Tag: business ethics

The Epic Failure Edition

On By southwerkIn Business Ethics

The Epic Failure Edition

I am referring, of course, to Wells Fargo.

hmlbr17Today we begin with a business ethics post from the blog, Lead Today. If you read yesterday’s post, you will note that both Mr. Keating and I are on the same page on this issue. Of course, as one business ethics blogger has complained, I’m shrill. Perhaps Mr. Keating my be considered more measured in his approach. In any case I was delighted with his take on the Wells Fargo Ethics disaster and I’ve included the first four paragraphs from it. However, you really must go and read the whole thing. And please like it and rate it, etc. Give the guy some attention for a fine piece of writing and a willingness to talk ethics in a business climate where people give you knowing smirks while occasionally rolling their eyes when you say words like morality or accountability. 

There is then a post about the loss of black teachers followed by some excellent writing from Eslkevin’s Blog. Next, a writer ridicules mainstream economics, a sentiment I very much share. There is a quick link to a clever post from “Hello Kitty, Some Blog,” a site I visit often. 

And we close with a remarkable business ethics disaster, the F-35A. Did I say remarkable? Really I’m thinking “legendary.” It’s going to make the Sgt. York Air Defense system, the M-16 and the F-111 into minor footnotes in the Pentagon’s long history of financial and military disasters. 

James Pilant

As usual, Please LIKE, Please Share and please subscribe.

 

This is Steve Keating writing in the blog, Lead Today

i_00i_145_tnWe have been presented with two options to choose from. Either the executive team at Wells Fargo is as corrupt as an executive team can be or they are the dumbest group of people ever to run any organization. 

5300 Wells Fargo employees were terminated last week for creating millions of fraudulent accounts to meet what has been described as nearly unbearable pressure and demands to add new customer accounts. Progress at some branches was reviewed as many as 4 times a day. The pressure was relentless. 

Nothing, not morales, not ethics, not even those little things called laws could slow down the relentless push to meet the Wells Fargo corporate initiative known as “Gr-eight Initiative.” Wells Fargo has a goal that every customer should have eight separate accounts with the bank.

Apparently goals are more important than anything at Wells Fargo. In order to meet the goals of the initiative employees opened new accounts for current customers without the customer’s approval or knowledge. This required forging signatures, creating fake email accounts, and moving customer’s money between these accounts without their knowledge, sometimes causing a customer’s real account to go into the red.

….

The loss of black teachers

i_00i_258_tnRizga focuses on the story of one teacher, Darlene Lomax. But the story she tells is about the widespread shedding of black teachers, women and men who were the backbones of their communities. In Philadelphia, almost 20% of black teachers are gone; in New Orleans, 62%; in Chicago, 40%; in Cleveland, 34%. School closings have been concentrated in historically black communities. Black teachers have been disproportionately displaced by “reform.”

There’s still hope according to Eslkevin’s Blog! (I think so, too. jp)

(This is really a good piece of writing – this is another one you really should go to the original blog and read the whole thing while browsing all the other writing there. jp) 

i_00i_286_tnI say all this because, as a journalist in this crazy year of our lord 2016, on a good day the temptation is to tilt toward cynicism. It’s our job to rake the muck and expose the trolls, to cast light on the wrongdoing and the failings in our society, but it’s up to others to set them right. Today, at this site, Bill Moyers writes about the greatest failing, the true disaster, of our time: the scourge of growing inequality, economic and political. He describes it as “a despicable blot on American politics,” as the very wealthy convert their financial might into political power to guard that wealth while exacerbating inequality further. The statistics Moyers deploys are chilling. Consume enough of them and you’re liable to feel a bit gloomy. But like those undergraduates, Moyers (very distinctly a post-graduate of our difficult political world) holds onto the hope, as today’s piece suggests, that Americans can still fix our world, make it a better place.

Paul Krugman Wrong

i_00i_281_tnThe only economic analysis that Krugman and other mainstream economists accept is the one that takes place within the analytic-formalistic modeling strategy that makes up the core of mainstream economics. All models and theories that do not live up to the precepts of the mainstream methodological canon are pruned. You’re free to take your models — not using (mathematical) models at all is, as made clear by Krugman’s comment on King, totally unthinkable —  and apply them to whatever you want – as long as you do it within the mainstream approach and its modeling strategy. If you do not follow this particular mathematical-deductive analytical formalism you’re not even considered doing economics. ‘If it isn’t modeled, it isn’t economics.’

That isn’t pluralism.

That’s a methodological reductionist straightjacket.

 

British fat cat gets average annual wage in 45 minutes

New American Fighter may need to be rescued by older fighters should it enter combat. 

The 16-page memo,first reported by Tony Capaccio at Bloomberg and then by others, details just how troubled this program is: years behind schedule and failing to deliver even the most basic capabilities taxpayers, and the men and women who will entrust their lives to it, have been told to expect.

The F-35 Joint Strike Fighter program is the most expensive procurement program in Pentagon history. It’s been plagued by schedule delays, gross cost overruns, and a slew of underwhelming performance reviews. Last month the Air Force declared its variant “ready for combat,” and most press reports lauded this as a signal that the program had turned a corner. But a memo issued from the Pentagon’s top testing official, based largely upon the Air Force’s own test data, showed that the Air Force’s declaration was wildly premature.

Below is the memo referred to above. Frankly, this is an upper class version of a lower class male frothing at the mouth administering a obscenity laden diatribe that would make an old sailor blush. This is a rain dance of hatred written in officialese. 

013a
Better than the F-35 Joint Strike Fighter?

 

 

Let me utterly simplify its conclusions – The plane is not as good as current serving aircraft. 

That’s an incredible statement particularly when discussing 400 billion dollars worth of plane. jp

(The document shows perfectly in tests but it looks like it doesn’t always appear when the site is accessed – my apologies. jp)

https://www.documentcloud.org/documents/3035572-DOT-amp-E-AF-IOC-Memo.html

Five Business Ethics Predictions for 2017

On By southwerkIn Business Ethics1 Comment

Five Business Ethics Predictions for 2017

What is going to happen in 2017? I have some hopefully educated guesses which I will share. So, here is my five guesses for what will happen in the new year.

