Letter: Put donations to the ballot

Mr S. G. Grant
Sunday 20 June 1993 18:02 EDT
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sIR: Political donations by public companies are most likely to be made by a company under the effective control of an entrepreneur of strong personality and/or with a large shareholding. In contrast, where the chairman is not more than the first among equals, and directors' shareholdings are modest, as is the case with a number of leading companies, political donations are not the norm.

There can be be no objection in principle to large shareholdings of directors conferring voting power proportionate to the size of stake, when such power is exercised as a stabilising influence in the pursuit of a company's commercial objectives. But do large shareholdings provide an adequate validation for decision-taking by directors over political donations?

These may depend more on personal political sympathies than on any perceived commercial benefit to the company.

An interesting initiative to ascertain the viewpoints of its large number of individual shareholders was carried out by a highly regarded multinational, Unilever, on a 'one shareholder, one vote' basis. The outcome was a slim majority in favour of political donations by the company, but as the result was finely balanced, the board decided not to go ahead.

The steps taken by Unilever, perhaps carried out periodically, could provide the basis for reform to resolve this contentious issue of political donations by public companies.

Yours truly,

S. G. GRANT

Letchworth, Hertfordshire

18 June

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