Amidst a flurry of protests and questions about corporate scandals, Citigroup CEO and Chair Sanford Weill ’55 delivered the 23rd annual Hatfield Address in the Schwartz Auditorium of Rockefeller Hall yesterday afternoon.
Weill’s address focused primarily on the effects of economic globalization, and was followed by a question and answer period. During his address, Weill directly addressed many of the controversial issues that have dogged him during the past year and fielded questions on topics ranging from his nomination to the New York Stock Exchange (NYSE) board to Citigroup’s involvement in rainforest depletion. At two points during the speech, students held up signs with slogans such as “Destroying old growth forests isn’t cool,” and were escorted out of the auditorium.
Weill himself is no stranger to controversy. This past fall, an e-mail sent to a colleague by former top analyst Jack Grubman of Salomon Smith Barney — a division of Citigroup — was made public and became the center of an investigation about illegal practices in the investment banking industry.
In the message, Grubman stated that he had raised his rating of AT&T’s stock in exchange for Weill’s help in securing his twins’ admission to the exclusive Manhattan nursery school, the 92nd Street Y. Citigroup later agreed to pay a settlement in excess of $400 million in response to charges that their analysts misled the public about several technology and telecom stocks at the end of the 90s dot-com market bubble.
The corporate scandal received renewed attention last week when Weill was nominated to represent the public on the NYSE Board of Governors, a nomination he later declined.
“I had been approached many times in the last six months about serving on the board of the NYSE, and I believe from the bottom of my heart that the individual investor builds the largest companies,” Weill said. “However, I did fear that my nomination could cause problems for the NYSE, and I told Dick (Grasso, chair and CEO of the NYSE) that there could be a lot of feedback.”
“Of course the following day the Attorney General went ballistic, and I realized that the best thing was to decline,” Weill said, referring to New York Attorney General Elliot Spitzer’s well-publicized outrage at Weill’s nomination to represent the public interest on the board. Spitzer called the nomination of Weill “a gross violation of the public trust.”
During his speech, Weill referred to the scandals that have plagued the financial industry, emphasizing the need for more transparency and regulation in order to regain public trust in corporations.
“We have to market the model of capitalism and democracy. The great majority of people in this industry are ethical, and they are tarnished by a few bad apples.” Weill also outlined many ways in which financial growth can lead to improvements in the overall quality of life in a country or region. “Two months ago I would have never thought of opening a bank in Iraq. Now, it seems like a good place, with a young population and tremendous natural resources.”
In addition to the attention on corporate scandals, Citigroup has been under fire for their contributions to global environmental degradation and exploitation of workers. Protesters gathered outside of Rockefeller during the hour prior to his speech.
“We’re here to make a statement against Weill and Citigroup,” said Tomer Malchi ’03 of Cornell Organized Labor Action (COLA). “They are responsible for funding environmental damage across the world. We have everyone here, Latin Americans, Greens, Labor and others.”
“Citigroup stands for corporate greed and basically everything we are against,” Malchi said.
Nathan Shinagawa ’05 said that he was “basically very concerned about Citigroup’s actions.”
“I believe in Citigroup, and I think that they can be leaders in helping to establish sustainable development in third-world countries,” Shinagawa said. “I tend to have faith in people, and Weill is the CEO of one of the largest banks in the world. We should talk about capitalism and profit, but without environmental degradation or third-world exploitation.”
Despite the protesters, the auditorium was nearly full of people eager to hear Weill speak.
“I am interested in seeing Weill and hearing him speak,” said Joe Benevento ’04. When asked what he thought of the controversies surrounding Weill, Benevento responded, “It’s unfair to single out one person for the excesses of the late 90s.”
“It’s important to note all of the great things he has done,” said Benevento. “He’s been a great beneficiary of both Cornell and New York City.”
J. J. Weinstein ’05 also had a differing view of the protesters.
“I think they reap the benefits that Weill has provided, such as the Medical school, but protest the way he made the money. They are being hypocritical,” Weinstein said.
President Hunter R. Rawlings III introduced Weill, describing him as one of the top business executives in the world and highlighting his generosity. “He is not only generous financially, but generous in another way: with his time, energy and aspirations,” Rawlings said.
Weill praised Rawlings’ leadership, joking, “My wife Joan and I were happy you decided to go back to teaching, to give us a chance to re-build. It’s beginning to feel like what’s ours is yours.”
Throughout his speech, Weill emphasized the important role financial services play in improving quality of life for developing economies. “Our industry raises more than capital, it raises quality of life,” Weill said. “We have a responsibility to the communities we affect.”
He also stressed that countries who choose not to participate in the free market would face being left behind the rest of the world. “Any growth agenda has to include integration into the global economy.”
Weill acknowledged that with the expansion into markets would come “major impacts on local environments and culture,” but said, “Citigroup is not seen as a threat to culture, because 98 percent of our workers around the world are locals.”
He used the branch of the Weill-Cornell Medical College in Doha, Qatar as an example of how investment can be used to improve the quality of life for everyone, whether through education or the spread of technology and medical care.
Weill closed the afternoon by answering Benevento’s question on how current Cornell students could emulate his success in the financial service industry.
“The most important thing is to do things a step at a time, not swing for grand slams but keep hitting singles,” Weill said. “Also be a risk-taker and make mistakes. You have to make mistakes in order to prepare for future decisions.”
Archived article by Gautham Nagesh