  1. Many more heads are going to roll at Fox News

!!!50053mThus far, the Murdochs have tried a middling approach to the aftermath of Roger Ailes, replacing some of the more objectionable of Ailes allies while retaining many others.

It isn’t going to work. The leadership that allowed the business ethics disaster at the network is still dominated by many of the same people. Geraldo Rivera implied in his latest Facebook post that the network still had work to do while Greta Van Susteren was emphatic that there was a failure in leadership.

It is quite likely that that the coming shakeup will not take place until after the election  but it has to happen sooner or later.

And don’t get confused, the sexual harassment charges may have started this thing but what’s driving it now is the use of corporate funds for settlements and black ops not to mention an apparently highly aggressive surveillance of employees across the corporation that is driving the need for action.

2. Corey Lewandowski and CNN will part ways

!!!i_00i_055_tnThis business ethics disaster is one for the textbooks. It will be studied in later textbooks as a cautionary tale of what can go wrong with both the hiring and employment process.

A quick recap for those who don’t follow the news cycle – Lewandowski was signed as a commentator by CNN in spite of the fact that he had just been bounced as Trump’s campaign manger and has a still active non-disclosure and basically a no criticism clause in his contract with Trump. Since his hiring, he has been an enthusiastic cheerleader for the candidate almost to the point of comedy.

Will they can him after the election or before? After. The network is far too devoted to making Donald Trump and his supporter happy in the pursuit of its demi-god, ratings, than to take any risks.

3. Criminal charges will be filed against some of Volkswagen American executives

Twenty Minutes of Action

Since the feds managed to roll one of Volkswagen’s employees, we can expect some of his fellows to grab a deal while they can while the others form a defensive circle of deniability. But these are big, big fish. This is a multi-year, multi-billion dollar fraud against all Americans but not just that, they tricked several federal agencies and made the them look like incompetent fools. Steal from people, kill people, okay – just another day at the office. But make the feds look silly and blood must flow.

Of course, Barack Obama, the consummate corporatist may yet overrule his angry prosecutorial warriors but his term is about up and he has many fights on his hands. We’ll see.

4. Wells Fargo will fire or allow some top executives to resign

g099Oh come on, did you really think any intelligent person buys the idea that thousands of low level employees concocted an enormous conspiracy to create false accounts for thousands of unsuspecting customer for more than five years? All by their little selves? Not a chance.

Someone upstairs at Wells Fargo decided to impose clearly impossible goals on the employees and still yet, even in the world of the American corporation, the word, accountability still gets said. It is said timidly, perhaps only whispered but it is still a presence.

The monumental stupidity of the harshly imposed goal system is going to claim some actual villains – probably before the end of the year. Watch for the executives resigning to “spend more time with their families.”

5. The Dakota Access Pipeline will be permanently cancelled

i_296Three federal agencies turned a big thumbs down on the damn thing before it even started. Only the Army Corps of Engineers got the thing going and how do they look now?

Their esteemed corporate pipeline company proceeded to turn a probably manageable public relations situation into repeated disasters. Of course, I suspect that in North Dakota stepping on the Native Americans and extolling the virtues of pipelines is normal for both government and industry, so unleashing the dogs on protesters and charging a presidential candidate with defacing a dozer blade with spray paint made good local sense. But to the rest of us, well – Hicksville on the plains.

The Army Corp of Engineers now knows that the company they went to bat for, can’t manage its way out of a wet paper bag. I have to admit the vision of bulldozers sent out like commandos on a strike mission to destroy Native American burial sites before the state and feds knew what was going on – looks just like a plot from a Billy Jack movie.

Here’s Billy Jack dispensing justice:

 

Where’s Tom Laughlin when you need him?

So, that’s my five.

Please Like, Subscribe and Share AND if possible – tell me what I missed. Do you know of some looming business ethics tragedy? I want to know.

James Pilant

Business Ethics Blog Posts 9-10-2016 The “Secret Eyes Everywhere” Edition

On By southwerkIn business ethics

Business Ethics Blog Posts 9-10-2016

We start with a post from “Secret Eyes Everywhere” about what you should do if you think Wells Fargo embroiled you in its system of forced enrollment for bank  accounts, credit cards, etc. It’s very good advice. Lynn Stout takes on the banking idea of virtue and demolishes it – very nice work. David Yamada in his blog, Minding the Workplace gets reflective on us. “Hello Kitty, Some Blog” has some more on induced earthquakes and we have two good posts from the blog, “The Net Economy.” Last we have a post from “A Philosopher’s Blog,” a site I talked about at length about a week ago. 

Best Wishes!!

Please Share, Subscribe and Like — Not just me, but these people are my colleagues and in my mind I see them as soldiers in the good fight and we need as many good hearted souls as we can get in these difficult times. Show some support!

James Pilant

i_00i_216_tnFrom Secret Eyes Everywhere, Your Customer Service Advocate–

Get all of your accounts listed

According to The Los Angeles Times,  the bank has 90 days to provide federal regulators with a plan to compensate all its customers. Go into a branch or call the customer service line and get a full list of all your accounts in your name. Should you close any or all accounts, be sure to get a receipt showing the account was closed. If there is something on them you don’t understand, be sure to raise hell about it to get it resolved. If a refund of fees is not given, do the next step.

Seek legal assistance (please go to the web site and read the rest! If I include all the good parts I’ll be posting the whole thing instead of an excerpt. jp) 

Lynn Stout writing for The Net Economy

i_00i_010_tn(If you read anything today, go to the link and read this. jp) 

In the wake of the 2008 crisis, Goldman Sachs CEO Lloyd Blankfein famously told a reporter that bankers are “doing God’s work.”

This is, of course, an important part of the Wall Street mantra: it’s standard operating procedure for bank executives to frequently and loudly proclaim that Wall Street is vital to the nation’s economy and performs socially valuable services by raising capital, providing liquidity to investors, and ensuring that securities are priced accurately so that money flows to where it will be most productive.

There’s just one problem: the Wall Street mantra isn’t true.

