I have written before that one of the biggest sources of government corruption is the revolving door that takes people from the private sector that serves big business and puts them into government agencies that are supposed to monitor and prosecute those businesses and then those people return to the grateful arms of that sector. The revolving door between the Treasury Department and Wall Street is the most notorious but it goes on at all levels.
These executives and lawyers from the private sector who went to work for the government often took a hefty pay cut but this was seen as an investment because when they returned to the private sector they received great financial rewards, far more than enough to cover their ‘sacrifice’.
But it turns out that even that slight risk and temporary financial hit need not exist. According to this report, firms are giving their people who go to work for the government huge bonuses in advance.
Stefan Selig, a Bank of America investment banker nominated to become the Under Secretary for International Trade at the Department of Commerce, received more than $9 million in bonus pay as he was nominated to join the administration in November. The bonus pay came in addition to the $5.1 million in incentive pay awarded to Selig last year.
Michael Froman, the current U.S. Trade Representative, received over $4 million as part of multiple exit payments when he left CitiGroup to join the Obama administration. Froman told Senate Finance Committee members last summer that he donated approximately 75 percent of the $2.25 million bonus he received for his work in 2008 to charity. CitiGroup also gave Froman a $2 million payment in connection to his holdings in two investment funds, which was awarded “in recognition of [Froman’s] service to Citi in various capacities since 1999.”
Many large corporations with a strong incentive to influence public policy award bonuses and other incentive pay to executives if they take jobs within the government. CitiGroup, for instance, provides an executive contract that awards additional retirement pay upon leaving to take a “full time high level position with the U.S. government or regulatory body.” Goldman Sachs, Morgan Stanley, JPMorgan Chase, the Blackstone Group, Fannie Mae, Northern Trust, and Northrop Grumman are among the other firms that offer financial rewards upon retirement for government service.
These practices shed light on the question: When these people go into ‘public service’, whose interests are they actually serving, the public or their private companies?