The Ethical Barometer

So testified the company’s current CEO, Mark Russell.  Nikola was the Tesla of electric trucks except for one thing.  The trucks never worked. Mr. Milton built a multi-billion dollar company out of, well, absolutely nothing.

The videos Mr. Trevor showed to investor of a fast-moving truck actually depicted a truck being sent down a hill.  Film editing  magic made it look like it was a truck speeding along I-10  on Texas flat lands.

The question thus remains, “How come the CEO didn’t say anything?”  Could he have mentioned that the video was a fraud?  We (and the markets) would have been intrigued. Instead all we got. even under oath,  was that the founder “was prone to exaggeration.”  The founder was prone to high-tech fabrication, aka fraud.  He’s on trial for that now.

The amazing thing is a conga line of witnesses from the company are all saying the same thing under oath, “There was no electric truck that worked.” Would have been nice if they had spoken up before the video aired.

During the pandemic, Wegmans decided to make it easier for customers to avoid germs and check out quickly.  Customers could use an app to “scan as they went” through the store picking up their food items.  The customers loved it, but, as Wegmans put it, “Unfortunately, the losses we are experiencing prevent us from continuing to make it available in its current state.”  Alyssa Lukpat and Jaewon Hang, “Wegmans Halts App for Self-Checkout Over Losses,” Wall Street Journal, September 20, 2022, p. B3.

Poor naive Wegmans.  Our current society  does not prosecute those who smash store windows and then grab anything designer in sight.  Not much chance  that grocery store customers would ante up for a can of Hunt’s Tomato paste they hurl into their backpacks with scanning or paying. And all without smashing any windows.

Wegmans did not give a breakout of its losses to the phone app.  But the shrinkage rate in self-checkout is 4%, a loss rate that occurs as an employee stands watch over the self-check customers.  With no guardrails the app, the losses must be double or triple that percetage.

People steal.  And with inflation pushing 9%, they will be stealing more.  Eventually the window-smashing will hit grocery stores — about the time  Pop-Tarts reach designer price ranges. You have to steal $1,000 in California before anyone will even prosecute a case of theft. The great civil society is eroding. Would you sell your soul for a can of tomato paste?  Apparently Wegmans shoppers are okay with that.

New York’s governor, Kathy Hochul, is a too-clever-by-half type.  New York has a longstanding executive order that prohibits governors from accepting donations from gubernatorial appointees. Ms. Hochul reissued the executive order on her first day in office.

Lo and behold, the gov has been accepting donations from gubernatorial appointees, $400,000 worth.  Her explanation is that she did not appoint those members; Andrew Cuomo, the offer governor, did.  Ergo, per Governor Hochul, she is not in violation of the executive order.

Technically speaking, she has found a loophole, a gray area, and she is going to use it unless and until the legislature steps in and codifies the executive order as law. Complete with penalties.  Otherwise, there are some board members who have donated who will continue to donate and will remain in their positions as long as their donations continue.

The exact type of quids and quos the executive order was attempting to stop have actually now been supercharged. Folks on boards from Buffalo to Yonkers are in for a long haul.  Governor Hochul is in for a big haul because she will be claiming donation immunity for years to come. “Don’t look at me.  I didn’t appoint them.” But she can put them to financial use.

Jay Root, “Hochul Donors Include Officers of State Boards,” New York Times, August 30, 2022, P. A1.

American industry is fundamentally sound and undisturbed by the recent financial upheaval, according to the Department of Labor in its monthly employment bulletin issued today.

The stock market break has not caused reduction in employment . . . and the belief was expressed that it might bring more money into industrial development.

Why, the Times was at it then! “It” being a lack of candor about the fate of an economy.  The market had just crashed in late October, but the federal government clung to its DOL stats and concluded, “Nothing to see here.  We are just fine.”

One decade later the United States was still in a depression.  But government bureaucrats insisted, “We’re fine!  Movealong!)Lots of jobs in WPA and other government programs.  We By 1932 the stock market had lost 89% of its value.  Multiply your retirement funds by .89 and then subtract that number from your current funds and you have 11% to survive upon as the government fiddles.

Not to worry — the Times is on the job today reporting every word of President Biden.

Thanks to Jay Evensen of Deseret News Weekly for including part of the above intriguing quote and teaser in his column onFebruary 21, 2022.  He inspired further research.

