Morgan Stanley acts to fend off Northern Trust style flak over golf tourney
Bank criticized for entertainment spending after taking $1.5 billion in bailout money
A day after TARP recipient Northern Trust Corp. came under fire for wining and dining clients, Morgan Stanley said Wednesday that it won't participate in festivities at its upcoming namesake golf tournament.
On Tuesday, Northern Trust, which received about $1.5 billion in November as part of the Treasury Department's Troubled Asset Relief Program, endured criticism from several members of the U.S. Congress for flying hundreds of employees and clients to the recent Northern Trust Open in Los Angeles, putting some of them up at ritzy hotels, and treating them to name concerts.
Several House Democrats called the activities arrogant and irresponsible and called on Northern Trust, which caters to wealthy clients and institutions, to return to the government the equivalent of what the Chicago-based bank "frittered away on these lavish events."
For its part, Northern said that such expenses are related to its five-year, $35 million commitment, signed in the fall of 2007, to sponsor the tournament, which it uses to maintain client relationships. Northern also pointed out that U.S. taxpayers are contractually assured a return on their investment through the TARP program; currently, Northern Trust said it pays the government $78.8 million on an annual basis as a return on taxpayers' investment, or $19.7 million per quarter.
But Morgan Stanley, which received $10 billion in TARP funds, on Wednesday took steps to avoid the backlash that
Northern experienced after word of its entertaining spread. TMZ.com was the first to detail the spending.
The Memorial Tournament Presented by Morgan Stanley is held June 4-7 in Dublin, Ohio, outside of Columbus.
"We're not participating this year due to the environment," a Morgan spokeswoman told the Tribune Wednesday afternoon.
Morgan will continue to sponsor the event but won't attend, bring any clients or do any entertaining related to the event, the Tribune learned.
Separately, Northern Trust told the Tribune Wednesday that it had no policy changes to announce related to the Northern Trust Open, which was held Feb. 19-22 in Pacific Palisades, Calif.
Northern also has posted a letter to employees, shareholders and clients on its Web site addressing questions about its golf sponsorship. To read the letter, visit www.northerntrust.com.
byerak@tribune.com
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