From Minding the Workplace and the invaluable David Yamada! 

i_00i_070_tnOn this Saturday morning, I’m enjoying some reflective moments that midlife sometimes invites — or requires. And although I don’t have the means to do a demographic survey of this blog’s readership, my best intelligent guess is that a good chunk of you have crossed the 40 year mark. I thought I’d collect a group of previous posts that enable some of that healthy reflection, especially for those who identify as being in midlife, but also hopefully useful to anyone who wants to live meaningfully. In these posts you’ll find some of my own commentary, as well as recommendations of books and articles for further inquiry. (He has a wonderful list – please follow the link to see. jp)

From Hello Kitty, Some Blog –

From one of my very favorite blogs, Warrior Publications! 

Mounted Lakota warriors, their horses resplendent in traditional regalia, charge a line of law enforcement. They gallop headlong, push back the police, pull up only at the last moment, and then circle back for more.

The scene could be the Battle of the Little Bighorn, circa 1876. But it’s not. Here, along the banks of the Missouri River, just beyond the boundary of the Standing Rock Sioux reservation in North Dakota, indigenous land and water defenders are standing together to block the Dakota Access Pipeline, which threatens their land, water, ancestral burial grounds, and future generations. They are part of a decades-long struggle to assert and reclaim indigenous lands, jurisdictions, and sovereignties. And they are doing so on ground that has given rise to indigenous resistance for centuries.

For the average American, it’s easy to mistake the resistance at Standing Rock for a one-time re-run: indigenous warriors emerge from the wild, put up a brief, fierce, but ultimately tragic fight before succumbing to progress and providence. Cowboys and Indians II: Pipeline edition.

From the web site, The Net Economy.

!!!i_00i_142_tnIn a post-scarcity society, everyone would be guaranteed an income that yielded a standard of living significantly better than poverty, and this guarantee would be unconditional. The move from a near-poverty benefit subject to eligibility conditions to a livable, guaranteed minimum income would require both an increase in productivity, such that a smaller number of workers could produce an adequate income for all, and some fairly radical changes in social attitudes.

It seems clear enough that technological progress can generate the necessary productivity gains, so what is needed most is a change in attitudes to work that would make a guaranteed minimum income socially sustainable.

And another post from The Net Economy

!!!i_00i_055_tnYet, ordinary people have not accepted this self-evident, ‘common sense’ knowledge shared by trade experts. They have not only challenged trade expertise by mobilizing counter-expertise (for instance, economic analyses that refute the Commission’s numbers), but they have also mobilized many people in order to make their epistemic claim more vociferously: what the trade experts hold true is wrong, false knowledge. The quarter of a million protesting in Berlin had posited: No, we do not believe that the world is going to be better off due to the TTIP; each and every family will not be 540 euros per year richer; and, no, we do not think that the regulations coming out of the TTIP bodies are going to respect the environment.

Trade experts are not seen here as neutral arbitrators of public policy but rather as representing a particular stance as to public policy or public interest.

From A Philosopher’s Blog –

!!!i_00i_097_tnMy adopted state of Florida was just hit by a category one hurricane; my adopted city of Tallahassee sustained considerable damage. A week after the storm hit, there are still people in the city without power. There are also people who suffered considerable property damage. Fortunately, there seems to be only one death attributed to the storm here.

I was rather lucky; though my power was out from Friday to Monday, my house sustained no damage and I was well-prepared. I also had the good fortune of leaving the city on Sunday morning on an already scheduled program review at St. Francis University. While I normally dislike airports, it was great having access to AC and electricity again. While I waited for my first flight out, I enjoyed the cool air and recharged my laptop.

The Fox News Regrets Edition

On By southwerkIn Business Ethics

The Fox News Regrets Edition

i_050Two who spoke out in behalf of Roger Ailes express regret.

It’s a banner year for business ethics disasters. We have Corey Lewandowski’s hiring at CNN. I haven’t written about it yet because the saga continues to carve out new terrain in ethically challenged comments and decisions. It’s like the Greek Tragedy of Oedipus, you don’t want to write about it until he blinds himself and a lot of people die. I’m waiting for the unfolding disaster’s climax.

We have Wells Fargo’s decision to fire a bunch of low level employees for upper management decision making. After all, it’s the American way to pass the buck from those responsible to those that weren’t. If they wanted job security, the little people should refuse to perform the unethical acts upper management threatens to fire them for.

And then, of course, we have the major media companies giving Donald Trump several billion dollars of free air time because it was good for ratings. Perhaps some modern day William L. Shirer will rise to the journalistic challenge of documenting this business ethics disaster?

But high on the list has to be the lawsuits, the investigation and the firing of Roger Ailes.

015bThe Business Ethics Debacle at Fox News

The revelations of immorality at Fox News are both shocking and seem to be never ending. If the charges are true we are talking about the misuse of funds, corporate espionage and sexual harassment of a particularly long term and degrading kind.

When Gretchen Carlson filed her lawsuit a few weeks ago, several of her fellows at Fox criticized her decision to sue. Among them were Geraldo Rivera and Greta Van Susteren.

Both now express regret.

Rivera published on Facebook a statement which includes the following –

The man we knew as the blustering genius who invented our mighty Fox News Channel is a deceitful, selfish misogynist, if the charges against him are true. And if they are true, then his shame and banishment are well earned.

Like virtually all my colleagues at Fox News, I was totally blindsided by his sexual harassment scandal, which is why I responded to Gretchen Carlson’s initial filing of her lawsuit with extreme skepticism. The man she described in her pleadings was unknown even to those of us who thought we knew him well.

And Susteren wrote on her Facebook page  –

I read Geraldo’s FB post in which he said he regretted not believing Gretchen Carlson’s claim of sexual harassment.

We all regret it – I made my regret self evident in my GretaWire posting about 3 weeks ago which ended with this: “Gretchen, you go girl.” That said it all.

Both Rivera and Susteren were critical of Fox management in their Facebook posts although Rivera implied mistakes were made while Susteren directly said that mistakes were made.

