Under the surface of the current anti-capitalist protests, from Wall Street to the City of London, is a decade-old sore that never healed. On October 16 2001, Enron hosted the earnings call that first alerted the world to the toxicity of its off-balance-sheet arrangements. It triggered a death spiral. By December 2, Enron was bankrupt. Within a year, Arthur Andersen, its auditor, had disintegrated.
Enron was turned into books, films, a play and a byword for fiduciary failings and fraud. But the real lessons went unheeded.
Instead, many read the sermons – the importance of ethics, governance and transparency, the dangers of complexity, short-termism and one-sided incentives – in the same way they had read Michael Lewis’s Liar’s Poker, about the Salomon Brothers trading scandal of the mid-1980s: not as a warning, but, in the author’s words, “as a how-to manual”.
Here’s what the world should have learnt from Enron. ● Bad culture starts at the top. As leaders of the company, Ken Lay and Jeff Skilling took credit for the growth of Enron, but they bore the responsibility for allowing a tangle of self-dealing and scandal to bring it down. The companies that failed during the financial crisis – AIG, Bear Stearns, Lehman Brothers among them – failed largely due to their leaders’ hubristic sense of their own impregnability. ● Bad outcomes often result from many small steps, not single reckless leaps. The Enron board’s notorious decision to waive its code of conduct and allow its chief financial officer to serve as general partner for an off-balance-sheet vehicle was the culmination of a series of smaller decisions. Directors were led step by step into the mire. ● Conflicts of interest and ill-conceived monetary incentives oil bad behaviour. Sherron Watkins, the Enron whistleblower, told me last week: “I’ve been speaking about this for 10 years and I’ve come to the sad conclusion that when a lot of money is pouring on top of your head, it really clouds your judgment.”
The consequences of Enron directors’ clubbiness (lubricated by consulting payments or donations to some directors’ favourite charities) were compounded by conflicts at Andersen, which earned more from consulting for Enron than from monitoring its books.
Yet US boards remain bastions of resistance to the checks and balances on shareholder democracy. European regulators have only recently rejoined the battle with professional services firms over the consulting-audit conflict. While fewer companies now award straight stock options, poor pay structures polluted judgments at banks in the run-up to the crisis and encouraged the short-termism that still blights much corporate decision-making. ● Complexity obscures weakness. The complicated derivatives and off-balance-sheet vehicles that undermined banks in the financial crisis were the inheritors of the exotically titled partnerships – Chewco, Jedi, the “Raptors” – that helped entangle Enron’s legitimate businesses.
Having built such structures, their architects, if they understood them at all, naturally preferred obfuscation to openness. ● Lack of trust destroys goodwill. Fraud and conspiracy were the charges that earned jailtime for Lay, who died shortly after sentencing, and Skilling, who continues to appeal. But the endgame started with the collapse of trust in the trading business at Enron’s core. As one ex-staffer puts it now: “The facts kept turning out worse than the reports.” That sounds eerily close to the crisis of confidence that has afflicted – and, in some cases, continues to afflict – the banks.
There are few comforts. The Dodd-Frank act that followed the banking crisis was more enlightened than the knee jerk Sarbanes-Oxley act that followed Enron. Boards are generally more wary of groupthink.
But, like Renaissance sages who kept a skull on their desks to remind them of their mortality, executives, directors, auditors and regulators should keep Lay and Skilling’s 2000 letter to shareholders (“Enron [is] the right company with the right model at the right time”) to hand.
Within six or seven years of the fastest fall from grace of any Fortune 500 company, we had largely forgotten the fatal flaws that caused it. Instead, we fostered an even grander, greedier, more systemic scandal. Such wilful blindness makes me worry what catastrophes we are now cultivating for the years ahead.
Reed Hastings, Netflix chief executive, made an about-turn following pressure from investors and customers
Netflix has buckled under pressure from investors and customers to make one of the most high profile US corporate strategic u-turns in recent years, backing off from a controversial plan to split its mail-order DVD and its online streaming media businesses.
Richard Greenfield, analyst at BTIG, called the move a “necessary reversal of a bad decision”.
Shares in Netflix had fallen 60 per cent since July, as investors and analysts reassessed the company’s long-term prospects. Netflix traded up modestly in midday trading, but the finished the day down 4.8 per cent to $111.62.
“They’ve completely alienated their customers at a time when there are strong new threats,” said Shahid Khan, a consultant with MediaMorph. “I don’t think their stock is ever going to recover.”
Mr Hastings last month said he would separate the mail-order business, which is declining, into a new company, called Qwikster, and keep the growing online streaming business as Netflix.com. But on Monday Mr Hastings completed an about-face.
“There is a difference between moving quickly – which Netflix has done very well for years – and moving too fast, which is what we did in this case,” he said.
