The Demand of Accountability: Secretary Mattis

The military had a botched mission in Niger.  Four Green Berets were killed.  The team had been left in desolate Africa without support and adequate equipment.  They were killed by Islamic State fighters. Following an investigation and report, several junior officers were reprimanded.  The Defense Department has been at th investigation and discipline for 14 months. When General Mattis was informed of the focus on junior officers, he was angry and sent everyone back to add accountability to the senior levels officers. However, the officers immediately above the junior officers were not reprimanded.  

A review found that the senior officers were allowed to investigate themselves.  The result was that the problems in Africa Command, including hostilities, lack of communication, warring power fiefdoms, poor planning for the mission, and lack of full disclosure about the nature and risk of the mission.  It was labeled as a meeting with tribal leaders.  Counterterrorism operations did not make its way into the planning documents. 

Following a teleconference about the report, General Mattis ordered everyone back to the drawing board.  The result has been that senior leaders have now been reprimanded, and at least one junior officer has had his reprimand lifted.  The request by the Green Beret team to return to base because they did not have sufficient intelligence or equipment was ordered to continue. In short, leaders knew of the problems and allowed the operation to continue.  

Businesses are like the military.  When something goes wrong on the front lines, the manager closest to the employees is disciplined, and often too quickly before understanding what was really going on.  They terminate the salesperson and his manager for hacking into a competitor’s website.  The failure to ask the question, “What and who motivated that kind of behavior?” leaves the bad actors in place.  The root cause of behavior is often well up the chain.  Those up the chain sit in judgment and click their tongues at such unethical behavior.  They conduct the investigation.  But another set of eyes, a CEO with Mattis experience and insight demands something more by asking:  Where did we up here in the rarefied air fail? 

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Mayor DeBlasio’s NYC Ethical Circus

His Honor DeBlasio has managed to preside over quite an ethical circus in the Big Apple. There is the lead paint problem in public housing, allowed to go unaddressed because of inspection lapses and serious records issues.  Then there was the waiver of deed restrictions on a Lower East Side parcel that allowed a nursing home to be cast aside for luxury condominiums. Let’s not forget the former corrections commissioner who was driving his city car to his Maine vacation home and was forced to reimburse the city and pay an $18,500 fine for violating city regulations on improper use of a city vehicle. The city fire chief is on leave for “inappropriate behavior.”  And there are those e-mails from a disgraced donor to Mr. DeBlasio that look to have the potential for a quid and a quo here and there.  

Now, for the coup de grace to eliminate these  ethical lapses.  His Honor has fired the man who issued most of the reports in these matters. Mark G. Peters, the city watchdog, who is to be independent of politics, was given the bum’s rush because he had abused his power and been “cavalier with the facts.”  Mr. Peters issued a parting e-mail to his staff explaining that the termination was “proof of the excellent work you do.”  

Mayor DeBlasio had a deadly combination of poor management skills (witness the city’s inability to prepare for snow) and a “cavalier” attitude about ethics. 

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Too Big for their Breeches @ “Sixty Minutes” and CBS

The CBS Board hired two law firms to look into whether it had grounds for firing Les Moonves, its former CEO.  The grounds-for-firing piece is an important deal because $120 million hangs in the balance.  The reports indicate that the CBS Board has “multiple bases” for claiming “fired for cause.”  The unwanted sexual advances and activities with employees.  The attempts to silence the victims.  The failure to disclose the cover-ups to the Board, well, that will do it. 

Then there are the problems at “Sixty Minutes.”  Seems that the show needed an unwanted camera on itself.  Turns out that the executive producers, Don Hewitt, and, more recently, Jeff Fager, were also engaged in unwanted, uninvited, and unbelievable conduct with female staff members.  One case dates back to 1990 and CBS is still paying the woman involved compensation.  That agreement has been renegotiated multiple times, with more than $5 million in cash paid as damages.

The reports note that there was a culture of “autonomy.”  “Sixty Minutes” pretty much operated in its own little world without oversight.  Mr. Moonves also suffered from a lack of adult supervision. 

Scrolling back through the “Sixty Minutes” archives, there are a stunning number of show segments devoted to the issue of sexual harassment, from coverage of the Baylor University scandal to the way servers are treated by customers in restaurants.  Did these guys watch their own shows?

