Michael Moore and Blogger's Confessions (Usher Style)

Michael Moore's new movie "Sicko" about the American healthcare industry premieres in Europe in the fall. If you're traveling to the US this summer, you could to catch it as early as June 29.

Here's another story about Moore you might not have heard.

Now...

"These are my confessions
Just when I thought I said all I could say
My resume shows I got to get /
one more thing out of the way


Even though this blog may occasionally make me as a blogger sound green, social justice oriented etc., that's really not the whole picture. My history includes a stint in a New York investment banking team that did deals with managed care organizations, the same firms and CEOs that Moore attacks in "Sicko." Honestly, I have to be the one of the only Net Impact members in the universe that gets totally worked up while reading about Darfur or watching a movie about Edith Piaf who's also worked for a company providing military avionics and another that pitches managed care mergers. Talk about a split personality. There are no other major skeletons in the closet, though.

Okay, fine. There were those board memberships at Talisman Energy, Halliburton, and TJ Group.

In a sense, the reason these issues get me so fired up is having been there and seen some of this stuff up close. Many guys did not leave the office on 9/11 even despite bomb alerts at Grand Central because "defense companies are going to be on fire, man." (...? - Honey, look at me. I have ovaries. And a womb. And I'm wearing a skirt. I know that's rare here unless you're a secretary, but do I look like a man?)

Senior managers talked passionately about raw material prices, life insurance trends and yield curves without mentioning the dead in the city. There was callousness on a level I'd never seen before. It changed my life. As far as managed care goes, even not having seen more than a trailer for "Sicko", it's pretty clear to me Moore is doing the right thing and chosen to raise awareness about an urgent issue. Mr Moore may get a lot of criticism, but looking at it from both sides of the fence, I absolutely know which side I'm on and strongly believe Mr Moore is on the side of the people for whom the healthcare industry exists in the first place: patients, not shareholders.

This was one of the deals done by the group that employed me. (It's old news now in fast-changing managed care. Trigon was bought by WellPoint.) Now, I could say I had no idea what I was getting into (that would be true), I could claim I was assigned to that group (sort of not true, I had befriended a colleague who I still keep in touch with), I could say that I had no choice (yeah, right), but I guess I can't. For a time, I wanted to see Wall Street. Also, I'm from Finland. Most Finns have no idea what American healthcare insurers do or how the system works. "Keeping administrative costs down and keeping health plans competitive" sounded good to me. Besides, my employer's health insurer wasn't hurting me in any way, so there were no negative personal experiences whatsoever. In fact, the bank even paid for everyone's Lasik surgery, worth (if memory serves correctly) about $12,000 each. (When the market melted, they stopped this practice though.) Anyway, at the time the bank had probably the best combination of healthcare plans any company anywhere could ever have. I, for one, am still thankful. Thanks to the bank's private health plan, I have 20/20 vision again.

The job was no picnic, though, but that's a subject of a whole different confession (Usher didn't do Pt. 3, I just might.) I left New York and soon after befriended a New York ER doctor on my travels. We kept in touch. He told stories about people whose only healthcare providers were the emergency medicine doctors and nurses. It was interesting to start reading up on things. We talked about medical malpractice insurance (I had participated in a pitch for a nearly bankrupt med-mal business) and how a lot of doctors could no longer afford to practise because their insurance costs against potential lawsuits were prohibitively high - in the hundreds of thousands of dollars a year. There were over 40 million uninsured Americans. Doctors were being squeezed and bullied by insurers and outrageous litigation. Patients were being denied payments by insurance companies. It was quite incredible; as a Scandinavian, you easily take universal healthcare for granted. I began to realize that for the little while that I had spent as part of the American workforce, I had been part of an exclusive group of elite workers and as such, I had received elite benefits. Had I continued, I never would've seen anything different (of course assuming I would've kept ploughing ahead on that same road.) I would've thought everything was just fine.

And then it hit me: why did the financiers orchestrating healthcare mergers never talk about doctors, nurses or patients? Not once. It was as if we operated in a wholly separate universe.

The only answer that seemed in any way credible was that it really didn't matter to us. Nobody even pretended to care. Managed care corporate finance was a business where deals were done one step removed from the CEO who talks to lower level executives who talk to the claims experts who talk to doctors and patients and maximize corporate profit by denying treatments and reimbursements.