The plan to split the company followed a price increase in July that caused Netflix to lose at least 1m subscribers. Mr Hastings on Monday said there would be no more price increases.
Analysts said the introduction of Qwikster and its quick demise ranks among the more spectacular debacles in recent business history.
“This doesn’t quite rise to the same level of self-destruction as New Coke [when Coca-Cola briefly tried a new formula in 1985],” said Adam Hanft, a brand strategist who works with media and technology companies. “But it’s pretty close.”
Mr Hanft drew a comparison between former Apple chief executive Steve Jobs, who died last week, and Mr Hastings: “It points to how sure-footed Apple is in understanding consumer behaviour, and how Netflix has lost its way.”
As Netflix works to attract new customers and retain existing ones, it is having to spend hundreds of millions of dollars on new content deals with television and film studios such as Fox, AMC and DreamWorks. Those costs continue to rise, and negotiations between Netflix and Starz, the premium cable network that owns rights to films by Walt Disney and Sony Pictures, recently broke down.
The turmoil has prompted a fresh analysis of the company’s value. “In the long run if they go all digital, the economics may not work,” Mr Khan said. “The whole love affair with Netflix is, if not over, at least tainted.”
Mr Lee Tzu Yang, chairman of Shell companies in Singapore, on his way to catch a ferry to Pulau Bukom. He said the fire was his most challenging battle with safety since joining the oil giant in 1979. -- ST PHOTO: CAROLINE CHIA
By Robin Chan
For 32 hours last month, Singaporeans watched with rapt attention as a fire burned on an island 5km off the southern shore of Singapore.
While firefighters battled to contain the conflagration at Shell's Pulau Bukom refinery, an eight-man strong crisis team huddled inside a room at Shell's headquarters on 83 Clemenceau Avenue, miles away from the action. Heading this team was Mr Lee Tzu Yang, the 56-year-old chairman of Shell companies in Singapore.
For the man facing the largest refinery fire in Singapore for more than 20 years, the pressure was on. There was a hint of irony too in the situation - Mr Lee is also the chairman of Singapore's Workplace Safety and Health Council. But if the heat was on him, one would have been hard-pressed to see it.
Shell chairman takes leave from workplace safety council
Shell Singapore chairman Lee Tzu Yang, who also helms the Workplace Safety and Health Council, took a temporary leave of absence from the industry body last Monday.
He told The Sunday Times that the move was to avoid any conflicts of interest as the inquiry into the cause of the Pulau Bukom fire gets under way.
'I wanted to make absolutely clear from the beginning that I do not seek to, and will not, have any influence whatsoever on the investigation, and Shell will fully cooperate,' said Mr Lee.
'This leave of absence will also enable me to better focus on Shell's recovery efforts.'
The blaze, which engulfed a pump house at the oil giant's half-a-million barrel-a-day refinery on Pulau Bukom, burned for 32 hours two weeks ago. As a result, parts of the refinery - Shell's largest in the world - have been temporarily shut down.
Investigations by the Ministry of Manpower and Singapore Civil Defence Force are still ongoing.
Mr Lee said he is confident Shell will take the lessons learnt from the fire in its stride and be the better for it.
'Safety is too important for us to shrink from the responsibility to make this message heard,' he said. 'If we do not step up to this, we will not succeed in making Singapore a leader for safety and health in the workplace.'
The 18-member council was established in 2008 to help raise workplace safety and health standards among local industry players.
The Manpower Ministry said yesterday that Maritime Sustainability chief executive Heng Chiang Gnee will be acting chairman of the council.
Shell's response to the crisis turned out to be so slick and well-oiled that Mr Lee said he did not have trouble sleeping about four or five hours each night, and did not even need to set foot on the island until the fire went out on Sept 29.
Speaking to The Sunday Times in an exclusive interview eight days after the incident, Mr Lee - dressed in a navy blue protective jumpsuit (known as personal protective equipment) on his way to Pulau Bukom - cut a cool figure as he shared his thoughts on his 'most challenging' battle with safety since joining the oil giant in 1979.
It started with a phone call at about 1.45pm on Sept 28.
On the line was Mr Martijn van Koten, vice-president for Shell's manufacturing operations, who said a fire had broken out at Pump House 43 - an area containing an intimidating network of pipes carrying gasoline, kerosene and other expensive refined oil products.
That first conversation was deliberately short.
'In a fire, the protocol is to let the folk at the fire fight the fire and not burden them with questions. Because that's not going to help them,' Mr Lee said.
Forty-five minutes later, he got another call telling him that the fire was being contained by Shell's own 40-man strong firefighting team, which was eventually boosted by some 100 personnel from the Singapore Civil Defence Force (SCDF).
At the site, safety mechanisms had also clicked into place.
