Letters to the Editor

To the editor:

Your recent headline, “American Express unit to pay record $7.4 million” (July 22-Aug. 4 New Hampshire Business Review), is similar to other reported “settlements” by major corporations for claims of wrongdoing, manipulation of earnings reports, misuse of corporate assets, etc.

While many of these payments are substantial — your article points out that this is “the largest securities enforcement agreement in the state’s history” — it should be acknowledged that “American Express” isn’t really paying anything. The reason is that “American Express” doesn’t own anything. The assets of the corporation — any corporation — are owned by the shareholders. Income is generated either by investment or by the sale of product or services.

Put another way, the $7.4 million being paid by “American Express” is coming either from the investors/shareholders or the customers/clients of the corporation, oftentimes the same people who have been victimized by the corporate wrongdoing in the first place.

Let’s put these “settlements” in proper perspective. The money doesn’t come from those individuals who are actually responsible for the illegal or improper conduct. It comes from reduced earnings to the shareholders and/or money obtained from the corporate activity; in the case of American Express from the interest, charges, penalties and fees charged the users of its products. In other words, from you and me.

The “penalty” to the corporation is zilch, and for American Express and the others who are paying the “settlements” (usually without any admission of wrongdoing) it will simply be business as usual — until the next time.

Anthony McManus
Dover