Finance

Netflix’s “The Laundromat” And Money Laundering Ethics

/ Jack Marshall / 2 Comments

Now streaming on Netflix, “The Laundromat” is an entertaining and flamboyant  examination of the phenomenon and roots of international money laundering, brought to us by director Steven Soderbergh (“Erin Brockovich,” “Traffic”) using a screenplay by Scott Z. Burns. The often tongue in cheek film is narrated by actors Gary Oldman and Antonio Bandaras playing lawyers Jürgen Mossack and Ramón Fonseca , whose now defunct firm set up tax shelters and shell corporations for the rich, corrupt and criminal  all over the world. Their empire was shattered by the Panama Papers data dump in 2016.

The film’s tone veers from smug to blunt as it focuses on three adaptations of true stories involving  Mossack Fonseca clients, all narrated by the excuse- and rationalization-spouting lawyers, the real life versions of which tried to sue to halt the production.

“The Panama Papers” as they are now called consisted of 11.5 million leaked documents that detailed financial and attorney–client information for more than 214,488 offshore entities, many of which were legal, but that supported fraudulent schemes and other crimes.  The documents were the property of  Mossack Fonseca. Even now, the fall-out from the release of the documents is unclear, in large part because so many of them involve attorney-client privilege, and the rules and laws governing their legal handling are spread over many nations, laws and ethics rules. The leak itself was a crime, and the hacker responsible, who goes by the name of “John Doe,” has never been identified.

This is an international ethics train wreck, and one that is so complicated that I didn’t cover it in 2016. That was ethics commentary malpractice on my part, I think. It was the biggest ethics story of the year, even if it is still largely unresolved.

Whether the law firm itself broke any laws is still a matter of debate. As Oldman and Bandaras constantly remind us, Mossack Fonseca set up arguably legal structures, and, they claim, didn’t know or care how they would be used. This is still a gray area of legal ethics in the U.S., one that was highlighted when “60 Minutes” broadcast its Global Witness episode in 2016 . Partners in eleven large Manhattan  law firms were caught on hidden cameras  exploring possible ways to represent an individual posing as the agent of an “African despot” seeking ways to launder millions of dollars. The ethics rules say that a lawyer may not knowingly assist a client in a crime or fraud, but contrived ignorance can be an effective, if unethical, device for lawyers to avoid  accountability when representing  unsavory (but profitable) clients.  Remember, Enron’s law firm avoided any sanctions, while the company’s accounting firm, Arthur Anderson, was prosecuted and destroyed.

No, Ethics Alarms didn’t cover the Global Witness scandal either, though I have talked about it in legal ethics seminars ever since. Clearly, money laundering has not had proper priority here. Again, my fault. I’ll do better. Continue reading →

Cancellation Culture Gone Nuts: The Kenneth Fisher Saga

/ Jack Marshall / 20 Comments

“Be afraid…be very afraid.”—Geena Davis in “The Fly”

Kenneth Fisher, the acclaimed billionaire money manager whose investment firm manages more than $112 billion of investors’ money,  spoke at an October 8 conference.  In his remarks, he said getting new clients was akin to “trying to get into a girl’s pants.” The analogy between marketing and seduction is old, common, and not without validity. It can (and should) be expressed in less vulgar ways, to be sure, but no one in the audience could have mistaken Fisher’s meaning.

Yet the New York Times described the remark as a “lewd and sexist joke”—Lewd? Joke?—and like-minded cancellation culture posse members set out to destroy Fisher and his business in retribution for using an analogy of dubious taste. [ I should note that some attendees at the conference–including some who are Fisher’s competitors—reported that there were other “off-color” comments that could not be confirmed by the Times.]

Thanks to a news and social media campaign since he made that “joke,” the past two weeks have seen public pensions and institutional investors pull nearly $2 billion from Fisher Investments, which has 3,500 employees.  They also deserve to lose their jobs, presumably, because their boss is insufficiently sensitive in a #MeToo world. Other public pensions have placed  Fisher’s firm on a watch list for potential action.

Oh, Great. ANOTHER Fake Stat That Everyone Will Cite As True For A Decade Or More: The $400 Emergency Expense Lie

/ Jack Marshall / 27 Comments

“Good news, Fake Campus Sexual Assault stats, Fake Gender Pay Gap stats, Fake Gun Violence stats, and the rest of the club! You have anew member!

