The Ethical Barometer

However, the top-heavy problem is not physical, as in the angle of attack on the 737 MAX or door panels falling form the skies.  Its top-heavy problem is with its executives.  They have ethical tin ears.

The most recent issue is the company recording executives’ personal company jet travel as business expenses. That personal travel is income to the executives and not a travel expense for Boeing.

Boeing has corrected the “accounting error” in an SEC filing.  That disclosure came after the Wall Street Journal raised questions about the executives’ use of Boeing’s private jet fleet. Andrew Rangel and Mark Maremont, “Boeing Eases Office Return for Senior Executives,” Wall Street Journal, September 12, 2023, p. A1. Andrew Rangel and Mark Maremont, “Boeing Didn’t Disclose All Executive Jet Perks,”  Wall Street Journal,  April 12, 2024, p. A4.

In fairness to Boeing, one can understand the confusion.  The executives live all over the country and then commute when they have to come into the office. In one case, Boeing actually set up an office near CFO  Brian West’s home in Connecticut so that he did not have to commute to an office so far away. Arlington, Virginia is not that far — is even in the same time zone!

Boeing has office in Arlington, Virginia (that resulted when the company HQs were changed from Chicago to the DC area).  Meanwhile, outgoing CEO Calhoun has homes in New Hampshire and South Carolina. But he zigzagged from Arlington, VA to Hilton Head, SC to Monterey, CA and then back to New Hampshire.  Mr. Calhoun noted in 2023 that Boeing headquarters is wherever he and Brian West are.

Is it any wonder the accounting on personal vs. business flights got jumbled?  The Barometer’s question is, “When do these guys actually work?” And all of this was going on as Boeing was ordering employees back to the office.  And it is a little difficult for those assembling airplanes to work from home. Perhaps the missing bolts from the ejected door panel can be found while at a machinist’s home who tried the work-from-home approach.

The executives at Boeing have tin ears on ethics and perception.  Jetting around the country and living away from plants and headquarters means an absence of leadership. You can’t build a culture via Zoom.

And a culture of integrity cannot exist when the executives are abusing the company’s private jet use. Boeing needs to start at the top for its clean-up. For replacements consider someone who will leave near the factories so that there is hands-on leadership shaping a culture of safety, quality, and ethics.  Oddly enough, you can’t do that from an airplane.

The accounting firm of KPMG has already paid a fine in the United States for facilitating cheating by its auditors on the required PCAOB exams on audit standards and ethics.  PCAOB (often referred to as Peek-a-boo) is the Public Company Accounting Oversight Board.

The $50 million fine in the United States was for lowering the score required for passing the PCAOB exams.  By changing a number in a hyperlink, KPMG had lowered the passing score to 25%.  That’s a crackerjack group of auditors who could get 25% of the answer correct on an exam. Thatscore that would be tough to get by just randomly selecting answers.

The  Netherlands just assessed a $25 million fine against KPMG for providing employees with answers and/or questions on the PCAOB exams in that country.  The sharing of exam information involved hundreds of KPMG employees.  The “sharing program” ran from 2017-2022.  In addition, the Netherlands officials found that KPMG leaders misrepresented their  knowledge of the cheating during the investigation.

KPMG issued a statement about the findings of the Dutch Authority for Financial Markets:

“The conclusions are damning, and the penalty is a reflection of that.  I deeply regret that this misconduct happened in our firm”. Mark Maurer, “KPMG Will Pay Record Fine Over Cheating,” Wall Street Journal, April 11, 2024, p. B1.

The Barometer notes that the fine for the cheating in the U.S. was issued in 2019.  One does wonder why KPMG did not review the exam practices in all of its offices worldwide.  Cheating knows no international boundaries.

The declaration, issued by the Vatican, begins by stating clearly the inherent dignity of all human beings.

The declaration then concludes that assaults against human dignity are abortion, surrogate childbearing, euthanasia, capital punishment, poverty, war, the travails of migrants, human suffering, sexual abuse, marginalization of the disabled, and digital violence.

The declaration added, “. . . all attempts to obscure reference to the ineliminable sexual difference between man and woman are to be rejected.”

The Pope noted that its clarity was designed to put an end to two sets of ethics among Catholics: life ethics and social ethics.  The People then added that such was a “misuse of reason.”

Since 1934, Harvard’s library has housed a copy of Des destinées de L’âme (The Destiny of the Soul by Arsène Houssaye).  The book was published in 1879. Dr. Ludovic Bouland, a French physician, acquired a copy and placed a new cover of human skin Ono that copy.  The skin came from an unknown woman who had died in a French psychiatric hospital.  The ghoulish doctor explained in a note placed in the newly covered book that “a book about the human soul deserved to have a human covering.” 