From Rivera’s:

50181mManagement’s role is to keep the playing field level, professional and fair. As society evolved from the “Mad Men” era of the 1950-60’s, giant steps have been taken to protect subordinate employees from harassment and unwelcome advances, particularly by superiors. Sure, there is far to go, but as the seismic response to Gretchen and the other purported victims makes clear, the news business will no longer tolerate boorish conduct by anyone, however powerful. Strict policies including sensitivity training are in place. Perpetrators do so at tremendous peril to their careers and families.

To all the victims of sexual harassment, direct and indirect, I am sorry for what happened to you. As the father of three daughters, including one in the news business, I urge all who have been offended to reach out. Similarly, if you see harassment, say harassment, even if the alleged offender is an old friend.

From Susteren’s:

0019mBut I have regrets beyond Geraldo’s and beyond not believing a civil complaint written by lawyers.

I regret that Roger Ailes was not supervised by those in a public corporation who had the duty to supervise him. This included his seniors, the CFO’s of both Fox News Channel and 21CF (and its predecessor NewsCorp), the Board of Directors and what I assume this public corporation had, outside auditors. Checks written that were suspicious should have been spotted.

Is all this sincere? In these kinds of cases, I let time tell me what’s really going on. Usually in six months or a year, you have a pretty good idea who meant what. Of course, that is a belief based on long experience. Often what appears in the news is not what it seems in just a few days. 

But if sincere, these Facebook posting suggest a dramatic decline in Ailes influence on his former colleagues.

James Pilant

As usual, Please Like, Subscribe and Share!!!

(I don’t think you guys understand the thrill of having people like your work. When I’m looking at other people’s blog and I’m impressed – I make sure and hit the like button so they know. It’s a big deal. There is no money at all in this – approval from our peers keeps us writing. jp) 

The Matt Lauer Catastrophe Edition

On By southwerkIn Business Ethics2 Comments

The Matt Lauer Catastrophe Edition

A failure of competence or a collapse of journalistic ethics or both?

!!!i_00i_207_tnIt has to be difficult for anyone with any knowledge of journalism to watch the Matt Lauer disaster entitled the “Commander in Chief Forum” without suffering immense pain. 

What did he think he was doing? He had a week to prepare. Did he use any of it? 

Basic journalistic ethics when faced with a “forum” between two candidates would indicate that you should offer both candidates similar treatment. It absolutely doesn’t have to be equal in every way but there should be level of similarity between the two sets of questions so that we have an impression of fairness. We didn’t get that – not even close. 

Why? No one knows. The web and the media are running all kinds of ideas. I’m not very interested. This is a failure of business ethics. We have an election to determine the leader of this nation and one candidate was clobbered for the umpteenth time about the private e-mail scandal to such a length of time that all the rest of the questioning had to be limited in time. The other candidate was given soft balls so soft and pudgy, it was difficult to believe what you were seeing. And when Trump lied about matters of public record, our intrepid interviewer just when on with another soft ball question. 

i_00i_197_tnOne commentator said that she had not believed that Trump could be elected President until she saw this program. 

I fully agree. Clinton was asked difficult questions as if to knock her off balance early on while Trump was simply allowed to hold forth on his ideas even when they didn’t make logical or political sense. 

What NBC news should have done instead of relying on a saccharine morning host was to have found someone in the news division willing to do their homework and demonstrate some journalistic integrity. 

They didn’t and the ethical failure is more theirs than Matt Lauer’s. It’s their business to know who to deploy and they sent their second or third string in. 

And they may have wanted to softball Trump and continue to profit from the ratings he generates while being afraid of provoking the wrath of the often mercurial candidate. 

I don’t know but if this is the kind of interviewing and questioning the candidates are going to get in the debates, who wins is anybody’s guess. Softballing one candidate and being tough on the other serves to level the playing field. 

i_00i_113_tnWe used to have journalists. Where are they now that we need them?

James Pilant

As usual, like, subscribe and Share! 

The New York Times

Like Mrs. Clinton, Mr. Trump has had a few controversies related to the military. You might recall him feuding with a Gold Star family, or mocking Senator John McCain of Arizona for being captured in Vietnam, or likening his prep-school attendance to military experience.

Mr. Lauer evidently didn’t recall any of that. He kicked off by asking Mr. Trump what in his life had prepared him to be president, the kind of whiffle ball job-interview question you ask the boss’s nephew you know you have to hire anyway.

Trevor Noah Rips Matt Lauer for ‘Terrible’ Job on Trump’s ‘Blatant Lies’ The Daily Show 9/8/16 – YouTube
https://www.youtube.com/watch?v=CdprE6tQJek

Network Privately Admits Interview was “Disaster”

One executive, speaking anonymously, was blunt about it: “Disaster.”

The day after Lauer’s back-to-back interviews of Hillary Clinton and Donald Trump, several high ranking sources at the network said they hear the criticism and agree with at least some of it.

Even his internal defenders acknowledge flaws in the forum’s production.

Lauer was widely criticized for failing to fact-check or follow up when Trump falsely claimed that he was opposed to the Iraq war when it started. Some viewers thought Lauer held Clinton to a higher standard than Trump. The Clinton campaign agreed — it blasted off a fund-raising email on Thursday afternoon titled “Matt Lauer.”

But this was not merely partisan warfare. Prominent journalists were sharply critical of NBC. And several people who were sitting in the audience told CNN that they were frustrated too.

 

Authoritarian Farce

Trump played his usual tricks. When he was quizzed about foreign policy, he changed the subject to trade. When he was pressed for solutions, he talked instead about President Obama’s failures. When he was asked about atweet in which he had blamed military sexual assaults on the integration of women, he acted as though he had always believed the problem was insufficient prosecution. He also claimed, contrary to fact—and undisputed by moderator Matt Lauer—that he had been “totally against the war in Iraq.”

Trump said at least two newsworthy things. First, he bragged that Mexico’s finance minister had just been ousted for setting up Trump’s meeting with Mexican President Enrique Peña Nieto. “The people that arranged the trip to Mexico have been forced out of government,” Trump said. “That’s how well we did. And that’s how well we’re going to have to do.” This boast tells you two things about Trump. It tells you that he measures success by the discord he sows in countries he visits. And it tells you that he likes to humiliate these countries.