First, automatic pumps were activated, spreading foam on the fire.
A drainage system around the pump house area also kicked into gear, pumping any run-off liquids out, away from the fire and pipes.
The fact that all these systems worked was a big relief for Shell, and they played a significant part in helping to keep the gigantic inferno to a contained area measuring 176m by 65m.
'These systems are designed for that purpose, but they may not be designed for that amount,' Mr Lee said.
'So we needed to make sure we could handle the volumes of foam, water and hydrocarbons that came through. And it worked, so that was another confidence-builder.'
Meanwhile floating barriers called 'booms' had also been put out as a precautionary measure, along with a boat that kept watch in case any of the chemicals spilled into the sea. But that did not happen.
Firefighting in the office
Mr Dai Nguyen, Shell's health, safety and environment manager, was attending a course on nearby Jurong Island when he heard about the fire through an automated emergency call-out message.
He could already see the huge plumes of smoke from where he was and, as he was a key member of the Emergency Response Team, he rushed back to Bukom to coordinate the site response and link up with the SCDF.
The cool and systematic approach to dealing with the fire came as no surprise to the thousands of staff and contractors who commute to Bukom each day.
Pulau Bukom, a 1.45 sq km mass of land that Shell has occupied since 1891, has 12 islandwide drills a year that specifically include firefighting, and contacting the SCDF in emergencies.
As luck would have it, its most recent exercise last month was its one annual joint exercise with the SCDF.
'These are the sort of things you thank God for after the event, that you have actually practised,' said Mr Lee, a father of three.
The SCDF came well-prepared too, so much so that piles of extra equipment, such as pumps and foam tenders, lined Pasir Panjang ferry terminal.
'They prudently over-responded,' said Mr Lee, smiling. 'You can laugh at it, but at the time, it was a great source of comfort.'
After receiving the second phone call at 2.30pm, there was radio silence from Bukom over the next few hours. Mr Lee hoped that meant the fire was being put out.
But instead he got shocking news that there had been a violent surge at around 6.30pm which damaged three fire trucks.
That was when Mr Lee declared a crisis in order to get more help, and formed a crisis management team at Shell House.
'I activated the office-based staff to start bringing them in and thought, 'OK, this is going to be a long night,'' he said.
'It was not just the people at the site who now needed to be fighting the fire, we needed to, as a company, think about what this might mean.'
Among the team were people in charge of Shell's manufacturing, supply, communications and human resources, and also an overall co-coordinator who would act as Mr Lee's back-up.
By then, Mr Lee had already made a phone call to Shell global chief executive Peter Voser in the Netherlands, who had offered words of support and asked Mr Lee to make sure that no one was being 'overstretched'. Mistakes happen in such circumstances, he had said.
But the more difficult conversation with Mr Voser came a day later, after a second violent surge in the middle of the day dented the spirits of the Shell and SCDF people.
'To have had not one, but two surges, that was quite worrying,' Mr Lee said.
'Some of our people had already been working for 20 to 30 hours straight. So we started to put on shifts and to find alternates. We started to say: 'Okay if this were to take a week, do we have the resources?''
Emerging from trial by fire
As the hours wore on and the fire continued to burn, the weariness and worry started to be clearly apparent on the faces of Shell and SCDF staff at their second media briefing at a temporary tactical HQ at the Pasir Panjang ferry terminal on the night of Sept 29.
The SCDF said it had never seen this kind of a fire, described later as 'complex and multi-dimensional'. And even Shell's experts could not figure out what was actually feeding the fire from the myriad pipelines.
They had decided to fly in Shell's global health, safety and environment consultant Evert Jonker to provide more help.
A weary Mr Lee headed back to the office, planning for another long day of crisis management.
But, just as unexpectedly as he had found out about the fire, he got a call telling him that it had finally been put out, 32 hours after it began.
Looking back, a stoic Mr Lee said he was just relieved that the fire was not bigger, and that no one was seriously injured.
'Fire is one of the things we fear the most and we are most loath to have because hydrocarbons and fire don't mix,' he said.
That the situation did not play out worse had much to do with training and rehearsing, he firmly believes.
'We are in an industry where the implications of taking your eye off the ball are horrendous, so we take safety very seriously in my company,' said Mr Lee.
'We train and train our people. And we tell them this is what we need to do, this is what we need to be ready for. And that even if this happens once every 20 to 25 years, one incident can wipe you out.
'I am still very, very interested in what caused the fire, because that's the other side of the safety angle that we need to pay attention to, but I'm very glad that on this side, we were able to protect people.'
The refinery on Bukom has now reached a stable and safe state, said Mr Lee, after it had been progressively shut down since the start of the fire.
With a key hydrocracker unit shut and others operating at low throughput, the challenge now is to find a way to supply customers with the petrochemical products they had ordered.
