Another Tin Ear

Speaker Nancy Pelosi is to be commended for traveling to Ukraine to meet with heroic President Zelensky.  However, a picture of the visit on the front page of the New York Times reflects  a tin ear on the sensitivity scale.  The speaker is clad in a sky-blue pants suit with matching 3-inch+ pumps.

When traveling to a war zone that is missing power, food, water, medicine, and wardrobe changes perhaps something a tad more rugged.  Heck, they’re missing their homes and closets. How tough can it be to choose Something that reflects the dire straits of the citizens of Ukraine in their quests for freedom and survival. Those poor souls were in olive camo — the same clothes we have seen them in for weeks, nay, months.

The photo op was  important for showing support.  It was cringeworthy because the speaker had no grasp of the war’s reality and the country’s conditions. Tough to take cover whilst running in stilettos and silk.

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McKinsey Goes to Washington

The McKinsey Managing Partner, Bob Sternfels, was hauled before the U.S. House of Representatives Committee on Oversight & Reform on April 27, 2022. We have not seen tin ears like this since Jack Haley trod the yellow brick road with Dorothy and Toto.

Mr. Sternfels still does not see a conflict with McKinsey’s work in advising opioid firm Purdue even as it was advising the FDA.  He said that, “McKinsey did not — did not–serve both FDA and Purdue on opioid-related matters.”  Michael Forsythe, Walt Bogdanich, and Chris Hamby, “Lawmakers Dismiss McKinsey’s Apology on Opioid Crisis as ‘Empty,'” New York Times, April 28, 2022, p. A21.

Let’s see.  McKinsey was working with Purdue and other opioid producers to stop FDA regulations on opioid safety restrictions .  At the same time, McKinsey was working with the FDA on its organizational structure and processes.  Processes must not include include agency rule -making. The Barometer is quite certain the FDA never mentioned opioids, its singular biggest challenge in working with its consultant on how to run the agency. Likewise, the Barometer is quite certain McKinsey never mentioned opioids in its work with the FDA.  Ergo, no conflict to see here.  Move along.

The committee members were on a fool’s errand in seeking a conflicts admission from McKinsey.  McKinsey does not see conflicts.  McKinsey does not have conflicts.  McKinsey is not subject to the ethical constraints of conflicts of interest.  And McKinsey is shocked, shocked that anyone would suggest it might have had a conflict or two in its history.

Stunningly, this whopper of a stance was not the worst part of the hearing.  The worst part was  a McKinsey slide from its work with Purdue to turbo charge opioid sales. The slide looks like something undergraduates in a marketing class would develop for their team project.  Developed at about 3:00 AM the day the team project was due, and probably after some frat-level drinking. There is a picture of a man wearing dollar-sign joke glasses fanning dollar bills. There are terms such as “regular champions” and “superstars”  that Purdue was to use for its salespeople. Those reaching champion level would get cash and the chance to meet, in the boardroom,  the CEO! There was even a picture of Donald Trump and “The Apprentice” logo on the slide.  The Barometer wonders whether McKinsey got permission to use both the photo and the logo for its commercial purposes.

The slide tells the whole story of McKinsey — tawdry and worn sales tactics pawned off by Harvard MBAs on boards and managers too gullible to see the sophomoric content of their consultant’s work product.

There’s a reason McKinsey had to ante up $600 million to settle with the government for its role in the opioid crisis.  They were pushing sales as deaths and addiction climbed. The firm was all in on selling, selling, selling.  But McKinsey’s apology in the hearing was, “Who knew?” Mr. Sternfels’ only regret was that McKinsey “failed to recognize the broader context of what was going on in society around us.”

Funny, the Barometer thought that was why companies paid consultants –to tell them just that — what they were missing in running their businesses.  McKinsey just joined the party to “springboard” Purdue in its “once in  a lifetime” opportunity for success.  Worked out really well for everyone.

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An Award for Writing About Ethics

The American Society of Business Publication Editors awarded Marianne Jennings bronze recognition (think third place) for her column “Ethics at Work,” published in New Perspectives, a publication of the Association of Healthcare Internal Auditors (AHIA).

The Barometer is grateful for a great editor-in-chief (Mike Fabrizius), Steve Dunn (for his layout and graphics), and Leslie Shivers, editor, for their support of the column and help over the years. Coming from the academic world, the Barometer is used to turning out research  that hardly anyone except PhD candidates looking for a dissertation topic. Recognition for writing that involves practical thoughts and advice is a lovely experience in and of itself because that form of writing far exceeds the average readership rate of seven souls per academic piece and perhaps actually helps someone in their work.   An award for such happy work brings even greater joy.

