''At Tate Modern we have even found a sponsor for lavatory paper," revealed Nicholas Serota in a recent newspaper article. The director of the Tate Gallery was celebrating the success currently being enjoyed by museums throughout Britain. Was this a subtle reference to the harmonious equilibrium of body and soul that art and its supporting institutions are said to promote? I think not. It is much more likely that the knighted supremo of the contemporary British art world was openly boasting about the new level of intimacy that he has reached with his commercial backers. If corporate sponsorship can be enlisted in this way to satisfy the most basic alimentary need of a national art institution, is there anything left at Tate Modern, you wonder, that has not been touted to the highest bidder? Surely this is what "doing the business" really means.

Serota has been bedding down with big businesses and wealthy patrons ever since he first arrived at the Tate Gallery in 1988. In order to realise its many ambitious projects, including the opening of Tate Modern and the expansion of Tate Britain, the gallery soon developed, under Serota's inspiring leadership, an insatiable appetite for bigger and bigger money - particularly private and corporate cash - to supplement its staple diet of public funds. Within a few years, every gallery space had been unashamedly transformed into a memorial to its wealthy patrons, and there was hardly a single exhibition for which Tate did not solicit (and get) significant levels of corporate support.

Following the high-profile £1.25m sponsorship from Unilever to launch Serota's pet project of Tate Modern in 2000, the gallery for the first time allowed a company name to be used alongside its own when it inaugurated the "Unilever Series" of art commissions. This brand-marketing collaboration between multinational company and public art institution took Tate's partnership with big business to new and glamorous heights. The recent sponsorship of lavatory paper, decidedly less glamorous but none the less imaginative, has to be seen, therefore, as the latest in a long line of similar entrepreneurial initiatives.

There are few art institutions in Britain, perhaps in the world, that could have negotiated a deal that so proudly equates the excretory with the profit motive. But there again, the Tate is no ordinary art institution. Since the opening of Tate Modern, it has been in the premier league of world art galleries. Tate is well aware of the power of its brand, and is far from coy when it comes to putting it to good use. In the catalogue for its 1996 Cezanne exhibition, the gallery congratulated itself on its "reputation for developing imaginative fundraising initiatives" and on working "closely with sponsors to ensure that their business interests are well served". It is hard to imagine any art institution surviving the Thatcher years without becoming skilled in cosying up to business. The question is, what particular business interests are we talking about? And in what ways does Tate set out to serve them?

Thanks to Tate Britain's proximity to Westminster, its corporate membership programme is able to provide all the facilities of a strategically placed watering hole, a unique and exclusive loca-tion in which to entertain important business clients and influential fellow travellers from government circles. Beyond the obvious perks of private views or free admission to special exhibitions, corporate membership provides access to the gallery's inner sanctum for all sorts of fat-cat hospitality. For example, it is reported that at the 1996 Cezanne exhibition, the accountancy firm Ernst & Young hosted more than 40 evening receptions for its clients. This is just one of the "real and exclusive benefits" that the Tate offers its select circle of corporate members and sponsors.

Even more exclusive are those benefits reserved for company chairmen and chief executives, such as the privilege of attending one of the most prestigious events in the national art calendar, the Turner Prize dinner. What restricted corporate membership does is to make the Tate into a high-society club, one whose members are able to take full advantage of the sort of ideological and political neutrality supposedly provided by a building such as an art museum. It is an ideal environment for the discussion of delicate business matters against a genteel background of clinking glasses and popping corks.

This does not necessarily mean that bodies such as the Tate end up having a significant impact on specific areas of public policy, but that their bureaucrats, in common with those who staff state agencies, form part of an intricate social and political network by virtue of their occupations and social origins. Here lies the most questionable, and the least acknowledged, aspect of corporate art sponsorship - namely, that public art institutions are being used to provide channels through which state power and private capital can interact, and access to the corridors of power can be opened up to big business. In this respect, it comes as no surprise when senior managers of multinational companies admit that their own art sponsorship is targeted not so much at any particular art institution as it is at governmental agencies.

However popular the Tate is in the public perception, there is an elitism at the heart of its operations. High culture is being exploited to advance the vested interests of social and economic elites. As the powerful multinationals arrived hot on the heels of the privatisations of the Thatcher era, so the Tate kept its doors wide open. The real challenge for the Tate is to prove that it is, first and foremost, a public gallery that belongs to the whole nation, not an agent for social elites and big business bent on advancing capital interests.

In the meantime, whether it is providing aesthetic food for the eyes and minds of its visitors, luxury social facili-ties for its fat-cat clientele, or simply customising its public conveniences, we know that the Tate is in safe hands. We can rest assured that its popularity will not prove to be a flash in the pan, and that any money-making venture endorsed by Serota is no bum deal.

Chin-tao Wu is a research fellow at the Academia Sinica in Taiwan and the author of Privatising Culture: corporate art intervention since the 1980s (Verso)