A dedicated safety study has been performed for all units adjacent to the incident site, which has confirmed that they are not damaged.
'We can confirm that some operations have continued and some operations will resume at the site but we are unable to comment on operational specifics,' he said.
Shell is now looking at re-connecting the network of lines within the refinery to start up operations without the damaged areas, which are currently under investigation by the Ministry of Manpower and SCDF.
One bone of contention that Shell has had to deal with is the concept of force majeure, which means the company is freed from contractual obligations in the event of extraordinary circumstances.
Although the company declared force majeure on some of its contracts, it does not mean Shell would be walking away from its obligations to its customers.
'It does not imply automatic cessation of supply or even reduction,' said Mr Lee. 'It basically gives notice that the circumstance agreed between buyer and seller in the contract has happened, so we need to re-think and follow the clause.
'We have been in Singapore for 120 years. We wouldn't be here if we didn't take our customers and our obligations seriously.'
Rising from the ashes
After any crisis, it is common for someone at the top to take the blame. But Mr Lee said he has no plans to resign and never felt any pressure to do so over the fire.
'Do I feel personally responsible? There is certainly a sense of responsibility,' he said.
'But I need to understand what I could have done better and I think I rely on the investigation to do that.'
He does let on, however, that he has been turning over in his mind things he could have done 'over the last three years, five years, or 10 years' that could have made a difference in preventing the fire from starting in the first place, or that could have made his people even better prepared.
But that reflection will have to come at a later time.
'My responsibility now is to make sure the company is brought together during this difficult period, make sure the co-operation with the public services goes on well, that the recovery for our customers is well managed and then let the investigation come up with its recommendations,' added Mr Lee.
Shell will go through an internal process of what he called 'causal learning' - looking back at each action that led to the fire 'almost to the point of absurdity'.
'You go back to not only what created the spark, but also what created the atmosphere around it. Was there deficiency in training? Were there things that we could have done differently?'
Before he left to catch his ferry to Bukom, Mr Lee could not help but warn Singaporeans not to be alarmed when Shell eventually starts up its refinery fully again.
'In a start up or shut down, you will always see a bigger flame!' he quipped.
'We don't want the public in Singapore to believe that this is any problem, this is entirely normal. And it is safer to have a bit of a flame than not to have it.'
A fire which is better than no fire? For Shell, clearly not all fires are so bad after all.
Founding PM considers himself first-time lucky in developing Singapore
Published on Sep 28, 2011
Mr Lee Kuan Yew with forum moderator Michael Tay at the Russia-Singapore Business Forum held at the Sands Expo and Convention Centre yesterday. Mr Lee also fielded questions on the global economic turmoil and the challenges facing Russia. -- ST PHOTO: LIM WUI LIANG
By Kor Kian Beng, Political Correspondent
SINGAPORE'S founding prime minister Lee Kuan Yew considers himself first- time lucky in developing the country to what it is today and believes that he 'could not have done better'.
Now, at age 88, Mr Lee is no longer harbouring burning ambitions to further shape Singapore, as that is a job for the younger generation, he said yesterday.
'I'm strolling into the sunset. When you're 88, there are very few new things you can undertake and have the hope of having enough time or energy to see through.
VALUE OF EXPERIENCE
'I'm strolling into the sunset. When you're 88, there are very few new things you can undertake and have the hope of having enough time or energy to see it through... So all I do is take part in dialogues like this and dispense my experience.'
Mr Lee Kuan Yew, in response to a question about his plans for the future.
'So all I do is take part in dialogues like this and dispense my experience,' he said at the Russia-Singapore Business Forum (RSBF).
Mr Lee was responding to a question from Mr Michael Tay, Singapore's former ambassador to Russia and founder of the RSBF, about his plans for the future.
It was one of two questions that got Mr Lee more pensive during the dialogue, which otherwise focused mostly on international and Russian affairs.
Asked what he would have done differently if he could start over again, Mr Lee, Singapore's first prime minister from 1959 to 1990, cited a lesson gleaned from his golf instructor to make his point.
He said: 'I think I can best describe it by my golf pro who taught me a trick when he put a golf ball on a high peg. He took a golf wedge, swiped, broke the peg into two and the ball dropped down.
'So I said, 'Show me again.' He said, 'But it may not happen the second time.' He was first-time lucky. I see my life like that. I won't like to retrace my life. I could not have done better.'
Mr Lee's response triggered applause from the audience, who were mostly Russian and Singaporean corporate leaders.
They were among some 700 participants at the yearly RSBF, which began in 2006 as a platform to explore business and investment opportunities in Russia and Singapore.
As in previous years, the three-day event, which ends today, featured a dialogue with Mr Lee.
