The Ethical Barometer

Jared Porter, the newly hired general manager for the Mets, was fired because Steven A. Cohen, the owner of the Mets, says that he “spoke about the importance of integrity and I meant it.” According to the New York Times, which struggles with accuracy in reporting in many areas, Mr. Porter sent 60 unsolicited text messages to a female baseball report in 2016. Some of the texts were “sexual in nature.”Kevin Draper and Davi Waldstein, “Mets Fire Recently Hired General Manager for Harassment,” New York Times, January 20, 2021, p. B7.

Do these folks read the papers, the Internet, or watch the news? How many times must we go through this? Keep your clothes on at work. Do not send photos of yourself without clothes. Do not send texts to folks who do not know you. When asked to stop texting, do so, and put your clothes back on and get back to work (if they will let you).

Mr. Cohen, a billionaire, ran a hedge fund, SAC Capital, where there was an entire conga line of insider trading charges and convictions against too many of the traders who worked for him. The firm entered a guilty plea but Mr. Cohen escaped the long arm of the SEC and shut down SAC.

However, a twist just 14 days ago provides an interesting paradox in the Cohen swift and decisive action in the name of integrity. A former female employee at another Cohen hedge fund has filed a discrimination complaint against him for the way he allegedly treated her at one of his hedge funds. According to her complaint, Mr. Cohen ridiculed her using derogatory terms and expletives, calling her “idiot,” “incompetent,”and “wrong about everything.” Matthew Goldstein, “Trader’s Complaint Portrays Different Side of Mets Owner,” New York Times, January 6, 2021, p. B12. She also alleges he told her, “I should fire you because you’re so stupid.” Mr. Cohen has denied the allegations. He is serious about that integrity issue. Call it a pot-and-kettle-moment.

‘Tis a dangerous thing to banish, censor, segregate, and/or ridicule on the basis of beliefs. Those seemingly small acts of “take that” are a dangerous shove down the slippery slope. In a class discussion of the importance of following the law and telling the truth, a student asked the Barometer, “What if you had been in Germany and knew a Jewish family — would you have lied and hidden them?” Without hesitation, the answer was, “Of course.” However, the Barometer added the head-turning observation another professor had offered years ago n response to the same dilemma, “The question that should really bother you is this, ‘Where were you when the Germans first placed yellow stars on the Jews in Germany?'”

Presently, we have lists of lawyers being singled out for disciplinary action for representing President Trump in his legal actions related to constitutional issues in five states. We have companies taking pledges not to hire those who worked in the Trump administration. Harvard is considering revoking the degrees of its alums who did the same. The PGA will not use a Trump golf course. Some companies will no longer donate to Republican politicians. The tech giants have joined together in permanently suspending accounts and taking away server access for sites such as Parlr. A congresswoman has proposed eliminating conservative television and radio networks as the root causes of evil. Each day another means for placing scarlet letters on Trump supporters, anyone who has done business with Trump, and anyone who sold a Trump a pack of M & Ms. The book-burners and witch- hunters had nothing on these zealots.

Political beliefs, no matter how misguided they may seem to those on the other side, are the stuff of the First Amendment. However, the First Amendment only prevents government silencing. In this era, the government stands back as a eunuch as private companies, nonprofits, and individuals do the silencing. What is being done does not cross legal lines. The ethical boundaries being cast aside, however, and the implications for equal protection and freedom, are staggering in number and boldness.

There will come a time when we look back on these emotionally raw times of great political division and wonder, “Where was I when those who were powerless were banished, censored, segregated, and/or ridiculed? How could I have remained silent?'” Easy enough to do when you are not affected personally and animus abounds. However, that last sentence is wrong. When a group in power exercises power over a minority group because they can, we are all diminished. The descent is swift and dangerous. And those who remain sullen and mute will one day meet the same fate. Unrighteous dominion does not end with perceived enemies. Never send to know for whom the ridicule and banishment come; they come for thee.

Thanks to nonprofit IRS filing requirements, we have now learned that Dr. Jose Baselga got a heck of a paycheck upon his departure. Memorial Sloan Kettering Cancer Center was upended when Dr. Baselga’s failure to disclose fundings conflicts to both Sloan Kettering and the journals in which he published. Not to worry, Dr. Baselga now works for AstraZeneca on the development of cancer drugs. Funny, it seems as if he was working for the pharmas all along, given the extent of his conflicts as well as the questions that have arisen about his published research.