Perhaps the most interesting part of the report is its conclusion that there was not a “frat house” atmosphere at “Sixty Minutes” or CBS.  Let’s see, Charlie Rose, Less Moonves, Don Hewitt, Jeff Fager?  Of course not. 

Too powerful.  Not subject to the rules.  The success excused behaviors or made those in charge look the other way.  Fear silenced employees. Self-righteousness prevented introspection.  All symptoms of those who are too big for their breeches. 

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When Irish Eyes Are on Customers’ and Company Property

The chief operating officer for Are Lingus told Ireland’s Sunday Independent that Are Lingus employees are stealing “many millions.” The employees are stealing customers’ property as well as company stock. Little did the employees know that the airline had posted security cameras and caught employees with the goods. The plan is to now spend millions to install more security cameras to stop employee theft.

When folks ask the Barometer if the rest of the world is seeing the same decline in ethics that we are seeing here. These sorts of stories tell us that we are slipping worldwide.If you are flying Aer Lingus, put a TSA-friendly lock on your bag.

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Bayada Home Health Care CEO Gives $20 mil to Employees

Mark Baiada, the founder of Bayada Home Health Care, announced at an employee luncheon that he was giving employees $20 million from his personal funds. New hires will get $50 and some of the long-term employees will be getting five figures. Mr. Baiada explained that it was a gift of gratitude after he thought through what got the company to where it is today.

Baiada started his business in 1975 with $16,000 in savings. Today, all 26,000 employees will receive part of the $20 million.

Bayada does have two lawsuits pending on the failure to pay employees the overtime they say they were entitled receive. And unions are at the door. Bayada says it follows state and federal laws. ‘Tis the nature of the employment relationship — there is always some tension, personal gifts aside.

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89% of Parents Admit Hiding Snacks So That They Can Enjoy Them First

The little cherubs just scarf those things up! But, we teach our children to, “Be nice. Share!” Do what I say, not what I do.

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Ex-President of Michigan State Charged with Lying About Nassar Gymnast Investigations

Lou Anna K. Simon, former president of Michigan State, was charged with two felony counts of lying to investigators. The investigation into the allegations of sexual abuse by Dr. Larry Nassar (the USA Gymnastics team physician) resulted in criminal conviction of Nassar, who is serving a 175-year sentence. Dr. Simon stepped down from her position under pressure, and Michigan State settled suits by the young women against the university for $500 million.

The alleged lies center on Dr. Simon’s statements to investigators about her knowledge of the investigation of Nassar, including the Title IX complaints. Dr. Simon’s lawyer has called the charges “completely false” and “criminal.” He said of the prosecutors, “Shame on them.”

The indictment is similar to those in the Penn State sexual abuse cases that resulted in the conviction of a former assistant football coach, Jerry Sandusky and the termination of legionary head football coach, Joe Paterno. former Penn State president, Graham Spanier, was convicted of a misdemeanor of failure to report child abuse allegations involving Sandusky.

During Nassar’s legal proceedings, Dr. Simon was asked by reporters what she would say to the abuse victims and their parents, she said, “I think there are steps being made towards accountability. And there are other steps that will follow.And some of if will have to occur in a setting that’s rule of law. Others will occur in other forms.”

The Barometer can only respond to that response with, “This is the kind of gibberish that gets academic studies recalled,” or, in other words, “Say what?”

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More Shenanigans Found at USA Gymnastics

The Indianapolis office of the FBI was headed by Jay Abbott. That office declined to investigate gymnasts’ sexual abuse allegations against Larry Nassar, the longtime physician for the USA Gymnastics women’s team. The refusal to investigate is now the focus of an investigation by the Inspector General of the Justice Department. Nassar is now in prison for sexual assault of dozens of young woman during their exams.

However, in one of the civil suits against the United States Olympic Committee (USOC) discovery yielded an interesting e-mail. The then-president of USA Gymnastics, Steve Penny, who has now been charged with evidence tampering in this whole sordid series of events, wrote to the head of USOC security about Mr. Abbott.

The head of USOC security, Larry Buendorf, was retiring soon, as was Mr. Abbott, and Mr. Penny’s e-mail explained to Mr. Buendorf that he had “found a great guy who might be the perfect fit for your role.” Mr. Buendorf told Mr. Penny to tell Mr. Abbott to “watch for the advertisement next year.”

