We don't claim to be corporate ethicists, but it strikes us as more than a little curious that Dell spent $165 million (including $10 million on management retention) for MessageOne, a company co-founded by Michael Dell's brother Adam, and partly owned by his parents, himself, his wife and his children, through a tangle of investment funds.
Although the company carefully noted in an SEC filing that Michael was not involved in negotiations on the deal, the acquisition points to a slew of sticky issues. First of all, there's an inherent conflict of interest: His parents will make close to half a million dollars on the transaction; his brother will make just under $1 million on it; and his personal family trust is due $12 million (which they are donating to charity).
The other question that immediately rises is whether Dell needed to buy MessageOne at all. It's hard to see how the "software-as-a-service enabled, enterprise-class email, business continuity, compliance, archiving and disaster recovery services" provider really fits into Dell's core hardware/computer business. (Please enlighten us if you have any ideas.)
And why doesn't the entire family give the proceeds to charity? We are, after all, talking about the 8th richest man in the U.S. (according to Forbes).
"Money flows in odd ways in some of these companies -- even if they're publicly traded," says Alex Brigham, CEO of Corpedia, a corporate ethics consulting firm. "You would think [Dell's] parents might have [also donated the proceeds to charity]. And Adam, too. Then the deal would have been much cleaner and smelled much better."
A Dell spokesperson was not immediately available to comment.
The announcement comes roughly five months after an internal probe at Dell uncovered evidence that it manipulated results and misled its auditors in an effort to meet its financial targets. As a result of the investigation, the company said it would restate four years of earnings.
Photo: Flickr/Joi
