The Ethical Barometer

Wall Street Journal, Sept. 30- Oct. 1, 2017, p. B3. Whoa, hold on there boys and girls on the board. Don’t get crazy on us! You would not want to rush into some kind of sanction for officers on watch when a credit reporting agency experienced the biggest security breach since Yahoo’s 1-billion-customer hack (now updated to 3 billion). Generally, when we peons are asleep at the wheel at work, it costs us. When we make mistakes, we pay. Debate away on those clawbacks. That kind of hesitancy in the name of deliberation and parameters is what will cost you in the battle to rebuild trust. Swift and definitive action builds trust. Now that your CEO is no longer your chairman, you have a fighting chance at independence.

President Trump, when asked about the revelations regarding former Secretary of Health and Human Services Tom Price and his $400,000 in chartered travel. Mr. Price resigned the next day. Good for President Trump in putting the writing on the wall. But, the resignation is not the end. There may be a cultural problem. Those in cabinet positions, in elected office, and anywhere in any administrative agency, even under rock in a forest managed by DOI, need to understand one critical universal truth: Just assume that everything you do will become public. Now, with that universal truth, behave accordingly.

The Barometer asked her former college BB player father, upon Coach John Calipari’s Kentucky hiring, “Why would a school hire this guy?” Dad shrugged. The NCAA just seemed to circle the guy like buzzards — only he never died. Schools just passed him along to other schools. Memphis — the fake SAT scores. UMass and the vacating of a Final Four slot there. Other schools kept hiring him, despite pending investigations and substantial doubts by fans about his, shall we say, ethics?

Enter Rick Pitino. The slicked-back hair gave off an aura of, well, slick, but nothing stuck. Still, his history was not pristine. His days at Hawaii were marred by an NCAA investigation. And the slick aura was all we had — until last year. The business with the escort services, the recruits, and all in the Louisville athletic dorm resulted in Coach Pitino being sanctioned for five conference games. The university president and board did not blink. Coach Pitino stayed — who wouldn’t keep the only coach to win the NCAA championship at two different schools? Enter the FBI. Although he was not indicted as a result of the FBI sting operation last week that revealed bribery and nabbed six assistant coaches with charges, Pitino has been fired. About a year too late. When the NCAA escort investigation was rolling along, the administration and those who oversee the university should have seen the writing on the wall. There was no happy ending to come. Escorts in the dorm. Those four words should have been the signal. The NCAA sanctioned Pitino for the failure to supervise. Seems that shortcoming thrives in college sports and colleges. A key function of effective supervision is the tool of termination. Can’t clean up the slick without that tool.

The Barometer was asked this question following a speech. Together my questioner and I noted all of the business executives and politicians who keep repeating the behaviors of others who have paid mightily (in fines and in the slammer). One could go with hubris, sociopathic tendencies, and other psychological explanations. But, here’s a thought. Maybe they just don’t know their history. Perhaps they are not reading the newspapers. For example, a headline in the Wall Street Journal today is “Kushner Used His Personal Email To Message White House Staffers.” We have been told that Mr. Kushner is just aces, a brilliant, young business man. Did the name Hillary Clinton not ring a bell? James Comey? Yoga classes and wedding plans? The rest of us stopped e-mailing during the presidential election just in case our e-mails to others showed up in some campaign somewhere.

The Barometer has hundreds of files in which the stories of ethical missteps are documented. History repeats, and so do ethical lapses. In all those files, there is nothing new under the sun. People just keep making the same mistakes. Perhaps we should read the newspaper each day to digest the stories so that we can curb our inner demons. Forget the psychoanalysis — read, digest and apply (to ourselves).

Ole Miss (University of Mississippi) is under investigation for alleged recruiting violations in its football program. In August, the athletic director (Ross Bjork) had to have the full coaching staff sign a form acknowledging that “prepaid phones, pay as you go, burner, etc . . . ) were subject to records requests for production from the NCAA or the University.”

The University took this voluntary step because it had received an allegation from Thomas Mars, the lawyer for Houston Nutt, a former football coach who is suing Ole Miss for an alleged smear campaign by the University on the NCAA recruiting investigation. Mr. Mars has also passed along information to the University that Hugh Freeze, the coach before Coach Nutt, had made a call from his university phone to an escort service. Mr. Freeze said initially the call was a “misdial,” However, when the University found other calls to the same number that coincided with recruiting trips, out when Mr. Freeze. Mr. Mars’s burner phones allegations followed his Freeze information.

Mr. Mars offered to settle Mr. Nutt’s case after the burner phone accusation but before his planned requests for additional phone records of Mr. Freeze and other coaches. Ole Miss declined to settle and then notified the NCAA of the burner phone allegation.

Ole Miss is currently under postseason ban after the Freeze issues. However, these events make it clear that the University has some investigating to do before this shall pass. With Mr. Mars on the case, the slow drip is a killer.

United, Delta, and American appear to have remarkable records for on-time performance, ranking right up there in the 80% range, on average. Meanwhile, JetBlue and Southwest have numbers dipping down into the 60% range. Is there really that much difference between and among airlines for on-time performance? Nope, there is not. United, Delta, and American have regional jet flights (Delta Connection, American Eagle, and United Express) that are operated by other companies. However, those regional flights are marketed as American, Delta, and United Flights. Most passengers are not even aware that there are these operating partnerships. And seasoned travelers know that the regional flights are notoriously late, canceled, and riddled with challenges. American, Delta, and United do not count those regional flights in their on-time performance data.

Until now. JetBlue and Southwest on-time performances include virtually all of their flights. American, Delta, and United include only their non-regional flights. The third-party operated but airline-marketed flights are not included in their overall on-time percentages. Not bad when you can spike the curve! However, starting in 2018, the data points change and so will the on-time performance rates. Except for the airlines that were already counting all of their flights.

There is a continuing investigation into Barclays CEO James E. (Jes) Staley’s attempts to unmask a whistleblower who was critical of Mr. Staley’s hiring of longtime associate at his former bank (JP Morgan) for a top position at the bank. Notice that plural in “attempts.” Mr. Staley was blocked by bank officials once from unmasking the identity of the whistleblower and he made a second run at it through different channels. Mr. Staley has been disciplined financially by the Barclays board for those actions and has issued an apology. However, both U.S. and UK financial regulators are investigating the bank for its treatment of whistleblowers. Mr. Staley is the third CEO at Barclays since the bank’s LIBOR scandal.

Jonathan Cox, Barclay’s global head of whistleblowing, had a dispute with the bank, a dispute that was scheduled to be heard in London this coming week. However, Mr. Cox agreed to withdraw his dispute. Barclays announced both the withdrawal of the Cox dispute along with his departure from the bank. No one is sharing anything about the nature of the Cox dispute or why it was withdrawn or why Mr. Cox is leaving. On the surface, the conclusion in the title is apt: This can’t be good news. Just the fact that the chief of your whistleblower program has an ongoing dispute with your company during a whistleblower investigation tends to speak for itself. The Barometer wonders if anyone has an eye for optics at the bank.

As an aside, there is some sort of U.S. Department of Justice investigation into the so-called “poaching” of JPMorgan execs by Mr. Staley. The status of that investigation remains unclear. Seems the Barclays board could use a frying pan to the head on this third CEO. How many more investigations, resignations, and issues have to arise before the board zeroes in on the epicenter?

Volkswagen CEO, Matthias Muller, in an interview with William Boston of the Wall Street Journal. Mr. Boston’s reporting on the VW scandal has been stellar.