Now, there are certainly many things I want to do in life - besides getting a dog. For much of it, money is necessary. Heck, I wouldn't mind vacationing on Mustique one day. But if I don't, I don't really care. And my bottom line is that I sure as hell am not willing to get there by profiting from humanitarians or other people's suffering.

Of course, my former colleagues might laugh at this. I will never forget going to work one mid-week morning from the church. Now, I'm not religious, but sometime in my second year I started volunteering at a Park Avenue church homeless breakfast on my way to work. I didn't tell anyone at the office, I just went. So I got to work that one morning, and my colleagues were just hanging out, laughing. One joked to another, "Buddy, go feed the homeless or something."

I'd like to say this was the turning point that made me resign and change course. Not really. I left the city I love most in the world, but I still went back into finance for a while, unsure of what I wanted to do. Instead of Che Guevara badges and hemp clothing, I still wore heels and the damn pantyhose. I did a bunch of other things. But then I started working at a hospital.

And come to think of it, Che was a med student :) ...

Can't wait to see this movie.

Trailer:

Clip from the film:

Interview:

This semester we were asked by a finance instructor for tips on how to increase the number of women in her finance classes. She said that there is not a single woman in her class; all her finance MBAs are men.

Ethics is elemental (although this has nothing to do with gender.) Finance is often - and this is my personal opinion - taught in ways that purport it is value neutral; the quantitative aspect of it further reinforces this. The work is somewhat presented as pure and practical and free of ethical debates, when in fact so much of what gets done is none of those things. The systems thinking aspect of it is lost in the compartmentalization. Perhaps it is a grave oversimplification, but for some people being involved in, say, a defense deal, is going to feel like they're also indirectly involved in weapons production and its end results. Life isn't always simple, but if I invest in this, I'm going to feel like I'm profiting from this. If you didn't pitch that weapons manufacturer financing - if nobody pitched that deal - where would the resources come to expand production in that segment of the economy?

If you don't water the seeds, they won't grow into trees. And finance courses, in my (limited) experience, don't prepare you to tackle the ethics side of things. What do you do if you are assigned to a group that deals with the producer of WMDs? Many, many women and men alike find even the prospect of such a scenario extremely troublesome. I'll be the first to argue that to do so - to raise the issue of whether, say, financing a certain project or company is ethical - is still more often than not considered naive or self aggrandizing. Someone once accused me of having a big ego (and he may well be right, but it was nonetheless an accusation hard to refute without fueling the fire), when he praised Michael Milken in an introductory CoFi class, and I raised my hand to point out Mr Milken was in prison for insider trading. Likewise, back when it was still legal, I was wondering why banks were taking research analysts to pitches and roadshows. These are (or were) not, some argue, strictly speaking "finance" issues. But they deal with the foundations, the building blocks, the ethos of the field. If legal professionals or healthcare workers were accused of corruption, malpractice, and failure to follow their professional oath, we'd say something - and people do. So why can some other professionals hide under the guise of numbers and the detached middlemannish nature of the business?

What we do and how we do it matters, and it has consequences. You cannot throw a rock in the water and expect no ripples. But as a finance student you are rarely taught or encouraged to approach the value judgments you might have to make in the field of finance, when hundreds of millions of dollars or euros literally start to seem like peanuts and when a deal is supposed to be just a deal, no questions asked. I argue that finance students still aren't taught to engage eloquently and reasonably with the qualitative or ethical side of the subject, and when you think about it, you're sort of lost.

There are sustainable investment ventures, which is great. There are sustainability indexes, which is great too. This blog entry doesn't concern those; it concerns the mainstream aspects of the business, and why someone might be turned off. Many women as well as men are, I believe, turned off from the field of finance, because they sense the arrogance and the detachment from the rest of society. For an industry that sells the tenets of efficiency and change, there are many examples that suggest Wall Street professionals themselves are hardly welcoming of it.

