The Ethical Barometer

Response to Herman Miller CEO, Max De Pree, from a young employee in Herman Miller’s research department when Mr. De Pree told him that he was thinking about writing a book on leadership and requested his help on editing.

Now, that’s a culture in which employees feel free to speak their minds. Google could learn a few things from Mr. De Pree’s acceptance of criticism from employees. Mr. De Pree died August 8, 2017 at age 92 in his beloved Michigan. RIP, Mr. De Pree, and thanks for your book on leadership that taught us to have covenants with employees, vendors, and customers. Peter Drucker thought that Mr. De Pree had important things to say; he just kept it brief.

Rajat K. Gupta,former Goldman Sachs director, former McKinsey consultant, who was convicted of insider trading for tipping off Raj Rajaratnam (Galleon) about Warren Buffett’s critical $5 billion infusion into Goldman in 2008. Mr. Gupta served a two-year prison sentence, and the Second Circuit has agreed to review his conviction.

His post-prison perspective is incorrect. He tipped off a guy who made a great deal of money on Goldman stock through the use of an inside scoop fed to him by Gupta, who breached his fiduciary duty as a director in so doing. That’s insider trading, with or without a politically ambitious prosecutor and “stupid” juries.

Dr. Carmen A. Puliafito was a heck of a dean at the USC medical school. Under his leadership, the school went up in the rankings and hauled in millions in donations. However, it seems there was some extracurricular activity on the dean’s part. Photos emerged showing Dr. Puliafito lighting a glass pipe for a female companion who was smoking heroin. Then there was the video showing the dean popping ecstasy and saying to the camera,“Thought I’d take an ecstasy before the ball.” School officials were then given a tip that a young woman (age 21 and reportedly a prostitute) who had been partying with the dean at a Pasadena hotel was hospitalized for an overdose. Following the overdose report, Dr. Puliafito resigned as dean to “pursue outside opportunities.” Adam Nagourney and Jennifer Medina, “Scandal Sinks Dean at U.S.C., Shocking a City,” New York Times, July 26, 2017, p. A1. However, he remained on the faculty and continued to see patients.

Once the Los Angeles Times reported on the drug issues, USC’s president issued a statement saying,“. . .it is clear to us now that the university currently has only loosely defined procedures and guidelines for dealing with employee behavior outside the workplace that may be improper or illegal and has the capacity to affect USC. And, presently, the university has very limited capacity to conduct investigations and follow up on leads or anonymous reports of such employee behavior.”

Sometimes we get a report and hope that it goes away. That hope is always ill-placed. If what is reported is true, you have a problem. If it is false, you still have a problem to manage via communications and solid facts. Either way, once the reports and pictures emerged, the only alternative was an investigation. USC has hired a former federal prosecutor to investigate what happened. Now if they could just get the guy off the faculty.

Currently, 47% of high school graduates have an “A” average. In 1998, that figure was 38.9%. Since 1998, the SAT average has dropped from 1026 to 1002 (scale of 1600 points). Brilliant students who can’t take a test? Grade inflation? Teachers trying to be nice to get the young ‘guns into college? Or, should we mention that cheating in high school has been steadily increasing as well.

When all is said and done, for whatever reason, we reach a point where we can’t trust the measurements. The measurements mean nothing. As USA Today noted in covering these trends, “A’s” may be fool’s gold.

On Sunday, July 16, 2017, New York Times reporter Philip Galanes, had his 1 1/2=page interview with Bill Maher and Fran Lebowitz published as a front-page feature in the Sunday Styles section (that is the section with the weddings, goofy stories about weddings, weddings gone wrong, weddings postponed, weddings that involved cabs — you get the idea.

Ms. Lebowitz spoke of her school years and explained, “We said the Lord’s Prayer every morning. The 23rd Psalm was read from the Bible.” Mr. Galanes quickly asked, “Which one is that?” To his credit, Mr. Maher offered, “Yea, though I walk through the valley of the shadow of Death . . . ” And Mr. Galanes then responded, “Seems a bit dark.”

Sad that Mr. Galanes does not even know the Old Testament of the Bible as content that might have some literary value, not to mention offering a little insight into the human soul, Indeed, if Mr. Galanes took a little time to read that 23rd Psalm, he would find, not darkness, but hope:

Yea, though I walk through the valley of the shadow of Death. I will fear no evil: for thou art with me; thy rod and thy staff they comfort me.

6 Surely goodness and mercy shall follow me all the days of my life: and I will dwell in the house of the Lord for ever.

All in all, not bad promises and endings — the point being we are never let alone in dark places. And it would be nice if a national reporter understood that, before, during, and after the interview. The common references we once all knew, and Ms. Lebowitz explained that, are gone. The darkness is in the lack of knowledge about basic religious tenets. You don’t have to believe, but there should be a mild curiosity and, perhaps, respect.