Most of the 16 questions that he fielded revolved around the global economic turmoil, and the challenges facing Russia.
On the global economy, Mr Lee called it 'a difficult situation', with the two big growth engines in the United States and Europe both slowing down.
He added: 'China and India have not slowed down, they are having their own internal consumption to push... But if the US market does not improve, then after a while the export growth volume of China and India selling to America and Europe will also begin to fall.
'So we have to hope that within the next few years, the American economy will recover and exports from China and India may carry on.'
Asked by a Russian participant if Russia or Singapore stood a better chance of coming out unscathed from the economic difficulties, Mr Lee said he would not compare the two countries.
That is because Russia is able to rely on its 'enormous resources' such as oil and gas, while Singapore is more dependent on external demand, he added.
So Russians are doing well now as commodities are commanding high prices and will continue to do so for a long time, Mr Lee pointed out.
But there are downsides too, he said, because as long as the country is doing well, there will be no incentive to change its systems and move towards becoming a more technology-based economy.
Bosses think their firms are caring. Their minions disagree
Sep 24th 2011 | NEW YORK | from the print edition
AS WALMART grew into the world’s largest retailer, its staff were subjected to a long list of dos and don’ts covering every aspect of their work. Now the firm has decided that its rules-based culture is too inflexible to cope with the challenges of globalisation and technological change, and is trying to instil a “values-based” culture, in which employees can be trusted to do the right thing because they know what the firm stands for.
“Values” is the latest hot topic in management thinking. PepsiCo has started preaching a creed of “performance with purpose”. Chevron, an oil firm, brands itself as a purveyor of “human energy”, though presumably it does not really want you to travel by rickshaw. Nearly every big firm claims to be building a more caring and ethical culture.
A new study suggests there is less to this than it says on the label. Commissioned by Dov Seidman, boss of LRN, a firm that advises on corporate culture, and author of “How”, a book arguing that the way firms do business matters as much as what they do, and conducted by the Boston Research Group, the “National Governance, Culture and Leadership Assessment” is based on a survey of thousands of American employees, from every rung of the corporate ladder.
It found that 43% of those surveyed described their company’s culture as based on command-and-control, top-down management or leadership by coercion—what Mr Seidman calls “blind obedience”. The largest category, 54%, saw their employer’s culture as top-down, but with skilled leadership, lots of rules and a mix of carrots and sticks, which Mr Seidman calls “informed acquiescence”. Only 3% fell into the category of “self-governance”, in which everyone is guided by a “set of core principles and values that inspire everyone to align around a company’s mission”.
The study found evidence that such differences matter. Nearly half of those in blind-obedience companies said they had observed unethical behaviour in the previous year, compared with around a quarter in the other sorts of firm. Yet only a quarter of those in the blind-obedience firms said they were likely to blow the whistle, compared with over 90% in self-governing firms. Lack of trust may inhibit innovation, too. More than 90% of employees in self-governing firms, and two-thirds in the informed-acquiescence category, agreed that “good ideas are readily adopted by my company”. At blind-obedience firms, fewer than one in five did.
Tragicomically, the study found that bosses often believe their own guff, even if their underlings do not. Bosses are eight times more likely than the average to believe that their organisation is self-governing. (The cheery folk in human resources are also much more optimistic than other employees.) Some 27% of bosses believe their employees are inspired by their firm. Alas, only 4% of employees agree. Likewise, 41% of bosses say their firm rewards performance based on values rather than merely on financial results. Only 14% of employees swallow this.
THE People's Action Party's loss of ground in the May 7 General Election will not cause Singapore politics to take a populist turn, former prime minister Lee Kuan Yew said at the Russia-Singapore Business Forum yesterday.
He was responding to a question about the future of leadership in Singapore.
A forum participant, noting that Singapore's strong leadership was one of its advantages, asked: 'With the political ground having shifted, are we likely now to see a more populist form of leadership in Singapore and perhaps a somewhat weaker form of government?'
Mr Lee did not think that would be the case.
'You lose one GRC and six seats in Parliament, that's not a disaster,' he said.
'It's just a change in the mood of the people. And whether the change continues depends upon the performance of the new elected people and the response of the Government.'
Some Singaporeans had decided to 'bring in (political) competition' in the belief that it would be good for the people and Government, said Mr Lee.
'But unless the competition is positive, I don't think the trend will continue,' he added.
The question was a follow-up to an earlier one from Russian entrepreneur Ruben Vardanian, who had asked about the problem of populist leadership, whereby worries regarding re-election might hold leaders back from making unpopular decisions.
In response, Mr Lee said that leaders can change policies once the people have decided that change is necessary.
Referring to the recent banking crisis, he noted that Americans and Europeans were leading comfortable lives, and thus did not welcome drastic change.
