Ethics Dunces: The Academy Of Motion Picture Arts And Sciences

The Academy Awards announced that it will allow PriceWaterhouseCoopers to continue to represent the Oscars’ integrity as well as the organizations pledge that the results aren’t being, will not be, cannot be and haven’t been rigged, misread, wrongly tallied or mistakenly announced.

This, despite the fact that the firm proved beyond a shadow of a doubt that it cannot be trusted to do this, by either the Academy or the Oscar viewing audience, because it did not do it, exposing its carelessness and incompetence on national TV.

This is NASA letting Morton Thiokol continue to build space shuttles. This is the federal government re-hiring the same IT firm that made Healthcare.gov. This is Wesley Snipes rehiring the tax expert who told him he didn’t have to pay income taxes.

In addition to complete failure of management that the Academy’s decision to let bygones be bygones represents, it also has cultural consequences. As a culture, the United States has become allergic to accountability in all sectors. Over at Wells Fargo, where management presided over a nation-wide conspiracy to defraud depositors,  CEO John Stumpf opted for early retirement after the scandal, and is walking away with around $130 million, according to SEC filings.  Unless further action is taken by Wells Fargo’s board, which looks increasingly unlikely, Stumpf will leave with a fortune made up of stocks, cash payouts and other compensation. The Obama Administration, as documented here, repeatedly refused to hold incompetent agency heads accountable for fiascos, notably both of its Attorney Generals, and all three of its White House spokesmen. University president after university president disgraced their institutions by capitulating to racist, anti-speech, anti-education demands by students without consequence to their tenure. In journalism, Brian Williams remains on NBC’s payroll and the TV screen, despite having proven himself to be a habitual liar. Continue reading

A Very Bad Month For Price Waterhouse Coopers

Earlier this month, Big Four accounting firm Price Waterhouse Coopers sustained a high-profile hit to its reputation when  the senior accountants the firm sent to ensure the integrity of the Oscars broadcast, a job the firm has had for more than half a century,  couldn’t manage to hand out the correct envelope at the televised ceremony’s surrounding.  Now it looks like the chaos that this botch created was a prelude to far, far worse.  For years, federal investigators have been scrutinizing Catapillar’s overseas tax affairs, examining the complex maneuvers involving billions of dollars and one of the company’s Swiss subsidiaries.

Now, a report commissioned by the government accuses the equipment manufacturing giant of carrying out a massive tax and accounting fraud involving billions of dollars. And the accounting firm Caterpillar employed to perform its audits?

The envelope please?

You guessed it.

The report, part of a wide investigation being undertaken by the United States attorney’s office for the Central District of Illinois, the IRS and the Inspector General of the F.D.I.C., thus far is neither public nor made available to Caterpillar for review.  It  describes an illegal company strategy to bring in billions of dollars from offshore affiliates while avoiding federal income taxes.  Leslie A. Robinson, an accounting professor at the Tuck School of Business at Dartmouth College and the author of the report, concluded that…

“Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules. I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent.”

Dr. Robinson’s 85-page analysis, based on publicly available and internal financial data from Caterpillar as well as bank data tracking wire transfers from Switzerland into the United States, found that Caterpillar brought back $7.9 billion into the U.S. structured as loans, over and beyond the income that had already been taxed overseas. The company failed to report those loans for tax or accounting purposes, though under U.S. law those profits would be subject to federal taxes.

For example, the professor  found  correspondence between the company and the Securities and Exchange Commission in which Caterpillar said it had $2.5 billion  in income eligible to be brought to the United States tax-free. The company, she wrote, did not have “anywhere near” that much money still available to be brought in tax-free.

No charges have been filed yet. Last week, federal agents raided three Caterpillar buildings near its headquarters in Peoria, Ill., as part of the investigation. Caterpillar said it was cooperating with law enforcement, but denied wrongdoing. The Internal Revenue Service is currently seeking more than $2 billion in income taxes and penalties on profits earned by the Swiss unit.

