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Monday, 4 February 2013

Modern leaders: knights of the divine self-righteousness!

Everybody probably knows the rules-with-a-wink that some managers of companies have on a piece of paper in their office:

Rule 1 – I am always right
Rule 2 – When by chance I am wrong, then rule 1 automatically applies

Fortunately, most people have enough self-reflection and sense of humour to admit that they are just a drop of water in an endless sea. They do their best and try hard, but the lists of successes and failures is nicely balanced out.

The search for perfection and divinity in ourselves is often frustrated by laziness, disorder, lack of concentration, ignorance and other ‘bad’ habits: these habits are what makes us human after all.

On top of that, most humans are surrounded by people that either love them and respect them or dislike and criticise them. Both categories are very well able to keep people firmly with their feet on the ground.

However, there is a category of people that is often not so much connected with the earth anymore. These are the so-called leaders. It doesn’t matter much whether those leaders are:
  • leading scientists and pundits; 
  • CEO’s of small companies or multinationals; 
  • Religious leaders on a local, national or global level; 
  • Political leaders on a regional, national or global level. 
Very often, you notice that similar patterns are emerging in those persons:
  • When they acquire their position, they build up a circle of trusted persons around them, while shutting out ‘strangers’, people that have very different opinions or a different personality and/or people that they don’t like or trust;
  • Their office, headquarters or palace starts to look like a cocoon that becomes more and more disconnected from the real world surrounding it;
  • They become overdosed with compliments on their decision-making, personality, character and looks, while at the same time they suffer from a lack of critical and contradictive people around them;
  • They start to believe in their own divinity and truly think that everything they do is God-given;
  • In the end, they can’t see the difference anymore between their own property and interest and other people’s properties and interests: “what is good for me personally, is good for my company or country”;
  • The worst victims of this ‘leaders-disease’ start to get rid of people who stand in their way or pose a (future) hazard for their position: sometimes by firing them and sometimes even by simply killing them or making their life impossible; 
I came to these reflections under influence of three events last week:
  • The nationalization of SNS Reaal NV in The Netherlands, as a consequence of past mismanagement and recklessness;
  • The sudden, serious illness of a member of the (in)famous Pussy Riot punk-rock group in Russia, caused by fatigue as a consequence of forced labour;
  • The hacks into the computer systems of the Washington Post, by presumably Chinese government officials, who want to intercept / terminate unfavorable news on China in the most important and authorative foreign newspapers; 
Ultimately, all these events have  been caused by leaders who started to believe in their own divinity and couldn’t stand criticism on their position.

The leader of SNS Reaal

Sjoerd van Keulen was CEO of SNS Reaal NV, a combination of a relatively small Savings and Loans bank and an insurance company in The Netherlands. 

This bank/insurer was doing fine and it had a rock-solid future ahead, as it filled the void that the large bank/insurers Fortis ASR and ING Groep (ING) and the large banks ABN Amro and Rabobank left open.

However, in the mind of ‘leader’ Van Keulen, this small, but sturdy bank was not ‘exciting enough’. In 2006, Van Keulen guided SNS Reaal through an IPO at the Amsterdam Exchange (AEX) and – with the shareholder money burning in his pockets – he started a take-over spree that left the CEO’s of ING Groep NV, Fortis-bank and ABN Amro flabbergasted.

Van Keulen and his henchmen took over:
  • Route Mobiel, an emergency car breakdown service, that was directly competing with the emergency service of the Dutch automobile association ANWB;
  • Bouwfonds Property Finance, a Commercial Real Estate investment company with enormous, billion-euro assets in the US, Spain, Luxemburg and The Netherlands. This company later turned out to be the Nemesis of SNS Reaal;
  • AXA The Netherlands: the Dutch activities of the large French insurer AXA;
  • Zwitserleven: the Dutch and Belgian activities of Swiss insurer SwissLife; 
SNS Reaal started to falter during the first months of the credit crisis in 2008: the top-heavy insurance branch of this “small bank with a big attitude” was hit heavily by the collapsing stock and bond markets and the diminishing demand for Life-insurances. Just like its peers Fortis-bank, ING and Aegon insurances, SNS Reaal needed to be rescued with state support, albeit much less than the other banks: €750 million.

