Sunday, June 2, 2013

Business ethics: The case of SM and the Philippine Government

Sy family to Sec. Abaya: You can build the common station anywhere, so long as it's named 'SM'

That was the headline on The issue stemmed from the building of the common station of LRT1 and MRT3 where SM North Edsa would be the common terminal for the metro train stations in Metro Manila.

Transport Secretary Joseph Abaya said that the government had decided to "ditch SM North EDSA as the common terminal for the Metro Rail Transit 3 and Light Railway Transit 1" after Hans Sy, son of business tycoon Henry Sy and President of SM Prime Holdings had said that the terminal should not only use North EDSA as the name for the common station, but must carry the symbol of SM as well. This, after SM had also given the government P200M ($5M) for bragging rights for the station's name. The station would also serve as the connection to MRT7.

This is a good case for business ethics in school. To some, it would probably mean that the Sy's seem greedy at promoting their company's name and emblazooning the name of the company at the station meant that it would be promoting it's company for business purposes.

But here's the flip side of the issue. The Sy's have recently been cited by Forbes Asia as one of the top philanthropists in the country. "John Koppisch, senior editor of Forbes Asia, was quoted in the report as saying that they picked only 'true philanthropists who are giving their own money, not their company’s because donating shareholder funds isn’t charity.'"

"The magazine cited Sy for donating $7 million to De La Salle University to build an eco-friendly building and $112 million to an unnamed foundation. Sy is the founder and chairman of the SM Group of Companies that is engaged in retail, shopping malls, banking, hotels and property development."

Many schools and institutions have buildings named after major donors. UST for example has three buildings named after donors - Tan Yan Kee Building (a donation of tycoon Lucio Tan), Alfredo Velayo Building (housing the college of accountancy, and the Angelo King Auditorium in the Benavides Cancer Institute. De La Salle University itself has a whole building donated by the Yuchengco family and is called the Don Enrique Yuchengco Hall. Ateneo de Manila houses the Eugenio Lopez Jr. Center for Multimedia Communications, John Gokongwei School of Management Business Accelerator, Ninoy and Cory Aquino Center for Leadership, Ricardo Leong Center for Chinese Studies, Konrad Adenauer Asian Center for Journalism (ACFJ), and the Governor José B. Fernandez Ethics Center for Business and Public Service. These are but a few examples of donors whose names have been affixed to what they donate.

So here's the rub - what was so wrong in having the common station at North EDSA renamed to SM North EDSA?

We all know that these tycoons have provided food on the table by providing jobs, schools, and other philanthropic work through what they have earned. Something that is palpably lacking with government. The taxes we have paid our government that should be translated to the masses are inevitably visibly lacking. The donation or "bragging rights" the Sy's have extended to the government in building the common station at North EDSA on the property of the Sy's would certainly go a long way in terms of public service programs.

However one puts it, I always say that "beggars can't be choosers". The government should reexamine why, in the first place, it accepted the P200M before deciding to "return" the money of the Sys. The ethical dilemma here is a two way street - and government must justify whether the decision is one of conscience or of ego.

Ego will never feed a nation where 70% of its people live below the poverty line.


Anonymous said...

I agree with your point. Hindi lang SM ang gumagawa ng ganitong promotion ng brand nila sa mga public places. Pero may interesting blog din about that MRT story here:

Kid at heart said...

It's a very interesting read!!! Thank you anonymous