The Ethical Barometer

Ross Wales, personal lawyer for Neil Armstrong, reflecting on the sales of Armstrong’s mementos by Armstrong’s sons. Mr. Wales noted that Mr. Armstrong quit giving autographs when he learned that people were selling them. A leader who refuses recognition and profit because of respect for all those who allow him to succeed is a rare breed, perhaps a dying breed.

As a result, the Equifax security breach that affected 147 million customers will net those customers, maybe $2.04 each because only $300 million is slated for the consumers affected by the breach. These security breaches, as well as folks finding a way to use my credit card to charge custard at Andy’s in Oklahoma are stunning to me. I am locked out of my own accounts more than I care to admit. If I use a different computer to log in or get a new computer and try to log in, Chase chases me away. My own accounts are frozen. I am unable to do any banking because they detected that I had a different computer. I have trouble getting into my Compression Hosiery account, yet there are human beings who manage to lift the account information of 147 million people. How is this possible?

However, as troubling as the ease with which geeks get into accounts is, the Equifax case is troubling on a whole different level. Documents were left online and unprotected. People at the top of the company dumped their Equifax stock. Three of the four top executives sold $1.8 million in Equifax stock in the days before the public announcement of the breach. A board report exonerated the officers. But the officer slated to be the next global information officer was charged with insider trading.

Bad enough that 147 million have to deal with their personal information being made public, but to think that someone avoided losses on his Equifax stock before the announcement is low. Illegal, and low. The stock took a dive, and so have the company’s profits. Now if they could just sit down with some of the geeks to find the weak spots in their system. The people they have on staff seem to have my skill levels.

The news agency, started by the United States during World War II, has been the trusted source of information for citizens in countries around the world that do not embrace freedom of the press. A series of problems at the agency dig away at that trust. Reporter Tomas Regalado and his camera man stand accused of faking a mortar attack on Mr. Regalado in Manguaga, Nicaragua last year. And internal controls at the news agency found that a deputy to the agency’s CEO embezzled $37,000 through the submission of fake hotel bills and other fake receipts for travel. The deputy admitted the fakery and will be sentenced. Last year, the agency fired 15 journalists for accepting “brown envelopes” from Nigerian officials. “Brown envelopes” is code language for bribes.

The agency, still being run by Obama administration appointees, is set for an overhaul as Trump nominees await Senate approval.That tone at the top is a tricky thing. So are internal controls and regular audits of expense accounts. Take away opportunity for embezzlement, and we halt the tempted souls. Terminate journalists who accept bribes and stage attacks and remaining reporters are more cautious.

The hits just keep coming for Boeing. Boeing announced on Thursday, July 18, 2019, that it was setting aside $5.6 billion to cover the costs of compensating airlines that have had grounded flights because of the international and prolonged grounding of its 737 MAX planes. Tha amount covers the contractual damages. Still ahead, the litigation from the families of the 346 victims of the two crashes of the 737 MAX. This hit means a loss for the quarter, and a loss that is equal to about 25% of the company’s anticipated $20-billion revenue this year.

Looking back at the series of events, one wonders whether the grounding would have lasted as long and as many orders would have been canceled or delayed if Boeing’s contrition had come sooner. The initial resistance to admission and grounding not only delayed the fix, but allowed distrust to fester among customers, passengers, and regulators. From there we can leap back to the design of the plane — unintended expeditious route to beating Airbus in the market. That too is lost as it looks as if Airbus will become the dominant player in commercial aircraft. So many lessons, strategically, managerially, and ethically.

So, the barista, full sensitized by Starbucks’ one-day-stand-down-anti-bias training asked the police officers to skedaddle. Oh, what times are these when police officers are free to wander the streets and enter coffee shops. They got some nerve.

Starbucks initially told baristas not to call the police. Now, that position has evolved to “get them out of there.” Starbucks has apologized for its treatment of the officers and pledges to make sure such an incident never happens again. More training, right? We used to know that you do not ask any customer to leave when the customer has done nothing wrong. We also used to be able to tolerate folks with differing lives, careers, and views. Now, we just throw the “baggage” out. Baggage training, that is what Starbucks needs now,

MLB Commissioner, Rob Manford, denies any intestinal manipulation. Tony Clark, the players’ association’s executive director, begs to differ. Mr. Manford acknowledged that the sports is considering new specifications. And, beneath it all is an interesting conflict of interest. MLB purchased the manufacturer of baseballs, Rawlings, in 2016 for $395 million. Mr. Manford says that the purchase was made in order to keep Rawlings, a major supplier for the sport, viable. The hits and the home-runs just keep coming as the rabbit balls keep hoping up.