Mr. Abbott did not get the job, and Mr. Penny’s lawyer says that Mr. Penny had no ability to hire and that there was no promise of a job. As is often the case, there is no smoking gun, but the appearance brings no credit to any of them or their organizations.

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Bonuses When Execs Run Sears into Bankruptcy Court

The Sears story just gets curiouser and curiouser. Sears has filed for Chapter 11 bankruptcy. The former chairman and CEO, Edward Lampert, resigned from those positions because his hedge fund, ESL Investments, Inc. is the only bidder for the purchase of Sears. This past week, Sears lawyers filed a request with the bankruptcy court to pay &8.5 million in bonuses to 18 executives, including the CFO and presidents of the various Sears operations. These executives were already the beneficiaries of pay-to-stay salary increases generally given to executives to get them to stay when a company is in Chapter 11.

The outcry from employees who lost their jobs, will lose their job, or have not been paid has been has been substantial. A court will review the decisions by Sears and the actions of the officers in accepting these assignments.

Under Chapter 11, the bankruptcy court (who can throw the case over into another court system), will need to. determine whether the goals are sufficient and whether those goals will help the company.

Funny how companies want to desperately hang on to those who drove the company into the ground. And doesn’t/didn’t Mr. Lampert have a conflict? Ah, the sophisticated ethics of high finance and low performance.

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Carlos Ghosn: CEO of Nissan and Renault Arrested; How Are the Mighty Fallen?

Ghosn’s co-chairman at Nissan said of the charges of using company money for personal expenses and under-reporting his earnings, “Looking back, the concentration of power was something we needed to deeply reflect on.”

Actually, you just needed to audit the expenses of the CEO. That is the Barometer number one tip for curbing what is called in the field of business heretics, “The Bathsheba Syndrome,” as in David &, in the Old Testament. Charismatic leaders (and both King David and Ghosn had that in spades), when they are unchecked, by little things such as their expenses, and without “yes” people around them do tend to get a little loosey goosey with the rules. As in the rules do not apply to them.

David saw this problem in King Saul. Upon Saul’s death, David wrote, “How are the mighty fallen.” 2 Samuel 1:19. Indeed, for David and Bathsheba and for Carlos Ghosn and personal expenses. They are fallen for the failure to stay within the basic norms. A good auditor and a staff willing to speak up can help.

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Louisville: Communication of Standards in Hiring and Firing

The clearest messages that an organization sends come through hirings, firings, promotions, bonuses, and all items HR. What organizations tout and say actually matter very little when it comes to ethical culture. What they do is who they are.

Enter the University of Louisville. In 2017, the school had a heck of a scandal when the NCAA uncovered nefarious activities in the student-athlete dorm. Call girls were present for purposes of, well, you know, but the NCAA focus was on the participation of basketball recruits in the dorm activities. Basketball Coach Pitino used the Sgt. Schultz (Hogan’s Heroes)defense, “I know nothing.” Louisville kept Pitino and the NCAA stripped the school of its 2013 Division 1 championship in 2017.

Fast forward to later in 2017 and the FBI basketball bribery scandal emerged. Criminal convictions resulted from the payment of cash by Adidas to the parents of recruits. Coach Piino did not survive that one and was fired in October 2017.

Enter football coach Bobby Petrino. His journey to Louisville came through his stint as head coach at the University of Arkansas. Here was a man who had a motorcycle accident with a young football staffer along for the ride. The two scrambled, and she quickly left the scene because the two were having an affair. As details emerged and the coach recovered from the accident, some lies were tossed hither and yon, and Coach Petrino was fired in 2012. However, Louisville picked him up as head coach that year. There were various events during his tenure, such as two football players and a cheerleader being shot as they celebrated the school’s Heisman trophy winner (Lamar Jackson). Nonetheless, these kinds of things bounced off Coach Petrino.

But, this week, Louisville put its foot down. The Coach was 2-8, and enough was enough. Vince Yyra, the athletic director, fired Coach Petrino with these words, “We owe it to our student-athletes and fans to turn this thing around.I did not have the confidence that it was going to happen next season without a change, and it needs to start happening now.” We will have none of this losing stuff.