You can't play fair, if people egregiously bend the rules decade after decade and get away with it. I'm not talking about bending the rules a little bit or cutting the corners a little bit. I'm talking about outright misconduct that appears to be obvious to anyone but the offender, who is like the emperor walking naked down Main Street, insisting his subjects compliment his attire. You can't instill the fairness mindset, if individuals who should set the standards abuse the system to their advantage. I have never understood why white collars and years of education make misconduct less reprehensible. You would think people with a higher education are better equipped to tell the difference between right and wrong, reasonable and unreasonable, acceptable and unacceptable. In answering the question, "how would we graduate more female finance MBAs", I would say, these issues must be addressed. How do you address them, especially if most people on the street think there's no problem? I have no idea. This is an issue that polarizes people, compartmentalizes them by class and gender, and easily alienates men from women even further. There's a huge issue there. It's not only about making the business woman friendly; it's about making it fair and ethical and transparent and open minded.

At the grocery store a half hour ago, the line was long enough for me to pull out the Wall Street Journal. On page 24 appeared a familiar face. It was Richard Grasso. Four years ago (now former) New York Stock Exchange chairman Dick Grasso received the highest pay package ever given to the head of a non-profit organization: 187.5 million dollars, consisting of a $139.5 million lump sum and a $48 million guarantee over the next four years.

At the time when the Grasso case kept making the headlines, I was working in finance and had a very amicable and just boss, who sort of agreed with me - nobody, we genuinely felt, especially not the head of a non-profit organization, was worth $187.5 million. It wasn't just that we felt that Grasso's pay package seemed unreasonable. New York's not-for-profit corporation law explicitly states that officers only be paid a compensation that is "reasonable." Does $187.5 million sound reasonable? Not to me, and New York then-attorney general Eliot Spitzer didn't think so either; he sued Grasso. At that time, even though I'm not big on ultimatums, I half vowed to myself that if the courts ruled in Grasso's favor, I would never ever work in business again. It was almost too easy a vow to make, because I never thought the state would lose the case.

But in the world of high finance, apparently things are not that simple. Today, the WSJ and the NYT report that Mr Grasso has just won a key round in a ruling over his pay: the appellate court ruled that the AG "does not have to authority" to bring major parts of its case against Mr Grasso. Consequently, Dick Grasso may be able to keep the money after all. One hundred, eighty-seven and a half million dollars. Grasso has also sued the NYSE for another extra $50 million in compensation and for damages due to defamation after his departure from the NYSE in 2003. Might this have something to do with his legal fees, which some say have exceeded 100 million dollars?

"This lawsuit from my point is about honor", Mr Grasso said in January.

Now, I don't know how Dick Grasso defines honor, but some of us are not yet jaded enough not to find the Grasso case outrageous.

Not-for-profit corporate law states that officer pay should be "commensurate with services performed." Lumping all of Mr Grasso's compensation together and considering it his 2003 salary, consider that the average annual pay of, say, a family doctor in the US is $152,249. Nurses earn about $55,000 a year. Thus, Mr Grasso's pay implies that he is valued at the equivalent of 1,231 doctors or 3,409 nurses. Mr Grasso didn't diagnose cancer. Mr Grasso didn't perform dialysis or assist in heart surgery. Extending this further, Mr Grasso didn't found a company. He didn't even run a company. He didn't inherit a family business. He didn't invent a thing, anything. He was the head of a non-profit securities trading platform, bound by a law meant to limit pay to what is reasonable and commensurate with services performed.

The world is warming. 3,381 American military personnel have been killed in Iraq. 46.6 million Americans don't have health insurance. About 60 percent of 16-25 year-old Americans are functionally illiterate. And some guy can get paid a couple hundred million dollars for sitting in the office and taking clients to Le Bernardin.

I'm not sure what I'm advocating here, but people should really just do something, anything - perhaps start by switching off their television sets and participating in public discourse, because this isn't right. It's wrong on so many levels.

Most DealBook Comments Ever?

John Doerr's tears elicited the kind of responses one would expect: disbelieving, cynical, accusatory, sympathetic and everything in between. There have probably never been as many comments on DealBook.

One reader pointed others towards The Great Global Warming Swindle, a documentary that was shown on the UK Channel 4 last week.

