The Ethical Barometer

The protesters in Hong Kong, risking arrest and imprisonment in China, have kept up their resistance to a Chinese takeover of Hong Kong. Their presence in the Hong Kong airport for days resulted in its shut-down and cancellation of thousands of flights. When the government moved to restrict airport access to ticketed passengers, a few protesters remained, but did so for the purposes of issuing apologies. At the airport, protesters held up handwritten signs that read:

“Dear Tourists,
We’re deeply sorry about what happened yesterday. We were desperate and We made imperfect decisions. Please accept our apologies.”

“We apologize for our behavior but we are just too scared. Our police shot us, government betrayed us, social institutions failed us. Please help us.”

“Please accept our sincere apology to all travelers, press reporters, paramedics. We will learn from our mistakes. Please give us a second chance to prove
ourselves that we can be better.”

As these freedom seekers plead for forgiveness, they are balancing limited options, limited time, and the risk of losing public support for their efforts. Our hearts are touched and we cannot help but be helplessly sympathetic. We sit, thousands of miles away in our freedom, watching the struggle of others, without the means to step in and settle it all. Yet, in their quest, they are still able to express concern for others and regret for violence that erupted. There are lessons in dignity and responsibility here on the part of those who are risking their lives and freedom to preserve the liberties they have always known but which are now threatened. This is history in the making. This is courage. This is a moment for gratitude for the liberty we enjoy.

Harry Markopolos, the man who kept telling us that Madoff was running a Ponzie scheme, believes that GE’s financial picture is worse than its financial statements depict, The exposure for the company is in its insurance reserves for long-term care policies its has issued. Markopolos says that the company will need ti add $18.5 billion to meet those reserve demands.

GE has dismissed the Markopolos reports, stating that its financial picture is healthy and its financial statements accurate. However, the SEC and Justice Department are currently examining GE’s accounting for who knows?

For those of us who have followed GE for some time, the thought has occurred to us, since the days of Jack Welch, that the financial side of GE (GE Capital and the insurer) may have been the engine of GE, not the engines themselves, or the appliances, or the plastic. Also, browse through this blog for the antics of Jeff Immelt with the two private jets everywhere he traveled and the lack of candor in disclosures about CEO perks and packages. Now with GE’ss financial side either no more or struggling to keep up with promises loftier than premiums, well, the Markopolos analysis can hardly be a surprise.

There’s another headline no mayor likes to see. New York Times, August 7, 2019, p. A26. One question: Why are only “some” crying foul? To paraphrase Shakespeare, this is corruption “most foul.” And let’s not forget the human dignity of the security detail, carrying out rolled-up futons. The union was not happy about that not being in the job descriptions of the security detail.

The mayor’s spokesperson says that “Chiara (the deBlasio daughter) did the majority of the move on her own by subway, but her mother helped with the last few boxes — something many parents do. Members of the family’s detail were standing by and offered to help. Their involvement was strictly voluntary.” A police spokesman said that the decision by the detail to get involved may have been easier because if a moving company had been hired, there would have had to be vetting and a background check.

Stunning that no one saw the risk of public perception — a police van and security doing moving duty. The suspicions about de Blasio’s hyopcrisy on everything from income inequality to environmentalism (the 11-mile daily trip to the gym does not help) are only fueled by such poor decisions. You can’t swing a dead cat without landing on some kind of gym in Manhattan. Unclear why he needs the trek, with security and a Suburban, to a Brooklyn gym.

In the field of ethics, appearance is part of ethical analyses, not just the rules or the need for convenience.

Now there’s a headline full of chutzpah. August 8, 2019, New York Times, p. B6.

There is no way to convince either the FDA or the public that Novartis did nothing wrong. Vas Narasimhan, CEO, offered the following explanations/justifications:

1. They are forcing out a small number of scientists who were involved in manipulating the data in the research for the company’s drug, Zolgensma, only the second gene therapy drug approved by the FDA.
2. The company wanted to wait until they had their information from their own internal investigation before telling the FDA.
3. The data manipulated were used only on mice in early phases of the research.
4. The tests that were manipulated were discontinued in the summer of 2018.
5. Patient safety was never threatened.

The FDA does agree that the data manipulations do not affect the safety or efficacy of the drug. If all of this is true, then why not just disclose? Ah, there would have been a delay. No approval, no sales, and no realized revenue. Zolgensma is a one-time treatment that costs $2.1 million. The only other drug on the market, Spinraza, can be used, but the patients must then take it for a lifetime. Novartis now copes with two problems — the negative data are now out there along with the manipulation word. However, the additional problem is that trust has been dissipated. The CEO added, “We are committed to rebuilding trust with society.” You better believe it because this is a drug given to infants to treat spinal muscular atrophy (400 babies a year are born with this disorder).

The failure to disclose to the FDA as soon as Novartis was aware of the manipulation of data (March, (2019) is problematic. The disclosure came in May, 2019, after FDA approval, and the first apologies followed in August. Too late! Law firms are already advertising for clients and families affected by taking Zolgensma.