Senator Kamala Harris cited the stat in April, and if someone doesn’t stop her, it will become part of the pro-socialism “narrative” during the 2020 election campaign.  “In America right now today,” she said, “almost half of Americans are a $400 unexpected expense away from complete upheaval.”  Naturally the statistic appealed to Top Demagogue Senator Elizabeth Warren, who echoed Harris last month: “The gap between incomes and costs is so gaping that 40% of Americans can’t come up with $400 in an emergency.” Then there is  Bernie, or course,  who says: “Four in 10 [Americans are] unable to afford a $400 emergency expense.”

I’m sure the rest of the field will come around to using the stat too; dishonesty loves company, especially when the idea is to frighten the members of public who trust what politicians say. And why shouldn’t they? Warren was a Harvard professor—she must know what she’s talking about! She wouldn’t use a statistic like that without checking it, would she? Nah! Warren and Harris are both lawyers too, and lawyers have enforced ethics rules that say they must not lie. All three—Warren, Harris and Sanders—are U.S. Senators. Surely three distinguished Senators wouldn’t all use a false statistic to deceive us! Would they? Continue reading →

Sunday Ethics Warm-Up, 5/19/2019: Conflicts, Hypocrisy, Censorship, And Creeping Totalitarianism…Praise The Lord.

/ Jack Marshall / 7 Comments

1. I love headlines like this. The Times tells us (in its print edition) , “Party Hosted By Drug Company Raises Thorny Issues.” Really? A group of top cosmetic surgeons had all their expenses paid to attend a promotional event in Cancun for a new competing drug for Botox. The doctors were fed, feted, invited to parties and given gifts, then they went on social media and gushed about the product. The “thorny issue”: Should they have informed their followers that they had just received all sorts of benefits and goodies from the drug manufacturer to encourage their good will? (Because none of them did mention this little detail.)

Wow! What a thorny issue! I’m stumped!

Of COURSE it was unethical not to point out that their sudden enthusiasm for the product had been bought and paid for. This is the epitome of the appearance of impropriety, and an obvious conflict of interest. The Times article chronicles the doctors’ facile, self-serving and disingenuous arguments that they didn’t have such an ethical obligation, but the fact that these are unethical professionals in thrall to an infamously unethical industry doesn’t make the ethics issue “thorny.”

2. The Assholes of Taylor University. Vice-President Mike Pence was the commencement speaker at Taylor University, and when he moved  to the podium, thirty or so students rose and walked out on him, in a smug and indefensible demonstration of assholery. The University should withhold the diplomas of every single one of these arrogant slobs until they each author a sincere letter of apology to the Vice-President, who was the school’s invited guest. Continue reading →

Sunday Ethics Warm-Up, 5/12/2019: The Tricky Edition

/ Jack Marshall / 5 Comments

Well, the news from Harvard has me half-headed and depressed, so I think I need to hear Winston Churchill’s favorite hymn…and my Dad’s, too.

1. I think this is known as “a drop in the bucket.”James Bennet, the editorial page editor of The New York Times, announced that he would recuse himself from any involvement in opinion coverage of the 2020 presidential election, after his brother, Senator Michael Bennet of Colorado, announced his candidacy for the Democratic nomination. I suppose this is admirable, as it is a standard conflicts of interest move, but I’m sorely tempted to call it grandstanding, and maybe even a diversion. Bennet’s brother candidacy is hardly the only blatant conflict of interest on the times staff that makes its news coverage and punditry suspect. Virtually all of them are Democrats, for example, and progressives. What’s so special about an editor’s brother making a completely futile run for the Presidency? (Quick: if you’re not in Colorado, can you picture his face? Name anything he has accomplished?)

This note from 2017 (in RealClearPolitics) puts the Times editor’s decision in proper perspective:

There is a pretty substantial symbiotic relationship between the political left in Washington and the media. While a few people went from the media to the Bush Administration, it was never like it was with Obama.

Jay Carney went from Time to the White House press secretary’s office. Shailagh Murray went from the Washington Post to the Veep’s office while married to Neil King at the Wall Street Journal. Neil King has left the Wall Street Journal to work for Fusion GPS. Linda Douglass went from ABC News to the White House and then the Atlantic. Jill Zuckman went from the Chicago Tribune to the Obama Administration’s Transportation Department. Douglas Frantz went from the Washington Post to the State Department and Stephen Barr went from the Post to the Labor Department.

Ruth Marcus, who heads the Washington Post Editorial Board, is married to the Obama Administration’s former Federal Trade Commission Chairman. Jonathan Allen had been at the Politico before going to work for Debbie Wasserman Schultz, then back to Politico before going to the left leaning Vox. Now he is at NBC News. Andy Barr worked for the Politico before leaving for Democrat politics. Michael Scherer was at both Salon and Mother Jones before going to Time. Laura Rozen was at Mother Jones and the American Prospect before Foreign Policy magazine. Even Nate Silver had started out at Daily Kos. Then, of course, there is Matthew Dowd, who worked for scores of Democrats before working for George Bush. That, though he later washed his hands of Bush, bought him street credibility with ABC News to become its senior politically analyst alongside George Stephanopoulos, formerly of the Clinton Administration.

