Fannie Mae was ranked first on Business Ethics magazine’s 2004 list of the “100 Best Corporate Citizens.” In response, Fannie Mae issued a press release proclaiming that it was “ranked number one among the nation’s elite companies for its commitment to socially responsible behavior.”

But a new report on Fannie Mae by the Office of Federal Housing Enterprise Oversight raised serious concerns “regarding the validity of previously reported financial results, the adequacy of regulatory capital, the quality of management supervision, and the overall safety and soundness of the Enterprise.”

OFHEO reported that in one instance, for example, Fannie Mae inappropriately deferred $200 million of estimated expenses, which enabled six corporate officers to receive full annual bonuses totaling more than $5.9 million. Had the expenses been properly recorded, no bonuses could have been paid.

The reported problems of Fannie Mae’s corporate management are potentially just the tip of the iceberg. Federal Reserve Board chairman Alan Greenspan earlier this year warned Congress that serious financial problems at Fannie Mae could put the nation’s entire financial system at risk.

“If Fannie Mae was truly ‘socially responsible,’ it would spend more time working diligently on genuine business matters and less time cooking its books and basking in the praise of phony corporate social responsibility rankings,” says Milloy.

Fannie Mae’s executives are not the only corporate managers to fail recently in their primary responsibilities while playing at the public relations game known as “corporate social responsibility.”

— Royal Dutch/Shell, a leader in the CSR movement, erroneously reported the amount of oil in its reserves.

— Financial services giant Citigroup adopted a comprehensive environmental policy for its lending practices that was dictated by the activist Rain Forest Action Network. Meanwhile, Japanese securities regulators may force Citigroup’s Japanese unit to reduce its business operations due to securities law violations.

— Consumer products giant Unilever, the highest ranked food company in the Dow Jones Sustainability Index, recently issued profit warnings.

When companies wave the CSR banner, employees and investors should be on heightened alert. will track developments in the corporate social responsibility fad. “It’s time for an in-depth look at just what CSR and its supporters are really all about,” says Milloy. “Just like no wizard was found behind the curtain in the ‘Wizard of Oz,’ the investing public might be surprised to find that there’s nothing ‘socially responsible’ behind the veil of CSR,” added Milloy.