Ethical Issues of Corporate Sponsorship of Museums

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In recent years, resources mobilization has become a challenge to museums all over the world, especially with the continued decline in public funding. The French government was the first to start cutting cultural spending in 1993. The government of the United States currently accounts for only approximately 28% of the museum’s operational spending expenses1. The reduction of governments spending has led to fundraising activities to help in covering the cost of running the museums.

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Over the years, museums have been perceived by societies as an epitome of respectability hence all the stakeholders are supposed to consider ethical self-regulation.2 However, museums management organizations faced integrity challenges when their major sponsors and funders have been implicated in unethical practices which risk the museums from losing public integrity. This case study report will provide detailed information on the moral chasm of the art museum corporate sponsorship.

This study review will focus on Vodafone telecom, Adelphia Communication Company founders John and Michael Rigas, Koch industries headed by David Koch and Siemens Ag. The review also highlighted cases involving, Denis Kozlowski, the former chief executive officer of Tyco International Company, Quebec advertising company founder Jean Brault, Philip F Anschutz the founder of Quest, Trafigura Oil Company and Dean Buntrock the founder of Waste Management Company. The study review also made conclusions and recommendations based on the cases that were studied.

There have been growing criticism and controversies on the issue of museums reaching out to corporate sponsors for financial aid. Activists in art industry have accused museums management and corporate sponsors of compromising the integrity and goals of art museums.3 Tate museum management accepted funding from Vodafone despite tax evasion scandal amounting to 6 billion pounds being exposed.4

The artistic activists questioned the legitimacy position of Tate museum ignoring ethical codes and decided to accept sponsorship from a corporation that was implicated in tax scandals. Accepting funds from such organizations damages the museum’s reputation that took years to build.

It is important for museum cooperates to have a good public record as they represent the art galley image. Adelphia Communication Company was once a highly valued sponsor of the National Cable Television Center and Museum.4 John and Michael Rigas, the major shareholders of the company at one time pledged $ 2million dollars. This charitable act earned them lifetime achievement award from the museum and theater was named after them.5

A few months later, museum management faced public embarrassment and shame after John and Michael Rigases had been arrested for allegedly defrauding Adelphia Communication Company’s shareholders billions of dollars.5 National Cable Television Center and Museum was accused of benefiting from stolen money and were guilty by extension.5

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It is evident that some of the museums are driven by financial greed and are not willing to observe their code of ethics. Siemens AG, a multi-national firm has been rocked by several corruption and criminal scandals.6 In November 2006, police officers arrested Siemens AG top level management staff for bribery, embezzlement and tax evasion charges in Munich.6

One year later, Siemens senior managers were convicted of embezzling funds amounting to 6 million Euros and bribing officials to win over turbine contracts. Such are the kinds of allegations that the company is facing. Despite the corruptions scandals, Zoo Children’s Museum and Science Museum maintains funding from Siemens AG.6

Accepting funds from Siemens AG questions the integrity of the two museums on ethical code.6 It is a fact that Semen Ag contributed in the transforming of the Children Zoo and Science Museum. But, Kevin Smith argues out that museum’s ethical code does not relate to how organizations run their business.4

Koch industries are one of the world’s “largest privately owned companies”. In May 2008, Koch industries were alleged to have paid bribes win contracts7. The same year, Lincoln Centre’s New York Theater was granted a million of dollars for its modernization. He also pledge $135 million to National Museums and $10 million dollars to Metropolitan Museum.7It is very clear that the three museums did not revisit their ethical code before appointing David Koch as member of trustee board. Considering that Koch companies were implicated in corrupt dealings.

Mr Denis Kozlowski the former chief executive officer of Tyco International Company pledged funds to Whitney Museum of American Art and Middlebury College.8 Mr Kozlowski was noticed to charge frauds, he was involved in racketeering, grand larceny and tax evasion; he was further accused of taking more than $43 million from Tyco International Company.

The reputation of Whitney Museum of American Art was negatively portrayed when Tyco International Company contended that $2.5 million donated by Mr Kozlowski belonged to the company.8 Such scandals have proven right that museums do not observe their code of ethics any more.

