Wikileaks Could Sink These Stocks

If you've been ignoring the ongoing controversy around document-disclosing website Wikileaks, you might be making a big mistake. More and more companies now find themselves exposed in Wikileaks' revelations of behind-the-scenes dirty dealings, and the results aren't pretty.

Shareholders invested in honest, ethical companies have little to fear from Wikileaks' push toward true transparency. Everybody else had better watch their portfolios.

Tracking mud
For all the outrage voiced by folks in positions of power over the releases of classified U.S. diplomatic cables, there's a very good argument that in other respects, Wikileaks is picking up where old-fashioned investigative journalism left off.

Aside from the political content of many of Wikileaks' disclosures, they're increasingly revealing nasty tidbits about well-connected corporations as well. In fact, Wikileaks head honcho Julian Assange has announced that a big business will be his next target for exposure.

The following unpleasant revelations have already hit the wires, courtesy of Wikileaks:

  • Bank of America (NYSE: BAC  ) has embarked on serious Wikileaks damage control after Assange threatened to expose something about a major U.S. bank, which Assange said revealed an "ecosystem of corruption."
  • U.S. diplomats have acted as a "sales force" for Boeing (NYSE: BA  ) , offering perks and goodies to foreign leaders who chose Boeing's products over competitor Airbus.
  • A U.S. ambassador suggested the Bush administration wage a retaliatory trade war with the European Union in 2007 over genetically modified crops. U.S. pressure applied to Europe, which is notoriously reluctant to accept GM crops, would most certainly have helped companies like Monsanto (NYSE: MON  ) .

The corporate jerk tax
In a rare interview in November, conducted by Forbes, Assange claimed that he has damning data on companies in the pharmaceutical, finance, and energy sectors. A lot of investors had best hope that their companies are beyond reproach.

Wikileaks may have rubbed a lot of people the wrong way, but there are definite virtues in its actions. Freedom of speech doesn't simply apply to speech you (or people in power) want to hear. And a true free market has corporations competing with one another on a fair and ethical playing field, vying to make the best products customers will want to buy. Corruption isn't supposed to be part of the equation, and the competitive advantages it can bestow don't strengthen our economy or better serve consumers.

A good brand reputation is a major asset for many corporations; a bad reputation can be a liability. "In the struggle between open and honest companies and dishonest and closed companies, we're creating a tremendous reputational tax on the unethical companies," Assange told Forbes.

Those of us who are searching for good, ethical businesses to invest in would call that a pretty smart "tax." In a world of greater transparency, only the corporate jerks have something to fear.

Dirty profits under pressure
Wikileaks could be good for American business -- not to mention American consumers -- in a new age of openness and responsibility.

Conscious companies -- not unethical corporations that seize unfair advantages -- make the best, most defensive stocks for true long-term shareholders. How do you think your stocks will stack up to sunshiny scrutiny? A Wikiworld of transparency will likely separate the high-quality companies from the dirty ones.

Check back at Fool.com every Wednesday and Friday for Alyce Lomax's columns on corporate governance.

Motley Fool Options has recommended a bull call spread position on eBay and a synthetic long position on Monsanto. The Fool owns shares of Bank of America, and through a separate account in our Rising Stars portfolios, also has a short position on Bank of America. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (18) | Recommend This Article (26)

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  • Report this Comment On January 05, 2011, at 3:40 PM, Retired31B5M wrote:

    So far Wikileaks has not lived up to their hype. The biggest piece of 'evidence' they have released was a helicopter video that they had to edit in order to fool the people who did not understand the issues into thinking a 'war crime' had occurred.

    The diplomatic cables release has been another example of mildly interesting trivia. Even the stuff you quoted is not really that damaging as we all know that all countries do this.

    Wikileaks is more about self-promotion than social responsibility and have damaged their own credibility by pushing a political agenda instead of an evenhanded approach to the issues.

  • Report this Comment On January 05, 2011, at 4:30 PM, midnightmoney wrote:

    Retired,

    If Wiki had an evenhanded approach to issues it wouldn't exist, and it would be thouroughly ineffective without an agenda. Its mission as I understand it is to reveal information that it believes people should have access to but do not, and thereby attempt to dismantle corrupt and/or secretive hegemonic structures (like Britain once was to the U.S.) that should not be allowed to function as they do. Justice and the freedom to access information is the core of their cause. Change absolutely requires an agenda, and may theirs be successful.

  • Report this Comment On January 05, 2011, at 4:53 PM, Fidelity123 wrote:

    your nuts

  • Report this Comment On January 05, 2011, at 5:18 PM, LoPhreaque wrote:

    If WikiLeaks were really interested in transparency then they would be directing their "leaks" to other countries as well.

    Do we see them "exposing" Iran, for example? No, it's all about punishing the US Military-Industrial-Banking complex and not about some high-minded "transparency" ideal.

    And yet they rail at the very system that gives them the freedom to do what they're doing.

    They should try this stuff in China or Iran and see where it gets them.

    Like most boorish celebrities, if you ignore them they'll go away. But our press can't ignore a story, so they're here to stay.

    David

  • Report this Comment On January 05, 2011, at 5:57 PM, xetn wrote:

    If the "press" were doing their job instead of acting as a shill for the government, there would be no need for Wikileaks.

  • Report this Comment On January 05, 2011, at 6:44 PM, mattsmithsd wrote:

    LoPhreaque,

    Wikileaks has been focusing on the U.S. because we have the laws which allow freedom of information and also allows freedom of press. Other countries do not allow this and it would be considered illegal which would end Wikileal's entire mission... However, rumors have it that Wikileaks has information about ties between the U.S. with other Nations and shows how the countries are working together against others.

    It's good for our Country and our relationship with other Countries to make governments and big businesses think twice about the negative acts they may partake in.