The Barometer acknowledges that contracts with the research stars (all kinds of stars actually) provide for severance packages that can be set aside only on grounds of things such as illegal conduct. Proving that level of conduct would require criminal charges and/or a trial and a mess, and the severance package may cost less than the litigation. However, this case teaches us the need for severance packages that provide for no severance when there is misconduct that, while legal, is not ethical.

Wall Street Journal, December 23, 2020, p. A12.

Whoa, Nellie! Stop the presses! Who knew? Unless tests are taken in person or students are required to have their cameras on whilst taking an exam, they are cheating. Perhaps the greater damage beyond a now-accepted culture of cheating is the reality that the student swill have learned nothing. Because of lockdowns applicable to a group not at risk for COVID, an entire generation las lost a year of personal development, knowledge, and skills development. However, they are masters at how to look things up on Google.

The electrician was redoing some wiring to correct an error in the wiring to the grinder pump. The Barometer has no idea what that last sentence means, but the electrician’s estimate for the fix came in at $350. When he submitted his bill by e-mail he explained that the invoice was for only $300 because he was able to finish the work in less time then he thought.

In these times of distrust, dishonesty, and disgruntlement, what a wonderful restoration of faith in humanity. The grinder pump switch works better and the whole world seems a little better because there is still one honest man among us.

That’s a quote from Martin Shkreli’s attorney. Martin Shkreli, often referred to as “Pharma boy,” was the young ‘un who raised the price on Daraprim, a life-saving drug, by 5,000%. If that were not enough for the little charmer, he also got into some securities fraud with one of his companies.

The quote, from the nonplussed lawyer, was a reaction to an Elle magazine article that revealed a former Bloomberg reporter covering the Shkreli case confessed to being in love with Shkreli. Christie Smythe, the reporter who broke the story of Shekreli’s arrest, had confessed to a federal judge in April 2020 that she had found both love and joy in Mr. Shkreli.

The confession of the reporter soul mate to Pharma boy was part of a federal district court filing that sought compassionate release of Mr. Shkreli from his seven-year fraud sentence. She was offering to have Mr. Shkreli live with her in her Manhattan apartment.

Ms. Smythe has divorced her husband, left Bloomberg, and remains confused about her ethical obligations of continuing to report on Mr. Shkreli despite her feelings. That last issue is not a tough call. She was warned by her Bloomberg editors about her social media posts that included personal correspondence with Mr. Shkreli. However, she could not give him up, so she resigned.

Unfortunately, Mr. Shkreli has not replied to her e-mails since last summer. Never trust hedge -fund traders who end up in jail for fraud. Dumping the reporters covering them is not a big step. Ms. Smythe has not been able to sell a book, but has sold the movie rights. After all, she said, “I love him. I am here for him.” Not the stuff of a Hallmark movie, but enough for the raunch of Netflix, HBO, etc. series.

William “Rick” Singer, college-admissions consultant and creator of one of the most bizarre criminal conspiracies in history that resulted in 52 folks, including parents, being charged with fraud, recruited college coaches for his scheme. At Stanford, he roped in John Vandemoer, the former sailing coach, to help in getting applicants with no sailing experience on the sailing team, even though they had never sailed. However, to its credit, Stanford commissioned a review of what happened at Stanford, and that review, by Simpson,Tacher, & Bartlett LLP, found that there were seven Stanford coaches who were approached by Singer. Only one succumbed. However, the review found weaknesses in internal controls at Stanford:

1. Stanford had no processes for the coaches to raise concerns or to caution others about the ubiquitous Singer.
2. Stanford lacked a code of ethics on admissions, donations, and athletic recruits, and their amazingly intertwined existence.
3. Stanford lacked a credo — a basic philosophy that admissions “cannot be bought and no donor should ever be under the impression that it can.”
4. Stanford needed more controls and disclosures from development officers on donations to the athletic department and the source of those donations.
5. Stanford needed to have coaches identify those recruits who were presented to them by third parties.
6. Stanford needed to clarify that fundraising was not part of coaches’ performance evaluations.

These types of internal controls are not unusual — many companies and nonprofits have these types of codes, processes, and information-sharing requirements. Where money comes in, who gave it, how it is being used, who recruited the money, and who benefits from the money. Fundraisers know these sorts of controls because they protect them and their organizations.