Second, Trump claimed that in the classified intelligence briefing he received on Aug. 17, he learned “that our leadership, Barack Obama, did not follow what our experts” had recommended “in almost every instance.” That’s quite a claim, since the briefing was prepared by James Clapper, Obama’s director of national intelligence. The session was classified, so Clapper and his briefers can’t rebut Trump in public. This tells you how Trump would treat classified information as president: He would lie about it for political gain and dare the intelligence community to violate the law by exposing him.

A Waste of Time

The moderator, NBC’s Matt Lauer (who proved himself unready from Moment 1), grilled Hillary Clinton on her emails—entirely appropriate, but then two of the veterans in the audience also grilled her on the emails. (Were the questions screened?) By the time Lauer got around to asking her about the Iran nuclear deal and she started to explain the deal’s context, he interrupted and urged her to make her answer quick. He did that a couple of times.

Lauer put some challenging questions to Donald Trump as well, asking, for instance, what in his experience made him qualified to be commander-in-chief. He replied, “I built a great company, I’ve been all over the world, I’ve dealt with foreign countries. … I have great judgment, I know what’s going on”—saying (and being asked) nothing about his company’s four bankruptcies, the fleecing of vendors, or the fundamental difference between running a business (where there’s a clear profit-loss tally) and running a country (where there are competing views of what the goals should be).

NBC’s Commander In Chief Forum was a failure

There were no questions about Trump’s recently fired campaign manager and hisshady, likely illegal financial ties to a pro-Russia political party in Ukraine. There were no questions about Trump’s insane posture on nuclear weapons, or his intention toreinstate torture as official policy of the United States, or his enthusiasm for committing war crimes. Lauer did ask, however, if Trump felt he was “prepared” to be commander-in-chief. Trump, you’ll be shocked to learn, said yes.

 As for Hillary Clinton’s portion of the forum, it wasn’t handled much better, nor was it any more enlightening. There were the requisite questions about Clinton’s email server, which resulted in the Democratic presidential nominee spending several minutes discussing the particulars of email headers used in official government communication. After burning his first few questions on email protocols, Lauer prodded Clinton to respond “as briefly as you can” to a question from a veteran in the audience about her threshold for using military force.
Unfair and sexist. 
But on Wednesday night, Trump got some help. Clinton and Donald Trump were making dueling appearances in New York in a live forum hosted by NBC’s Matt Lauer to address subjects including national security, veterans’ welfare, and sexual assault in the military. Here, Clinton was called upon once again to defend her emails, her hawkish foreign policy record — and ultimately answer for her femininity.
In the aftermath Lauer has been widely called out for what many saw as an unfair, sexist approach to moderating.

The Irish Apple Edition

On By southwerkIn Business Ethics

The Irish Apple Edition

Where we discuss what should and should not be done in regard to national borders and taxes.

Apple, the company, exists and does not exist. It exists very firmly in reality if you wish to buy its products or contract for services. It has no legal geographical existence for tax purposes, that is, it cannot be taxed because it has no locality at which it can be taxed. 

Apple in this way is almost identical to the character in Hitchhiker’s Guide to the Galaxy, Hotblack Desiato, a rock singer, who is “dead for tax reasons.” Corporate amorality has reproduced Douglas Addams humor. 

It’s fascinating. Modern tax avoidance methods allow multi-nationals to suck up subsidies and the countless benefits of organized societies from education to roads without so much as paying a dime in support. If you were at a safe distance in a society where the tax burden hadn’t been shifted to middle class incomes, it would probably be funny. You’d think, “What kind of silly people would allow that nonsense?” But we are the people whose elected representatives allow and facilitate this kind of “globalism.” 

This is truly wretched business ethics. There is an implied social contract under which we cooperate for the common good and Apple chooses to abuse all of us by evading its responsibility. 

I never get to be consultant or even work very much in the field. And this is because I write these kinds of posts. What is wanted is a general denunciation of workers stealing from their employers or a long winded diatribe aimed a worker sloth. Writing that gets you jobs. Writing that international business acts in many ways as parasitical pirates makes businessmen uneasy about their own morality and beliefs and if there is anything they loath it is doubts about there own worthiness. In their own eyes, they are doing “God’s work” much like the Wehrmacht. 

But tax avoidance is a legitimate subject for business ethics and many, many companies are evading their most basic responsibilities. 

James Pilant

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From the Blog, Random Public Journal

!!!!!!i_00i_00i_152_tn
The Iris Apple Edition

Years of Irish wheeler-dealing directed towards attracting business from multinational corporations has produced an at least morally bankrupt near zero rate of corporate tax. While on the books Ireland has two rates for corporation tax – 12.5% for trading income and 25% for investment income, special deals negotiated by the government with the bigger fish in the Irish pond has resulted in companies like Apple paying no more than 0.005% on declared wealth generated in Ireland. In the last few days the European commission has called last orders on this shady dealing and has called in almost €13 billion in unpaid taxes from Apple.

Ireland – of all European member states – could do with this money. In over a decade of failed state “leprechaun” economics Ireland has found itself in a deep dark hole. Social welfare and spending cuts have ensured that more Irish people emigrate or die as a direct result of these decisions. Lower levels of real employment, zero hour contracts, a housing crisis, and levels of homelessness as high as the years of the Great Famine have brought Ireland to its knees, and yet the suits in government are “outraged” that Europe would dare to help them with their money problems. What they have done instead is take the side of the corporate giant and keep up the policy of screwing Irish people.

From the Guardian’s Matthew Gardner –

!!!i_00i_145_tnThe international tax system is only as strong as its weakest link. This is the clear message that the European Commission sent on Tuesday when it announced that Apple will have to repay as much as €13bn ($14.5bn) in back taxes due to illegal Irish tax breaks it has received.

Tax justice advocates across the globe lauded the decision as a big step toward tax fairness. Unfortunately, an immediate critical response from US lawmakers, coupled with a slick and disingenuous public relations play from Apple CEO Tim Cook, suggests that American taxpayers will probably continue to pay the price for Apple’s tax dodging for some time to come. This is a shame, because the commission’s goal of ending tax haven abuse is one in which the United States should, and ultimately must, be a full participant.