Prostitution, bribery, scandal at previous jobs — those kinds of things bring mixed or delayed signals when it comes to athletic department personnel. However, one losing season and they are out (although exiting with $14 million takes away some of the ignominy). Everyone at Louisville understands how the game is played there — not football, obviously from the record, but the ethics thing. The rules of that game are clear and the result is one sad culture.

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Contrasts: A Senseless Act & A Senseless Act of Courtesy

Over the past month, the Barometer noted two articles that presented a stunning contrast. The first, by Bob Greene, in the October 20-21, 2018 Wall Street Journal. Mr. Greene told a story that unfolded during a Sunday morning walk. An elderly couple pulled up at a medical complex, parking in a lot that had 100 parking spaces. When the couple got out of their car, they realized that they had parked over the white line on one side of their parking space. Rather than take up two spaces, the man got back into the car as his wife directed him on moving the car within both white lines. They then went into the medical building. Mr.Greene rightly observed that no one would have minded if they had not reparked. No one would have been affected or inconvenience by a single car taking up two spaces. Yet, they followed a small rule because they had in their minds the thought that you just don’t do those kind of things. It was a small but inspirational act of doing the right thing — a random act of courtesy.

In the New York Times, there was the story of the death of Professor Kurt Salzinger, a professor and scholar of behavioral psychology at Hofstra University. He was 89, a native of Austria who had fled the Nazis and come to the United States. Having survived the horror of the Nazis, Professor Salzinger was the victim of a random act of physical rudeness. While Professor and Mrs. Salinger were waiting on a subway platform to go to Macy’s Herald Square when hurried straphanger pushed them aside as he hurried to catch the southbound train to Brooklyn. The Salzingers were knocked to the ground, and Professor Salzinger suffered bleeding in his brain from being knocked to the ground. He subsequently died when he contracted pneumonia in the hospital as they struggled to save him. Someone in such a hurry that others’ lives did not matter rudely pushed aside two tender human beings and now one of them is no longer with us. A random act of brutality committed in the name of time pressures. What drives someone to be so unaffected by the lives of others? What has happened to common courtesy? The Barometer need not have graciousness from all, just common courtesy, the kind that would never take human life in the subway rush.

Two different stories with the common thread of courtesy — in one courtesy was inspirationally present, and in the other shockingly absent. One cannot help but wonder in which direction we are headed.

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The Tesla Purchasing Manager, $9.3 Million Embezzlement, & Internal Controls

A federal grand jury had indicted former Tesla purchasing manager, Salil Parulekar, for operating a $9.3 million embezzlement scheme. In a nutshell, here’s what happened:

1. Mr. Parulekar, part of Tesla’s supply management group, was in charge of Tesla’s relationships with certain suppliers
2. Tesla had ended its relationship with supplier, Schwabische Huttenwerke, in 2016.
Tesla’s new supplier was Hota Industrial Manufacturing.
3. During 2016 and 2017, Hota’s payments went to Schwabische.
4. Mr. Parulekar was able to funnel the $9.3 million to Schwabische by stealing a Hota employee’s identity and switching the bank account information.
5. Mr. Parulekar then falsified documents showing that Hota had been paid.

It is not clear how or if Mr. Parulekar benefited from the deal, and he is not returning calls. Neither is anyone from Schwabische.

One must never assume, for there are always human running companies and their supply chains. The foolproof method of direct bank deposits is not so foolproof. The lapse in internal controls here (and the new chairman of Tesla may want to chat with audit about this) is that there was no check on the person supplying the bank information for the direct deposit. The direct deposit method is only as solid as the person who gave you the information, or if that person really did give you the information.

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Tiger Woods Turns Down $3.5 Million for Saudi Tournament

Although the media coverage seems determined to attribute Tiger Woods’s decision to decline $3.5 million to play in a Saudi tournament to age factors, more than a few of us have been able to drag our old bones out for pay. Mr. Woods, with the usual reticence that has accompanied his professional golf career, has not given an explanation. However, he should be given some credit for declining. Not many people would turn down that kind of money. In fact, the list of celebrities who have graced thugs, dictators, and human rights violators for cash includes Nicki Minaj, Kayne West, Jennifer Lopez, Beyonce, Mariah Carey, Sting, and Usher. Many were urged to return the money. They did not — that would have the odor of attic atonement come too late anyway. Better to refuse. A tip of the golf cap to Mr. Woods.

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