Nov 7, 2008 11:34 pm US/Pacific
Bailed Out Morgan Stanley Throws Lavish SF Party
SAN FRANCISCO (CBS 5) ―
A company that received tax dollars as part of the economic bailout threw a fancy party in San Francisco's new Academy of Sciences this week. CBS 5 cameras went undercover and caught the party on tape.
That private party was indeed held by Morgan Stanley on November 3rd after closing time at the new California Academy of Sciences in Golden Gate Park.
These attendees are not members of the normal paying public. They're some of Morgan Stanley's wealthiest clients, part of the company's private wealth management division. On this night, guests and their children were given access to all 410,000 square feet of the world-class museum, including the rainforest exhibit and the aquarium.
There was plenty of wine, plenty of food, and dessert served in the restored African Hall.
The price tag? CBS 5 Investigates estimated at least $50,000 for the catering, and some $30,000 for the venue, over $80,000 total.
A Morgan Stanley spokeswoman said the party is a non-issue, that it was a client event and a "completely legitimate business expense, a normal and appropriate part of running our business."
But the question raised by some, for a company that's part of the big government bailout, that had $10 billion dollars pumped into it by the Treasury Department, was this too much business as usual?
CBS 5 Investigates took that question to business ethics professor Ben Hermalin with UC Berkeley's Haas School of Business who says there is a reality here. "I think that they have to do business and wining and dining clients is part of doing business," Hermalin said.
But he also said in these economic times, businesses may need to be a bit more sensitive to appearances. "It sounds a little bit tone deaf in the sense that having a big public event like that in a prominent place at this time might seem a little bit insensitive to people's concerns about undue extravagance," Hermalin told CBS 5 Investigates.
A Morgan Stanley spokeswoman said the party was planned and paid for back in August, and the costs are "tantamount to an advertising budget." But Hermalin said it might also pay to think about the message.
"It's really just a matter of perception, do they want to seem as if they are being extravagant, which will cause people to become upset, particularly now that they know that its taxpayer money that has gone into these firms," Hermalin said.
Meanwhile, Morgan Stanley did announce it was cancelling all holiday parties for employees nationwide.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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