It goes on and on in a feedback loop of incestuous politics and worldview shaping. In the Obama Era, it was all about protecting their precious. Now it is about undermining the President.

2.  Puerto Rico Ethics. OK, explain to me, if you can,  why this isn’t incredibly unethical:

From the Times:

The government oversight board leading Puerto Rico through its $123 billion debt crisis sued dozens of banks and financial firms on Thursday, saying that they had helped the island issue $9 billion of debt illegally, and that the people of Puerto Rico should not have to repay it.

The board said the debt should be voided because it exceeded the territory’s constitutional debt limit, and it added that Puerto Rico would try to recover hundreds of millions of dollars in interest and principal payments that it has already made.

The board was joined in the litigation by the official committee representing Puerto Rico’s unsecured creditors in the territory’s bankruptcy-like legal proceedings. Both plaintiffs said they understood they were making an unusual request, but asserted that no other approach would be legal or fair.

“The laws of Puerto Rico limit government borrowing authority for a reason: to prevent the government and its financiers from hitching the Commonwealth and its instrumentalities, as well as taxpayers and legitimate creditors, to a level of debt that cannot be repaid without sacrificing services necessary to maintain the health, safety and welfare of Puerto Rico and its people,” the plaintiffs said in one of several complaints…

What a great theory! The government of Puerto Rico has managed its finances irresponsibly and needs more money. “Hey!” says a brilliant staffer. “There’s a law that limits how much debt we can run up. Let’s borrow billions from banks illegally, then later sue them saying that the debt is invalid because they abetted our illegal act!”

3.  Candidate for the Rationalization #22 Hall of Fame. Rationalization #22 is one of the most cited entries on the Rationalization List, and in my opinion, the worst of them all:

22. The Comparative Virtue Excuse: “There are worse things.”

If “Everybody does it” is the Golden Rationalization, this is the bottom of the barrel. Yet amazingly, this excuse is popular in high places: witness the “Abu Ghraib was bad, but our soldiers would never cut off Nick Berg’s head” argument that was common during the height of the Iraq prisoner abuse scandal. It is true that for most ethical misconduct, there are indeed “worse things.” Lying to your boss in order to goof off at the golf course isn’t as bad as stealing a ham, and stealing a ham is nothing compared selling military secrets to North Korea. So what? We judge human conduct against ideals of good behavior that we aspire to, not by the bad behavior of others. One’s objective is to be the best human being that we can be, not to just avoid being the worst rotter anyone has ever met.

Behavior has to be assessed on its own terms, not according to some imaginary comparative scale. The fact that someone’s act is more or less ethical than yours has no effect on the ethical nature of your conduct. “There are worse things” is not an argument; it’s the desperate cry of someone who has run out of rationalizations.

Now outgoing Mayor of Chicago Rahm Emanuel has boasted in the  New York Times about his success at  introducing  police reform and reducing crime.Emanuel  makes his case in part by comparing Chicago’s crime numbers over the last two years with those of  Baltimore, one of America’s most dangerous, murder-prone, mismanaged cities. He omitted mentioning New York orLos Angeles, perhaps because his city had more murders in 2018 than New York and L.A. combined, though Chicago is smaller then either.

I wonder if the Chamber of Commerce is considering “Less dangerous than Baltimore!” as a promotional slogan. [Pointer: City-journal]

Comment Of The Day: “Reparations Again”

/ Jack Marshall / 23 Comments

Reparations for slavery are 1) impossible 2) unaffordable  3) offensive, and 4) guaranteed to worsen race relations rather than repair them, but as long as progressives feel the need to pander to a victim mentality among blacks and think they can prosper by professing to support what they must know is a cynical fantasy, we will continue to hear about them. Ethics Alarms, in turn, will have to keep noting the proposal is unethical.

We got a classic example of the kind of “logic” applied by reparations-mongers when one of the more obscure and unqualified contenders for the Democratic Presidential nomination—you can imagine how obscure and unqualified that must be—announced her support for taking the money from other races to enrich anyone who identifies as the offspring of slaves. Marianne Williams—quick, now, who is she?—told CNN over the weekend,

“It’s simply a debt we owe. This country will not heal until we take a serious moral inventory. A nation must undergo the same level of deep moral inventory [and] admission of our character defects. Racism is a character defect. Let’s end this. Let’s fix this. Let’s solve this. Reparations won’t end everything but it will be a profound gift. It implies a mea culpa. It implies a recognition of a debt owed and therefore, it carries not only economic power but spiritual force — whatever it costs, it’s time to do this.”