The facts of the Apple case are straightforward: with the blessing of the Irish government, Apple created a byzantine network of subsidiaries to shelter its profits in an entity that was a tax resident of no country. As a result, billions of dollars of Apple’s income have flowed almost tax free through Ireland’s tax system. The European Commission estimates that in 2014, one of Apple’s Irish affiliates paid a tax rate of just 0.005% on its Irish profits.

From Dear Kitty, Some Blog!

Andrew Walker at BBC News

05Was this week a turning point? It has certainly been expensive for the biggest stock-market listed company on the planet.

Of course, Apple can afford that €13bn (£11bn) tax bill that may be heading for the chief financial officer’s in-tray. And who knows whether it will actually have to pay up.

Perhaps the planned appeal will be successful. But it certainly feels like a very important moment in the battle to get multinational businesses to pay what many governments – as well as ordinary people – think would be their fair share of tax.

It is true that this episode has not brought unity among the governments concerned. The United States in particular is livid about the way the European Commission has gone about trying to get Apple to cough up.

But despite the spat, there’s still a degree of underlying common purpose. It is driven in part by a recognition that voters, many of them at least, detest what they see as the devious behaviour of many multinationals and some wealthy individuals.

From Real-World Economics Review (My favorite comment. jp)

!!!i_00i_207_tnIreland (the government plus the private sector) has by far the largest net international debt of all EU countries (measured as a % of GDP). To an extent this is caused because the Irish state was pressured, by its EU friends, to borrow money from other countries to bail out (the creditors of) Irish banks. The large and fast deterioration of the Irish position in 2014 and 2015 might be caused because large international companies finance their Irish headquarters with inter company international debt. But whatever the cause – it is ridiculous that a country like Greece, which is in a much better state when it comes to its net international investment position, is pressured (among others: by Ireland!) to cut pensions, sell government assets and raise taxes – while the Irish government even refuses to collect taxes due.

Apple taxed at 0.005% rate in 2014

013mEarlier the European Commission said Ireland had enabled Apple to pay substantially less than other businesses, in effect paying a corporate tax rate of no more than 1%.

Ireland and Apple both said they disagreed with the record penalty and would appeal against it.

“Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said Competition Commissioner Margrethe Vestager.

The standard rate of Irish corporate tax is 12.5%. The Commissions’s investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014.

Ms Vestager said that the tax agreement reached between Ireland and Apple meant that the company’s taxable profits “did not correspond to economic reality”.

Business Ethics Blogs 9-1-2016 The Disastrous Drugs Edition

On By southwerkIn Business Ethics

The Disastrous Drugs Edition

Here is some blogging I’ve been following. Some are more business ethics than others. We open with a contribution from the ever versatile, “Dear Kitty, Some Blog.” The blog, Kempton Ideas Revolutionary, talks the importance of original sources. We discover that research universities in the quest for money are fueling inequality. “Meet the billionaires” speaks for itself and a truly fascinating take on how immigrants become “white!”

I close with a blogger returning from life crisis to blog again.

Best wishes!

James Pilant

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This is from “Dear Kitty, Some Blog.”

Please share this important podcast as we hear from ex-Irish Defence Force members highlight the grave circumstances around the use of Lariam. Lariam is an extremely dangerous drug with damaging and long lasting side effects. This show must be heard and spread across Ireland.

Members of the Irish Defence Forces are not legally or constitutionally protected in this matter. They need the people to raise a voice and stand for them and with them in putting an end to this and protecting our fellow country men and women.

I’m seeing similar problems with American soldiers in a more general way. This is from author, Alan Zarembo, writing for the Los Angeles Times. 

20317mU.S. Army researchers have found that soldiers coming home from war suffer from chronic pain and use prescription opioids at far higher rates than civilians.

In a survey of an infantry brigade that had recently returned from Afghanistan, 44% of soldiers reported having been in pain for at least three months, and 15% had used opioids during the past month.

By comparison, researchers estimate than 26% of civilians live with chronic pain and 4% use opioids.

“We were surprised by the percentages,” said Robin Toblin, a psychologist at the Walter Reed Institute of Research and lead author of the study, published Monday in the journal JAMA Internal Medicine.

Experts said the study suggested that, despite the military’s efforts to improve pain management — a growing concern during the course of the recent wars — more needs to be done. It also raised but did not answer questions about whether opioids were being prescribed properly.

Dr. Mark Edlund, a psychiatrist and pain expert at RTI International, a North Carolina nonprofit research group, said the study gave no indication that painkillers are being used any differently in the military than they are in other health systems.

“American medicine in general is overprescribing,” said Edlund, who was not involved in the study.

Kempton Ideas Revolutionary

(He’s quite right – it is always most rewarding to read the originals rather than the current summarizers. Go to the original where possible! jp) 

One time I was looking at a beautiful picture book of fractals, my elderly and wise math professor ask why didn’t I go read the master Benoit Mandelbrot himself instead? Since then, I’ve made it a habit to read masters’ works by the masters themselves, often in their original papers.

!!!!!!i_00i_00i_136_tnResearch Universities encouraging inequality

We’ve been learning a great deal about the conditions and consequences of the obscene levels of inequality in the United States—now, in the past, and it seems for the foreseeable future.

Right now, inequality is escalating within public higher education, especially in research universities that are chasing both tuition revenues and rankings. Thus, the editorial board of the Badger Herald, the student newspaper at the University of Wisconsin, found it necessary to criticize the lifting of the out-of-state student enrollment cap because it betrays the Wisconsin Idea and is making the university both “richer and whiter.”

Meet the billionaires pushing charter schools

How Immigrants became white?!

!!!i_00i_035_tnHere it is important to understand how, exactly, Americans ‘become white’. The history of Polish-Americans is an illuminating example. Upon arriving in the U.S. en masse in the late 19th and early 20th century, Poles endured discrimination based on their appearance, religion and culture.In 1903, theNew England Magazine decried the Poles’ “expressionless Slavic faces” and “stunted figures” as well as their inherent “ignorance” and “propensity to violence”. Working for terrible wages, Polish workers were renamed things like “Thomas Jefferson” by their bigoted Anglo-Saxon bosses who refused to utter Polish names.