Important drug. Critical for those 400 babies. What a shame that it will carry this shadow. Truth percolates — just disclose it when you know.

Rosei Ruiz, the runner who won the 1980 Boston Marathon with a time of 2:31:56 (third-fastest time for a woman in history, for a few days passed away on July 8,2019. Ms. Ruiz, a secretary in a commodities firm, was a surprise winner for a number of reasons, the most compelling one being because no one had seen her at the race checkpoints. Then, a free-lance photographer who was covering the New York City Marathon in 1979 recalled that she had been on the subway with Ms. Ruiz who said that she had dropped out of the race at mile 10 because of an injured ankle. However, Ms. Ruiz was recorded as having finished that NYC Marathon in 2:56:33.

WHen Ms. Ruiz could not answer questions about her training and how she was able to lop off 25 minutes on her time over the course of one year. She could not explain it, and did not seem to know what interval training is. The Boston officials examined 10,000 photographs and then nullified the race because they could not find her in the photos. Ms. Ruiz maintained to the end that she had won the race. She was permitted to keep her medal; the race officials had a second meal made for the real winner. A friend said that she admitted to him that she had cheated. RIP as the founder of new marathon checks, balances, and foils for cheaters.

David Roth, owner of www.tuto-homework.com, on his service to high-school students of doing their homework for $20-$30 per hour. His specialties are math, chemistry, and physics. In fairness to Mr. Roth, he does have a disclaimer on his site:”Disclaimer: THIS IS INTENDED AS A STUDY GUIDE AND A WAY FOR YOU TO CHECK YOUR ANSWERS. SIMPLY TURNING IN THESE PROBLEMS FOR A GRADE WILL NOT HELP YOU TO STUDY, AND AS A RESULT, YOUR EXAM SCORES WILL SUFFER AND YOUR GRADE WILL SUFFER.
If you use this homework help service as a homework cheating service, it will NOT help you in the long run because you need to pass your exams”.

Our little darlings have spawned quite an industry. They now put their homework out for bids. In fact, the label given for all of this is “contract homework.” Some sites offer the luxury of having someone do your full online course for you.

The legality of all of this scholarship for hire? Only 17 states have a related criminal statute that prohibits selling written work in order to earn academic credit. So, the completion of online courses for someone else is problematic in 17 states. Overall, however, all of this homework commerce remains an ethical issue.

Perhaps the saddest part of this story in the Wall Street Journal is the fact that those who are selling homework were willing to be interviewed and even pictured in the article. Tawnell D. Hobbs, “Schools Go After Online Cheating.” Wall Street Journal, August 13, 2019, p. A3. The unethical have always been among us, since the time of Cain. However, the distinction appears to be that those participating in the cheating are willing to be identified publicly. No shame. No blame.

Former Michigan State President, Lou Anna Simon, who has been charged criminally with lying to investigators about her knowledge of complaints made against former gymnastics program physician, Dr. Larry Nassar. Mr. Nassar entered a guilty plea to seven counts of sexual abuse and young women in the USOC gymnastics program at MSU. He was sentenced to 175 years in prison.

Dr. Simon, who has been on voluntary unpaid leave from MSU since she resigned as president in January 2018. The university’s board negotiated a settlement with Dr. Simon. She will retire on August 31, 2019 with the titles of president emeritus and faculty emeritus, her full retirement available to all MSU professors, and a payout of $2.45 million. Dr. Simon entered a not guilty plea and her case is pending. Her lawyer issued a statement saying Dr. Simon did “incredibly great things” for Michigan State and served “with distinction.”

If she is convicted of the charges, she will not receive her office space, public recognition of her emeritus status, or her official portrait. So there.

Initially, VW was the company that installed the software defeat devices in its diesel vehicles in order to meet emissions standards. And VW paid fines of $22 billion in the United States for the falsification of its emissions data. However, over the past year, documents have emerged that indicate Audi’s diesel division was also involved. E-mails include some bon mots that are the stuff of criminal charges.Germany has just charged the former CEO of Audi with fraud, false certification, and illegal advertising. The charges allege that Rupert Stadler knew as early as September 15, 2015 about the emissions falsfications, but took no action.

Audi settled a civil case in Germany, but the criminal charges against Mr. Sadler and three others are new allegations. Mr. Sadler has denied knowledge in the past but had no comment on the charges. According to the charges, the engineers and others “bluntly” discussed their attempts to defeat the emissions testing process with terms such as “defeat devices” and “cycle beating.” Who puts this stuff in e-mail? There has to be some kind of misunderstanding about privacy combined with hubris that fuels the willing documentation of malfeasance.

US Food conducted a survey of 500 delivery drivers, and 59% said that the food they are delivering to customers is tempting to taste. And 30% admitted to having sampled their customers’ food.

Customers seem to be on to them — US Food also did a survey of 1,500 customers and 89% of them want some form of tamper-proof packaging of their delivered food. Without it, you are doing to be a few fries short on your Happy Meal.

