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CorpWatch, a non-profit research and advocacy group based in San Francisco, declared its support today for Secretary General Kofi Annan’s decision not to renew a UN contract for scandal-ridden Swedish business leader Goran Lindahl. Mr. Lindahl, who was Mr. Annan’s special advisor for the UN Global Compact, has been the subject of a pension scandal at Asea Brown and Boveri (ABB), where he was CEO until last year.
“Kofi Annan chose a business leader with a reputation for high ethical standards, but Mr. Lindahl turned out to have a greedy streak unbecoming to his role as a UN representative promoting business responsibility,” said Kenny Bruno, the UN Project Coordinator for CorpWatch. “Mr. Annan is doing the right thing by letting Mr. Lindahl go. We hope he will now also re-examine the UN’s approach to corporate partnerships.”
Earlier this month, Swiss-Swedish multinational energy giant Asea Brown and Boveri (ABB) revealed that former CEO Mr. Lindahl, along with his predecessor Percy Barnevik, had taken retirement packages totaling about US$137 million, about $53 million of which went to Mr. Lindahl. In 2001, the company lost $691 million and its stock price dropped precipitously as news of the company’s asbestos liabilities and other problems surfaced. ABB is now seeking return of some of the retirement money from Mr. Lindahl and Mr. Barnevik.
Aside from the personal embarrassment for Mr. Annan and Mr. Lindahl, these events point to some fundamental weaknesses of the Global Compact, the corporate partnership program for which Mr. Lindahl was a special advisor in charge of recruiting corporate participation. The Compact relies on purely voluntary measures by companies like ABB, which has been a self-declared leader of corporate environmentalism for at least a decade. Yet ABB’s practices regarding asbestos and executive compensation have been shown to be unsustainable at best, and possibly immoral and illegal as well.
“Below the surface of ABB’s voluntary pronouncements of social responsibility was a case of Enronitis,” said Mr. Bruno. “The association of the Global Compact with Goran Lindahl is embarrassing for the UN and detrimental to its image. The Secretary General should learn from this experience, temper his enthusiasm for partnerships with the private sector and redirect the UN’s efforts in this area toward fostering corporate accountability.”
Kenny Bruno
Corpwatch.org
February 27, 2002