The Poles, in other words, were not considered white. Far from it: they were considered a mysterious menace that should be expelled. When Polish-American Leon Czolgosz killedPresident William McKinley in 1901, all Poles were deemedpotential violent anarchists. “All people are mourning, and it is caused by a maniac who is of our nationality,” a Polish-American newspaper wrote, pressured to apologize for their own people. The collective blame of Poles for terrorism bears great similarity to how Muslims (both in the U.S. and Europe) are collectively blamed today.

!!!!!i_00!i_00i_114_tnFrom the Blog – Rainbows and Road Rage – A blogger suffers the slings and arrows of outrageous fortune but returns to blog anew

Hi. Its been a while.

I wish I had some extremely life changing event that would explain why I took time off so early in my attempted blogging “career” (cuz I’m making ZERO dollars from this venture). I wish I had some amazing trip that explained my absence from the blogosphere and provided a wealth of writing material for those who haven’t unfollowed me at this point.

I don’t.

Instead, I have this explanation: Life got in the way and is basically being a bitch at this point.

The Athlete Rapist Edition

On By southwerkIn Business Ethics

The Athlete Rapist Edition

Business ethics does not exist in a vacuum. Ethical beliefs are shaped by the larger society. Business ethics are simply a sub-set of a society’s ethics. And this society’s ethics are often problematic at best. 

The worship of athletes and sporting events is part of American society. And worship is not too strong a word. Fans have actually rioted when their teams have lost. Many people seem to have lost all perspective when it comes to supporting their team and their athletes. 

This brings us to today’s subject, David Becker, a rapist. He raped two women and he was sentenced to two years probation which if he fulfills the terms of – will result in his record being clean. It will be as if he had never committed a crime. This is a sweet deal for him. 

For the rest of us, not so much. Creating a class of privileged athletes empowered to prey on women might not be a goal for the “good” society. It might be, in fact, be counterproductive and evil. 

When you hand a “get out of jail free card” to an athlete, you are conveying a powerful message to everyone that these people are special, their lives and careers must not be jeopardized by being penalized for their acts. 

i_466
The Athlete Rapist Edition

No, they are criminals. Whatever their pretences to special treatment, their actions have placed them in opposition to society’s rules. That women should able to sleep undisturbed by sexual assault is an important social value. That crimes should be punished is another one. 

And I’m sorry. I just don’t get it. There are a lot of athletes. If some go to prison for their crimes, how are we impoverished? What have we lost? 

If there is anything a society should want to be know for, want to be famous for and is vital to uphold, it is justice. 

Let us be known more for our justice and less for our sports. 

James Pilant

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Mary Elizabeth Williams writing in Salon 

Upon sentencing, Becker’s attorney gloated in court that “he can now look forward to a productive life without being burdened with the stigma of having to register as a sex offender. The goal of this sentence was not to impede this individual from graduating high school and to go onto the next step of his life, which is a college experience.” (The University of Dayton, where Becker reportedly had planned on attending, says he will not be joining the freshman class.)

 Rooke believes that what occurred that April evening was “one mistake at one moment on one night which was clouded with alcohol,” and that “We all made mistakes when we were 17, 18, 19 years old, and we shouldn’t be branded for life with a felony offense and branded a sex offender. Putting this kid in jail for two years would have destroyed this kid’s life.”

Ah, yes, the old “What about the kid? What about his life?” argument. It should go without saying that headlines of the story do not fail to mention that Becker is a promising athlete who plays volleyball, basketball and soccer. Gotta think of that guy’s future! Hm, where have we heard this before? Oh that’s right, EVERYWHERE.

Is it Time to Prohibit All Non-Audit Services for Audit Clients? (Guest Post)

On By southwerkIn Business Ethics

Independence Impairments Threaten the Public Interest

(My friend, Steven Mintz, the Ethics Sage, has a new column that he has graciously allowed me to post. This is his blog – here.)

The Ethics Sage
The Ethics Sage

The accounting profession has lost its way and has reverted to old behaviors, including increased commercialism, and created a worrisome trend of deficient audits. It may be time to change the regulatory regime and completely prohibit the performance of all non-audit services for audit clients. Restrictions in place since the passage of the Sarbanes-Oxley Act (SOX) in 2002 seemed to work at first as audit firms were on their best behavior, but recently the profession has reverted to commercial behaviors that brings into question their commitment to serve the public interest, not the client’s interest or self-interest.

Most people do not realize that the accounting profession is the only profession where the public interest must be placed ahead of other interests. In law, the client’s interest is above all else. In medicine, with some exceptions, the patient’s interests are paramount. Indeed, the accounting profession is a profession because the SEC created its franchise right in that only CPAs can conduct audits of public companies.

The years and activities since the passage of SOX shows that the profession has reverted to its old ways. Firms like PricewaterhouseCoopers sold off its consulting business back in 2002 to IBM for $3.5 billion. It didn’t take long for PwC to back-track and in October 2013, the firm announced it was acquiring the consulting firm of Booz & Company thereby adding $9.2 billion in global consulting revenue to its total global firm revenue of $32.1 billion, or a 28.5% share for consulting services of the overall firm revenue.

Other firms have been sanctioned for providing prohibited non-audit services to audit clients. In January 2014, KPMG agreed to pay $8.2 million to settle charges by the SEC that the firm violated auditor independence rules by providing restructuring, corporate finance, and expert services as well as providing non-audit services such as bookkeeping and payroll services to an affiliate of an audit client. These activities create a self-review threat to independence because the audit firm winds up reviewing its own services.

Some of the independence impairments border on the bizarre, at least with respect to the broadening efforts of Big-4 firms to gain a competitive advantage and bring in lucrative consulting work. In July 2014, Ernst & Young agreed to pay more than $4 million to settle accusations by the SEC that the firm violated independence rules by lobbying on behalf of two of its audit clients, an advocacy threat to independence.