You don’t usually see this kind of behavior in a happy place, particularly a place that sells desserts with 1,000+ calories per serving. They do put it right out there on the menu — you can get a full day of calories in one slice.

However, during the pandemic, the Cheesecake Factory told investors that it was “operating sustainably.” However, the reality was that the chain was bleeding $6 million weekly. In short, the chain was starving for cash. It had only four months of dough left. And it did not disclose that it was skipping some rent payments in April.

The Cheesecake Factory settled with the SEC by agreeing to pay a penalty of $125,000. New lockdown rules in California sent the company’s shares down 2%.

Honesty in calories turned out to be the easy thing to do. Honesty on cash burn was the challenge.

Jeffrey Toobin, attorney and writer was placed on leave from his gig at CNN after he exposed and touched himself on camera during a virtual meeting with New Yorker journalists about an upcoming podcast they were planning — on the presidential election. New York Public Radio has banned Mr. Toobin from its station and the New Yorker fired him.

As awful as his conduct was, two New York Times writers offered their two cents, reporting that many professionals they visited with to obtain views indicated, “There but for the grace of God, go I.” Katherine Bosman and Jacob Bernstein, “The Undoing of Jeffrey Toobin,” New York Times, December 17, 2020, p. B1.

The Barometer knows a thing or two about religion and can assure the Times that God does not intervene in situations in which people show their naked selves via Zoom. God pretty much lets that kind of conduct carry its consequences. As for the Times journalists interviewed for the piece, well, that take is hardly the stuff of their own #MeToo! movement.

One last thing — a simple rule. Can’t we just all keep our clothes on at work? It does make life easier.

For six years the UAW will have a court-appointed monitor overseeing activities. The UAW will also pay $1.5 million related to text issues. The settlement on a four-year corruption investigation does not cover individual criminal charges for embezzlement and racketeering. And there have been guilty pleas

At the height of union activity and car production in the United States, the UAW had 1.5 million members. Today, there are about 400,000 members. Bleeding funds and memberships, all at the same time.

Ben Foray and Nora Naughton, “UAW Settles U.S. Corruption Probe,” Wall Street Journal, December 15, 2020, p. A1..

It seems someone woke up at McKinsey, the world’s most prestigious consulting firm, and decided it was time to change. McKinsey was a consultant to Purdue, the pharmaceutical company that produced OxyContin. Purdue is now in bankruptcy and owes $8.3 billion under a settlement approved by the bankruptcy court.

Reports emerged last month that indicated McKinsey had advised Purdue on how to “turbocharge” sales of OxyContin through a structured rebate program. Courtesy of the bankruptcy court’s document dump last week, we gain insight into McKinsey’s work as well as Purdue’s desire for sales. Together these two were Butch and Sundance — the ending was not going to be pretty for either.

The documents find you shaking your head. In the middle of a nationwide opioid crisis, there are PowerPoint slides on the rebate program that showed how to use higher rebates for higher strength prescriptions. Using the soft language of “innovative contracts” to describe these pay-to-prescribe programs, it’s as if the two parties were weighing the benefits of consumer coupons on Uncrustables. These were amoral technicians at their best.

Both current and former McKinsey employees are calling for everything from remediation to reform. Walt Bogdanich and Michael Forsythe, “Rare Apology by McKinsey for OxyContin Work,” New York Times, December 9, 2020, p. B9.

Even the remediation, i.e., apology, was pitiful. A McKinsey spokesperson went to great lengths to emphasize that the rebates were not intended to boost sales. That claim contradicts every slide in the 41-slide deck. See the slides here for yourselves. https://beta.documentcloud.org/documents/20421781-mckinsey-docs.

And where were these McKinsey righteous dudes and dudettes when we had the great conflicts of interest issues as McKinsey was recommending bankruptcy plans that favored the companies in which their retirement plan held investment? Oh, that’s right — no conflict there because those working on the bankruptcy plans could not be expected to know where their retirement funds were being placed. Then there was the infamous PowerPoint slide presented to Boeing on how to get mine ownership in India. Here was the catch-phrase on what would be required to get the mine: “respect traditional bureaucratic process including use of bribes.” Walt Bogdanich and Michael Forsythe, “How a PowerPoint Slide Tangled McKinsey in a U.S. Bribery Case,” New York Times, December 31, 2018, p. A1.

