally.
The Starr Foundation also ante’d up the lion’s share of funding for the report of the Committee on Capital Markets Regulation, co-chaired by the former head of the Bush Administration’s Council of Economic Advisors, R. Glenn Hubbard, (the remainder from a “vulture” investor named Wilbur Ross, the other from a hedge fund manager named Kenneth Griffin, both of whom served on the committee). The report was yet another new corporate stratagem to roll back Sarbanes-Oxley, though most people joined Senator Christopher Dodd in referring to the organization as the “Hank Greenberg commission”.
The Starr Foundation’s support of the National Chamber Foundation is described in the Cohen Report published by Nonprofit Quarterly magazine.
But an exceptionally odd part of the Greenberg story has been playing out in litigation in Massachusetts District Court.
Along with the Foundation’s capital infusions into the National Chamber Foundation, Greenberg launched a PR campaign to resurrect his and his institutions' image after many decades of corporate and philanthropic service— a strategy that included hiring journalists and academics to pen encomiums to the octogenarian billionaire .
In one instance, Greenberg’s investment company, C.V. Starr & Co., hired an entity called eSapience, based in Cambridge MA, to do some personal image-burnishing. A number of conservative scholars dedicated to free-market business theories run—or ran—eSapience, including the dean of the MIT Sloan School of Management. Probably no one would have noticed eSapience’s contractual relationship with Greenberg and C.V Starr & Co. had the firm not filed suit in U.S. District Court alleging that it had been stiffed for over $2 million in expenses (since the litigation, the website of www.esapience.org has been largely down).
In its court papers, eSapience said it was hired to “develop a campaign that would, among other things, help establish Greenberg as a visible and highly credible public intellectual”, “to change the public conversation about Greenberg,” and “to raise questions about the effectiveness of the current legal and regulatory environment.” Among the elements of the strategy was the creation of two virtual and apparently artificial think tanks, the “eSapience Center for Law and Business” and “the Barbon Institute”, each headed by principals of eSapience.
Whatever the facts of the billing dispute, both eCLB and Barbon were essentially think tanks designed to do little more than simply promoteing Hank Greenberg. The addresses of the websites of eSapience and the two think tanks ended in “.org”, the tell-tale domain extension of the non-commercial entities such as nonprofits, charities, religious organizations, and educational and cultural institutions, but most experts in the field quickly saw through them as Greenberg instruments. While armed with “.org” tags, none of the entities appear to be registered nonprofits.
The work of eSapience for Greenberg included recruiting journalists to write Greenberg-friendly articles, running think-tank conferences with big name speakers replete with applause for Greenberg and his free-market ideas. Run by MIT academicians and recruiting names for speaking gigs like Gore (and Greenberg) attorney David Boies and White House Iraq communications aide Dan Senor, eSapience’s functions for Greenberg added a veneer of manufactured intellectual credibility for Greenberg and his anti-regulatory agenda. The Greenberg think tank is no more convincing than the Greenberg commission as a high level examination of Sarbanes-Oxley-related issues.
There’s nothing to prevent a conservative philanthropist like Greenberg from putting his tax exempt capital behind nonprofits that believe what he belives. And there’s nothing to prevent conservative business economists at places like MIT from weighing in with attacks on Sarbanes-Oxley and tort reform. But when the agenda is intensely personal, about the specific business and personal interests of the philanthropists’ outside business interests, then the philanthropy raises questions. And in the case of recruiting PR firms to conjure an array of high falutin’ think tanks to do personal and political image burnishing to undermine corporate accountability standards, the real experts and academics on both sides of the issue ought to reject the veneer and expose the paid ventriloquists.
Coda: As of April, eSapience probably thought it had won its case. Greenberg and CV Starr hadn’t responded to the complaint and eSapience called for a default judgment. Apparently, Greenberg and associates contended that they hadn’t been served properly. The lawyers talked, maybe it looked like things were going to be settled, but as of May 2nd, the eSapience litigation was on again with an amended complaint and a remarkable explanation of the firm’s strategy for rebuilding Greenberg’s image.