Greed has also infected the actions of some auditors. In May 2013, Scott London, the former partner in charge of KPMG’s Southern California regional practice, provided inside information to a close friend about audit clients. Once KPMG found out, the firm had to recall its audit reports on two clients, Herbalife and Skechers, because of the lack of independence. London sold his soul for $50,000 in cash and a Rolex watch.

A troubling trend is the high level of deficiencies cited in inspection reports by the Public Company Accounting Oversight Board (PCAOB). In 2014, the PCAOB identified deficiencies as high as 54% (KPMG) to a low of 21% (Deloitte). The deficiencies most often cited include a failure of internal controls over financial reporting, inadequate responses to risks of material misstatement, inadequate review and assessment of auditing estimates, and deficiencies in the audit of inventory, loan reserves, and revenue recognition.

The nature of the revenue stream for public accounting firms has changed since the passage of SOX. The audit function that had previously been treated as a loss-leader in many cases has now become a consistent source of firm revenue in part due to compliance requirements with SOX. New requirements, such as the rotation off the audit of the lead and reviewing partners every five years, has, presumably, created a check on auditors getting too cozy with their clients. Moreover, the PCAOB is considering whether to require audit firm rotation every 10-20 years, as has been done in the European Union (EU) for public interest entities.

Protecting the public interest starts with maintaining the foundation of independence and commitment to serve investors and creditors above all else. Given the ongoing challenges for the accounting profession and questionable results of prohibitions of certain non-audit services for audit clients in the post-SOX era, I believe it’s time to prohibit all such services for audit clients. Of course, firms would still be able to provide non-audit services, just not while they perform audit services for the same client.

Are there other options to protect the public interest? Yes. Similar to audits in the EU, the audit function might become a statutory one regulated through “audit directives”. In this case the annual and consolidated financial statements of public interest entities would be based on these prescribed regulations. The big firms would still be able to perform such audits but they would be answerable to the state as well as to investors and creditors. This exists in the U.S. right now through the PCAOB audit requirements, but a statutory regime implies determination by a governmental body that currently does not exist except for areas such as regulated industries (i.e., utilities).

The time has come for the audit profession to rethink the way in which it provides services, both audit and non-audit, to public clients. The recent trends cited above give me great pause about a diminished commitment to professionalism. I believe the reason is non-audit services are performed largely by non-CPAs that have a lesser commitment to the ethics of the profession and serving the public good rather than the commercial and financial reporting interests of their clients. The audit culture and non-audit culture can sometimes be diametrically opposed.

Blog posted by Steven Mintz, aka Ethics Sage, on August 18, 2016. Dr. Mintz is Professor Emeritus from Cal Poly San Luis Obispo. He also blogs at http://www.ethicssage.com.

The Fatwa Hotline Edition

On By southwerkIn Business Ethics2 Comments

Today, we discuss the fact that it is better to understand than not specifically in regard to Islam.

The Fatwa Hotline Edition

Ignorance can kill you. It can also hurt a business and lead to unethical content. One kind of ignorance is the simple unwillingness of men to get it, to realize that women have a different experience of the workplace than they do. The idea that your experience is typical is one we have trouble shaking. We devote considerable mental energy to finding ourselves “normal” even mundane.

014-1But the facts are otherwise. We live in bubbles of meaning. Don’t believe me? How about this? A recent poll shows that 63% of Republican men believe sexism is over.  That’s a real bubble. Hopefully, you don’t need me to reiterate the grim statistics on women in the workplace to find the idea that sexism exploded in a bubble of political correctness to be nonsense.

Of course, we can’t know everything but we can try to learn essential things like “how to cross the street” and “what indicates someone is angry.” Knowing that different sexes, races and belief systems are treated differently is important knowledge to both employer and fellow employee. A little sensitivity  and knowledge is good.

While I begin by discussing women in the workplace, my focus today is on religion.

I came across this article in the Guardian. It is called –

The fatwa hotline: ‘We have heard everything’

It can be read in its entirety here.

I think it is one of the best reads I’ve seen in many days. For one thing, it clarified my understanding of what a fatwa is and how hard followers of Islam work at their religion. And I often found it humorous and fascinating.

In the UAE, they have a hotline to answer questions about what should and should not be done as Muslims. There is one for women and a much more elaborate one for men.

What’s a fatwa and where does it come from?

(from the article)

A fatwa is not merely an opinion, however. It must be based on the verses of the Qur’an or the hadith, or the opinions of previous generations of Muslim scholars across 1,400 years of history, or, in the rare cases when those sources do not provide an answer, well-argued logic, to come up with a completely new ruling. These complexities tend to be missing from many self-styled Islamic experts, whose opinions are just a quick Google search away. You can find fatwas giving permission to behead captives or, in the case of Isis, take women as sex slaves. This free-for-all is why the Emiratis have taken steps to direct people towards approved scholars.

“On the internet, not everything is correct,” Zaidi says. “You ask a simple question and get many opinions. I believe it is better to go to a specialist if you have a problem.”

“Most questions from Muslims will have to do with their relationship with the divine and their ability to fulfil that for which they will be rewarded not in this world but in the world to come,” says Justin Stearns, an American associate professor and head of the Arab Crossroads Studies programme at New York University Abu Dhabi. I meet Stearns in a cafe in the sprawling pale stone campus surrounded by miles of sand on Saadiyat Island on the north side of Abu Dhabi. He has a short, greying beard and peppers his speech with fluent Arabic as he types on a silver MacBook. “In the marketplace of religious opinion, if you are just an average Muslim out there, you’d look to someone who can separate the wheat from the chaff when it comes to religious authority,” he says. “Here you have the state doing that.”

What you should do.

I recommend you read this. One of the issues in the current election is the status of the followers of Islam in the United States, and, of course, all of us are likely at some point in the future to encounter other religions and it is better to have actual knowledge than the lurid fantasies of the Internet or talk radio.

As a matter of business ethics, an understanding of different religions, their ethical systems and beliefs on business is critical and should be part of every four year business degree although currently it is not a requirement. That we have a separation of church and state does not imply a separation of business and religion (although several of my students have claimed just that). The different ethical systems in play in society affect how we think and act. Business should pay attention.

James Pilant

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