Wednesday, August 20, 2008

Wise Guys always get paid

I was watching one of the greatest gangster movies of all time: "Goodfellas". There was one segment that I found interesting. A guy who owned a restaurant needed a partner to operate the business and wound up with a wise guy (a mafioso).

After the partnership was made, the wise guy got wise and started to suck money out of the business. The main character describes the relationship like this:
That's the way it is with a wiseguy partner. He gets his money no matter what. You got no business? Fuck you, pay me. You had a fire? Fuck you, pay me. The place got hit by lightning and World War Three started in the lounge? Fuck you, pay me.

So is the relationship between the SRF directors and their businesses. To my knowledge, none of the businesses ever made a "profit". I remember the founder telling me that his cohorts were worried about having to pay taxes on profits the companies made. Since the Spiritual Rights Foundation abhors the payment of taxes (for things like, you know, schools, hospitals, roads and clean water) his advice was to have the companies donate more money to SRF. That donation reduced the total profit to the company and kept money at SRF.

So, those companies were not making a profit due to poor practices. They were not making profits due to sharp practices. No profit means no taxes.

But the directors were making money. Lots of it. Money from renting out slum apartments, selling self-help materials, construction and other pseudo-businesses. The money the businesses made was used to pay the SRF directors salaries. Employees got small salaries and there was never any program to re-invest money in the companies. I've had people who were involved in those business say that the directors did little or no actual work for the company. No matter how poorly the company was doing, the wise guys always got their money.

So, buying anything from an SRF-related company like "Health and Wealth" might get you something more than you bargained for.