The Ethical Barometer

His conviction was the first time a high-ranking executive was convicted of a safety violation crime.  Now, Donald L. Blankenship, former CEO of Massey Energy Company, has received a one-year sentence for his conviction on a conspiracy-to-violate-safety-standards charge.  Mr. Blankenship was at the helm of Massey when 29 miners were killed in an explosion at the Upper Big Branch Mine, an explosion that federal and state inspectors said was exacerbated by Massey’s failure to fix water sprays and letting dust accumulate.  The result was an explosion that roared through 2 miles of tunnels. Continue reading →

Do you think so? New research confirms the obvious once again. (Evercore ISI) Companies with great pro formas are focused on numbers and managing numbers. Those in the exec ranks are no longer managing the business; they are fretting over the short term at the expense of strategy. See The Seven Signs of Ethical Collapse by Marianne M. Jennings for more detail on this issue. Research that preceded this research.

When former Turning CEO Martin Shkreli proposed increasing the price of Daraprim by 5,000%, Turing’s now former vice president and general counsel joined with other managers to tell Shkreli that the move “would have a severely negative impact on Turing’s business and reputation.” Taking the price from $13.50 per pill to $750 per pill was too much for Howard Dorfman, and he spoke up. The price went up anyway and Mr. Dorfman was fired a few weeks later. Mr. Dorfman testified before a Senate committee about his experience and job loss. Meanwhile, ex-CEO Shkreli has entered a not guilty plea to charges of securities fraud. Mr. Shkreli, an active Tweeter, rebutted with a reminder that he got no salary as CEO of Turing. Hat tip to Mr. Dorfman for speaking truth to power. The Barometer expects that he will land on his feet despite the abrupt termination for doing the right thing. He gives the world hope.

Who knows what happened at the once 1,300-lawyer firm? Well, post-2008, the law firm was not doing as well as it would have liked. Revenue was not what it needed to be, particularly if the firm was to meet the revenue requirements under its loan covenants. So, the powers that were at the firm found a young collections employee to allegedly participate in a multiyear scheme to cook the books. The firm collapsed anyway. Three Dewey partners and the young man, who was not a lawyer at the time, were charged with multiple felony counts, some of which included grand larceny.

The three partners, after an arduous trial, had a jury deadlock. That left the young man standing alone to face his trial. He will not be going to trial because Continue reading →

Mr. Silver faces up to 20 years in prison. However, a few classic lines indicate that New York’s reforms will take more than one measly conviction of the state’s most powerful political figure for the last 20 years. Mr. Silver’s lawyer argued that just because Mr. Silver had accepted millions of dollars in outside income did not make him a criminal because, “That is the system New York has chosen.” And perhaps the New York Times phrased it most aptly, calling the conviction, “A blow to lawmakers who considered conflicts of interest to be business as usual.” Only in New York.