Continue reading

Incident At Big Bowl

Am I the only one who has weird  encounters  every single time I travel? That can’t be. (Can it?)

This week, I had a quick trip to Boston (where my heart resides, so I have to visit it) to present a legal ethics program to recently minted lawyers. On the way, I tried to grab a meal at Reagan airport. The flight was at 6:30, and I wanted to eat before I had to get on the plane. I chose an allegedly fast food outpost near my gate, Big Bowl. It was not busy: maybe two people ahead of me, one behind. The order was simple: a “big bowl” of kung pao chicken with white rice, no drink. I paid, and got my slip with the number 555.

When they called 555, it wasn’t my order. They called 549 before that, and it wasn’t right either. All the numbers on all the orders were wrong, and the confusion added about 10 minutes to everyone’s wait, notably mine. Finally, they skipped the numbers entirely, and shouted out the contents of each order. My big bowl had been mislabeled 550, and for a while I had to argue with the customer who had the 550 ticket, until she realized she had ordered fried rice, not white rice.

Meanwhile the employees were just shrugging, giggling and smiling away. “You had the wrong number,” one said to me. “No, you had the wrong number on my order. Why?” She shrugged and smiled.

“That’s no answer, ” I said. “Do you have a system, or not?  Can’t you tell me what happened? I was inconvenienced. Part of what I’m paying for is service. Why did this happen?”

Another shrug. No acceptance of responsibility. No apology or anything remotely sounding like one.  At this point, a superannuated hippy who looked like she was ready to do a Joan Baez set intervened with a condescending, “They made a mistake. Mistakes happen.” Continue reading

Washington Post Writer Stephanie Merry Has A Devastating Metaphor Right In Front Of Her, And Can’t See It. Three Guesses Why…

oscar-mix-up

In an essay recounting the Wrong Envelope Oscars Disaster, Washington Post writer Stephanie Merry lionizes  “La La Land” producer Jordan Horowitz, who after learning that his movie was not, in fact, the actual “Best Picture” winner, took charge. Faye Dunaway was dashing for cover, MC Jimmy Kimmel was wishing he was in an undersea paradise, and in general everyone was losing their their heads and blaming it on Warren Beatty, but the producer took the microphone and said,“‘Moonlight’ won. Guys, guys, I’m sorry, no. There’s a mistake. ‘Moonlight,’ you guys won best picture.This is not a joke. Come up here.

Then he held up the card just pulled from the actual award envelope, so that the cameras could zoom in.

“Moonlight,” he said. “Best picture.”

Merry seems to think this was some extraordinary act of improvisation and heroism. True, Horowitz did what ethical people do when in a position to: he fixed the problem.  Still, his actions only seem remarkable in light of the incompetence all around him. Ah, but Merry has an ulterior motive, you see, because the Post, like the New York Times and so many other news sources, apparently pay a bounty for every story that can somehow betwisted into a attack on the President. That’s the full time mission now, and journalists really, truly think that’s responsible journalism, and responsible citizenry, though it is neither. So she wrote:

He told the truth even though it was difficult and awkward and embarrassing, because he had just stood in front of the world and thanked his friends and family for an award that wasn’t his. But that didn’t stop him from admitting that he was wrong, even though he was a victim of circumstance. He could have slunk offstage and let Jimmy Kimmel and Warren Beatty continue to fumble through an explanation. Instead he did the dirty work with what looked like pride.

This behavior shouldn’t be all that exceptional, but truth has been hard to come by lately. We’ve all just come off an election in which politicians have happily danced around facts, and the president continues to make false or misleading claims. When the truth is inconvenient, a lot of people spin it or bend it to their will. But that’s not Horowitz’s style.

What, holding on to the Oscar like grim death and screaming, “I WON! I WON!” and running into the wings cackling maniacally isn’t his style? I should hope not! What possible alternative did he have in that situation? He didn’t have to “tell the truth,” he just had to submit to it. Yes, he was gracious. But the episode had no lessons for President Trump, except in Merry’s fevered, Trump-addled mind.