The FAA analyzed the risk in the Lion Air flight that crashed in October 2018, killing everyone on the plane. The analysis concluded that “didn’t take that much” for such a malfunction to happen again. The FAA made the decision to inform pilots about the hazards of an onboard sensor malfunction that led to the flight-control system pushing down the plane’s nose. The analysis concluded that they should “Get something out immediately and then mandate something more permanent.” Boeing got 10 months to implement the new design and necessary changes – April 2019 was the deadline. However, the Ethiopian Airlines crash occurred on March 10. With the two crashes 346 lives were ended.

Sometimes, the risk analysis is overly optimistic. The finding was that it would be difficult for pilots to manage the situations the planes experienced, even with the warning. Hindsight is 20/20, but it did not take a visionary to see the higher risk than the fixes assumed.

If you are a Capital One customer because for 103 million folks, your information was sold on the dark web. There it is again — another hacker got access to accounts, but, fortunately, she left a trail.

First, we had “Operation Varsity Blue,” a sting in which 50+ parents, coaches, test administrators, etc. were caught getting kids admitted to prestige colleges by laying down serious scratch, from $15,000 to $6+ million. Now we have “Operation Signing Over Kids.” The Department of Education is investigating a new trend in the wealthy suburbs. Parents in the tony suburbs who do not want their children going to school with the riff-raff in cheaper state universities and community colleges are signing over legal guardianship of their children to less wealthy relatives and friends so that their children qualify for financial aid.

As documented in the Wall Street Journal (Guardianship Ploys Taps Aid for College,” Wall Street Journal, July 30, 2019, p. A1. One mother (with household income in excess of $250,000), transferred guardianship to her business partner. With that accomplished, all her 17-year-old daughter had to report on her financial aid application was $4200 in summer earnings. So, let’s do the math for the daughter’s $65,000/year college expenses:

$27,0000 merit scholarship
$20,000 need-based financial aid
$47,000 TOTAL

Leaving $18,000 that the daughter must pay, so she hit up the grandparents and they are kicking in this portion.

Mom is paying nothing, but assures that she has no assets, no equity, and no cash, but apparently a gullible and/or beholden business partner. Mom says she spent everything on paying for college for her older children. Do these parents realize the implications of signing over legal guardianship? No straw man transactions allowed in the courts — no “legal guardianship solely for the purpose of duping the Department of Education” is yet available.No say in medical decisions. No say in nada, and then they turn 18, and Poof! No more legal guardianship.

Just a simple suggestion for parents and children: Choose a college within your means. Work together to plan and save and choose a school that make financial sense. You might be better off spending your dough on graduate school. In fact, perhaps the kids could consider getting a graduate degree at the school of their choice after they are working– online offerings these days are phenomenal, and employers love to help with the finances.

And one simple suggestion for TV wizards and producers — a reality show. We need a reality show tracking these desperate (desperado?) parents and the lengths they go to for prestige. Signing your kids away is, the Barometer suspects, the second in a series of limitless ploys employed by the gaming snobs seeking cookie-cutter lives to ensure the success of their children. Oh, could the Barometer tell them stories, from both personal and classroom experience.

Talk about your embarrassing PowerPoint presentation! McKinsey, consultant to Johnson & Johnson, prepared a PowerPoint presentation in 2002 that included the following question: “Are we properly targeting and influencing prescription behavior to pain clinics?” McKinsey explained that its work for J & J, “was designed to support the legal use of a patch that was then widely understood to be less susceptible to abuse.” The slides emerged as evidence in the state of Oklahoma case against J & J for its marketing of opioids, marketing that resulted in large numbers of addicted patients and expenses for the state (other states have joined the suit and the damage request is for $17.5 billion)

Meanwhile, back in the court room, a J & J witness kept repeating to the judge, “McKinsey’s words.” Some other words McKinsey used? “get more patients on higher doses of opioid” and employ techniques that “keep [ ] patients on opioids longer.” On cross-exam of the J & J sales representative about the “McKinsey words,” one simple question was telling, “Still use them today?” (referring to McKinsey). And the answer was, “Yes, for different projects.” McKinsey announced that it has now stopped with its words of advice, withdrawing from any opioid advising engagements. Thanks for this brave act after everyone was addicted.

Were I at J & J, I would take a new look at those projects for which they still use McKinsey. Check the PowerPoint slides as well. Sometimes management consultants offer advice that is a bit edgy, and, later, expensive.

The Federal Trade Commission (FTC) is requiring Facebook CEO, Mark Zuckerberg, to sign off personally on the company’s compliance with privacy protection requirements for Facebook users. The step comes because it is clear that Facebook violated the provisions of a 2011 FTC order in which Facebook promised to protect users’ privacy and disclose how it was using their data.

Zuckerberg would pay substantial penalties if he certified compliance on the privacy requirements and that certification was false. Personal liability was a big step for the FTC. However, past history demonstrates that Zuckerberg does not quake in his boots (Birkenstocks) over FTC stuff.