Sure.

Here is A.M. Golden’s Comment of the Day on the post, Reprations Again.

I’ll be back with a brief comment after A.M. has his say.

I oppose reparations. It’s no better than the lottery or a medical settlement.

In the Black Community, the concept of “Giving Back to the Community” is huge. It’s expected that, if you run a business in the neighborhood, you will use your largess to help your neighbors. This is, in part, why Asian-owned businesses that tend to be family run get flack because they don’t hire within the community. A wealthy resident or a business owner is made to feel obligated to fund a community center or food pantry (though this is really just making the lottery winner a forced charitable organization or even an extension of government). But, in many cases, “Giving Back to Community” means that you just hand over money to people as loans that are, in actuality, gifts.

I remember attending a sci-fi convention a few years ago with a notable black actor who spent many years working at his trade before becoming famous. At his Q&A session, he talked about a charitable organization he is involved with that sends minority children out into a type of summer camp in open places like Montana so they can be exposed to nature and a different environment. Halfway through the panel, an African-American fellow walked in, sat down, raised his hand and asked what the actor had done to “Give back to the community”. The actor then repeated his earlier description of his charitable work. After that, the newcomer left…probably to go into other Q&A sessions to determine if other black actors were pulling their weight. Continue reading →

New Week Morning Warm-Up, 3/4/19: Luck, Fairness, And Delusion

/ Jack Marshall / 34 Comments

Looking forward to the best ethics week yet…

…but not really expecting it.

…Maybe I’ll get lucky.

1. A Progressive war on luck. Yesterday, NPR, which we all pay for, offered a long segment that was ostensibly about “luck,” but it actually was an extended argument for socialism and a political ad against President Trump. “One we move from talking about merit to concentrating on opportunity, then we have changed our focus from scarcity to abundance,” some Ted-talker said. “Then there is no need for walls.” The general thrust of the program, which included at least one speaker (I didn’t stay to hear all of the agitprop) who literally didn’t know what luck is, was that successful people think that hard work and talent is what got them where they are, when in reality it was all, or mostly luck. Thus the idea being pushed was that national policy should eliminate, or at least minimize, the effect of mere chance on human affairs. This means, once you read between the line, government distribution of resources, jobs and benefits to ensure the “fairness” that the random vicissitudes of cruel fate so often eschew.

As I touched on in a recent discussion of Clarence Darrow’s progressive principles, the rejection of personal responsibility and the very idea of free will has permeated progressiveness from its origins. It is, and has been, an anti-American construct that runs against the core principles the nation was founded on, but the theory has always appealed to those who welcome the opportunity to blame others, or just cruel Fate, for their own mistakes and failures.

That said, of course luck plays a massive and sometimes decisive role in our lives. That’s called “life.” Ironically, one of Clarence Darrow’s favorite poems (I know I have posted this before) makes the point:

Whist by Eugene Fitch Ware

Hour after hour the cards were fairly shuffled
And fairly dealt, but still I got no hand;
The morning came, and with a mind unruffled
I only said, “I do not understand.”

Life is a game of whist. From unseen sources
The cards are shuffled and the hands are dealt;
Blind are our efforts to control the forces
That, though unseen, are no less strongly felt.

I do not like the way the cards are shuffled,
But yet I like the game and want to play;
And through the long, long night will I, unruffled,
Play what I get until the break of day

2. Speaking of controlling “opportunity”…which usually means constraining liberty and autonomy, officials at Lakeland Regional High School in Wanaque, New Jersey have forbidden prom goers from hiring limos or private vehicles to arrive and leave in. The boilerplate official explanation is that the change ensures safety for all students, but it also is an effort to create “equality” because not all students can afford a limousine or party bus. Of course, not all students can afford a prom gown or to rent a tux. Why not ban formal wear, and have a simple dress code that all families can afford, like jeans and a T-shirt?

The school will charge each student $15 for transportation costs.

3. Thank-you, Captain Obvious! Avner Zarmi has written an essay in which she argues that President Trump’s “style” undermines his effectiveness. Ya think? What was Avner’s first clue, I wonder?

If the President could restrain his inner jerk as effectively as his predecessors (for he is far from the biggest jerk to occupy the White House—my vote would be with JFK, but there is lots of competition) and if he wasn’t opposed by a hostile news media determined to magnify his deficits and ignore his accomplishments, he would have a 60% approval rating.

4. And this is why there is a national emergency… Continue reading →