Yet she had laid out a very useful and germane metaphor, so good and timely that I will give her credit for it even though Bias Made Her Stupid, and blind to boot.

Here, let’s see if you get it; it isn’t hard:

“La La Land” had been conceded the Best Picture award for months. Virtually every critic and prognosticator predicted its victory, even when one felt another film was more deserving. The film’s cast and crew had to be very confident entering the theater that night, though the film’s failure to win some of the lesser awards was ominous: the predicted sweep wasn’t happening. Still, all the polls said the movie was a lock.

Then, just when victory seemed certain, it was gone. An underdog competitor took the prize, and not cleanly, either. After all, the deck had been stacked in favor of giving black artists more recognition. And what the heck was going on with the alleged guardians of the voting results?

Remind you of anything? Continue reading

Ethics Hero Emeritus Desmond Doss, And “Hacksaw Ridge,”

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Desmond Doss, who died on March 23, 2006 at the age of 87,  was the very first hero to be enshrined in the Ethics Alarms Hall of Heroes. I wrote about him before there was an Ethics Alarms, shortly after he died.  I had never heard of Doss before, and I remember being angry that I had never heard of him. Everyone should know about him. There literally are no Americans who were any more heroic, and whose ethical conduct was any more astounding, than Desmond Doss.

If the values of this nation, and especially Hollywood, were healthy and correctly aligned, he would be a household name, and the film about his World War II heroism would have been made long ago. Finally “Hacksaw Ridge” was produced in 2016, and has been nominated for an Academy Award, although it will never win.

When I first read about Doss, I couldn’t get my mind around what he had done to be awarded the Congressional Medal of Honor, the only conscientious objector ever to achieve that honor during combat. During the battle of Okinawa, we were told that he survived heavy enemy fire as he struggled to carry seventy-five wounded soldiers to the sheer cliff at Hacksaw Ridge, personally picking up each one and lowering them over the edge the cliff 400 feet to safety.   How is that possible? Now that I’ve seen the film, it still seems impossible.

Desmond Doss proved that principled opposition to violence against his fellow human beings need  not be based on fear, self-interest or self-preservation. It is often impossible to tell whether those who oppose armed combat really object to the spilling of all human blood in battle, or only their own. With Desmond Doss, there was never any doubt. He didn’t like the term “conscientious objector,” preferring the term “conscientious cooperator.” He enlisted in the army following Pearl Harbor, believing that the war against the Axis had to be fought and wanted to be part of the war effort despite believing, as a devout a Seventh Day Adventist, that it was a sin to kill, with no exceptions. Thus he refused to carry a rifle (or shoot one, even in training) but yet insisted that he be involved in combat as a battlefield medic. He achieved conscientious objector status  but would hot accept a deferment. Assigned to the 307th Infantry Division as a company medic, Doss was hazed, abused and  ridiculed  for his dedication to non-violence, and as the Mel Gibson-directed film shows, many of his tormentors eventually owed their lives to his astonishing heroism. All of his compatriots were amazed by his evident fearlessness under fire and remarkable dedication to duty, never hesitating to go after a wounded soldier no matter what the personal risk. As a combat medic on Guam and at Leyte in the Philippines, Doss had already been awarded the Bronze Star  before the three-day battle at Hacksaw Ridge.

Many of the soldiers in Doss’s 307th Infantry, 77th Infantry Division were driven off the ridge by a furious Japanese counter-attack, and  wounded G.I.s were stranded atop it. Doss remained with the wounded, and, according to his Medal of Honor citation refused to seek cover, carrying them, one by one, to the edge of the ridge in the face of enemy fire, some of them from behind enemy lines. He lowered each man on a rope-supported litter he improvised on the spot, using double bowline knots he had learned as a youngster and tying the makeshift litter to a tree stump to serve as an anchor. Every wounded man was lowered to a safe spot 35 feet below the ridge top by the 145 pound medic. Finally, Doss came down the ridge himself, incredibly, unharmed. Continue reading