'But if it goes on - piling on debt and living beyond their means - then their mood will change and then the leaders will be able to take action,' said Mr Lee, adding that 'leaders cannot move out of step with the people'.
On the topic of leadership, a Russian graduate of the Lee Kuan Yew School of Public Policy asked: 'Do you think that institutions have come to be too strong to let any single individual emerge as a strong leader?'
Mr Lee replied that institutions are important to 'make up for the shortcomings of weak leaders'.
With strong institutions, countries such as the US can still go on even if they have weak leaders, said Mr Lee.
'If you depend on a strong leader without institutions, the moment you change the leader, you are in trouble.'
The abbot of Shaolin Temple, labelled as the ‘CEO monk’ by the Chinese media, talks about balancing business and Buddhism
With my iPod headphones plugged in, the abbot of Shaolin keeps his expression perfectly neutral as his eardrums are assailed by the thumping beats of the Wu-Tang Clan.
“I don’t get it,” says Shi Yongxin in his heavily accented Mandarin, after politely listening to the pioneering 1990s rappers from the New York borough of Staten Island who, in homage to kung fu movies of the 1970s, described themselves as coming “straight from the slums of Shaolin”.
We’re sitting in the restaurant of the Shaolin Temple, a Unesco world heritage site nestled in a wooded valley in the shadow of Mount Song in China’s central Henan province. This small monastery is the 1,500-year-old cradle of Zen Buddhism and the spiritual home of kung fu, where for centuries the temple’s monks have practised martial arts so they can uphold justice in society and cultivate their own search for enlightenment. Outside in the warm sunshine, tourists wander the temple grounds and watch incredible displays of strength and acrobatic kung fu, performed at regular intervals by the world-famous fighting monks.
It’s hard to imagine a place less compatible with the violent tirades of one of hip-hop’s greatest ensembles. But I’m trying to explain to his eminence that, even though he is unaware of the Wu-Tang Clan, many people who came of age in the west in the 1990s first heard about his temple from songs such as “Shaolin Worldwide”, and lyrics such as:
The Jedi, only use the Force if ya force me
Shaolin What? Don’t get it f**ked up and cross me
Rappers gettin’ stuck for actin’ stuck up and flossy
“People tell a lot of tall tales about the Shaolin Temple,” the abbot says with the composed demeanour of the deeply religious. “They are not familiar with and don’t represent the real history of Shaolin, the Shaolin culture or the inherited essence of Shaolin.”
If this sounds accurate in the case of RZA, Ghostface Killah, Ol’ Dirty Bastard and the rest of the Wu-Tang Clan, it is also a criticism that many in China have levelled against the abbot himself. The 46-year-old is a highly controversial figure. Since he became, in 1999, only the 30th monk in the temple’s long history to be ordained a full abbot, he has faced relentless attacks for accepting expensive gifts and for commercialising the ancient temple. For those who denounce him through the Chinese internet, the abbot’s initiatives are a sad reflection of society’s crude materialism in a country where, in the past few decades, the crumbling of communist ideology and the rush for wealth have left a spiritual and moral vacuum.
Buddhism is the dominant religion in China, with as many as 300m believers across the country. Like other forms of Buddhism, Zen emphasises letting go of worldly cares and working towards enlightenment through meditation and practice of the Buddha’s teachings, which include a ban on harming any sentient beings. As its home, and the centrepiece of many kung fu novels and films, the Shaolin Temple has become an integral part of Chinese popular culture. In fact, it is probably one of the most famous global brands to have come out of China in any industry, thanks in no small part to the abbot, whom Chinese media have dubbed the “CEO monk”.
The temple’s business ventures include investments in its famous globetrotting kung fu performance troupes, renting out the Shaolin name for films, cartoons and stage productions, and an early stage investment in a possible line of traditional Chinese medicines. It has also sent monks to set up more than 40 Shaolin kung fu and meditation centres in countries across North America, Europe and elsewhere, but the abbot says these and most of Shaolin’s other “cultural activities” barely break even. Instead, he says, the vast majority of the temple’s “few dozen million renminbi” in annual income comes from tickets sold to the roughly 2m tourists that visit the site every year. The temple keeps 30 per cent of the ticket revenues and hands 70 per cent over to the local government.
The temple has registered its trademark across the world in an attempt to stop people from using its name to promote concepts that do not fit with its Buddhist precepts. But the main battleground is in China, where intellectual property protections are weak and companies making everything from soft drinks and chopsticks to electrical machinery and buses have appropriated the Shaolin brand. Even liquor producers and makers of pork sausages have taken the name, despite the fact that strict Zen Buddhism prohibits the consumption of meat and alcohol.
