Facing removal of his patronage activities from the websites of charities, Prince Andrew has stepped back his royal public duties. His Epstein connection and bizarre responses in a BBC interview were too much. Describing Epstein’s conduct as “unbecoming” was an eye-roller.
The media shall resume their dogged pursuit of Meghan Markle stories following this brief respite into the underworld, they are back to gossip.
The CFO has left, the PricewaterhouseCoopers audit partner assigned to the company has been placed on administrative leave. So, what happened? Here are the steps:
1. Weak holiday sales in 2018
2. Mattel rejects a takeover offer from Hasbro
3. Mattel’s shares lost half their value over the one-year period that followed.
4. There were problems with the accounting for the company’s Thomas the Train & Friends show.
5. When the valuation issues emerged, the discussion was initially fixing the valuation problem and restating earnings.
6. A earnings restatement was not what Mattel needed at that time and stock price.
7. Senior executives and the PwC audit partner decide to change the accounting treatment without telling the board or CEO what had happened.
8. This is a mess.
Both the SEC and the Department of Justice are investigating accounting practices at Under Armour. The focus is on revenue recognition. UA has been missing sales targets since 2016, and since 2016 has had three of CFOs, two of whom left with the usual “personal reasons” explanations.
There have been some unusual cultural issues at the company– including the expensing of strip club visits and inappropriate behavior by male executives. Although CEO and founder Kevin Plank has vowed to do better, he will be stepping down as CEO on January 1, but will remain as chairman of the board.
The pattern is always the same: tremendous growth that cannot be sustained, a wild yee-haw culture, executives rotating in, out, and through, and the inevitable questions about accounting. Groovy company, groovy leaders, followed by groovy accounting. This one will not end well.
Some quotes from Prince Andrew’s interview about his contacts with the late sex offender, Jeffrey Epstein, with BBC journalist Emily Maitlis, and the quotes speak for themselves, although the Prince probably should not have:
“Do I regret the fact that he (Epstein) has quite obviously conducted himself in a manner unbecoming? Yes.”
Of the photo of him standing with accuser, Virginia Roberts Giuffre, then 17,
““Oh it’s definitely me, I mean that’s a picture of me, it’s not a picture of… I don’t believe it’s a picture of me in London because… when I go out in London, I wear a suit and a tie. . . The photograph was taken upstairs, and I don’t believe I ever went upstairs. . . “I am not one to, as it were, hug and public displays of affection are not something that I do. So that’s the best explanation I can give you and I’m afraid to say that I don’t believe that photograph was taken in the way that has been suggested.”
On regrets about his relationship with Jeffrey Epstein:
“As far as Mr Epstein was concerned, it was the wrong decision to go and see him in 2010. As far as my association with him was concerned, it had some seriously beneficial outcomes in areas that have nothing to do with what I would describe as what we’re talking about today.”
Okay, one comment: WHAT?
One can understand the mental pressure of solitary confinement. Washington State Prison officials have done their part when prisoners are so confined. They are given a pamphlet entitled “101 Ways to Relieve Stress.” Here are some of the kindly tips for the solitary prisoners (with Barometer comments):
1. “Plant a tree.” (Check with the warden first)
2. “Go on a picnic.” (If this is the plan, notifying the warden first may not be a good idea)
3. “Put air freshener in your car.” (Ask the warden if a family member can do this for you.)
4. “Avoid negative people.” (That’s a tough one in prison, but will be relatively easy during solitary, so enjoy the solitude.)
5. “Relax, you have the rest of your life.” (And your plans are pretty much in place for that)
Cruel and unusual punishment come to mind, or at least a cruel and unusual joke.
Thanks to Mike Baker at the New York Times for this fascinating story. November 18, 2019, p. 14.
Allegedly trying to mimic art, two chemistry professors at Henderson State University have been trying produce methamphetamine. On October 8, the Reynold’s Science Center had to be closed because of an odor that turned out to be benzyl chloride. No one is saying whether the incident was the clue, but benzyl chloride can be used to make meth. The Science Center reopened on October 29. That’s some serious clean-up.
Benzyl chloride is pricey — is it possible that Henderson State was subsidizing the two alleged entrepreneurs? One of the alleged entrepreneurs made bail. Their arraignment is pending. Both have been on leave since October 11.
The FAA nearly grounded 38 of Southwest’s 737 fleet on the grounds that the planes had incomplete maintenance records. Inspectors on the ground said immediate action was necessary. The FAA’s head of the office of audit and evaluation said urgent action was necessary and that some of the records for the planes had not yet been translated into English. Southwest has called the situation one of “regulatory compliance” not an “elevated safety risk.” Got that? The regulations on inspection and records are not necessary for safety. Either the inspections and records are in compliance or they are not. Why are the regulations there? Why the inspections? There is some circular reasoning going on here.
In May, Intel released a fix for a series of security weaknesses in its processors. Users assumed the problem was fixed. However, some Dutch researchers found that the problem was not fixed, and six months later (November), Intel released another patch. The problem is not a new one to Intel. The company lived through a debacle in 1993 when a math professor found a computing error in Intel’s new Pentium chip. Intel continued to ship the chips despite knowledge of the problem and offered fixes, but only for those computer owners who need to do computations. When IBM quit using the chips until there was a fix, Intel finally undertook a real fix. Sometimes the lessons in the past are forgotten in the future.
Kudos to the Wall Street Journal for good old-fashioned journalism. The Journal uncovered that McDonald’s was investigating its former CEO, Steve Easterbrook, for weeks before the announcement of his departure. The company’s general counsel had conducted an investigation and reported to the board that Easterbrook had a short-term consensual relationship with an employee. However, the board concluded that Easterbrook’s judgment was in question. The board reached that conclusion because this was not its first rodeo.