Philip F Anschutz, the founder of quest was charged by New York attorney for improperly benefiting from initial public offer (IPO); he sold $213 million shares with the knowledge that Quest had financial problems.10 American Museum of Natural History over looked its ethical code and still retained Mr. Anschutz as the president of the honorary trustee board.10

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Dean Buntrock the founder of Waste Management was charged for fraud practices. Mr. Buntrock has been an active financial sponsor of various museums. Most recently, Mr. Buntrock was appointed the chair and the president of museum of Science and Industry trustee contravening the museum ethical code. Such cases, demonstrate museums managements unwillingness to observe ethical conduct and integrity1.

In 2009, Cynthia Corbett’s museum management was commended for observing museums ethical codes by dropping Trafigura Oil Company as their cooperate sponsor of Corbett art prize.4 The museum management did not wish to be associated with a corporation that was accused of environmental pollution. They observed their ethical code which strongly advocated for sustainable environment4.

These are such decisions that help maintain reputation and integrity while archiving the primary goals of art museums exhibitions. Museums management should verify the integrity of the corporate sponsors to make sure they don’t contravene their ethical code.

In conclusion, it is evident from the case studies identified that museum management does not observe the set ethical codes, which has led to increase of the cases related to cooperate fraud and corruptions. Artistic activists have often criticized museums managements for not observing their ethical codes and allowing corrupt dealings. The case studies have also reveled that most of members of museums’ boards of trustees have been accused of corporate fraud and tax evasions hence they can not pass the integrity test.

This case study, recommends a review of policy guide lines that regulate cooperate museum funding. If new policies guidelines are well implemented and ethical code are upheld, improved governance will prevail whilst public faith in museums corporate sponsor ship and philanthropy will be restored.

Footnotes

  1. Jill Martinez, “Financing a Global Guggenheim Museum” in Jonathan Glancey, ed., Art – the showbiz years: (South Carolina: University of South Carolina press, 2001), 4-5.
  2. Simpsons Solicitors. Ethical Problems. Web.
  3. Stefanie Little, The Business of Museum Ethics and Sponsorship Relationships: University of Sydney. Web.
  4. Tom Jeffreys, Tax, Oil, Capitalism, Censorship: Corporate Sponsorship and the Arts. Web.
  5. Ariana Eunjung, Corporate Scandals Tainting Donations: Mind full. Web.
  6. Steve Akana, Case Analysis: The Bribery Scandal at Siemens AG, Document Transcript. Web.
  7. Bloomberg. Koch Brothers Flout Law Getting Richer With Secret Iran Sales. Web.
  8. Stephanie Strom, In Charity, Where Does a C.E.O. End and a Company Start? .Web.
  9. CBC news, In depth: Sponsorship Scandals Who’s who: Players. Web.
  10. National Committee for Responsive Philanthropy Serving Time on Foundation Boards. Suite 620.

Bibliography

Akana, Steve. “Slideshare.” case-analysis -the- bribery-scandals-at-siemens. Web.

Bloomberg. “Koch brothers flout law getting richer with secret Iran sales.War in Context , 2011. Web.

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Eunjung, Ariana. Corporate Scandals Tainting Donations:Mind full Org. 2002. Web.

Jeffreys, Tom. Tax, Oil, Capitalism, Censorship: Corporate Sponsorship and Arts. 2011. Web.

Little, Stefanie. The Bussiness of Museum Ethics and Sponsorship Relation. 2006. Web.

Martinez, Jill. “Financing a Global Guggenheim Museam.” In Art the show biz years , by Jonathan Glancey, 4-5. South Carolina: South Carolina Universirty , 2004.

News, CBC. Indepth: Sponsorship Scandals. 2008. Web.

Philanropy, National Comitee for Responsive. Serving Time on Foundation Foundation Boards. Washington DC: National Committee for Responsive Philanthropy, 2004.

Solicitors, Simpson. “Ethical Probrems.” Simpson. 2000. Web.

Storm, Stephanie. The New York Times BUssiness Day. 2002. Web.

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BusinessEssay. "Ethical Issues of Corporate Sponsorship of Museums." September 2, 2022. https://business-essay.com/ethical-issues-of-corporate-sponsorship-of-museums/.