The Ethical Barometer

What a day the Barometer is having!  Ethical leadership from the mouths of babes.  They look as if they are 12, those first-year Harvard medical students on the cover of the Business Section of the March 3, 2009 New York Times. But these four students began a movement that has resulted in a rule:  Harvard professor-physicians must now disclose their relationships with pharmaceutical firms to the Hardvard med students.  With this disclosure, students can understand why their pharmacology prof favors one cholesterol drug over another or why the prof was short on discussion when it comes to side effects.  Bless you, future physicians, for understanding the Barometer’s simple rule:  There are only two ways to manage conflicts of interest:  Don’t do it or Disclose.  Harvard has progressed to the latter, thanks to its students.  Well done. 

The Barometer doesn’t see it too often.  The Barometer hopes for it.  The Barometer cajoles others to just do it.  “It” is ethical leadership.  Folks pretty much understand when they have crossed an ethical line.  The courage to do the right thing is much more difficult to muster.  The ability to do the right thing and by so doing inspire others? Darn tough these two things in action and practice.  Governor Pat Quinn (D. Ill.) has come under fire from former Governor Rod Blagojevich for “frivolous travel.”  File this accusation into the pot and kettle feuds.  So, folks looked into it and found Governor Quinn didn’t even take the state’s allowed $32 per diem for traveling employees and paid his own way on 8 of 10 trips and often stayed in cut-rate hotels.  He even paid for his own lodging quite often.  The Barometer is sure the governor doesn’t expect state employees to pay Continue reading →

Former Dallas Mayor Ron Kirk is the third nominee in the queue for Commerce Secretary.  New Mexico Governor Bill Richardson withdrew his name because of an ongoing investigation into contracts the state awarded to various companies that donated funds to Mr. Richardson’s campaigns.  The second nominee, Senator Judd Gregg, withdrew because he felt he could not be a 100% team player.  But, Mr. Kirk is also the fifth nominee in the Cabinet queue to hit the back-taxes issue. Continue reading →

Laura Pendergest-Holt, the chief investment officer of Stanford Financial Group, was arrested for obstruction of the SEC inquiry into Stanford, which appears to have been yet another Ponzi scheme ( a mere $8 billion).  Ms. Holt is 35 years old and has known James Davis, second in command to Sir Allen Stanford, since she was 15.  Davis hired Ms. Pendergest-Holt in 1997, just after she graduated with a degree in math.  There you have it, one of the Seven Signs: The iconic leaders, charismatic, well known, and respected in the community, Davis and Stanford, surround themselves with young ‘uns (a full generation younger) who want to be successful and rich.  The young ‘uns work hard and don’t ask questions.  The SEC picks at them first, and so Ms. Pendergest-Holt and her ankle monitor await the grinding wheels of justice.  Beware the Seven Signs.  Read the book, the Barometer’s own, “The Seven Signs of Ethical Collapse:  How to Avoid Moral Meltdowns Before It’s Too Late.” (St. Martin’s)    

Hedge-fund managers Paul Greenwood and Stephen Walsh were arrested this week.  The pony-collecting, teddy-bear treasuring scalliwags stand accused of pilfering $553 million from their investment clients.  Those clients included Carnegie-Mellon University, the University of Pittsburgh, and the Iowa Public Employees and Sacramento County Employees Retirement Systems.  These institutions and funds were hornswoggled by a couple of fellow who fit the pattern, the Madoff pattern.  What are its elements?  Well, for one, the fund outperformed Standard & Poor’s 500 index for more than 10 years.  If it sounds too good to be true . . . Then you have the lavish spending, weird even by Robin Leach standards.  An $81,000 teddy bear collection? Continue reading →

No good deed goes unpunished.  Bail someone out of a bad decision or conduct, and the odds are that you won’t net gratitude and reform but will earn the right to negotiate another bail-out.  The Comptroller of the Currency has some proof of moral hazard in a December 2008 report.  John C. Dugan, THE Comptroller, offered the following hard data to support the hard truth on bail-outs being ineffective, “After three months (following a modified loan or loan work-out), nearly 36% of the borrowers had re-defaulted by being more than 30 days past due.  After six months, the rate was nearly 53%, and after eight months, 58%.”  The data cover 60% of all first-lien mortgages Continue reading →