From steroids to humidors, the MLB is a study on a sport, players, and teams who behave as amoral technicians. They take their toes right to the line. They will not step over the line (they think), but they are unapologetic about what they are doing because they do not see the issues. Were the Barometer working on this issue of the baseballs and resulting homers the message to the MLB Commissioner would be: Change the specs, sell Rawlings to someone else, and live with the number of homers that come naturally. How many times do we have to walk through the Valleys of the Shadows of Pushing the Envelope before we begin to rein in players, teams, leagues, and fans.

“I want to be clear that there is not a demand problem.” Those are Elon Musk’s words as he indicated that total delivers would be between 80,000-90,000 cars. He indicated there might be an all-time record for deliveries. The things missing in the delivery figure: costs (and ergo profits) and sales. Tesla says that it will be hiring. Again, costs and sales. You want to root for the best for a visionary, but the switching focus on which numbers is a signal. From sales to production to deliveries and away from profits and costs mean that we celebrate each quarter without really knowing future plans and potential demand. It is not lying or misrepresentation, but it is a distraction strategy: Issue reports on singular numbers that bring resulting joy singular. Overall? Watch those other numbers when the record deliveries are celebrated.

Those DNA tests that the family history sites run are quite fun. You can find relatives that you never knew that you had. However, once those DNA profiles are out there for public consumption, crimes can be solved. For example, over three decades ago, two young people were found dead in Washington state. The police had nothing to go on except a semen sample found on one of the teen’s clothing. By 1994, DNA testing emerged, and the detectives tried to find a match, with even the FBI unable to help. To find a match, the DNA data bases have to have that person in there. There is no nationwide, universal DNA test or data base. One of the detectives in the case realized that there was a bigger DNA data base than what he and the FBI were working with in their quest. Oh, those ancestry sites!

Detective James H. Scharf of the Snohomish County Sheriff’s Office used the DNA from the victim’s clothing and found two second cousins of the suspect with a DNA match. CeCe Moore, a genetic genealogist, traced the cousins’ family tree and found great-grandparents and then traced forward from them, which led her to a couple with a son in a home seven miles from where one of the teen’s boys was found. That son, William Talbott II, was 24 at the time of the murders, and his DNA matched the sample from the teen’s clothing. Heather Murphy, “Milestone for Genealogy Sites: First Guilty Verdict,” New York Times, July 1 2019, p. A11. All achieved through the use of public records. No warrant needed.

Mr. Talbott was convicted of two counts of murder. Detective Scharf was only on the stand for six minutes. The jury deliberated for two days. The case must have troubled them, and that would be because a harsh reality emerged with this first-ever case. Truth percolates. It finds a way. It took scientific discovery and broader use of that tool in the private sector, but DNA spreads. And it tells a tale.

One question the Barometer is always asked, “How can you say that truth percolates? There are many things we will never know about or many more no one can ever find.” There is one variable in truth percolation: Time. It took from 1987 until 2019 to get a conviction of Talbott, but it all percolated through what amounts to science being on the side of truth. The defense introduced evidence of letters from family, friends, and neighbors — no one could believe that Mr. Talbott could have done such a thing. The Barometer has interviewed friends and family of white-collar criminals who all say, “This is the last person I would ever expect to do such a thing.” As Detective Scharf, with years of investigating crimes against children, explained, “Everyone in this world has secrets.” Yes, there are secrets, temporarily, but truth percolates.

In what is its strongest statement of responsibility for the crashes of two of its 737 Max jets, Boeing will give $100 million to support the families of the victims. Government and nonprofit organizations will assist in the distribution of the funds. The purpose of the funds is to provide funds for living expenses, education, and hardship. The funds are separate and apart from the suits some of the family members have filed against Boeing that allege faulty design of the planes.

CEO Dennis Muilenberg said the fund could grow with employee contributions, contributions that Boeing has pledged to match. He also added that Boeing is focused on “re-earning” passenger trust in Boeing airplanes.

The methodology description is fuzzy, but USA Today published a study by Comparably on the “Top-rated CEOs for Diversity.” The data were collected from June 7, 2018-June 7, 2019 and were collected from a pool of “ethnically diverse” employees (anonymously). Here are a few of the rankings:

5. Google
11. Salesforce
15. Microsoft
17. Facebook
18. Apple
24. Coupa Software
29. Amazon
30. Starbucks

Now, let’s compare what we saw in the press during the same period. Google fired two employee for raising questions and issues related to diversity. These are the Silicon Valley/Seattle companies and their struggles in recruiting women and minorities are the subject of ongoing seminars, discussions, and hand-wringing. Facebook chastised an executive for attending the Kavanaugh Senate hearings on the now-Justice’s nomination (the two were friends). There is the Ellen Pao discrimination suit that consumed the techies. Starbucks had a stand-down on diversity.