At the time that the problems with the insurance branch of SNS Reaal were more or less solved, the real problem-child SNS Property Finance (formerly Bouwfonds PF) started to bleed money at an unprecedented rate, leading the bank into its demise eventually.

Afterwards, it became clear that SNS Reaal and Van Keulen had been warned for the underlying risk of their expansion plans on a number of occasions, starting as early as 2006. They had been warned for Bouwfonds through the media [FEM Business Magazine in its issue of August 5, 2006 | unfortunately no vivid link available – EL] and even by their peers Rabobank and ABN Amro, who almost reluctantly sold them Bouwfonds PF(!). Also the risk control department within SNS Reaal itself, is said to have warned the executive management.

In 2010, auditors of Ernst & Young warned SNS Reaal in a secret report that a write-off of €1.2 bln on their CRE-portfolio was inevitable.

However, as true ‘leaders’, Van Keulen and his successor Ronald Latenstein van Voorst didn’t listen to these warnings. Instead, they collected and maintained their X-mas tree of companies, only to see it crumble five years later, at the beginning of 2013. At that time, Van Keulen had already left SNS Reaal as CEO, while receiving a book for the occasion, called: “Daring as a virtue”.

There is one quote by SNS Reaal itself that I don’t want to withhold from you. It comes from the Adopted Minutes of the SNS shareholders meeting 2008 (clicking the link immediately starts the download of this PDF-file):

The chairman noted that it is hard to remain humble when one is as good as we are.

That says it all, doesn’t it?!

The leader of the Kremlin

Vladimir Vladimirovich Putin is the archetype of the modern, hedonistic leader that I try to describe in this article.

When Putin rose to power in the Kremlin as the young and dynamic successor of the notorious “boozer” Boris Yeltsin, he seemed like a down-to-earth and sensible Russian president. Approachable, intelligent, humorous (albeit sometimes quite vulgar) and from a common, middle-class descent, with good knowledge of the German language. At the time, this enormously helped Russia’s relation with the Germany of Bundeskanzler Gerhard Schröder.

He was a former student of the State University of St-Petersburg, who had enjoyed a brilliant career in the Russian Secret Service KGB/FSB.  And although Putin had some good friends-with-a-dark-past, it seemed that he could further normalize the relation with the West from the point where Gorbachev and Yeltsin left it. 

However, after a few years Putin got corrupted by the power and influence that the Kremlin stands for. He became a victim of his own cocoon of compliments and (forced) admiration, protection and lack of contradiction and criticism.

In other words, Putin turned into a solar king, like Louis XIV:
  • Putin’s own actions became more and more audacious (take f.i. the fatally messed-up liberation action of Russian children, taken hostage by Chechnian terrorists or the murder on Alexander Litvinenko that people surrounding Putin have been accused of) and grotesque (‘Putin in a Delta-wing, saving the geese…’);
  • His humour and leadership-style became more hostile, aggressive and vulgar, alienating leaders from former adversaries and friendly countries;
  • He started to mix up Russia’s interests and his own: for instance by using Gazprom as his personal pension plan or by appointing his ‘henchman’ Dmitriy Medvedev as his (temporary) successor, while changing the constitution, so he could remain in charge as president for two more stints;
  • On top of that, he allowed that his friends and trustees built up their own empires at the expense of the Russian people. 

Deepest point during Putin’s presidency: the arrest and year-long imprisonment of the harmless punk-rock group Pussy Riot, that dared to criticise and personally offend him in a Russian-Orthodox church.

During the last Russian elections, Vladimir Putin has for the second time been re-elected as president of Russia. Apart from the blatant signals of election fraud during this day, there is still a majority of Russians that trusts him better than they trust the opposition.

However, if Putin’s increasingly erratic behaviour of the last few years is a tell-tale signal, Putin is not certain at all that this group will remain loyal to him in the future. It could be that if Putin stays in charge a few years longer, the Russian people will finally become fed up with him and will try to impeach him or even worse. Time will tell…

The leaders of China

Under a thin capitalistic varnish, China is still very much the communist country that it had been since the days of Mao Zedong. In this context, I mean communist as in ‘all animals are equal, but some animals are more equal than others’. And China will probably remain to be so for a very long time. To paraphrase Keyser Sösze from the classical movie ‘The Usual Suspects’: ‘the greatest trick the devil ever pulled, was convincing the world he didn’t exist anymore’.