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Conflict Blindness at McKinsey — Again

There must be something in the water at McKinsey.  Or perhaps they screen for it in the DNA in the hiring process.  The gang there at McKinsey could not spot a conflict if it was written on a neon sign in Amish farm country in Lancaster. These pages have documented the legendary firm’s blindness to conflicts in the past.  However, the  New York Times has culled through the firm’s e-mails, obtained through a congressional investigation of McKinsey’s work with Purdue Pharma — the mighty marketer of Oxycontin, an opioid.

Turns out that McKinsey was also serving as a consultant for Alex M. Azar, the former HHS secretary.  The McKinsey folks working with HHS issued reports warning Secretary Azar of the importance of addressing the opioid crisis.  However, the warnings really did not get to HHS in their original form.  That would be because McKinsey partners working with Purdue, in e-mails, objected.  When the author of the strategic plan focus for HHS was vetoed a few times he wrote that a colleague working with Purdue “waters down whatever I say.”  Chris Hamby, Walt Bogdanich, Michael Forsyth, and Jennifer Valentino-DeVries, “How McKinsey Advised Purdue and the FDA,” New York Times, April 14, 2022, p. A1.

McKinsey’s response?  “Because there was not a conflict of interest, there was not a requirement of disclosure.”   So there!

One side of the house is stopping the other side of the house working with the regulators from regulating even as they are pushing exponential sales plans for their regulated pharma client.  How could there be a conflict?  It’s either in the water or DNA.  No one is this untrainable on compliance.

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Military Commanders and Harassment in Canada

The Barometer had to read the article twice just to be certain that she had the facts right.  Jonathan Vance, Canada’s former chief of defense staff, entered a guilty plea to charges of obstruction of justice.

It seems that the commander (now retired) contacted one of the women who made complaints against him, Major Kellie Brennan. Mr. Vance asked her to give false statements to investigators while the investigation was ongoing.

Maj. Brennan is one of several women who came forward with complaints about then-Commander Vance’s sexual harassment.  Maj. Brennan has gone public and testified before Parliament.  During that testimony she disclosed that Mr. Vance is the father of two of her eight children.

Yes, you read that correctly.  The harassment continued through two pregnancies. Allegations of harassment are always serious.  However, some advice for victims might be to walk away and report at least after the first pregnancy.

Ian Austen, “Canada’s Ex-Military Chief Pleads Guilty in Sex Scandal,” New York Times, March 31, 2022, p. A7.

 

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Credit Suisse and Cut and Pasted Client Signatures

It is tough to believe that any banker, following the Wells Fargo debacle, would fool around with customer signatures. Nonetheless, Credit Suisse private banker, Patrice Lescaudron, admitted cutting and pasting his client’s signature to make unauthorized, high-risk stock transaction.stock bets. The client was Bidzina Ivanishvili, and Credit Suisse was ordered to pay the client $555 million. Mr. Ivanishvili sued the bank for breach of contract and fiduciary duty. However, Credit Suisse’s defense was, “Hey, we got hoodwinked too by the guy.”

However, Mr. Ivanishvili, who had invested $1 billion with the bank over a ten-year period, was able to establish that Mr. Lescaudron repeatedly broke bank rules. Managers turned a blind eye to the antics because Mr. Lescaudron brought in $25 million in annual revenue to Credit Suisse. Unfortunately, he brought very little revenue to Mr. Ivanishvili. The court awarded him the money he would have made had Mr. Lescaudron just opted for medium-risk investments — the $555 million.

The best part of the story is that Credit Suisse is appealing. Mr. Ivanishvili is shocked, shocked that Credit Suisse is still refusing to pay. Mr. Ivanishvili should have checked on Credit Suisse. The bank recently set aside additional funds for legal fees as it cleans up other messes. Julie Steinberg, “Credit Suisse Warns of Dent to Earnings From Legal Costs,” Wall Street Journal, January 26, 2022, p. B11. $545 million there. $500 million here. Pretty quick you have a billion invested in fighting legal woes or repaying clients. And this dear bank has been hauled in before Congress to explain hy it ordered clients to destroy documents about their investments at the bank. Russian oligarchs are involved in this one because there are questions about the bank’s compliance with financials sanctions on Russia. Margot Kidder, “Credit Suisse Probed Over Compliance with Sanctions,” Wall Street Journal, March 29, 2022, p. A7. After the Archegos losses of $5.5 billion, Credit Suisse lost two chief compliance officers just four months apart. The new one barely got her feet wet before she was out the door. Dylan Tokar, “Compliance Head Quits Swiss Bank,” Wall Street Journal, July 13, 2021, p. B9.