The overwhelming number of infringements and the weak protection offered by China’s justice system mean it is simply not worth going after every offender, but the abbot is optimistic that things will change for the better eventually. “Now if we are to engage in a lawsuit to protect our rights, we will have to spend a lot of money and time and the result will not necessarily be satisfactory,” he says. “Once Chinese citizens are like western citizens, in an environment where the awareness of law is firm, people will naturally abandon using the name of Shaolin Temple.” I’m struck by how similar his vocabulary is to that of a typical Chinese chief executive.
Nevertheless, he explains, the creation in 1998 of the Henan Shaolin Temple Industrial Development Company, saw the temple become the first Chinese religious group to register a trademark for its name, “We’re using legal and commercial means to protect our intellectual property, protect our brand and protect our own inheritance,” he says.
The temple has been destroyed and rebuilt many times since it was established in the fifth century and, following the communist victory in 1949 all of its surrounding farmland was confiscated and redistributed among the masses, leaving the monks with no way to feed themselves. In the disastrous cultural revolution of 1966-1976, the monks who remained at the temple were beaten, persecuted and forced to disperse, but when the terror ended some returned and set about reviving their traditions, including the practice of kung fu.
Since his arrival at the temple in 1981, aged 16, the abbot has dedicated his life to its restoration and revival. I get the feeling he has had to make many compromises in order to protect and promote his monastery and its heritage. But, as he points out, the Vatican is a multinational corporation with its own bank, and Shaolin’s annual income doesn’t even put it in the top 100 on the list of richest temples in China.
We wish everyone could lead a simple life and not chase luxury lifestyles in the way the awful nouveau riche do
“We don’t have much savings in the bank but there is a lot of grain stored in the barn, enough for two years, so if there is a disaster in society the Shaolin Temple could hold out for two years or so,” he adds. It is an astonishing insight into the historical legacy that has forced him to hone his business skills.
The menu for our lunch has been arranged by the temple’s veteran chef, and as our waiters arrive with the first dish – a delicate selection of vegetarian morsels called “three treasures to welcome guests”, made from baked bran, pickled radish and dried tofu – the abbot’s phone rings and he reaches into his flowing crimson gown to retrieve a buzzing Samsung mobile. He politely dismisses the person on the other end of the line and I notice his immaculately manicured fingernails and also that his earlobes are unusually large, a physical trait that in China is said to indicate competence and bring good fortune and riches.
As the bowls keep coming, the abbot is careful to point out that he normally eats very plain food. In fact, that morning I had been allowed to attend dawn prayers and join him and his monks for a hearty meal of rice porridge, vegetables and steamed buns, served by trainee monks who couldn’t have been more than 10 years old. At that meal, the abbot sat with the others on wooden benches in silence as they scoffed down their food in less than 15 minutes.
Having spotted his phone, I decide now is the time to ask him about his penchant for gadgets and expensive gifts, including a Volkswagen SUV and an iPad he is often seen using in public. “The Volkswagen is worth less than Rmb 1m [£98,000] and it was given to me by the local government because we have brought them a lot of profits,” he tells me with only the slightest hint of exasperation breaking through his Zen composure. “We attract a lot of visitors and students so the government awarded me a car to encourage me to do a better job.”
He says the iPad and other gadgets are all gifts from devotees but that he tries to use such things until they are broken and unusable before replacing them. “I’m not doing what I do for other people but for society, for the masses; it’s not for me personally or for the local government but if there is a need in society or among the ordinary folk, then I should do what I can.”
Shaolin Temple,Henan Province, China
‘Three treasures to welcome guests’: with bran, pickled radish and shredded dried tofu
‘Vegetarian shark fin soup’: with pumpkin and bean flour noodles
‘Rose salad roll’: spring rolls with melon, radish and vegetarian ham
‘Floating fragrance in a Buddhist pot’: with cabbage and tofu
‘Blossoming smile of enlightenment’: with fried eggplants, tofu, vegetables
’Buddha jumps over the wall with Zen in his heart’: oily soup with ginseng, mushrooms, wolfberry
Set menu price: approx £80 per person
(After negotiations that lasted almost an hour, I was allowed to pay the bill, as per the rules of the Lunch with the FT. This was a breach of Chinese etiquette but the transgression was eventually forgiven)
We tuck into a dish of cabbage and shredded dried tofu with the delightful name of “floating fragrance in a Buddhist pot” but I notice that the abbot is hardly touching his food. The mention of his dealings with the local government is an illustration of the difficult relationship in China between organised religion and the officially atheist ruling Communist party. The Chinese government only recognises five official religions – Daoism, Buddhism, Islam, Catholicism and Protestantism – and requires that these be organised into institutions supervised by “patriotic associations”, in turn supervised by the State Administration for Religious Affairs and the Communist party’s United Front department.