  • Report this Comment On January 05, 2011, at 6:53 PM, centerline150 wrote:

    "Conscious companies -- not unethical corporations that seize unfair advantages -- make the best, most defensive stocks for true long-term shareholders."

    ...I think you mean "Conscientious companies..." Unethical companies may very well be consciously unethical.

    If we're going to be professional writers, let's be precise professional writers.

    And, to rebut xetn, the "press" is NOT doing their job, and haven't been for a long, long time -- they've lost the edge. And it seems they're not, ah, conscientious about it at all. So Wikileaks IS a necessary outlet for free speech's principle of sharing important information.

  • Report this Comment On January 05, 2011, at 7:11 PM, midnightmoney wrote:

    centerline,

    Conscious is absolutely appropriate in this context. It suggests that the companies are aware of what they're doing in terms of doing right or wrong, and making an effort to act ethically. That's how I read it, anyways. Conscientious would describe the people who run the companies that are conscious. In my opinion Alyce is a really good writer--always clear and fighting the good fight to boot.

  • Report this Comment On January 05, 2011, at 8:08 PM, modeltim wrote:

    The truth will set us free. I'm all for wikileaks, truth, justice and what used to be the American way.

  • Report this Comment On January 05, 2011, at 9:40 PM, RobVann wrote:

    WikiLeaks pro or con will be a game changer on how governments and companies conduct future business. Their paranoid reactions to the leaks is certainly reveiling. BOC buying up all those nasty domain names..what a JOKE. About 2000 (approx 1%) leaks so far but don't expect much coverage from US mainstream media.. I'm following here:

    http://www.thenation.com/blog/157478/wikileaks-news-views-bl...

    http://www.guardian.co.uk/world/interactive/2010/nov/28/us-e...

  • Report this Comment On January 05, 2011, at 10:37 PM, ET69 wrote:

    Wikileaks really hasn't exposed much of anything that a person who just reads wouldn't already know. What P.O.'ed the diplomats was that their everyday comments were made public and lord knows they just can't stand a simple moment of honest comment by anyone. They live for mindless hypocritical formality and "diplomatic" panache

    As for the Wall St.establishment they sure cut Wikileaks off instantly. Look at Pay pal and Visa. Who said they have a right to decide on their own that I can't donate to an organisation I support?

    Time to nationalize these anti - democratic creeps! Live Free Wikileaks!

  • Report this Comment On January 06, 2011, at 3:00 AM, Venkyj wrote:

    What you have mentioned here is nothing unfair. If you fight in mud, you are bound to get muddy. Internationally, business is neither clean nor transparent. US MNCs cannot fight with one hand tied behind their backs. They are using legitimate channels to fight the unfair advantages other countries' companies have, for e.g., very few countries have laws prohibiting corruption in foreign countries. Using diplomatic channels and international forums to put pressure on each other is pretty common and is not tantamount to corruption or lack of ethics.

  • Report this Comment On January 06, 2011, at 12:00 PM, eksummers620 wrote:

    I like how Wikileaks is helping OMEX. Turns out the US government was back channeling against OMEX. OMEX has filed an inquiry on behalf of its shareholders with the state department.

    This information has propelled OMEX up pretty handily as of late.

  • Report this Comment On January 06, 2011, at 4:50 PM, TMFDiogenes wrote:

    "What you have mentioned here is nothing unfair. If you fight in mud, you are bound to get muddy. Internationally, business is neither clean nor transparent."

    But in a democracy citizens should have the right to decide for themselves whether they want their government subsidizing certain companies and industries. And that means there has to at least be transparency about where the corporate welfare goes.

  • Report this Comment On January 06, 2011, at 5:10 PM, MyDonkey wrote:

    Alyce, politics and big business are two sides of the same coin; you can't separate them. When corporations give money to public officials with the aim of influencing their actions, it's called lobbying, and is A-OK. When individuals attempt the same thing, it's called bribery, and is punishable by fines and/or incarceration. In other words, corruption is built into the corporate/political system.

    If investors suddenly decided to avoid all corporations that engaged in lobbying or other types of corruption, the market would collapse immediately.

    That would certainly be interesting; I think it would be fun to watch all the mayhem that ensued.

  • Report this Comment On January 07, 2011, at 12:29 AM, VisionDo wrote:

    European leaders championed for their companies all the time, and many of their state visits are indeed marketing events joined by their major companies. China's high profile shopping trips to the US and Europe were both political and commercial events. The US government actually does not play enough an active role relative to other countries' governments to influence the trade flow. Comparatively our companies are at a disadvantage in the global marketplace.

  • Report this Comment On January 07, 2011, at 5:07 PM, LoPhreaque wrote:

    Let's just keep the playing field level and not expect the US to have to operate under different rules than the rest of the world. That is not fair.

    As to the private conversations that have been revealed, think about how your relationships between friends and family would change if your private conversations were revealed to all?

    And it was just you, not everybody else.

    How would that be a fair or noble thing?

    How would your relationships change when your Aunt Jane found out you hated her cornbread? Or thought she smelled like corned beef?

    Now, amplify that with situations that could result deteriorating relationships with our allies around the world.

    Transparency = Good

    Revealing private conversations --> no good

    David

  • Report this Comment On January 07, 2011, at 6:30 PM, rovobo wrote:

    Wikileaks should have been around when ENRON & kenny boy were screwing the public & stockholders of their life savings with the tacit approval of the U.S.energy dept,kenny boy was within a heartbeat of becoming our energy secretary after raising electric rates in California over 100%,talk about the need for transparency.Goldman-Sachs,Countrywide Lehman Bros. Morgan Stanley these are people who need watching.

    Right on WIKILEAKS

    ROVOBO

    ,

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