Page 122 - Introduction to Business

96 PART 1 The Nature of Contemporary Business

Technology and Business

E-mail, AT&T, and Jack Grubman

You might assume that once you delete Saved e-mails also appear to reveal that Weil, to
e-mails from your computer, they are help grease the skids with Grubman, made on behalf
forever gone from the world. This is, though, as even of Citigroup a $1 million donation to a very high-class
computer guru Bill Gates of Microsoft Corporation New York City nursery school. Grubman had been
ironically learned during the government’s antitrust trying to get his children admitted to this nursery
case against his company, simply not the case. Com- school and had, despite his $20 million per year
puter servers save everything, including deleted salary, been unsuccessful until the Citigroup philan-
e-mails. Jack Grubman is another high-level execu- thropy. A lesson from all this: Never write anything in
tive to fall victim to e-mail technology. an e-mail you wouldn’t want published on the front
Grubman was formerly a star stock research ana- page of the newspaper!
lyst at the Salomon Smith Barney brokerage and
Source: Charles Gasparino, “Fallout from Grubman E-Mails Adds a
investment banking unit of Citigroup. His intensive
Twist to Wall Street Probe,” The Wall Street Journal, November 14,
research of AT&T had given him a long-held negative 2002, p. 1; Emily Nelson and Laurie P. Cohen, “Why Jack Grubman
view of the company’s stock. In November of 1999, Was So Keen to Get His Twins into the Y,” The Wall Street Journal,
November 15, 2002, p. 1; Gretchen Morgenson and Patrick McGee-
however, he abruptly changed his research rating of
han, “Wall St. and the Nursery School: A New York Story,” New York
AT&T to “buy.” Times—Online, November 14, 2002.
A series of saved e-mails purportedly revealed,
however, that Grubman may have been pressured to
Questions
change his stock rating on AT&T by Citigroup’s chief
executive Sanford I. Weil. Weil wanted to be in AT&T’s 1. What are some other ways e-mail has had a pro-
good graces for a couple of reasons. First, Citigroup found impact on the way business is conducted,
wished to do investment banking business for AT&T, beyond the saving of past communication
especially with respect to its sale of public shares in records?
its wireless division scheduled for April 2000. Second, 2. What are some other new technologies that help
Weil sought political support from C. Michael Arm- employers monitor and keep better historical track
strong, the CEO of AT&T and a member of Citigroup’s of employee activities?
Board of Directors, in his bid to “nuke” intracompany 3. Are there ways charities can better make sure cor-
rival John Reed, Citigroup’s co-chairperson. porate gifts won’t present any conflicts of interest?

The above discussion illustrates some of the kinds of competitive pressures
facing top business executives today, pressures which may at times force even the
heads of leading corporations like Citigroup to arguably tread the line between
ethical and unethical behavior. Citigroup chief executive Sanford I. Weil felt com-
petitive pressure externally in that he feared that AT&T’s investment banking busi-
ness might go to a Citigroup competitor like Merrill Lynch Corporation. He also
felt competitive pressure within the firm from the company’s co-chairman, John
Reed. Nevertheless, the actions Mr. Weil may have taken with respect to pressuring
Mr. Grubman to change his recommendation on AT&T stock appear to be inap-
propriate. Moreover, the $1 million donation Mr. Weil made to a ritzy New York
City nursery school may not have represented the best possible use of shareholder
money.

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