The Ethical Barometer

Reverb Communications settled up with the FTC.  The marketing company agreed to remove from the Internet all the iTune reviews that appeared to be written by run-of-the-mill app users but that had really been written by its very own employees.  Reverb admitted nothing, noting that it could not agree with the FTC on the facts.  However, Reverb could have taken a lesson from Hollywood.  Fake reviews are nothing new.  We have had them for movies. Actress Demi Moore starred in the 1995 movie, The Scarlet Letter,   (more…)

Roger Clemens was indicted for perjury.  Former Illinois Governor Rod Blagojevich was convicted on one count of 24 charges – that of lying to the FBI. Common thread?  Their troubles did not spring from their mistakes, misjudgments, and almost felonies.  Their troubles resulted from what they did when their conduct percolated to the surface.  Well, their troubles began when their conduct gushed to the surface like oil from a BP Gulf rig.  From the time of Nixon, it’s always the cover-up that gets you.  (more…)

The Barometer demands reasoning and analysis from her students, not “I feel.”  Were well trained ethics students charged with the assignment of evaluating whether a Muslim community center and mosque should be built three blocks away from Ground Zero in New York City, they would seize first on the word “should.” “Should” grabs them because they are trained to avoid confusing “could” with “should.”  In this emotional debate, the two have been confused. The First Amendment and religious freedom being what they and federal courts being staffed ideologically (more…)

1.  Has every male in America forgotten “Fatal Attraction”?
2. There’s a fine line between romance and sexual harassment – a line that becomes noticeably brighter once one party in the romance loses interest, drops out, or quits awarding contracts.
3. Expense reports are tricky things.  Before signing, read.  Actually, follow the academic studies and read The Ten Commandments before filling them out.  The studies show (more…)

The New York Times ran a piece on Sunday, August 1, 2010 that highlighted, as it were, research on the tendency of students today to cut and paste information from the Internet without attribution.  The Times discovered a phenomenon with which those of use in the academic world are all too familiar.  To students today, “cut and paste” is the way to write papers!   Cuts way back on the nastiness of footnotes and sources.  About 40% of students admit to copying others’ work for assignments and only 29% believe that Web cut-and-paste is “serious cheating.” And the Times also discovered that, when discovered, (more…)

The SEC announced the Goldman fine with fanfare.  But the amount Goldman Sachs will ante up for its role in the Abacus mortgage fund was small potatoes.  Howard Chen, a banking analyst, had the best take on Goldman’s lack of remorse and unlikely damage:  (1)  He observed that there would be no management changes at Goldman; and, (2)  ”We do not anticipate any material long-term impact to the firm’s client franchise.”  Mr. Chen is right, of course, but those who step in line with his conclusions are the chumps. The tale (more…)

Richard Scrushy, the former CEO of HealthSouth who was acquitted of the criminal charges  related to his role at that company but later convicted of bribery, has asked for an early release from prison based on the U.S. Supreme Court decision on “honest services fraud.”  The Barometer says, “Let him out!”  If you give him freedom, he will spend.  (more…)

The consumers are different and the products worlds apart but there is a common thread.  When the sudden acceleration issues with Toyota vehicles first emerged, the company hedged on a floor-mat cause, opted not to make disclosures and filings, and generally hoped the problem would just go away.  It did not, has still not, and the recent data concluding that drivers are to blame in some accidents should not result in oh-what-a-feeling there at Toyota. When Apple customers, emerging from the queues with their latest iPhone, began to complain that the phone antenna did not work as they held the phone a certain way, Apple gave a classic Henny Youngman one-liner in response, ‘Well, then, don’t hold it that way!”  Apple also hoped that the whole thing would just go away.  (more…)

Bank of America has joined the ranks of companies ‘fessing up to “repos.”  “Repos” do not mean the same thing to banks as they do to those rather large fellows with tow trucks and crow bars.  To the latter, repos are the honest work of repossessing cars from deadbeats.  To the former, repos are the dishonest practice of hiding debt in order to avoid being a deadbeat.  BofA had admitted to the SEC that it used some “window dressing” transactions to make its balance sheet look better at the end of the quarters in 2007-2009.  Repos are becoming a daily event.  The bankruptcy trustee let loose on Lehman Brothers (more…)

Some years ago, Intel poo-pooed the protests of a math professor who complained that once you got past a certain number of digits in your calculations the Intel chip resulted in incorrect answers.  Intel hemmed and hawed and initially allowed replacements only for those who could show that they really did the math.  Intel eventually had to make good on all the chips and even its employees’ internal newsletter did a parody of the company’s lame initial response.  Enter Dell.

Recently revealed court records show that the math department at the University of Texas at Austin complained to Dell (more…)

P = f(x).  The probability of a safety conscious decision being made is a direct function of budgets and margins. Put them both together in a meeting and budgets will rule.  When all the analyses on BP’s Deepwater Horizon well are done we will find this inherent tension was at the root of the Gulf Coast disaster.  Indeed, we already have evidence of BP’s shortcuts in the critical path and decisions that fell well short of industry standards.  BP was notorious for coming out on the wrong side of the safety/budget conflict.  In Marianne M. Jennings, Case Studies in Business Ethics, 6^th Ed. (2007), BP appeared in a case study used to teach students about the risks of failure to manage the  P = f(x) tension. (more…)

I have lived in Arizona since 1976, a choice of residence that finds tongues clicking about me around the country.  Before giving a speech last week, a potential attendee queried the sponsor, “Where is she from again?”  He responded, “Arizona.”  And the comeback was, “Arizona?!  I’m not coming to hear anyone from Arizona speak.” (more…)

If you thought that “The Seven Signs”  applied to only for-profit entities, you would be wrong.  Numbers pressure is everywhere, even in government and even if meeting the numbers is self-destructive.  If the just-released Office of Inspector General’s report is any indication, employee stats may have been the root cause for the SEC in Fort Worth, Texas passing (four times) on bringing enforcement action against Stanford Securities because it was not a “quick hit” for their success-rate stats.  (more…)

The SEC complaint against Goldman is a stunner.  Stunning because Goldman had a 31-year-old flying about as close to the treetops as one can get without crashing.  Or maybe Fabrice Tourre has indeed crashed now.  If the SEC is right, Goldman’s Tourre put together a deal of CDOs with the mortgage pool handpicked by John Paulson, a guy who planned to position himself short on the securities Goldman would sell to its clients.  Needless to say, the SEC complaint shows that Paulson chose dogs.  But Fabrice was savvy enough to have a third party, ACA Management, actually structure the deal.  The funny part is (more…)