After acquiring the book, there were some rumblings within Harvard.  Finally, in 2014, scientific studies were performed on the cover.  Scientists confirmed that it was human skin.  That revelation zoomed across the internet as “good news for fans of anthropodermic bibliopegy, biblomaniacs, and cannibals alike.” [Jennifer Schuessler and Julia Jacobs, “Harvard Removes Book Binding of Human Skin,” New York Times, March 29, 2024, p. A1. ]

At that point the book became an “attention-grabbing, sensationalized display item.” The library began restricting access in 2015.  In February 2023, access was denied to all new researchers.

So, a group of Harvard faculty members, headed by “a scholar of early modern books,” asked for the book binder to be removed and that the woman’s remains be given “a proper burial.”  Their demand was published in the Harvard Crimson as an advertisement.  Thus, the group concerned about sensationalism added to the attraction by advertising its demands.

Harvard has now removed the cover and replaced it a book cover made from trees. The head of the group of professors called the action “the right thing to do.”  Indeed.  The book is now accessible by all.

The library indicates that it will take months “or longer”  to research the original binding and make any decision about its disposition.

Interesting how the thinking process at one of the nation’s allegedly top universities requires research and further analysis to determine what is the right thing to do.

Nonetheless, we must give Harvard credit for at last removing the book cover.  When an elephant takes wing, you do not criticize it for not staying up long enough.

Whilst reading the 2024 story of  Colorado’s former star forensic scientist,  Yvonne “Missy” Woods, the Barometer had that feeling of déjà vu.  Had this story of an incredible forensic scientist whose results were flawed over decades been told before?

Indeed it had.  Checking her records, the Barometer found the 2001 story of the late Joyce Gilchrist.  another star forensic scientist in Oklahoma City whose reputation was national.  In 1985, she was named the Oklahoma City police department’s employee of the year.

When the FBI checked her work it found “incomplete and inaccurate data.” The FBI also found DNA matches that “fall far below the acceptance limits of the science of hair comparisons.” Twelve defendants were exonerated when Ms. Gilchrist’s work and testimony in 3,000 cases from 1980-1993 were reviewed. She was fired for fraud.

The FBI report suggested that all of the cases that used her work be re-examined. One of the changes made following the Gilchrist revelations was to move forensic labs out of police departments to remove the inherent conflict.

Ah, but government employees, scientist or not, are still paid by the same employer.  Changed reporting lines do not always curb bias. You can take them out of the police department but you never really remove them from law enforcement.

The Colorado Bureau of Investigation  is also now looking at about 3,000 cases that involved DNA testing in the 29 years Ms. Woods worked there.  Ms. Woods was a witness or potential witness in 56 closed cases and 13 open cases.  Her attorney issued a statement, “She continues to stand by the reliability and integrity of her work on matters that were filed in court, and particularly in cases in which she testified in court under oath.” Dan Frisch and Zusha Elision, “DNA Scandal Jolts Colorado Justice System,”  Wall Street Journal, March 8, 2024, p. A3.

The lesson from this case is the critical need for quality peer review of forensic labs.  But there is another lesson still not learned from both cases — if it sounds too good to be true, it is too good to be true.  Forensic scientists who can solve cold cases and always seem to be on the prosecution’s side may not be brilliant stars.  Audit, check, and recheck their results.  Do it long before they reach their 20-30 year marks.

Gro Intelligence, a climate analytics startup, was going to fix the global food system.  That’s a tall order.  But folks invested and created an $850-million company.  As it turns out, Gro had no impact on the global food system.  In fact, it did not even make its payroll taxes.

Beware of entrepreneurial wizards promising the world, or at least a new food system.  Gro’s CEO founder is out along with the operations VP, and the Board has hired a law firm to determine what went wrong.  The board now oversees a $20 to $25-million company.

One has to wonder, where was the board when it was reviewing the company’s financials? Contributions to the employee retirement plans were late. Yet, Gro, ranked as one of the most influential companies in 2021,  was not making  payroll. And 60% of its work force has been pink-slipped with remaining employees promised that they will get their missed paychecks.  Getting that in writing will still put those employees  fourth in line in bankruptcy.

There was the usual cash-burn problem as former Gro CEO Sara Menger did her TED talks and Davos appearances. She had lined up some clients such as Bayer and Unilever, and shame on them for buying it all hook, line, and sinker.  But the board saw nothing except star power and heard only promises until a consultant came on board, as it were, and discovered the payroll issues.