In the 1941 film, The Married Bachelor, Robert Young plays a con man trying to convince a mobster that said mobster can trust a professor to keep quiet about their  scheming efforts.  Young offers about the professor, “He’s honest!”  And the mobster replied, “I don’t know about this.  He’s educated.”

Sometimes it is the heavily degreed who pull the wool over our eyes.

Columbia had been ranked as #2 on the magazine’s top universities.  However, when U.S. News & World Report learned of questions about Columbia’s data in March 2022, it requested that Columbia provide the data to substantiate what it had submitted for ranking purposes. By July, with no “satisfactory responses” to its requests forthcoming, U.S. News & World Report unranked the school. Columbia went from #2 to “appearing nowhere on this list.”

Columbia Professor of Mathematics, Michael Thaddeus, explained why the numbers submitted were not accurate in an executive summary of his analysis that he put on his website in March 2022. Professor Thaddeus said that he began his investigation into the Columbia data when he realized how quickly Columbia had climbed to the #2 slot. .http://www.math.columbia.edu/~thaddeus/ranking/investigation.html

Professor Thaddeus has described in his analysis what education can do when responding to simple questions.  There was some serious gaming by Columbia when it came to class size, the number of full-time faculty members, and the number of faculty with advanced degrees.  And one more thing. Let’s just say that any time you have two budgets — one that goes to the Department of Education and one that goes to U.S. News & World Report you may have crossed a few ethical lines.  The big difference?  Amount spent on educational instruction.  Much higher for rankings purposes than in reports to government bureaucrats.  The DOE budget is the accurate one — those penalties for submitting false information to the government can be stiff

Harvard and MIT have one less competitor in the #2 slot they shared with the now deranked Columbia. Yale stands alone at #1.  If I were an administrator at any of these three schools, I’d be checking with the math department for a little analytical help to determine if and how there has been any gaming.

Different accounting firm, but same issue.  Do they not read what’s online?  Following the KPMG cheating scandal, the SEC checked with other accounting firms.  The question was straightforward — Any cheating going on in your shop?  EY responded there had been incidents reported in the past but “nothing to see here.”  Turns out that cheating had been reported and management knew but no action was taken.  There was a whistleblower as well.  That’s how the SEC got in on the action.

The best part is that the EY employees were cheating on the ethics exams they must take for their CPA license renewals.  Cheating on an ethics exam?  Hmmmm.

EY must also have two external compliance reviews.  One will be for determining whether EY is promoting ethics and integrity.  The other will find out why EY did not make the disclosures when asked by the SEC as part of its investigation of cheating amongst accountants.

History repeats.  If you cheat, you get caught.  If you get caught, big fines and fees result. How many more times and firms must we go through before this simple principle sinks in? Just study for your exams.

Dave Michaels, “EY to Pay $100 Million Fine in Ethics-Cheating Scandal,” Wall Street Journal, June 29, 2022, p. A1.

A frustrated Safeway clerk in the Denver area. “Quote of the Day,”  New York Times, June 30, 2022, p. A3.

Since the time of his campaign for mayor, Mr. Adams had been dogged by questions about owning a second apartment.  Initially, Hizzoner’s story, which he is not sticking to, was that he co-owned the apartment with Sylvia Cowan.  Former partners, Mr. Adams and Ms. Cowan acquired the Crown Heights one-bedroom apartment in 1988.

Mr. Adams did not list this ownership interest on his financial disclosure forms for his mayoral run. He explained last year that he had conveyed his interest to Ms. Cowan in 2007. Mr. Adams even produced an unsigned, non-notarized three-sentence document that said so. Someone may want to chat with Mr. Mayor about transferring title to real property.  Casual papers do not do the trick.

Now, Mr. Adams’s new disclosure statement, filed June 22, 2022, indicates that he still owns an interest in the apartment. Ready for the story?  His accountant, a homeless accountant, failed to take care of the issue.  However, Mr. Adams now has a new accountant who has pledged to remain in some form of housing (an apartment in Crown Heights, mayhap?) and to take care of the transfer.

Actually, it was Ms. Cowan who, in May 2021, asked the co-up board to transfer full ownership to her. And the co-op board has not yet approved the transfer nor seen any paperwork.  That paperwork would generally be done by a lawyer for the two parties, homeless or otherwise.

