The retirement system’s essential service
The New Hampshire Retirement System deserves much praise for its efforts in keeping at least portions of corporate America on the straight and narrow.
The retirement system, as New Hampshire Business Review’s Bob Sanders reports on our front page, has taken the lead in several class action shareholder suits – suits that have had an all-too-unfortunate ring to them in recent years. they all involve some kind of misleading by executives on profits and revenues and other bookkeeping matters.
Most of the companies are not well known, but one certainly is: AT&T.
It turns out, according to the retirement system, that Ma Bell concealed massive service failures to its major corporate long-distance customers and made up bogus wireless accounts in an attempt to artificially inflate revenues before spinning off its wireless division, a move that brought the company billions of dollars.
The most disappointing aspect of the charges is that they involve a company that was once as solid and reliable as any corporation that walked the earth. But no longer, according to the suit. In fact, if the charges are correct, the company was acting much in the way Enron, WorldCom, HealthSouth and other assorted corporate criminals have acted.
Of course, the retirement system has been seeking monetary damages in its suits, or at least attempting to recover some of the millions it has lost in investments it says were made based on bogus information. But to its credit, it’s not stopping there. The system has been using the suits to seek corporate reforms at the defendant companies “so it won’t happen again,” says the system’s attorney, Alan Cleveland.
The retirement system’s actions are a model for other large pension funds, many of which have been following the same strategy already. If shareholders – particularly large shareholders – play a vigilant, active role in making sure corporations play by the rules, it’s guaranteed that they will.
The state of New Hampshire could be playing an even larger role in the necessary battle for corporate governance. Unfortunately, except for a brief moment in time, we have yet to hear from the people at the Center of Corporate Responsibility and Corporate Citizenship, the center that was funded by a $5 million civil settlement with Tyco International in the wake of revelations about its board’s misdeeds.
In fact, more than a year and a half later, we’re still waiting to hear from the center – whose work is needed at this moment, not years from now.