Sophisticated board members awaken and arise.  Forget about the rankings, the PR, and the promises. Forget about markets and valuations.  Stick with the basics:  Are we meeting payroll? Sad that we cannot trust executives to do the basics that the smallest LLCs and S corps do.  Sophistication and Davos do buy cover.  Ignore the media coverage and hype, don’t hire consultants — just ask employees about their paychecks.

Juliet Chung, “Climate Analytics Startup, Once Rising Star, Is in Crisis,” Wall Street Journal, March 8, 2024, p. B1.

Oprah Winfrey has served as a spokesperson and board member at WeightWatchers.  However, in December 2023, Oprah, having lost 40 pounds touting the self-discipline WeightWatcher plan of  counting points,  announced that she had been  taking one of the weight loss medications.

WeightWatchers’ stock took a 25% plunge.

Oprah, who responded to the hoopla about her announcement seemed baffled, “What?” was a summary of her response.  The deception, the millions of WeightWatcher sign-ups in response to her success, seemed to be an issue.

Oprah will now be leaving the WeightWatcher board, but she assures that she still believes in its programs and follows them.  Right-o!

Whilst serving on a dissertation committee, I gained mighty insight into the halls of academe. My fellow committee members and I were sitting in shocked silence.  We had just finished a PhD candidate’s oral defense. The defense was a stunner.  The candidate could not answer questions, tackle challenges, or even summarize  what he had written.

He was terrific at spouting terms, stringing them together, and concluding circuitously.  But  mumbo-jumbo hung heavily in the room. One committee member shook his head and observed, “Sometimes I think we take these doctoral students for five to seven years and just beat the common sense right out of them.”

In fact, there are now generations of them, lumbering about the halls of academe, and continuing to spout mumbo-jumbo.  Harvard is the leading residence for the mumbling jumbos.

To tackle the issues surrounding Harvard’s  international embarrassment in its standards for and treatment of Jewish students, the new acting president created a Presidential Task Force on Combating Antisemitism.   The head of the task force is Professor Derek Penslar.

Professor Penslar’s book titles alone suggest that his heart may not be into even-handedness:: “Israeli Historical Revisionism,” “Shylock’s Children: Economics and Jewish Identity in Modern Europe,” and “Colonialism and the Jews.”  His books never quite get around to covering, say, anti-Zionism. But he has covered topics such as Israel’s creation of apartheid, grounded in “Jewish Supremacism.”

On what planet was this choice acceptable ? Give us a welder, a butcher, a baker, and throw in a candlestick maker for the climate-change crowd.  In short, give us some common sense.

In the Neil Simon comedy, “Seems Like Old Times,” a character proposes a ridiculous solution for stopping nightmareish headlines.  Upon hearing the insane suggestion the victim character responds, ” We’ll make the cover of the National Enquirer!”

Yes, the magazine that relies on lack of common  sense for readership and defies the laws of defamation would worry about running a story that Harvard’s anti-Semitic task force is headed by a professor whose writings highlight the problems with Israel and the  Jews.

In studying the Harvard Board’s actions when it comes to hiring and not firing presidents of their institution, the old adage of warning comes to mind, “Would you buy a used car from this person?”

Let’s run down the checklist of the Board’s missteps:

1.  Claudine Gay did not have the depth of experience in management or leadership that is necessary to be an effective university president. Lawyers prepped her for her testimony.  You can’t toss out legal mumbo jumbo when your students are chanting “From the River to the sea” stuff about eliminating Jews. Genocide cannot be washed away by claiming the  cleansing of the “First Amendment.”   Harvard ranked dead last in a survey on campus freedom of expression. Harvard has spent years banishing speakers and rescinding admission offers for what it deemed offensive speech. Dr. Gay spent weeks trying to clarify her testimony and only made more mumbo jumbo. Rookie mistakes.
2. The Board did a lousy job of vetting Dr. Gay.  The background check did not pick up the plagiarism (and just an online search could have done that, which is why Christopher Rufo wrote about the issue just five days after Dr. Gay’s testimony before Congress). Even without that issue, there was the sheer unremarkable and pedestrian qualities of her dissertation and other work.  Her scholarship did not move the needle in her field. To quote Carol M. Swain, whose work Dr. Gay plagiarized, “Ms. Gay was able to parlay mediocre research into tenure and administrative advancement at what was once considered a world-class university.”  Carol M. Swain, “Claudine Gay and My Scholarship,” Wall Street Journal, December 18, 2023, p. A15.
3. The Board did not spend enough time investigating or offering  transparency for previous complaints about Dr. Gay’s plagiarism (in October 2023 –two months prior to her testimony).  The Board was quick to sniff at those charges as well as the post-testimony disclosures. The arrogance is stunning.  But boards that dismiss allegations too quickly pay the price.  See Barclay’s board and Jes Staley. See McDonald’s board and Steve Easterbrook. Neither CEOs nor boards can ride out misconduct. More just keeps a’comin’.
4. The Board was more focused on DEI than credentials.  First woman to be a Harvard president (pardon the use of the term “woman”). Harvard’s first black leader. Now firing her would be an embarrassing admission of a lesser standard for the pedigrees required of minority candidates.
5. The inconsistency of the Board in upholding stated Harvard standards is stunning.  Imagine what students are thinking, “All I have to do is put quotes around my whole assignment and I am in the clear for lifting it.” There’s an arrogance in the inconsistency too, “We are Harvard.  We don’t care.  We don’t have to because we are Harvard.”  Until the boycotts come.  From potential employers. From bright students choosing to go elsewhere. As one Harvard faculty member noted, this is an inflection point.  One wonders if the Board understands that.

