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Nepotistic Networks

November 17, 2011

I take my hat off to François Pérol, the adviser whom Nicolas Sarkozy, France’s president, controversially appointed to head two merging mutual banks, and of whom it’s said is not known as a champion of transparency.  But Mr Pérol has let it be known that he intends to reduce the influence of Freemasons at Caisse d’Epargne and Banque Populaire, [1] obviously admitting he recognises there is a major problem with them, and refused an invitation to a ‘tenue blanche ouverte’, a Masonic meeting that non-Freemasons may attend.  And he does not want senior posts shared among the bank’s various “rival lodges”.  See what I mean; “rival lodges”, I hope your getting a clearer picture about the truth of these banking cables.  And this kind of lodge rivalry isn’t just subject to France or their banking fraternity, as it’s the same in the UK, USA, Germany, Canada and many other countries, and in virtually all major industries. – French business may be particularly full of networks, but every country has its cliques, whether based on education, social background or spiritual beliefs, “Ox-bridge” is a good example here in the UK, whereas it refers to that elite group of people whom all seem to have found cushy numbers in governmental jobs and connected vocations, and whom many seemed to have attended either Oxford and Cambridge Universities respectively.

America has its Alpha, Delta, Kappa like Greek Fraternities and Ivy League alumni type of groups and Rotary and Lion clubs etc.  Chinese businesspeople often rely on Guanxi [2], which describes the basic dynamic in personalised networks of influence, and is a central idea in Chinese society.  At the same time, online professional networks such as LinkedIn, headquartered in California, Viadeo, a French-owned website, and Xing, a site with a strong presence in German-speaking countries [formerly called the Open-Business-Club], are surging in popularity thanks in part to the fear of lay-offs during the recent and continuing recession/s.  In 2009, it took LinkedIn a month to win one million new members; in 2010 it was taking about 15 days to attract this same number, and the site had 60 million members around the world by February 2011.  Online networks, in contrast to the old kinds are open to all and easy to join.  Old-style networks, however, are usually stronger than online ones, and the trust between their members facilitates transactions of all sorts.

In Spain, Italy and Latin America as well as France, businesspeople speak of the influence of Opus Dei, who keeps cropping up throughout the book, – there a conservative Catholic lay-order which supports a number of business schools, and as I’ve said universities are breeding grounds for all these kinds of fraternities.

Opus Dei membership is no bar to political office, says Scottish National Party [SNP’s] David Kerr, the SNP’s candidate who ran for office in the July 2009, Glasgow North-East by-election, confirmed he is a member of the controversial organisation Opus Dei, but argued that his religious beliefs should not be a factor in the election.  Former BBC journalist David Kerr, chosen as the party’s candidate, said it was “preposterous and deeply prejudiced to argue that somebody of his religious beliefs should be debarred from running for public office”.  He said his religious views were now an “open book”.

Not all students at the Instituto de Estudios Superiores de la Empresa [IESE], a leading business school with campuses in Barcelona and Madrid are aware that it’s an initiative set up by Opus Dei.  But many of them, particularly those of Spanish origin are invited to join the Order.  IESE has a network of 15 business schools in developing countries, some of which explicitly state a goal of bringing a Christian perspective to business – combining family with work is the special subject of Nuria Chinchilla, a professor at IESE.  But networks can also have sinister effects, and sometimes aid and abet crimes.  In many French companies, there’s often pressure to employ or promote people based on their connections, businesspeople say. [1]

A study by Francis Kramarz and David Thesmar published in 2006 by the Institute for the Study of Labour in Bonn, looked at students connected to French business networks; former civil servants who graduated from the École Nationale d’Administration and École Polytechnique who went straight into business, out of these two elite schools, it produce 500 or so French graduates a year, and who dominate the boards of France’s biggest companies [1].  The study showed that firms run by former civil servants who maintained their links to government markedly underperformed those run by executives with purely private-sector backgrounds.  Competition suffers, too, as Nicolas Véron of the organisation Bruegel – a think-tank, says, networks make it hard for new firms to emerge in France, since established ones are conservative about whom they do business with.  As a result, he says; “You often see that successful young firms are business-to-consumer rather than business-to-business”.

Whilst in America, a 2007 study of mutual funds by Lauren Cohen and Christopher Malloy of Harvard University and Andrea Frazzini of the University of Chicago found that American fund managers invested more money in firms run by people who attended the ‘same university’ as them [1].  Moreover, membership of the Rotary service clubs, which started in Chicago in 1905 and have since spread across the world with well over a million members, is by invitation only and women were not admitted until the late 1980’s.  The Lions Club International, also based near Chicago, may be the most global offline business network, with 1.3million members in more than 200 countries.  A third business network is the Benevolent and Protective Order of Elks, members of which must be Christians.

According to Dan Serfaty, Viadeo’s co-founder, online networks can reinforce offline ones.  “A graduate of École des Hautes Études Commerciales de Paris [HEC] might use the school’s own website to look for any alumni working at, say, Google”, he says.  “But using Viadeo’s tools, he can also do a broader search for anyone who attended HEC and knows someone working at Google, so the network becomes more powerful”.  Online networks make it easier to gather information on firms and their employees, argues Jean-Michel Caye, a specialist in human resources for the Boston Consulting Group in Paris.  But if you want to influence a big decision or secure a job, he says; “It’s still the old networks that really count”.

Extract from Trapped in a Masonic World.

[1] “LinkedIn v freemasons: Joining the club | The Economist.” <http://www.economist.com/node/13914661?story_id=13914661&gt;.

[2]”Guanxi – Wikipedia,<http://en.wikipedia.org/wiki/Guanxi&gt;.

 

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