This is like paying for your startup with a credit card and being called out on it by reporters when the bill gets paid by the company rather than the individual, but on a much larger scale. There are perfectly valid, ethical reasons why you're using alternative sources of credit to fund a startup!
Here's why this article is an opinion piece searching for scandal that fails to reveal one:
Consider the legal definition of "self-dealing":
"One important duty of a fiduciary is to act in the best interests of the
benefited party. When a fiduciary engages in self-dealing, she breaches
this duty by acting in her own interests instead of the interests of the
represented party. For example, self-dealing occurs when a trustee uses
money from the trust account to make a loan to a business in which he has
a substantial personal interest. A fiduciary may make such a transaction
with the prior permission of the trust beneficiary, but if the trustee
does not obtain permission, the beneficiary can void the transaction and
sue the fiduciary for any monetary losses that result."[1]
Every decision WeWork made to lease new commercial space was made with board support. The CEO and family members conducted deals with WeWork that he or family personally benefited by, but it was done in a transparent manner and with board support.
WeWork is navigating uncharted territory. This makes those working in finance apprehensive. Underwriters have certain requirements that a borrower must meet before a loan is approved. A rapidly expanding, growth-oriented business like WeWork may not qualify to lease new space as quickly as it requires. However, perhaps individuals who pledge their own collateral might. Commercial space was leased by individuals (or other entities) and then re-leased to WeWork.
I could be wrong about this case, but if I am then this will likely grow into a scandal and self-dealing will be revealed.
> This is like paying for your startup with a credit card and being called out on it by reporters when the bill gets paid by the company rather than the individual, but on a much larger scale.
I've seen this happen in multiple cases, and I find it highly unethical. At the very least it means the CEO is raking in thousands of dollars a month in credit card points for purchases across the entire company.
I'm on the fence about it. It seems unethical initially but the CEO is taking a personal financial risk using their own funds. I would say it's definitely a gray area but wouldn't call it flat out unethical. As with most things, it is very dependent on the situation.
Here's why this article is an opinion piece searching for scandal that fails to reveal one:
Consider the legal definition of "self-dealing": "One important duty of a fiduciary is to act in the best interests of the benefited party. When a fiduciary engages in self-dealing, she breaches this duty by acting in her own interests instead of the interests of the represented party. For example, self-dealing occurs when a trustee uses money from the trust account to make a loan to a business in which he has a substantial personal interest. A fiduciary may make such a transaction with the prior permission of the trust beneficiary, but if the trustee does not obtain permission, the beneficiary can void the transaction and sue the fiduciary for any monetary losses that result."[1]
Every decision WeWork made to lease new commercial space was made with board support. The CEO and family members conducted deals with WeWork that he or family personally benefited by, but it was done in a transparent manner and with board support.
WeWork is navigating uncharted territory. This makes those working in finance apprehensive. Underwriters have certain requirements that a borrower must meet before a loan is approved. A rapidly expanding, growth-oriented business like WeWork may not qualify to lease new space as quickly as it requires. However, perhaps individuals who pledge their own collateral might. Commercial space was leased by individuals (or other entities) and then re-leased to WeWork.
I could be wrong about this case, but if I am then this will likely grow into a scandal and self-dealing will be revealed.
[1] https://legal-dictionary.thefreedictionary.com/Self-Dealing