We have this vision in our minds about corporate boards:  experienced, no-nonsense folks with bottom-line good sense all wrapped together in a “does not suffer fools well” package.  Three recent case studies tell us that we are misguided in our assumptions.  Here’s the first example in a series.

HeadSpin — Yet another Silicon Valley fraud start-up. Who were the investors? To name two:  GV — Google’s (Alphabet’s) venture capital subsidiary and  Iconiq Capital (manager for the Zuckerberg fortune but terrible at spelling).

These gazillionaires, with off-the-charts IQs, plunked their money into a company without getting board representation.  They also let HeadSpin sally forth without a single audit.  In fact, HeadSpin had one accountant — a freelance accountant who worked from home and used only QuickBooks.

HeadSpin had no CFO or HR department. When anyone asked for, oh, say, financials, Manish Lachwani, simply ignored them.

HeadSpin claimed Apple and American Express were clients that used its software for app testing.  No one ever checked with those companies to verify that they were indeed customers. They were not and there were many others on the list of customers who were not customers.

Well, it was a fraud.  So much of a fraud that Lachwani has entered a guilty plea to three counts of fraud.  Most of the other fraudsters have at least gone to trial. One of his not-so-clever tricks was to take investors’ money and  invest it in Snap, Roku, and Tesla. He never shared his portfolio approach to running a business with his investors.  He made up financial statements and joined a long line of Silicon Valley fraudsters:  Elizabeth Holmes (Theranos); Samual Bankman-Fried (FTX), Trevor Milton (Nikola), and 9/10ths of the dot.coms.

The lack of oversight is stunning — no financials, no CFO, no bank statements – just a few of the things boards should be looking at. But governance is something to be mocked in the Valley unless it involves whipping nuns into a frenzy about climate change so that they can take center stage at the annual meeting.

The excitement over something new in tech draws investors, but the genius of ideas and takes structure to turn that idea into a business.  Both investors and boards should  know by now that when it comes to Silicon Valley investments: Do not trust and verify everything.

Well, there just might be a culture problem at that university.

New York Times, December 10, 2023, p. A28.

Well, la-de-dah. who knew?

Headline, New York Times, December 12, 2023, p, A1.

On July 4, 2021, the Barometer posted the following

Cardinal Giovanni Angelo Becciu, the former chief of staff for the Vatican’s Secretariat of State, was indicted, along with nine others, for money laundering, fraud, and abuse of office. It seems the Vatican investment in some real estate in London’s Chelsea neighborhood went south. The building had been a Harrods Department Store showroom but was to be turned into luxury apartments.

Dreams turned to dust, and the Vatican lost about 350 million Euros in the deal. Turns out that the broker involved has refused to turn over title to the building the Vatican thought it bought. Business risk is inevitable but a broker purloining a building from the Catholic Church is something more than a risk. “Multiply it by infinity, and take it to the depth of forever, and you will still have barely a glimpse of what I’m talking about,” to quote Joe Black, aka Death.

Already, Pope Francis has stripped Cardinal Becciu of his employment as “head of the Vatican’s saint-making department.” The Barometer does not know the qualifications for heading up such a unit, but being under indictment would surely call Cardinal Bicciu’s credentials into question.

Now the update — the trial is ongoing. The Vatican sold the building for $225 million — it had put in about $400 million for purchase and improvements. But prosecutors have also brought in Cecilia Marogona, a self-styled intelligence expert, who was sent 675,000 Euros to use in freeing a nun kidnapped by Islamist militants in Bali.  Got that?

