The Ethical Barometer

First, we had “Operation Varsity Blue,” a sting in which 50+ parents, coaches, test administrators, etc. were caught getting kids admitted to prestige colleges by laying down serious scratch, from $15,000 to $6+ million. Now we have “Operation Signing Over Kids.” The Department of Education is investigating a new trend in the wealthy suburbs. Parents in the tony suburbs who do not want their children going to school with the riff-raff in cheaper state universities and community colleges are signing over legal guardianship of their children to less wealthy relatives and friends so that their children qualify for financial aid.

As documented in the Wall Street Journal (Guardianship Ploys Taps Aid for College,” Wall Street Journal, July 30, 2019, p. A1. One mother (with household income in excess of $250,000), transferred guardianship to her business partner. With that accomplished, all her 17-year-old daughter had to report on her financial aid application was $4200 in summer earnings. So, let’s do the math for the daughter’s $65,000/year college expenses:

$27,0000 merit scholarship
$20,000 need-based financial aid
$47,000 TOTAL

Leaving $18,000 that the daughter must pay, so she hit up the grandparents and they are kicking in this portion.

Mom is paying nothing, but assures that she has no assets, no equity, and no cash, but apparently a gullible and/or beholden business partner. Mom says she spent everything on paying for college for her older children. Do these parents realize the implications of signing over legal guardianship? No straw man transactions allowed in the courts — no “legal guardianship solely for the purpose of duping the Department of Education” is yet available.No say in medical decisions. No say in nada, and then they turn 18, and Poof! No more legal guardianship.

Just a simple suggestion for parents and children: Choose a college within your means. Work together to plan and save and choose a school that make financial sense. You might be better off spending your dough on graduate school. In fact, perhaps the kids could consider getting a graduate degree at the school of their choice after they are working– online offerings these days are phenomenal, and employers love to help with the finances.

And one simple suggestion for TV wizards and producers — a reality show. We need a reality show tracking these desperate (desperado?) parents and the lengths they go to for prestige. Signing your kids away is, the Barometer suspects, the second in a series of limitless ploys employed by the gaming snobs seeking cookie-cutter lives to ensure the success of their children. Oh, could the Barometer tell them stories, from both personal and classroom experience.

Talk about your embarrassing PowerPoint presentation! McKinsey, consultant to Johnson & Johnson, prepared a PowerPoint presentation in 2002 that included the following question: “Are we properly targeting and influencing prescription behavior to pain clinics?” McKinsey explained that its work for J & J, “was designed to support the legal use of a patch that was then widely understood to be less susceptible to abuse.” The slides emerged as evidence in the state of Oklahoma case against J & J for its marketing of opioids, marketing that resulted in large numbers of addicted patients and expenses for the state (other states have joined the suit and the damage request is for $17.5 billion)

Meanwhile, back in the court room, a J & J witness kept repeating to the judge, “McKinsey’s words.” Some other words McKinsey used? “get more patients on higher doses of opioid” and employ techniques that “keep [ ] patients on opioids longer.” On cross-exam of the J & J sales representative about the “McKinsey words,” one simple question was telling, “Still use them today?” (referring to McKinsey). And the answer was, “Yes, for different projects.” McKinsey announced that it has now stopped with its words of advice, withdrawing from any opioid advising engagements. Thanks for this brave act after everyone was addicted.

Were I at J & J, I would take a new look at those projects for which they still use McKinsey. Check the PowerPoint slides as well. Sometimes management consultants offer advice that is a bit edgy, and, later, expensive.

The Federal Trade Commission (FTC) is requiring Facebook CEO, Mark Zuckerberg, to sign off personally on the company’s compliance with privacy protection requirements for Facebook users. The step comes because it is clear that Facebook violated the provisions of a 2011 FTC order in which Facebook promised to protect users’ privacy and disclose how it was using their data.

Zuckerberg would pay substantial penalties if he certified compliance on the privacy requirements and that certification was false. Personal liability was a big step for the FTC. However, past history demonstrates that Zuckerberg does not quake in his boots (Birkenstocks) over FTC stuff.

Ross Wales, personal lawyer for Neil Armstrong, reflecting on the sales of Armstrong’s mementos by Armstrong’s sons. Mr. Wales noted that Mr. Armstrong quit giving autographs when he learned that people were selling them. A leader who refuses recognition and profit because of respect for all those who allow him to succeed is a rare breed, perhaps a dying breed.

As a result, the Equifax security breach that affected 147 million customers will net those customers, maybe $2.04 each because only $300 million is slated for the consumers affected by the breach. These security breaches, as well as folks finding a way to use my credit card to charge custard at Andy’s in Oklahoma are stunning to me. I am locked out of my own accounts more than I care to admit. If I use a different computer to log in or get a new computer and try to log in, Chase chases me away. My own accounts are frozen. I am unable to do any banking because they detected that I had a different computer. I have trouble getting into my Compression Hosiery account, yet there are human beings who manage to lift the account information of 147 million people. How is this possible?