A tip for the new chief compliance officer: Pay attention to the enforcement processes and sanction. And never let even top private bankers off the hook. Mr. Lescaudron was a push-the-envelope kind of guy and had a history of having breaches of bank rules ignored, glossed over, or lightly addressed. Employees don’t wake up one day and start forging their clients’ signatures. They take a descending path into illegality with tiny steps that are, well, ignored, glossed over, or lightly addressed. And, like Mr. Lescaudron, they are ignored. He was sentenced to five yers. He was released from prison in 2019 and killed himself in 2020. We worry about the small things because they ripen into BIG things, often tragic things.

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“I lied a lot.”

Tim Leissner, former Goldman Sachs partner, and the federal government’s star witness in the criminal trial of another former Goldman partner, Roger Ng.

But not to worry. Mr. Leissner assures that he is not very good at lying despite his extensive portfolio. Some examples? He showed his now estranged third wife a fake divorce decree so that she would marry him.

He used $10 million he made from the fraud (for which he has yet to be sentenced) to buy a $10 million house for a girlfriend so that she would not disclose what he was doing at work along the lines of fraud. It was unclear which girlfriend, potential wife, or ex-wife got the house. Matthew Goldstein, “Case Hinges On a Banker Who’s Lied,” New York Times, March 14, 2022, p. B1. If I were the girlfriend/wife/ex-, I’d check the title on that house.

There were six days of cross-examination of this righteous dude.

Ah, but not to worry about the impact on the case. A legal ethics expert says that you can have “a horrible person,” a “serial liar,” but you can persuade the jury that the witness has had a “come-to-Jesus moment.” Wow — not sure that will work. Mr. Leissner has spent too much time in the devil’s workshop.

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“May I Disinherit My Right-Wing Daughters?”

Now there’s a loving mother for you. This was a question posed to the New York Times resident ethicist in Sunday’s magazine (March 6, 2022), p. 14. The Ethicist responded that it was not ethical to change the will because you are angry. However, it would be oethical to change the will because “people with their views are doing a great deal of harm.”

There is a great deal of harm coming from the other side — partial-birth abortion tugs at the heartstrings of those malevolent right-wingers. Be that as it may, most parents come to the realization (most later rather than sooner) that they raise children not to control them as adults (or their views). Heaven help us, as it were, if we decide to attempt control from the grave. The mother added, “I am distraught by this and have considered changing my will and leaving it all to a good cause.”

My dear lady, your children, with all their flaws and misguided views (from your perspective), are still a good cause. Love them for who they are.

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Half-Truths: Are They a Form of Lying?

In his state-of-the-union address, President Biden said that he was “the only President ever to cut the deficit by more than one trillion dollars in a single year.” Well, that would be true. The bragging rights belong to this president EXCEPT:

1. That claim will not be true if Mr. Biden passes his “Build Back Better” spending extravaganza, something that he say must be passed.
2. That claim does not cover COVID relief spending, something he asked for again for 2022.
3. That claim does not take into account that the reduction is based on the 2020 budget that included $2 trillion in COVID relief.
4. In December 2020, Congress added another $900 million to that 2020 budget.
5. In March 2021, Congress added another $2 trillion.

If the deficit is indeed declining, it is because the extraordinary COVID spending is not in Mr. Biden’s budget proposal — a total of $4.9 trillion in reductions. Despite all of those reductions, the deficit will still be $1 trillion. And that pesky deficit will remain at that level for a decade. Also, that $1 trillion deficit is actually higher than it was in 2019– the deficit that year was $984 billion and that was a normal year. No COVID spending in that year.

So, the bragging rights, even without the deficit additions of BBB spending, are actually that the deficit has increased, not decreased. It takes some math and detail to understand that, Nonetheless, President Biden has set his claim for bragging rights that are misleading. No one reads the footnotes on thesesclaims. Heck, no one writes the footnotes on these claims.(with the exception of the Wall Street Journal “Joe Biden Tells A Budget Whopper,” March 3, 2022, p. A20) that did the computations (except for the 2019 deficit) No one knows these claims except as claims that sound pretty good. If a claim is false and no one notices or explains why, is it still a lie? In the mysterious world of government accounting we are back to the great philosophical question, “If a tree falls in the woods and no one is there to hear it, does it still make a noise?”

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Medina Spirit Stripped of Kentucky Derby Win, Posthumously

Medina Spirit, a Bob-Baffert-trained-horse, won the Kentucky Derby in May 2021, tested positive for betamethasone (a corticosteroid injected in the joints) after the race, died of a heart attack in December 2021, and was stripped of the Derby title in February 2022. Fast start, fast finish. Oh, the ignominy of it all. For Baffert more so than the horse. These pages have offered insights on Bob Baffert and his history with horses and excuses when his horses test positive for prohibited drugs.