Sister Gloria Cecilia Narvaez was released on October 9, 2021, five years after being captured.  However, some of the money is missing sent to Cecilia, the intelligence expert, is missing.  Cecilia, not spent at least one night at Cardinal Becciu’s apartment.

However, Cardinal Becciu responded to the speculation about their relationship, “Sonia Munda mounds,” or “to the pure in heart everything is pure.”  The Wall Street Journal concluded the cardinal was quoting from an Italian novel, “The Betrothed.”  Actually, the Barometer gives the cardinal a break.  He may be quoting the New Testament, Titus 1:15,Unto the pure all things are pure: but unto them that are defiled and unbelieving is nothing pure; but even their mind and conscience is defiled.”

At any rate, the Vatican needs a good accountant and a conviction to clean house. The Pope is hoping for a verdict of innocence.  Somehow, given the cardinal’s questionable conduct, innocence is not a quality that comes to mind.

Francis X. Rocca, “A Cardinal Once Seen as Future Pope Now Faces Prison,”  Wall Street Journal,”  December 13, 2023, A1.

UPDATE:  Giovanni Angelo Becciu was sentenced to 5.5 years in prison for financial crimes.  Yes, Pope Francis’ former chief of staff is going to jail. Elisabetta Povoledo, “Vatican Fraud Scandal Ends in Prison Term for Once-Powerful Cardinal,” New York Times, December 17, 2023, p. A13.

In addition to the shock of financial malfeasance and/or incompetence at the highest levels of the Catholic Church, the Barometer was also surprised to learn that the Pope had a “chief of staff.” The political imagery sends the mind reeling.  Bob  (H.R.) Halderman and all.

Mercy!  Watching the debacle of the three sirens (the presidents of Penn, MIT, and Harvard) testify about calls for genocide was frightening.  The three managed to reach the same conclusion:  Halting calls for genocide of Jews or imposing sanctions on students who do so is controlled by context. Until there is physical harm or action taken, no harm, no foul.

The three got things so wrong. There are tips we can all take away from this experience.

1.  Don’t allow lawyers to prep you for public hearings.  Two of the sirens (Claudine Gay of Harvard and Elizabeth Magill (formerly of Penn)) were prepped separately by teams from WilmerHale.  WilmerHale also had a separate meeting with Sally Kornbluth of MIT.  Apparently the message and advice was the same (although the Barometer is guessing that the billing was separate although the prep was, no doubt, the same).  When testifying in a public hearing, the key is not legalisms.  The key is public perception. Outrage at the witness is not a good outcome when  an executive gives public testimony. (Lauren Hirsch, “One Law Firm Prepared Two Colleges for Hearing,” New York Times, December 10, 2023)
2. Check your records for what your organization has done vis-a-vis abusive language before testifying.  Hypocrisy is a killer when it comes to posturing. Dr. Gay would have known that Harvard’s code  prohibits “using racial epithets, making racially derogatory remarks, and using racial stereotypes.”  Perhaps she also would have known that Harvard ranked 248 out of 248 schools on individual rights of expression.  That’s dead last. Using the terms “fatphobia” and  “cisheterosexism” are a form of abuse at Harvard as described in Harvard’s required training materials for all students. Harvard revoked the admission of several potential students several years ago for their offensive posts on Facebook. In fact, the training teaches that using incorrect pronouns to refer to someone is abuse.  Calling for genocide of a group surely has a place in that code somewhere . Ingrid Jacques, “Harvard president botched her testimony on antisemitism. Firing her would’ve made it worse,”  USA Today, December 12, 2023,
3. Forget the First Amendment stuff the lawyers drilled into you. Free speech does have that “Don’t yell fire in a crowded theater!” exception.  More importantly, Harvard is not a public entity; it is a private one.  It has the authority to control speech on its premises without trampling on First Amendment rights. Answer as a human being — not a puppet for big law firms who trickled legal technicalities into your brain.
4. Lose the subterfuge. The plagiarism investigation probably should have been disclosed  — again something Harvard has done to students in the past, along with penalties, such as expulsion.
5. As the lawyers say and should have told you, this phrase works wonders, “Mea culpa.” Not pledges to do better, Not, “Here’s what I meant.”
6. If you have been accepted at Harvard, decline the offer.  If you are the parent of  child who been admitted, tell them this tale of, “The Three Sirens Go to Congress.”  And then ask the question, “Is the cost of attending an institution that lacks structured thoughts, clear values, and consistent standards for all worth it?” Explain that putting Harvard on your resume now will probably get some giggles and smirks, but not a job.  What has been done to chip away the value of a college degree and now Harvard’s standing is a tragedy.