Scroll back through the work on this site — there were plenty of warnings provided here for a firm that did not understand the role of ethics in business. One McKinsey executive noted, “While we can’t change the past, we can learn from it.” There is nothing in McKinsey’s work or its feeble apology that shows any such activity is in its tool box.

Ralf Bose, the head of Apas, a German government agency that oversees auditors, confessed to Parliament there that he purchased shares in Wirecard in April 2020. At the time Apas was reviewing the work of Wirecard’s auditor. Mr. Bose sold the shares one month later, about four months before the PayPal-type company collapsed. Not to worry, the agency has new regulations that now prohibit “most” staff from trading in shares of financial companies. Conflict of interest used to cover this type of behavior. Ruth Bender and Patricia Kowsmann, “Audit Overseer Traded Wirecard Shares,” Wall Street Journal, December 12-13, 2020.

In many cases, administrators receive bonuses. At some universities the entire MBA staff benefits if the rankings for their programs improved. The pressure is perhaps greater than that experienced by CFOs on earnings results. Temple University submitted data to U.S. News and World Report that was not accurate for four consecutive years. As a result, the MBA online program at Temple was ranked the #1 online program in the United States for 2014-2018.

According to a settlement agreement with the U.S. Department of Education, Temple submitted false information in the following categories:

(1) the number of Fox School entrants providing GMAT scores as part of the application process,

(2) the mean undergraduate GPAs of students admitted to certain programs offered by the Fox School,

(3) the number of offers of admission extended by the Fox School to applicants,

(4) the debt levels of Fox School students who borrowed loans to pay tuition, and

(5) the ratio of full-time technology support personnel to supported faculty members at the Fox School.

Without admitting any wrongdoing, Temple agreed to pay a $700,000 fine. Temple had already settled a lawsuit brought by current and former business students over the false data for $5.5 million. A report by the law firm of Jones Day that was commissioned by the University found that there were similar data reporting issues in six other university programs.

Temple administrators said that they had taken steps to ensure data verification prior to its submission for external use. Temple now has a data-verification unit. Temple also settled a suit brought by the Pennsylvania Attorney General, a settlement that also required certain internal changes to ensure data accuracy.

The dean at the time of the data falsification was terminated, but he has filed suit against the university for defamation. He has advanced an “under the bus” defense, calling himself a “scapegoat” for the university.

Oh, what a tangled web. Oh, what times are these when universities cannot be trusted to submit accurate data. Now if they could only do the same thing with faculty research.

New York City has a long list of problems, to which we can now add overtime pay fraud. Yes, five MTA employees were putting in for overtime, when, in one case, for example, they were actually bowling (Average score 196). Yes, in charges filed by the U.S. Attorney, one now-retired worker, Thomas Caputo, was the highest paid transit worker in 2018, with $461,000 being his take for the year. And $344,000 of that was overtime. That’s 1,682 hours regular time and 3,864 overtime hours.

How did the U.S. Attorney catch on to the overtime fraud? Comparing hours claimed to actual presence on the job. For example, according to the charges, Mr. Caputo put in for overtime for working a shift on the Long Island Railroad that began at 4:00 PM and ended at 7:00 AM the next day. However, Mr. Caputo was actually 55 miles away in Patchogue, New York, bowling away. And doing quite well. He was on his game, and being paid for doing so.

There were four other defendants named in the charges, and all of them made more than the MTA Chairman as well as Governor Andrew Cuomo. Matching of other defendants’ traceable activities also did them in. Michael Gunderson is charged with putting in for $2,481 in overtime hours in 2018, but he was not at work. He had hotel reservations in Atlantic City as well as tickets to a concert there. On his other overtime hours submissions, he was on vacation in Williamsburg, Va, doing a 5K race in New Jersey, or taking a vacation in the Hudson Valley. He earned about $348,000 in 2018.

The U.S. Attorney’s office found the high levels of overtime pay intriguing. They were originally found by a nonprofit group (Empire Center for Public Policy) pursuant to a public records request. From there, the investigation focused on verification of actual work and whereabouts. The charges are federal program fraud. Penalties include up to 10 years in prison and pay-backs plus fines.

Funny how truth percolates.