What is powerful about this provocative program is the way TGGWS unearths how the public feels about climate change. People start discussing this stuff over the internet, and it is obvious many people harbor serious doubts. If you watch even a few minutes of this film, you'll see why and how, because it is fairly well made (with groovy background music...) Unsurprisingly, many viewers responded positively; some even saying that just as they had been convinced of global warming, they were right back to square one after having watched TGGWS. Here's one reader quote from a British news site, in response to TGGWS:

"Good. The sooner all this global warming hyper nonsense is consigned to the dustbin, the better off we'll all be. I've been telling people, for many years, to ignore the scaremongers. There never was any convincing evidence that CO2 produced global warming - and there's still none. More and more evidence, however, points firmly to the Sun as the cause of episodes of warming and cooling."

— Posted by Peter Warlow, Brentwood, UK

fter seeing a film like this, you start to ask questions: who made this film? Why? Why is a UK government channel showing it? Who paid for it and who received the proceeds?

1) The director of the film Martin Durkin doesn't have the greatest reputation. The Guardian's George Monbiot wrote about his films back in 2000, after Mr Durkin filmed a number of questionable documentaries, including one that claimed silicone breast implants protect women from breast cancer.

2) Professor Carl Wunsch of MIT, interviewed in TGGWS, is considering making a formal complaint against Channel 4, because his views on climate change in the film were misrepresented. Professor Wunsch believes human activity causes climate change, but his interview was edited such that he appears sceptical. Said professor Wunsch, "If they had told me even the title of the programme, I would have absolutely refused to be on it. I am the one who has been swindled."

You could argue that the greater issue this raises is the inadequacy of science education that renders many of us frankly incapable of making sound critical judgments regarding the natural sciences.

Becoming hysterical helps nobody; Greenland won't melt next year. But even if fossil fuel combustion caused no environmental effects whatsoever (and it does, in addition to CO2 emissions), we would still have to find alternative fuel sources because oil resources are limited. Someone is still going to have to figure out what those sources are, and someone is still going to have to risk their money to fund the R&D.

90 percent of the world's transportation systems run on oil. Nobody contests the Hubbert peak oil theory, according to which the world will eventually run out of oil. People complain about gasoline prices, but they don't see the connection: increasing demand for a finite, declining resource leads to higher prices! Simple. Eventually the cost will be very high, and sometime later, we will need to rely on other fuels. John Doerr has more than a fair right to feel badly; who cares if he hopes to make a few dozen million dollars more? If one of his companies actually strikes gold and popularizes a new affordable, clean fuel to power all our cars, Doerr, in my view, is more than deserving of the cut he makes -- much more, one could argue, than the CEO of Shell that received a 6% pay raise (from €3.5 to €3.7 million) for overseeing the company's most profitable year ever, according to today's WSJ.

Your next algae-powered joyride?

The New York Times reports that venture capital investment into green energy is soaring, and one of the newest developments is algae as fuel.

His Name is Bonderman, David Bonderman

Last week I blogged about the largest LBO in history. KKR and TPG (two huge American private equity firms) recently bought TXU, a Texan energy utility.

This deal was touted as a green LBO, because KKR and TPG agreed to freeze plans to build eight coal power plants and also invited a new board member onto the TXU board, William Reilly. Reilly has served as the chairman of WWF. Kauppalehti wrote about this in February.

After blogging about this deal, I emailed a friend of mine; he is an investment banker in New York, specializing in LBOs. "They've done the math", I argued, and said the financiers probably weren't doing all these good things just out of the goodness of their hearts. But perhaps I was wrong.

My friend blackberried me back, saying these green issues have been a "roadblock" to a deal for years (not sure what that meant -- we debated this stuff in December, without coming to any kind of conclusion. Still hoping for an invitation to his wedding, though...)

Anyway, I asked him about the deal because I wanted to know if he thought the TXU buyout signified a sea change on Wall Street. He wrote back with more information, all publicly available, but it has mostly gone unmentioned in the press.

Apparently, the major reason why the TXU deal was so "green" is, in fact, that David Bonderman, one of the founders of TPG (and the new owner of TXU) has been a board member of WWF, American Himalayan Foundation and the Wilderness Society.

Bonderman is not only a hugely successful investor -- he also sports a serious activist streak, of the suit-and-tie kind, and he pushed his agenda through in a big way, supported by pressure from numerous environmental groups.

Of course reducing emissions makes economic sense as well, especially in the longer haul, but certainly there's more than a pinch of goodness of heart there, too.

KKR and Texas Pacific Takeover of TXU

In the largest private equity takeover in history, environmental concerns play a major role.