You could feel tension in the room as Wake Forest alumnus, entrepreneur and filmmaker Devin Smith (’98) showed politically charged short films challenging business students, faculty and visitors to think deeply about ethics and greed.
The BB&T Center for the Study of Capitalism at the Wake Forest University Schools of Business invited Smith to return to campus to share some of his work and lead a panel discussion posing the question—while certain business practices are technically legal, are they are morally correct?
Smith is vice president of operations and business affairs for Brave New Films in Los Angeles. He credits Betsy Hoppe, associate dean of student graduate affairs, for helping him marry his passions of entrepreneurship and film. “I am an entrepreneur at heart. I did not want to go to work for a bank or a large corporation. I really enjoyed films, but I didn’t know the business of films at all,” he said.
“I told Betsy what I was interested in, so I took some courses in film history and screenwriting at Wake Forest just to get learn about the nature of film and see how I could use my business background in the film industry.”
With a solid business education, Smith went on to earn a Master in Fine Arts degree from the American Film Institute and got a job with Robert Greenwald films in Los Angeles. Greenwald founded Brave New Films to create short political documentaries to educate, influence and promote action to an online audience.
The “War on Greed” series of films presented by Smith focused on the personal wealth of Henry Kravis, of the private equity firm Kohlberg, Kravis, Roberts & Co. The films juxtaposed images of Kravis’ luxurious estates with the homes of blue collar workers like a teacher, nurse and firefighter.
“This is more along the lines of propaganda than anything,” said panelist Austin Shrum, a political science major and chairman of the Wake Forest College Republicans. He came to the defense of Kravis and his PE firm. “Kravis is employing thousands of people, maybe even one of those blue collar workers. If there is a problem with the tax law, then that is not the responsibility of Mr. Kravis. Taxes are decided by public policy.”
Business Enterprise Management major Andrew Singer (’11), acknowledged public support to require private equity firm owners to pay higher taxes, but emphasized the importance of the firms’ existence. “Private equity firms provide an avenue and a service to the clients without customers noticing a difference,” he said.
Dr. Charu Raheja, assistant professor of Finance at Wake Forest used a local example of when Kravis’ company KKR took over RJR Nabisco to explain the function of a private equity firm to the audience. “Private equity firms buy failing companies, make them more efficient, and typically fire the CEO and top management. They (private equity firms) try to fix production problems, decrease costs, and either take the company public, or sell to a private company.”
She also posed the question of whether today’s taxpayers would have been better off if a private equity firm took over General Motors. “GM cost the U.S. government $50 billion. What would have happened if a company like KKR acquired GM, and gotten millions of dollars in tax breaks, would it have cost taxpayers as much?
Another series of short films shown by Smith focused on taxpayer money going to lenders during the mortgage crisis and CEO compensation. The films ended with a call to action to “fire Ken Lewis” (former Bank of America Corp. president and CEO).
Panelists and audience members engaged in a discussion of whether both banks and mortgage applicants were participating in unethical activity. Raheja pointed out how some mortgage holders knew going into it that they could not afford the monthly payments in addition to regular household expenses such as groceries and utilities. “Part of the morality issue here is who do we blame? Are we responsible for our own actions or do we need someone else to stop us from doing things because they know better than we do?”
While discussions were intense at times, Smith defended his work and the messages. “Our point is to say don’t just sit back and allow things to happen. Do something” he said. “As you go out in the world, look at how your company is doing business.”
The “Ethics and Corporate Greed” presentation was part of the Ethics Passport Series presented by the BB&T Center for the Study of Capitalism. Click here to learn more about the Center's upcoming events.