Other world religions, such as Orthodox Christianity, Judaism, Mormonism or Baha’i, are not recognised by Beijing, and nor are countless underground Catholic and Protestant “house churches”. The government tends to tolerate much of this “unofficial” religious activity as long as it is a private matter, but any hint of political organisation will bring a crackdown.
The Shaolin abbot doesn’t need to worry about this. He has been a member of the National People’s Congress, the country’s rubber-stamp parliament, since 1998 and vice-chairman of the official Buddhist Association of China since 2002. Ordinarily, the abbot and other senior monks at the temple will decide who can be ordained as a monk and the temple will then register them with the provincial religious affairs bureau. But the position of abbot must be directly authorised by the religious affairs authorities, almost all of whom are atheist Communist party members.
I ask his eminence why he thinks he was chosen and his answer is simple: “Because I am obedient. I’m willing to donate myself and serve the people.” To “serve the people” is a traditional communist slogan that regularly trips off the tongue of party bureaucrats. He explains that this subservience of religion to the state has always existed in China and in many other countries as well. “Throughout history it is the same: religion must respect the emperor, respect the government. If a religion doesn’t respect the government, it will have difficulty surviving,” he says. “We have to rely on the government to publicise and promote us. The government has a lot of power and it’s difficult to promote ourselves without it.”
There he goes again, speaking like an executive from a global marketing firm.
As the waiters place a fried eggplant and tofu dish called “blossoming smile of enlightenment” in front of us, I ask him how he responds to the critics who say he is too fond of mixing the sacred and the profane.
“Our aim is to promote Buddhist culture, to baptise human souls and purify people’s minds,” the abbot says. “What we have done so far [in terms of commercialisation] is actually quite conservative because we don’t want to get too mixed up in the affairs of society or over-exploit Shaolin Temple.” He describes how a proposal in 2009 by the local government to list the temple on a domestic or international stock exchange was abandoned after he and the other monks voiced strong objections.
On the abbot’s instructions, the flow of dishes has slowed and most of his plates have been cleared without him tasting more than a spoonful or two. Throughout our lunch it feels as if he is trying to convince me that he is not the materialistic villain he is often portrayed as in China. More than once he mentions the fact that he and each of his monks live a plain existence, normally surviving on just Rmb 7 (70p) per day.
His explanation of the pressures he faces in a modern Chinese society is, however, persuasive. “We hope we can improve the bad atmosphere of modern society through the influence of the Shaolin Temple; over the years we have seen society pollute the earth and overexploit resources and people’s desires continuously grow,” he says. “We wish everyone could lead a simple life like us monks and not chase after famous brands and luxury lifestyles in the way the awful nouveau riche in our country do.”
One of the last dishes is laid in front of us and the abbot breaks into a beatific smile in appreciation at the irony of its name. It is a vegetarian version of “Buddha jumps over the wall”, an oily soup that usually includes meat and seafood and is supposed to taste so good that it can tempt even devout monks to jump the monastery wall and renounce their monastic vows.
“See, that shows you how open and sympathetic Chinese Buddhism is,” he says. “In other cultures or religions, if somebody used this kind of name for such a sacrilegious dish there would be a huge fight.”
Coming from a religion where monks who have sworn not to harm sentient beings wield swords and practise cracking skulls with their fists, this too is persuasive. For the abbot, temporal dealings – including business – appear merely a necessary diversion on the path towards enlightenment.
Jamil Anderlini is the FT’s Beijing bureau chief
Timeline: A brief history of the Shaolin Temple
AD495 Shaolin Temple (literally “temple in the forests of Shaoshi mountain”) is built by Emperor Xiaowen of the Northern Wei dynasty as a place for the Indian monk Batuo to live, translate Buddhist scriptures and preach to his followers.
AD618-907 A band of 13 Shaolin monks is reputed to have saved the life of the future Tang dynasty Emperor Li Shimin. When Li took power, he showered favours, land and wealth on the temple and it experienced a golden age.
1368-1644 During the Ming dynasty, the temple houses more than 3,000 monks. It declines under the Manchurian Qing dynasty (1644-1911).
1928 Chinese warlord Shi Yousan attacks the temple and a fire rages for 40 days, destroying nearly all relics and records. Despite having been looted, burned and destroyed many times over the centuries, the temple has only been abandoned – briefly – in the seventh and tenth centuries.
1950s-1970s The temple’s lands are seized during the communist land redistributions and most monks driven away. During the cultural revolution that follows, the handful of monks who remain are beaten and persecuted or forced to renounce their vows.
1981 Shi Yongxin, born Liu Yingcheng, arrives at the Shaolin Temple to train as a monk.
1987 Begins running the temple after the previous abbot’s death. In 1998, he is selected as a representative to the National People’s Congress, China’s rubberstamp parliament.