RE: Medina Spirit, Mr. Baffert says that they applied a cream for a skin rash, that there was no injection. In another race, one of the stable guys had used arthritis cream for his own ailments and the horse had it in its system via the touch of the trainer’s hands. In yet another race, Baffert said the prohibited drug was in the feed.

Appeals on Medina Spirit (now aptly named) are planned. Pity the poor horse betters. Those who went with Medina Spirit keep their winnings. Those who bet on Mandaloun (the second-placer elevated to first place now) still have their losing tickets, but a class-action lawsuit is pending. Hell hath no fury like mint-julepped race fans cheated out of a winning ticket. Their hats and plaid pants may give the appearance of fools, but they are not.Bookies beware.

Meanwhile, criminal trials surrounding the trainer for also disqualified 2019 Derby winner are pending. Just charges of secretly doping horses to to beat the beting public. Bettors beware. The run for the roses is now held in the underworld.

What a sport!

See Joe Drape, “Medina Spirit Is Stripped of Victory in the Kentucky Derby,” New York Times, February 22, 2022, p. B10.

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“Flash-Mob Thieves Use Apps to Plan”

Wall Street Journal, December 14, 2021. One has to wonder where all the cancel folks of social media were on this one. Note to the self-righteous on new screening criteria: The site will not tolerate advance planning of group theft.

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“I knew it was illegal. I wanted this to be done for Goldman Sachs. I wanted to be a hero at Goldman Sachs.”

Timothy Leissner, former Goldman Sachs partner, in his testimony at the trial of another former Goldman Sachs partner, Roger Ng. Ng and Leissner were both charged with conspiracy to launder money and to violate the Foreign Corrupt Practices Act in securing a $6.5 billion bond offering for Goldman Sachs. The two worked with Jho Lo on a bond offering for iMalaysia Development Bhd (IMBD), a state-controlled economic development company. Goldman got $600 million. Leissner entered a guilty plea and turned state’s evidence against Ng, a friend. What a company! James Fanelli, “Ex=Goldman Partner Spells Out Scheme,” Wall Street Journal, February 17, 2022p. B10.

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A Mess of an Olympics

Journalists got dragged off camera. NBC pulled journalist who mentioned the Uyghurs. And as for 15-year-old Russian skater, Kamila Valieva, well, that initial quadruple turned into the quadruple that roared. Her drug test came back positive for a banned heart medication. Generally, when athletes test positive for banned substances, they cannot claim their win nor can they compete. Disqualification is the penalty. How the drugs got into her system is not the issue. Whether she took them voluntarily or aggressive coaches foisted them upon her, the penalty must be the same to prevent both athletes and coaches from crossing that line into performance enhancing drugs.

However, the bumbling IOC decided, with Russia shelling kindergartens in Ukraine, that now was not a good time to banish that country’s athletes. So, the young skater could continue competing but there would not be an awards ceremony if she won. In what universe was this a good idea let alone a means for upholding rules and standards? Now that the young girl blew her performance in her final competition and had a crying jag, the IOC is outraged at her treatment.

The mental gymnastics, as it were (of Olympic proportion), are stunning. Is there a clear thinker anywhere in Beijing? Nope. These Olympics were ill-fated when the IOC allowed the CCP to host the 2022 games. The whole effort was a facade that began to develop layers of facades. Those brave ambassadors who staged a diplomatic boycott, whatever that means. Those obsequious toadies from NBC. The IOC officials creating new rules, new solutions, and new outrage at what those new things wrought. Where in the world is there principle?

Peradventure, on the tennis courts, or not on the tennis courts is more accurate. In that sport they ban athletes from competition who prefer not to put medications in their bodies. No exceptions to that requirement even when science demonstrates natural immunity affords the same or greater protection. If only Djokovic were Russian. He would have a chance to break the rules and still compete.

Politics and sports do not mix. Indeed, once you start it is a slippery slope on which a quadruple is impossible.

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“Inflation Remains Stable, Well Below Its October Peak”

Now there’s a silver-lining-in-a-cloud headline. New York Times, February 13, 2022, p. BU9. Nothing to see here, folks.The article gives reasons and ways to calm down.The pandemic caused it, quit looking at gas prices too often, and just reframe the Consumer Price Index news. Now this is real journalism — don’t report the facts, just reframe the headlines and content. Baghdad Bob and decades of dictatorships dreamed up this approach to reporting long before the New York Times decided it was time to see inflation in a whole different light. Are you going to believe your empty pockets or what the ray-of-sunshine headlines tell you at the Times? Oh, and just calm down.

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