Before Easterbrook became CEO he had a relationship with Denise Paleothodoros, staff member at Golin, a PR subsidiary of Interpublic Group, a company that contracts with McDonald’s. Ms. Palothosdoros did work on the McDonald’s account. Easterbrook disclosed the relationship to the board, the board approved it if Ms. Paleothosdoros was removed from the account. Easterbrook was separated from his wife at the time he became CEO of McDonald’s and is now divorced. The relationship with Ms. Paleothdoros is also now over.
This is the stuff of soap operas. How do thees folks get any work done? Just have a Happy Meal and do your job. Dating, marriage (and not the same person), and CEOing do not mix.
There McKinsey is, right in the middle of that PGE mess of a bankruptcy. And there the Feds are doing interviews at Alpha Natural Resources and SunEdison and McKinsey’s work in their bankruptcies. The bankruptcy judges in both of those cases suggested that the Justice Department was best equipped to handle the conflicts questions related to McKinsey’s involvement and possible conflicts in those cases. McKinsey has had legal opinions and has been insistent that investments by its investment fund, MIO, did not require conflicts disclosures for its position in the companies. MIO is listed as a McKinsey subsidiary and an investment vehicle for retirement funds for McKinsey’s employees and partners.
A curious question in the SunEdison bankruptcy relates to McKinsey pulling back unpaid invoices for its work for SunEdison after SunEdison filed for bankruptcy. Those invoices were then revised and resubmitted to four profitable subsidiaries of SunEdison. An e-mail discloses that project managers in those companies were miffed about absorbing the costs. Whoa! Little bit of gaming the system there.
Unclear where this will go, but it ain’t over until it’s over.
Titans (I believe Tennessee?) offensive lineman (who knows what that is), who leads his team with 9 penalties in 6 games.
The Barometer is grateful for this NFL player’s well said standard for avoiding penalties in football. Stay as far away from the line as possible — don’t interpret, don’t push the envelope, and don’t give any regulator any reason to call a penalty. From the world of sports, a wonderful analogy.
Yale, Georgetown, USC, and other universities were hit by operation Varsity Blue, the largest college-cheating scandal in history. Mastermind Rick Singer funneled money to the universities in exchange for their admission of the children of the wealthy. However, when Singer called the admissions officer of Occidental College and asked Mr. Vince Cuseo to reconsider the rejection of an “academically challenged daughter of a wealthy family,” he hit a closed door in his side-door, back-door, basement infiltration approach to admissions. Singer said Occidental was “dumb” for having “too thick of a wall between admissions and fundraising departments.” Jennifer Levitz and Douglas Belkin, “L.A. College Rebuffed Admissions Scammer,” Wall Street Journal,, November 7, 2019, p. A1.
Singer was flummoxed because he referred to what he was proposing as a “win-win” for the young woman and her family and Occidental. But, Occidental had made the decision back in the 1980s that it would not admit the children of the wealthy because they were the children of the wealthy. Occidental went with upholding standards and a strategy of raising money for scholarships for minority students.
The campus does not have the trappings of the schools with legacy admits and the children of the wealthy, but the school seems to have a credo, lines it does not cross. One is not gaming the rejection rate. Occidental has not lowered its standards in order to increase the number of applications and appear to be more selective. Faculty members report discussions of those strategies but also a simple shut-down, “It’s not who we are.”
FYI — 43% of Harvard white students are athletes, legacy admits, or the children of donors or faculty. Parents, please let your children grown up to be Occidental students. Occidental — stay the course. To the Wall Street Journal, gratitude for showing us that there are those who do not rationalize, who have clear lines, and whose employees know those lines and live them.
Oh, that College Board! Oh, those test scores! Oh, those colleges and universities! They are gaming the system.
The College Board rakes in the dough by charging students to take PSAT, SAT, and AP tests. Then the College Board sells test data to colleges and universities. The colleges and universities then take then send out letters to high school students that seem to be recruiting letters. Most of the students apply and most are rejected. However, the colleges and universities thereby get their rejection rates up, thereby giving the appearance of an elite institution. The number admitted has remained the same, but the number rejected has increased almost 300%. Yes, more are applying, but you have a great many crestfallen applicants who believed that they were sought after and assured acceptance.
Well Fargo and their fake accounts have nothing on this scheme to improve those numbers, rankings, and ratings.
Two weeks before the collapse of the Vale SA dam in Brazil that killed 270 people, Vale’s then-CEO, CFO, and other executives received the following anonymous e-mail:
“We are facing great challenges ahead, our operations are lacking the minimum level of adequate investment, we are lacking personnel in the operational, maintenance and engineering areas and they are poorly remunerated…equipment is breaking, the dams are at their limit.” Luciana Magalhaes and Samantha Pearson, “Warned of a Problem, Vale’s CEO Lashed Out,” Wall Street Journal,November 5, 2019, p. A1.
There is now a criminal investigation focusing on the warning and a Vale spokesperson said that the warning was “generic.” However, the follow-up e-mail from then-CEO Fabio Schvartsman to other executives told them to find out who wrote it so that he could speak to the employee “eye to eye.” Mr. Schvartsman did not order an investigation into the allegations and added that the employee was a disgruntled one who was upset with his changes as CEO — one of which was eliminating the fiefs in the company. Say what?
Here’s a safety tip for CEOs around the world: When you get an anonymous complaint or any type of complaint, piece of information, or tip, remember this saying, “If what they said it true, you have a problem, if what they said is false, you have a problem. Find out if what they are saying it true, fix it. If what they are saying is false, fix the culture.” Disgruntled employees have a root cause– find it and fix it.
