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.

Posted in News and Events | Leave a comment

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.

Posted in News and Events | Leave a comment

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.

Posted in News and Events | Leave a comment

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.

Posted in News and Events | Leave a comment

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.

Posted in News and Events | Leave a comment

Jim Acosta Accosts a Young White House Aide

She remains unidentified, but the young White House aide who was pushed away by CNN reporter, Jim Acosta, is owed an apology. The president had ended his question time, and her job was to take the microphone. Mr. Acosta refused, she grabbed the mic, and he touched her to pull it away as he pushed her. In a professional setting, in the Barometer’s simple world, folks do not treat others this way. That the aide was female allows her a #metoo moment because physical contact was a disgraceful and infantile.

Mr. Trump and Mr. Acosta and their issues aside, someone should have stepped up and stepped in to preserve the dignity of this young woman. She deserved better. She showed great restraint in adhering to professionalism in circumstances that would have given her license to give Acosta a Barbara Stanwyck slap across the chops.

Posted in News and Events | Leave a comment

Under Armour Gets Way Harsh on Corporate Credit Cards

Per company e-mail, Under Armour employees can no longer charge strip-club visits on their corporate credit cards. These are the times that try men’s souls. They follow on the heels of the times that tried the souls of the women who worked at Under Armour and witnessed the behavior.

Posted in News and Events | Leave a comment

Accounting News from Apple, Tesla, and GE

As if GE did nor have enough troubles: CEO ousted, flaws in its power-plant turbines, dividend cut yet again, and now the Justice Department has announced criminal probe into its accounting. The SEC is already there on accounting issues. The new CEO has not commented on the accounting issues except to say that a CEO should never say that “there is nothing in the woodpile.” Conjures up some powerful images.

Apple — no longer going to disclose unit sales on iPhones, iPads, and Macs. Generally, when companies change sales reporting methods, there is a decline. When Coach no longer identified outlet sales vs. retail store sales it was because the brand was in a dip. Apple remains mute about unit sales, explanations, and insights. More probably coming.

Tesla — how exactly did Tesla make its biggest profit ever? Not entirely from care sales. Tesla booked $189.5 million in sales of government credits. The government credits are earned by Tesla by producing clean-energy products. Tesla can sell those credits to other companies. Not the core business, and a tribute to a government that subsidizes car purchases by the wealthy.

Accounting remains more art than science.

Posted in News and Events | Leave a comment

What Do I Owe My Severely Disabled Parents?

Question asked of The Ethicist in the New York Times on Sunday, November 4, 2018.

Like shopping at Tiffany’s, if you have to ask the price, you cannot afford it.

If you have asked the question, you already have the answer.

The circumstances of the parents in this situation are severe (auto accident that left the parents severely disabled), trying, and demanding for their son/daughter (name was withheld). This is a tragedy, but the resentment in the description (of lost career opportunities), the discussion of cultural differences between the immigrant parents and their child, and the disgruntled acknowledgment of the parents’ sacrifice for the child’s education all point to a desire to walk away.

The advice given in response? Don’t further derail your life because then another life is lost. Is a life ever lost in making what will be the short last years of a loved one’s time on earth a bit more comfortable? Will the experience enrich the child? Is it possible that the child can reconnect with mom and dad? Just thinking through the issues beyond the derailed career.

Having raised a child with significant disabilities, the Barometer witnessed first-hand the number of philanthropic and other resources available for families trying to care for the severely disabled. With the help of those who feel we owe something to those who cannot care for themselves, we can shoulder the burden and still have a life.

For an ethics expert to fail to point out the human side in response is sad for the recipient of the advice as well as the expert. John Stuart Mill, quoted in the response, may not be the best source for a situation that requires a heart.

Posted in News and Events | Leave a comment

The Companies That Need an Ethical Culture Review

Each day the Barometer muddles through four newspapers and scans in articles that involve ethical issues in government agencies, companies, nonprofits, NGOs, schools, etc. — anywhere humans are because where there are humans there are ethical issues. For futurists, where there are robots designed by humans, there will be ethical issues. The scanning is necessary because items disappear from the Internet. Also, some newspapers, in their online versions, update articles without explanation. Having the original often demonstrates ethical issues on the part of the journalists at the newspapers.

The Barometer is exhausted with the scanning. So, herewith is a plea to several companies, agencies, nonprofits, etc. to get some help. These organizations are in dire need of a review of their ethical culture. The hits just keep coming, yet they cannot seem to grasp that they have an issue. Herewith the Barometer’s list for ethical triage:

Facebook: From the privacy issues to the security breach that went undisclosed to its policies on pulling materials and closing accounts, this is a company struggling to find its way.

Tesla: Now facing a criminal investigation over its production numbers, which follows on the heels of the SEC settlement, which follows on the heels of accounting questions which follows on the heels of the conflicts in its purchase of a solar company run by Elon Musk’s brother– get some help quickly.