One additional aside — Ms. Cowan owns another apartment in the same Fort Lee, NJ property in which Mr. Adams co-owns a unit with his current partner, Tracey Collins.  So, the mayor of New York City lives in New Jersey? Oh, the tangled webs of deception from public officials, the homeless, and other sundry characters in seeking (or not) a transfer of a co-op interest. Perhaps the non-transfer is necessary political cover.

The New York Times and its “The Ethicist” feature continues to offer its jaw-droppers. This is one example in which the fact that someone asked the question is the stunner. A doc wrote in to explain that a patient he was treating for sepsis was uttering racist and homophobic slurs at staff members.

The doctor had a talk with the patient and outlined the conditions for her treatment.  The patient was warned  to stop or she would be discharged, against her will if necessary.  According to the doc, risk management and the nursing staff were A-OK with this approach.

Thankfully, that patient stopped.  However, the doc wanted to know if it would be okay to discharge a patient who did not meet conditions of treatment.  The doctor admitted that because the patient had a substance abuse problem releasing her with oral antibiotics would perhaps be a death sentence.

Let’s look at this quasi hypothetical.  You have a drug-addled, septic patient who is uttering hurtful things to the staff. And risk management determined that a death sentence was an appropriate response? Could I get a Hippocratic oath here?

Whatever was causing the patient to mouth off, bigotry or medical condition, means you have a person all of us need to rein in.  But that’s the point — we don’t impose a death sentence.  What the patient was uttering hurt the staff and no one should be faced with that level of verbal abuse.  However, the dehumanization of bigots and feeling justified in ending their lives will not fix the underlying hate.

The doc, the nursing staff, and risk management all missed an opportunity to turn the other cheek and humanize the staff — a means for overcoming the damaging hate of bigotry.  Had the Barometer been the CMO of the hospital or a risk manager or head of nursing, well, here’s a different approach.

Ask one of the staff members who was verbally and undeservedly hurt to go with you into the patient’s room and say, “This is my colleague and friend.  She has worked at this hospital for 15 years.  I have watched her save lives.  I have seen the loving care she has given to you and so many others.  She is one of the finest people I know.  Please do not hurt my friend with name-calling or slurs.  Treat her with the respect this wonderful human being who has cared for you deserves.” We change hearts and minds when we see humans instead of letting outrage (however well justified)  drive our attitudes and decisions.

Instead, the doc and others went to risk management with its processes and procedures, and then to the patient with threats.  They dehumanized a patient so that they could impose a death sentence for bad words and worse behavior and feel justified in abandoning the ethical essence of health care.

We give medical care to prisoners, enemy combatants, and POWs who have taken our treasure.  Surely we can muster the same compassion for an ill drug addict whose slurs offend.

The solution the medical professionals came up with stopped the behavior. But no heart or mind was changed vis-a-vis the patient.  Worse, they introduced dehumanization into their medical care. No good can come from that development.

Sheryl Sandberg, she of “Lean In” book fame, has left Facebook (Meta or whatever its name is today).  However, there is an internal investigation pending.  Seems the Facebook boys and girls are looking into whether Facebook/Meta resources were used to support Ms. Sandberg’s “Lean In” foundation as well as the planning for her wedding as well as for the promotion of her second book.

Over $24 million in total compensation in 2020 alone and Ms. Sandberg faces questions about use of company resources for personal stuff?  What is it about leaders in companies and politicians in general who seek to find ways to have someone else pay for their personal junk?

If an employee were using Facebook/Meta resources to plan his/her wedding, the pink slip would be in the inbox tout de suite. Somehow leaders dip into the petty cash and worse and then offer, “Sheryl did not inappropriately use company resources in connection with the planning of her wedding.”  Deepa Seetharaman and Emily Glazer, “Meta’s Probe of Sandberg Is Covering Several Years,” Wall Street Journal, June 11-12, 2022, p. B1.

Just look at the wiggle room in that defiant statement.  “Did not inappropriately use company resources.”  Is it possible that she may have done so appropriately or is there a Meta rule about company resource use in general? “In connection with the planning of her wedding.”  Have we ruled out the use of company resources, appropriately or inappropriately, for other reasons?

A statement of outrage with qualifiers is often the slippery  set-up for when the investigation concludes.  Lots of space for “it depends on the meaning of” for leaders, although not for employees.  They just get sacked, for appropriately and/or inappropriately using company resources. Oh, and by the way, the investigation had nothing whatsoever to do with Ms. Sandberg’s decision to retire. Appropriately stated.

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.

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.

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.

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.