The Ethical Barometer

Ivan Fernandez Anaya,  the world-class runner who stopped short of crossing the finish line in a cross-country race in Burlada, Spain because he realized that Abel Mutai, who had held a comfortable lead throughout the race, thought he had crossed the finish line but had stopped short (10 yards). His Kenyan not being as good as his Spanish, Ivan motioned and gestured to Abel to cross the finish line ahead of him.  Abel caught on, finished first, and Ivan took second place. Ivan’s coach said he “wasted an opportunity.”  Ivan responded, “I did what I had to do.”  The Barometer suspects that Ivan will have many successful races ahead in his life.  The Barometer knows that those victories will be all the sweeter because of his actions in this race.  Ivan has rescued us from the Armstrong blues.  In a world in which rationalizations abound, his decency and definitive standards are  rare and, oh, so welcome.

Former New Orleans Mayor, Ray Nagin, during his 2002 campaign, a campaign based on ethics reforms.  Mr. Nagin has been indicted on charges of accepting $160,000 in payments and $72,000 in free granite for his family business as part of a systemic network of bribes, kickbacks, and pay-to-play.  If convicted, Mr. Nagin faces 15 to 25 years in federal prison.

The “Friends of Eleazar Wheelock,” an anonymous group drawing its name from the founder of Dartmouth, sent a letter to New Hampshire officials requesting that they take a look-see at the interrelationships between and among Dartmouth’s trustees and the university’s endowment investments. The investigation found that Dartmouth complied with the law, but did uncover that 13.5% of the university’s endowment is invested with funds headed by trustees or members of the university’s investment committee. Dartmouth had complied with the requirement that two-thirds of the board (with the trustee whose fund is involved not voting) approve the investments.

Dartmouth will now have the audit committee take a look at the investments to be sure that they do not pose “an unreasonable risk of appearance of conflict of interest.” Randall Smith, “Dartmouth Controversy Reflects Quandary for Endowments,” New York Times, January 6, 2013, p. B5.  Oh, the unreasonable vs. the reasonable conflict of interest.  Where is that line?   The Barometer can only offer that the line will be found in hindsight when one of these funds ends up losing money or worse.

The university indicates that it is proud its graduates have become some of the world’s leading money managers and that the funds were chosen on the basis of strategy, experience, and performance.  No doubt, until something goes wrong.  Exactly how does one fire a trustee? And about those placement commissions earned by trustees?  Well, they earn them, but give back portions of those fees to Dartmouth and get a building named after them.  Ah, the deeper we dig, the more we find.  Wait until something goes awry. Anyone remember UNLV’s foundation board?  These relationships are tricky things.  Tread carefully, Dartmouth, ever so carefully.

USA Today sports writer, Bob Nightengale. Here’s another classic from his January 8th, 2013 article, “[Barry] Bonds also beat perjury charges and was convicted only of an obstruction-of-justice charge that he’s appealing.”  Well, then, the Hall of Fame it is.  The operative words in that last quote are “only” and “convicted.”  Funny, obstruction of justice is something that usually points to guilt.  Why obstruct if there ain’t nothing there?

Oh, and the subtitle of his article is also a classic, “Cheating will always be a part of baseball.”  And now, thanks to convoluted logics such as this, the Hall of Fame.

Well, Mr. Sokol, the Barometer can shed some light.  There is a big difference between what’s legal and what’s ethical.  Too many people occupy that space between the two as they cloak themselves in self-righteousness, victims of another’s willingness to call them out in their gray territory.  Mr. Sokol simply escaped the law’s long arm.  The SEC’s decision to close Mr. Sokol’s insider trading case is not a vindication.  Mr. Sokol bought $10 million in Lubrizol Corporation shares in 2011, just a few months prior to Berkshire Hathaway’s acquisition of the company, an acquisition that increased the value of Mr. Sokol’s shares by $3 million.  The SEC simply struggled with the proof standard of our times, “What did he know and when did he know it?”

The ethical standards were spelled out in Berkshire’s insider trading policy that applied to all employees — you can’t trade in stocks Continue reading →