Goldman Sachs — with the criminal charges against two Goldman bankers in the Malaysian embezzlement prosecution and all the related and shady Jho Low activities, Goldman topped its previous issues. As the Justice Department phrased it, the Goldman fellows charged were focused on deals–“putting them ahead of the proper operation of its [Goldman’s] compliance functions.” This is a classic cowboy culture that still does not understand what its culture is. And it cannot be fixed with its fancy philanthropic and sustainability efforts.

Google– The “don’t be evil” gang surely struggles with ethical issues, from expanding into China to intolerance for diverse views to hiring practices to secret settlements to walk-outs — who exactly is running this company? An external review of its goings on and a slightly different perspective could help.

University of Maryland: Maryland’s Board of Regents is, in Shakespeare’s apt phrase, a piece of work. It recommended retaining the football coach under whom a player died. The president reversed the decision, but the Board was not pleased. The president agreed to retain the coach, but announced his retirement. Then the Board president resigned. The Board and the University need an external review. Without it, they both lose credibility internally and externally. The strongest and clearest communication any organization comes with this: Whom do you hire? Whom do you fire? Whom do you discipline? Who is quitting? Messages sent and received here, and the culture is affected and/or evidenced by both.

Posted in News and Events | Leave a comment

Man Commits Suicide in His Parked Car in NYC: No One Said Anything

The tale of Geoffrey Weglarz is one that should give us pause. A man, troubled financially and personally, drank poison in his car, parked on a residential street in the East Village in New York City. His remains were finally found in the car one week later. One man said that he had passed by the car “half a dozen times” while Mr. Weglarz was in it.

His family in Florida were worried and tried to make contact with police, but rules, procedures, and cracks between both let time march on without finding the car. Mr. Weglarz had texted some troubling notes, but the responses from those who received them were too late to stop the suicide.

Mr. Weglarz visited with his son in the afternoon and then parked his car and took his life. Those in the neighborhood sensed a bad smell, but no one investigated. Friends were concerned with no responses on his phone, but waited.

Sometimes we don’t want to get involved. Sometimes we are too busy to notice. Sometimes we don’t pick up on signals from those we know and love. This sad story is a reminder that we may not be as concerned and connected as we need to be with those we love, those we know, and those we don’t know, except as a fellow traveler in this difficult world.

“Any man’s death diminishes me, because I am involved in mankind, and therefore never send to know for whom the bells tolls; it tolls for thee.” John Donne

Posted in News and Events | 1 Comment

Beto O’Rourke and Conflicts

When current U.S. Senate candidate in Texas, Beto, nee Robert, O’ Rourke, was a member of the El Paso city council he represented a historic Mexican-American neighborhood. He proposed a revitalization of the tenements with restaurants, shops, and an arts walk (think San Antonio River Walk). He was married to the daughter of an investor’s daughter.

In addition, his constituents, the residents and many of the owners of the small businesses in the area, were against the changes. Further, a study commissioned by the city referred to the residents of the area as “dirty,” “uneducated,” and “lazy.” Guadalupe Ochoa, a resident of the neighborhood, says that she voted for Mr. O’Rourke and then “he turned things around on them,” once he got close to the power. They filed an ethics complaint with the city, which was rejected. However, Mr. O’Rourke finally took the advice of an attorney to no longer be “tone deaf” to the appearance of a conflict, and recused himself from voting on the proposal. The plan eventually fell apart.

The folks in the neighborhood have not forgotten. It was not the appearance of a conflict. It was a conflict.

Posted in News and Events | Leave a comment

Google and the Executive Exits With Golden Parachutes

The New York Timesran a story about the payouts that Google made to exiting executives, those who exited under a cloud of sexual harassment allegations. In one case, Google paid an executive $90 million upon his exit despite finding the allegations credible.

There was insurrection in the ranks once Google employees read the article in the Times, albeit online since one cannot find a newspaper in the Silicon Valley. The employees demanded a meeting, as they do when Trump is elected, Google might sign contracts with the Department of Defense, and when payouts are given despite behaviors.

The “Do no evil!” credo has definitional struggles. The strongest communication a corporation has with its employees comes through it hires, fires, and disciplines. The silent payouts were one heck of a message on values to Google employees.

Posted in News and Events | Leave a comment

FBI Probe of Tesla RE: Production Figures

Tesla has voluntarily turned over documents to the FBI relating to the agency’s criminal investigation into whether Tesla misled shareholders and investors about its production figures. The Bureau has also been questioning former Tesla employees.

Elon Musk said in conference call with analysts in July 2017 that the company would be making 20,000 Model 3s a month by December 2017. Actual production for all of 2017 was 2,700, with 793 produced in the last week of 2017.

This investigation is separate from the SEC settlement for the Musk statements on the company going private. That settlement does not cover the production issues still under investigation.

We got big trouble here in Teslaville, that’s a capital T that rhymes with “P” and that stands for problems ahead.

Posted in News and Events | Leave a comment