However, as troubling as the ease with which geeks get into accounts is, the Equifax case is troubling on a whole different level. Documents were left online and unprotected. People at the top of the company dumped their Equifax stock. Three of the four top executives sold $1.8 million in Equifax stock in the days before the public announcement of the breach. A board report exonerated the officers. But the officer slated to be the next global information officer was charged with insider trading.

Bad enough that 147 million have to deal with their personal information being made public, but to think that someone avoided losses on his Equifax stock before the announcement is low. Illegal, and low. The stock took a dive, and so have the company’s profits. Now if they could just sit down with some of the geeks to find the weak spots in their system. The people they have on staff seem to have my skill levels.

The news agency, started by the United States during World War II, has been the trusted source of information for citizens in countries around the world that do not embrace freedom of the press. A series of problems at the agency dig away at that trust. Reporter Tomas Regalado and his camera man stand accused of faking a mortar attack on Mr. Regalado in Manguaga, Nicaragua last year. And internal controls at the news agency found that a deputy to the agency’s CEO embezzled $37,000 through the submission of fake hotel bills and other fake receipts for travel. The deputy admitted the fakery and will be sentenced. Last year, the agency fired 15 journalists for accepting “brown envelopes” from Nigerian officials. “Brown envelopes” is code language for bribes.

The agency, still being run by Obama administration appointees, is set for an overhaul as Trump nominees await Senate approval.That tone at the top is a tricky thing. So are internal controls and regular audits of expense accounts. Take away opportunity for embezzlement, and we halt the tempted souls. Terminate journalists who accept bribes and stage attacks and remaining reporters are more cautious.

The hits just keep coming for Boeing. Boeing announced on Thursday, July 18, 2019, that it was setting aside $5.6 billion to cover the costs of compensating airlines that have had grounded flights because of the international and prolonged grounding of its 737 MAX planes. Tha amount covers the contractual damages. Still ahead, the litigation from the families of the 346 victims of the two crashes of the 737 MAX. This hit means a loss for the quarter, and a loss that is equal to about 25% of the company’s anticipated $20-billion revenue this year.

Looking back at the series of events, one wonders whether the grounding would have lasted as long and as many orders would have been canceled or delayed if Boeing’s contrition had come sooner. The initial resistance to admission and grounding not only delayed the fix, but allowed distrust to fester among customers, passengers, and regulators. From there we can leap back to the design of the plane — unintended expeditious route to beating Airbus in the market. That too is lost as it looks as if Airbus will become the dominant player in commercial aircraft. So many lessons, strategically, managerially, and ethically.

So, the barista, full sensitized by Starbucks’ one-day-stand-down-anti-bias training asked the police officers to skedaddle. Oh, what times are these when police officers are free to wander the streets and enter coffee shops. They got some nerve.

Starbucks initially told baristas not to call the police. Now, that position has evolved to “get them out of there.” Starbucks has apologized for its treatment of the officers and pledges to make sure such an incident never happens again. More training, right? We used to know that you do not ask any customer to leave when the customer has done nothing wrong. We also used to be able to tolerate folks with differing lives, careers, and views. Now, we just throw the “baggage” out. Baggage training, that is what Starbucks needs now,

MLB Commissioner, Rob Manford, denies any intestinal manipulation. Tony Clark, the players’ association’s executive director, begs to differ. Mr. Manford acknowledged that the sports is considering new specifications. And, beneath it all is an interesting conflict of interest. MLB purchased the manufacturer of baseballs, Rawlings, in 2016 for $395 million. Mr. Manford says that the purchase was made in order to keep Rawlings, a major supplier for the sport, viable. The hits and the home-runs just keep coming as the rabbit balls keep hoping up.

From steroids to humidors, the MLB is a study on a sport, players, and teams who behave as amoral technicians. They take their toes right to the line. They will not step over the line (they think), but they are unapologetic about what they are doing because they do not see the issues. Were the Barometer working on this issue of the baseballs and resulting homers the message to the MLB Commissioner would be: Change the specs, sell Rawlings to someone else, and live with the number of homers that come naturally. How many times do we have to walk through the Valleys of the Shadows of Pushing the Envelope before we begin to rein in players, teams, leagues, and fans.

“I want to be clear that there is not a demand problem.” Those are Elon Musk’s words as he indicated that total delivers would be between 80,000-90,000 cars. He indicated there might be an all-time record for deliveries. The things missing in the delivery figure: costs (and ergo profits) and sales. Tesla says that it will be hiring. Again, costs and sales. You want to root for the best for a visionary, but the switching focus on which numbers is a signal. From sales to production to deliveries and away from profits and costs mean that we celebrate each quarter without really knowing future plans and potential demand. It is not lying or misrepresentation, but it is a distraction strategy: Issue reports on singular numbers that bring resulting joy singular. Overall? Watch those other numbers when the record deliveries are celebrated.

