Punishing Corrupt Companies Without Punishing the People Who Make Them Corrupt

By all means, fine corrupt companies, but we need a new dress code for their management.

From The National Law Journal, December 8:

“The Justice Department has announced that Wachovia Bank N.A., now known as Wells Fargo Bank N.A., will pay $148 million to federal and state agencies after admitting to anti-competitive activity in the municipal bond investments market.”

I understand why the Justice Department, the SEC and other federal agencies fine companies huge amounts for what is essentially criminal conduct, choosing negotiated settlements rather than engaging in time-consuming trials that would cost taxpayers money and risk failing for reasons ranging from investigator error to skillful defense strategy. Nevertheless, the policy encourages rather than discourages unethical conduct by corporate decision-makers. It  does nothing to improve a culture that tends to define a bad business practice as a gamble that doesn’t work, or a scheme that gets discovered. Continue reading

Do the right thing? Naaaa.

Business executives regard this as a gross and unfair exaggeration. It's time for them to prove it.

Nabors Industries Ltd. (NBR), the world’s largest oil-drilling companies, will pay outgoing CEO Gene Isenberg $100 million in cash as a result of provisions in Isenberg’s employment agreement. Isenberg is 81, and has led Nabors since 1987.

Jeff Dietert, an analyst at Simmons & Co., an energy investment bank in Houston, wrote his clients yesterday that “We believe the compensation to Mr. Isenberg is excessive,” noting that handing over $100 million payment “for what we view as essentially retiring will be offensive to some.”

May be excessive? Offensive to some?

Here’s what I would hope would be going through Mr. Isenberg’s mind about now: Continue reading

Comment of the Day on “Ethics Bob Opens An Ethics Can of Worms…”

Chase Martinez enters the debate on the ethics of Nike’s labor practices abroad, raised by a post by Bob Stone on his blog, and explicated here with some business ethics questions that have long perplexed both critics and advocates of American capitalism.Here is his Comment of the Day:

“The company has a duty to make money.”

“I think what is unethical is consumers abdicating their ethical duty to make informed choices. In big business, “everybody does it” is self-propagating because there is no consumer pressure to be better than your competition. The “free market” assumes an informed consumer-base that punishes companies who disagree with their values by taking their business to those that do. This doesn’t happen, and while some fault lies with companies for using the EBDI rationalization, most, I think, lies with consumers for being apathetic. As long as American consumers don’t care about Chinese peasants working for a dollar a day because they don’t know any better, corporations like Nike have no reason to care.”

When Business Rejects Ethics: the Sorabella Story

"So sorry about your wife's cancer, Carl. Let me know if there's anything we can do. Oh, by the way...you're fired."

I usually feel that organized labor rhetoric about cruel and heartless employers is archaic and exaggerated for political effect. This story, however, is almost enough to make me pick up a sign and start picketing.

Carl Sorabella, 43, got a merit raise in November for Haynes Management,  a real estate company in Wellesley, Mass., where he has worked as an accountant for almost 14 years. Then he learned that his wife, Kathy, had been diagnosed with advanced cancer. Told that the likelihood was that she had only months to live, Carl approached his boss. Sorabella explained that his wife’s illness would require him to have flexible hours as he supported her during her tests and treatment. He assured her that he would do whatever was necessary to keep his work up-to-date and complete his duties.

She fired him anyway. Continue reading

Now We Know: 22.5% of Business Execs Don’t Know What Ethics Is

The Potter Factor: is 20% too much?

David Sokol was widely believed to be the anointed successor to billionaire Warren Buffett at the helm of Berkshire Hathaway Inc. until he resigned unexpectedly, following shocking revelations about his personal stock trading. Clever Sokol! He purchased ten million dollars worth of shares in Lubrizol Corp., a chemical company, then persuaded his boss, Buffett, to acquire it. Buffett agreed, the purchase swelled the values of the stock, and Sokol then sold his shares at a hefty profit, about 3 million dollars.

Sokol lost his job over the transaction, which has tarnished Buffett’s reputation, but he got his money. He appears to have found a neat little loophole in the insider trading prohibitions, which make it illegal for an individual to profit from investments made with the assistance of information that is not generally known. If Sokol knew that Buffett was going to purchase Lurizol and bought the stock to profit from it, he could be headed to jail. Because he made the purchase before he and Buffett discussed the deal, however, he’s only heading to the bank. Galling as it is, most authorities agree that he broke no laws.  Continue reading

SyFy and the Absence of Integrity: A Case Study

At TV.com, there is a fascinating account of the evolution of the Sci Fi Channel, once cable’s reliable source for science fiction programming, into SyFy, which is nothing of the sort. As the article points out, the two individuals who have run the channel since 2002, Bonnie Hammer and Dave Howe, appear not to like, understand, or trust the genre their channel supposedly was dedicated to advancing. Now, having cancelled the two shows its science fiction fans most enjoyed, “Caprica” and “Stargate Universe,” SyFy is a bona fide whatsis, with a schedule that includes professional wrestling, cheesy horror movies, ghost hunter and psychic reality shows, and whatever else Hammer and Howe think will attract what they regard as a non-geek audience.

Here is the problem: Continue reading

Unethical Quote of the Week: Amazon

“…Amazon.com does not support or promote hatred or criminal acts; we do support the right of every individual to make their own purchasing decisions. Amazon.com believes it is censorship not to sell certain titles because we believe their message is objectionable.”

Amazon.com to the technology blog TechCrunch, in response to the bookseller’s offering the e-book, The Pedophile’s Guide to Love and Pleasure: a Child-lover’s Code of Conduct by Philip R. Greaves II. Continue reading

A. J. Pierzynski, Baseball Cheating and Moral Gray Zones

The baseball season is certainly off to an unethical start.

In Tuesday’s game between the Blue Jays and White Sox, Toronto pitcher Ricky Romero’s gestating no-hitter was aborted in the 8th inning in part because of some deceptive play-acting by ChiSox catcher A. J. Pierzynski. Every era  has one player who acquires a reputation for being tricky, a.k.a. “dirty,” and Pierzynski is the current title holder. When he came to bat against Romero, the catcher with the unspellable name took advantage of a pitch that bounced in the dirt near him to hop up and down as if his widdle toe had a ball-induced boo-boo. Incredibly (for even the White Sox announcers were chatting about how obvious it was that the ball hadn’t touched A. J., noting that he wasn’t even hopping on the most plausibly injured foot), home umpire Tim McClelland stood by silently as Pierzynski trotted to first base. Blue Jays manager Cito Gaston protested to no avail, and, not for the first time, A. J. Pierzynski had stolen first base. Now Romero had to pitch from the stretch rather than a wind-up, and the no-hitter (and the shut-out) was no-history seconds later, as Toronto’s Alex Rios hit a home run.

Did A. J. Pierzynski cheat? Should he be fined or punished for feigning an injury,  as some have suggested? Continue reading

Proof of Faulty Ethics Alarms in the Business World

We tend to think that unethical conduct by individuals in business arises from “bad” individuals, people who either have no ethics alarms at all, or those whose alarms are merrily ringing loudly while they go about their corrupt ways. Certainly there are people like this, but it is increasingly clear to me that most people behave unethically because they have been completely confused by the rationalizations and unethical arguments all around them. Combine this with the absence of ethics training in the schools, and you have a large segment of the public with ethics alarms that are like digital alarm clocks carelessly set to go off at 7 PM  instead of 7 AM. (An analogy that occurs to me now because that’s exactly what I did last night.)

A stark example was on display over the weekend at Computer World, where Mark Gibbs helpfully presented an ethics quiz to his readers entitled “Seven ethical questions.” Continue reading