Before the Greek debt crisis, the Greek government’s statistics agency, headed by Andreas Georgiou (yes, his name does end in IOU), manipulated the stats and made the Greek budget deficits smaller than the actually were. Under pressure from the EU, Georgiou changed the Greeks accounting, thus tumbling Greece into a crisis. Oh, what times are these when even the stats guys are under criminal charges.

There were grandiose plans. A full anticorruption effort complete with anticorruption prosecutor, 18 judges to hear corruption cases, and all within one year. Here we are, one year later, and the deadline has come and gone. Lawmakers could not agree on who should be the anticorruption prosecutor. The Senate failed to appoint any of the 18 anticorruption judges. And nearly one-half of the 32 Mexican have not passed any of the local regulations that were to also be part of the effort. Juan Montes, “Mexican Antigraft Efforts Falter,” Wall Street Journal, July 20, 2017, p. A18. https://www.wsj.com/articles/mexicos-anticorruption-efforts-stall-1500483099

The backdrop for all of this planned, albeit unexecuted activity, is that the U.S. will be demanding anticorruption provisions as part of the renegotiation of NAFTA. And, the fact that graft costs the Mexican economy $50 billion annually in lost output (according to the Mexican Institute for Competitiveness) did provide some motivation.

The movement for change started in 2014 when Presidente Pena Nieto had the embarrassing problem of his wife and finance minister purchasing homes on credit from a government contractor, a contractor with a close relationship with el Presidente. Small wonder that 82% of Mexicans believe the current party in charge is corrupt. No one in it is willing to create, implement, or enforce anticorruption laws. There are 352 graft cases, dating back to 2003, awaiting trial in the Senate, and they are taken in chronological order. Former President Javier Duarte, who left office when state auditors found a one-half billion dollar hole in the country’s coffers in 2015, has a long wait for his trial. And without a prosecutor and judges, well, without trials, the corruption might as well just sally forth.

There’s headline you don’t want to see. R. Seth Williams was charged with providing official favors to two businesses in exchange for cash, Caribbean vacations, airline tickets, expensive furniture, a Burberry watch, a Burberry purse for his girlfriend and a Jaguar convertible. In exchange, one business owner got a special badge and access and another received help with security clearance in getting back into the country. The items were not disclosed on the city’s required disclosure forms until Mr. Williams learned that he was under investigation. The judge sent Mr. Williams directly to jail in advance of his sentencing hearing because the judge was “astonished” at the evidence and could not trust that Mr. Williams would show up for sentencing. Pennsylvania lost its attorney general to criminal charges and a representative to 10 years in prison for an illegal $1 million loan to his unsuccessful campaign for mayor. Pennsylvania is still south of the number of corruption convictions in New Jersey and New York, but the high offices held by individuals convicted finds Pennsylvania taking the lead.

Blog post by Dave McClure, founder and now former CEO of 500 Startups, a Silicon Valley incubator. The post was made after the company confirmed his resignation as CEO. Mr. McClure went on to explain that he made advances to “multiple women in work-related situations, where it was clearly inappropriate.” The woman upon whom the advances were made were entrepreneurs in need of financial support for their fledgling companies.

As more situations rise to the surface across Silicon Valley it has become clear that the culture of the high-tech field is one of the casting couch. To get ahead, women had to tolerate propositions, advances, and worse. As one Silicon Valley capital firm phrased it, “This is not just a case of a few bad actors. This is not something that is fixable with a pledge or a new policy. This is a culture that has been allowed to fester and to rot by enablers who refused to intervene when they witnessed inexcusable behavior or went to great lengths to avoid seeing it.”

Take iconic CEOs, phenomenal financial performance, perks, perception of goodness (Seven Signs) you create one heck of a yeehaw culture that is going to harm many. Too bad the remedy is ousting rogues instead of changing the culture.

A potential juror during voir dire in the jury trial (for securities fraud) of Martin Shkreli.

Other potential jurors, who were struck one-by-one, did not have much better to say, even after the judge reminded the potential jurors that the trial was not related to Mr.Shkreli’s role as CEO of Turing Pharmaceuticals and his role in increasing the prices of certain drugs by, oh, 4,984%. Here is a sampling:

“He is the face of corporate greed in America.”
“You’d have to convince me he is innocent.”
“Who does that? A person who puts profit above everything else.”
“The most hated man in America.”
“I honestly don’t think I can be impartial.”

The judge reminded the panel of potential jurors about the presumption of innocence. But, jurors were not buying this justice stuff. One responded, “I understand that, but everything I’ve seen. . . ”

The judge interrupted him mid-sentence and had to hold a side bar because the defense raised the legitimate point that the jurors who were being excused for cause were tainting the remainder of the pool with their comments.

Sixty-nine jurors were dismissed — dozens for cause. Forty potential jurors return today for further screening. The judge has asked for 100 more for the panel. A defendant so notorious that you cannot bring together an unbiased panel. You may have crossed a few ethical lines when you can’t find a juror with an open mind about you.

Travis Kalanick, Founder and Former CEO, Uber. Hmmmm.