Those DNA tests that the family history sites run are quite fun. You can find relatives that you never knew that you had. However, once those DNA profiles are out there for public consumption, crimes can be solved. For example, over three decades ago, two young people were found dead in Washington state. The police had nothing to go on except a semen sample found on one of the teen’s clothing. By 1994, DNA testing emerged, and the detectives tried to find a match, with even the FBI unable to help. To find a match, the DNA data bases have to have that person in there. There is no nationwide, universal DNA test or data base. One of the detectives in the case realized that there was a bigger DNA data base than what he and the FBI were working with in their quest. Oh, those ancestry sites!

Detective James H. Scharf of the Snohomish County Sheriff’s Office used the DNA from the victim’s clothing and found two second cousins of the suspect with a DNA match. CeCe Moore, a genetic genealogist, traced the cousins’ family tree and found great-grandparents and then traced forward from them, which led her to a couple with a son in a home seven miles from where one of the teen’s boys was found. That son, William Talbott II, was 24 at the time of the murders, and his DNA matched the sample from the teen’s clothing. Heather Murphy, “Milestone for Genealogy Sites: First Guilty Verdict,” New York Times, July 1 2019, p. A11. All achieved through the use of public records. No warrant needed.

Mr. Talbott was convicted of two counts of murder. Detective Scharf was only on the stand for six minutes. The jury deliberated for two days. The case must have troubled them, and that would be because a harsh reality emerged with this first-ever case. Truth percolates. It finds a way. It took scientific discovery and broader use of that tool in the private sector, but DNA spreads. And it tells a tale.

One question the Barometer is always asked, “How can you say that truth percolates? There are many things we will never know about or many more no one can ever find.” There is one variable in truth percolation: Time. It took from 1987 until 2019 to get a conviction of Talbott, but it all percolated through what amounts to science being on the side of truth. The defense introduced evidence of letters from family, friends, and neighbors — no one could believe that Mr. Talbott could have done such a thing. The Barometer has interviewed friends and family of white-collar criminals who all say, “This is the last person I would ever expect to do such a thing.” As Detective Scharf, with years of investigating crimes against children, explained, “Everyone in this world has secrets.” Yes, there are secrets, temporarily, but truth percolates.

In what is its strongest statement of responsibility for the crashes of two of its 737 Max jets, Boeing will give $100 million to support the families of the victims. Government and nonprofit organizations will assist in the distribution of the funds. The purpose of the funds is to provide funds for living expenses, education, and hardship. The funds are separate and apart from the suits some of the family members have filed against Boeing that allege faulty design of the planes.

CEO Dennis Muilenberg said the fund could grow with employee contributions, contributions that Boeing has pledged to match. He also added that Boeing is focused on “re-earning” passenger trust in Boeing airplanes.

The methodology description is fuzzy, but USA Today published a study by Comparably on the “Top-rated CEOs for Diversity.” The data were collected from June 7, 2018-June 7, 2019 and were collected from a pool of “ethnically diverse” employees (anonymously). Here are a few of the rankings:

5. Google
11. Salesforce
15. Microsoft
17. Facebook
18. Apple
24. Coupa Software
29. Amazon
30. Starbucks

Now, let’s compare what we saw in the press during the same period. Google fired two employee for raising questions and issues related to diversity. These are the Silicon Valley/Seattle companies and their struggles in recruiting women and minorities are the subject of ongoing seminars, discussions, and hand-wringing. Facebook chastised an executive for attending the Kavanaugh Senate hearings on the now-Justice’s nomination (the two were friends). There is the Ellen Pao discrimination suit that consumed the techies. Starbucks had a stand-down on diversity.

The inconsistencies between rank and activities can be found by “Googling” the company names. Like all employee surveys, one should wonder about issues such as anonymity fears, gaming, and the usual rankings interpretations.

Aide to former New Jersey Governor Chris Christie (Bridget Kelly) and Port Authority executives Bill Baroni and David Wilder were convicted of federal crimes for creating a traffic jam closing of highways leading to the George Washington Bridge. They said they were conducting a traffic study. The government successfully prosecuting them under the theory that their actions were payback to the mayor of Fort Lee for his failure to endorse then-Governor Christie for re-election.

The U.S. Supreme Court held, in reversing the convictions of Governor Bob McDonnell and his wife, that the standards of “distasteful” and “tawdry” conduct cannot be used as a basis for prosecution under the federal bribery statute. The court noted that public corruption criminal statutes should not give government “boundless interpretations” on conduct that is unethical. This case is something less than Rolexes and Ferraris in exchange for a good word on a product. It would seem that Ms. Kelly and the Baroni/Wilder team have a shot.