Although there is now much more room in China for entrepreneurship, it is the kind of entrepreneurship that only benefits a relatively small group of people, while ignoring or even hurting the interests of the largest group of Chinese: the common people.

Protests of these common people against the inequality of the Chinese society, the environmental damage and straightforward abuses of workers caused by these entrepreneurs, have often been brought down in the most brutal manner by the local and central authorities. Many Chinese protestors paid the ultimate price for their protests.

The ‘most equal’ group in China are the leaders of the executive committee of the Chinese Communist party: leaders like current president Hu Jintao and PM Wen Jiabao and the future president Xi Jinping. While they try to look like simple civil servants in their uniform-like, common blue suits, reality is very different. These are people with unlimited power and – as a consequence – probably unlimited wealth.

There are two things that the current Chinese leadership are extremely allergic to:
  • Losing control over the people of their country;
  • Criticism on them personally and on their position;

How extreme the Chinese desire for total control, ‘peace and quiet’ is, became already dramatically clear during the events at the Tiananmen Square in 1989, that cost the life of hundreds and maybe even thousands of protestors. Now, more than 24 years later, it is still not clear how many people have been massacred on this doomed day in June, 1989.

Even today, this desire for total control by the Chinese government is very much alive and kicking. Numerous local and national dissidents have been killed in the past. Others have either been imprisoned or they live at home in fear, being stalked and intimidated 24-7 by the police and government officials that follow all their whereabouts.

While the internet had initially been allowed and partially ignored by the Chinese government as being harmless, this changed during the last years. 

The Chinese government got an ever tighter grip on the internet and presented internet behemots like Youtube, Yahoo and Google with ever-longer lists of do’s, don’ts and forbidden subjects. If these companies wouldn’t follow the Chinese guidance, their sites were simply shut down by the Chinese officials.

Also other sources of news and information have been victims of the Chinese control fetish. At the beginning of this year, Chinese journalists - sick and tired with the stringent government control - were protesting against a overdiligent civil servant, who had censored a critical article in the Southern Weekly newspaper.

And during the last few weeks, at least two leading American newspapers (The New York Times and the Washington Post) have been attacked by Chinese hackers, after they published critical articles about the €2.7 bln fortune that PM Wen Jiabao allegedly gathered during his stint as Prime Minister of China.

These were the last, for the time being, in a series of Chinese attacks that started in 2008, according to the following article in the New York Times:

The question is no longer who has been hacked. It’s who hasn’t?
The Washington Post can be added to the growing list of American news organizations whose computers have been penetrated by Chinese hackers.

After The New York Times reported on Wednesday that its computers as well as those of Bloomberg News had been attacked by Chinese hackers, The Wall Street Journal said on Thursday that it too had been a victim of Chinese cyberattacks.

According to people with knowledge of an investigation at The Washington Post, its computer systems were also attacked by Chinese hackers in 2012. A former Post employee said there had been hacking attempts at the Washington Post for at least four years, but none targeted the company’s newsroom. Then, last year, newsroom computers were found to be communicating with Web servers that were traced back to China, according to people with knowledge of the Post investigation who declined to speak on the record.

Security experts said that in 2008, Chinese hackers began targeting American news organizations as part of an effort to monitor coverage of Chinese issues.

In a report for clients in December, Mandiant, a computer security company, said that over the course of several investigations it found evidence that Chinese hackers had stolen e-mails, contacts and files from more than 30 journalists and executives at Western news organizations, and had maintained a “short list” of journalists for repeated attacks.Among those targeted were journalists who had written about Chinese leaders, political and legal issues in China and the telecom giants Huawei and ZTE.

One could argue that the uncharismatic and inconspicuous Chinese leaders are the total opposite from flamboyant leaders, like solar-king Vladimir Putin or bank-buccaneer Sjoerd van Keulen.

However, all these leaders have in common that:
  • They all live in a self-built cocoon that clouds their vision on reality;
  • They don’t accept contradiction and personal criticism anymore;
  • They all confuse personal for mutual interests, dragging the people down with them that were under their responsibility; 
Summarized, they are all knights of the divine self-righteousness!

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