The inconsistencies between rank and activities can be found by “Googling” the company names. Like all employee surveys, one should wonder about issues such as anonymity fears, gaming, and the usual rankings interpretations.

Aide to former New Jersey Governor Chris Christie (Bridget Kelly) and Port Authority executives Bill Baroni and David Wilder were convicted of federal crimes for creating a traffic jam closing of highways leading to the George Washington Bridge. They said they were conducting a traffic study. The government successfully prosecuting them under the theory that their actions were payback to the mayor of Fort Lee for his failure to endorse then-Governor Christie for re-election.

The U.S. Supreme Court held, in reversing the convictions of Governor Bob McDonnell and his wife, that the standards of “distasteful” and “tawdry” conduct cannot be used as a basis for prosecution under the federal bribery statute. The court noted that public corruption criminal statutes should not give government “boundless interpretations” on conduct that is unethical. This case is something less than Rolexes and Ferraris in exchange for a good word on a product. It would seem that Ms. Kelly and the Baroni/Wilder team have a shot.

The news stories laud the courage and activism of the Wayfair employees. However, one must look far and wide to find an important part of the story. Wayfair was not selling mattresses to ICE, as some stories reported, or the federal government, as most of the stories reported. Wayfair was selling mattresses to Baptist Children’s Family Services, a government contractor running detention centers. A nonprofit government contractor. A religious-based nonprofit trying to make conditions better in the humanitarian crisis at the border.

Regardless of how we feel politically about immigration laws, immigration policies, and who caused what or did what, we have those who serve those who are at the border, for whatever reason. Those who serve need food, shelter, sleep, and basic hygiene products to do so effectively. Shall we punish toothpaste companies? Shall we boycott dairies? Shall we boycott Frito-Lay if a bag of chips ends up in a detention center? Shall farm workers walk out because lettuce is making its way into meals there?

The praise for Wayfair employees not only misses facts, it misses reality. Corporate activism is depicted as the brave effectors of Generation X, Y, and Z employees who feel empowered to demand certain actions and views from their employers. From Google to Microsoft to Twitter and all up and down the Silicon Valley, these employees demand that their employers adopt their political views.

The Barometer is all for employee activism, but stunned on employee inconsistency in this realm. Employees rarely speak up about defective products, shoddy production, money laundering, or insider trading. The press coverage just is not there. Yet, these are the activities that bring a company down. So, this brave new generation remains sullen and mute on legal and safety violations because, “I don’t want to lose my job.” One wonders where the line is for what employees can tolerate in employers.

There is little thought, but plenty of emotion and few facts, that go into social responsibility issues and protests. Employees fail to grasp that their self-righteous indignation on their chosen issues puts their companies at risk. Wayfair is currently struggling financially. Turning down customers on the basis of their customers or sales (although not selling to a religious nonprofit that is giving teens a mattress on which to lay their weary heads seems slightly antithetical to social responsibility goals), is not an effective path back from the business red zone. Ironically, employees’ vocal positions on these safe, media-darling issues will produce the same negative consequences for their employers their reticence and silence on the legal and safety issues do: You destroy the business (not even taking into account the customer backlash that could follow).

Wayfair did agree to make a donation to the Red Cross (a donation greater than the profit Wayfair will make on the mattress sales). The Red Cross stays away all things border. Still not good enough to prevent the walk-out. Neutrality is insufficient in this era of emotion — my way, or no way. The employees may get their wish. Wayfair may not survive.

As the Barometer once said to a former student who was working for a defense contractor that made weapons and who was struggling mightily, “You may have to find a different company with social and political values consistent with your own.” Wayfair employees may soon be looking for such a company. The Barometer only hopes they can find such a company somewhere in a supply chain. Where is a company that sells products to entities, agencies, governments, other companies, and human beings that someone could not find objectionable? There is that line question again. We are now into secondary boycotts. Can tertiary ones be far behind? The Baptists are next. Followed by anyone who sells to Baptists. Followed yet again by anyone who sells to those who sell to Baptists. Followed by boycotts of those who defend Baptists. Followed by boycotts of those who were Baptists 40 years ago. You get the idea.

The FAA has stepped in and transferred three senior managers from its FAA office that oversees Southwest Airlines. The FAA took the steps following a series of investigations by the Office of the Inspector General (OIG) for the agency that raised concerns about retaliation against whistleblowers who have raised safety concerns about Southwest Airlines’ operations and maintenance. The FAA union for safety inspectors has also reported concerns about retaliation to the FAA.

The FAA has had ongoing investigations into that FAA office’s supervision of the airline’s management of issues such as maintenance of 100 jets, computation of the weight of checked baggage, and hazardous landing incidents. The three FAA managers were in the FAA areas for supervision of operations and maintenance.

Southwest issued a statement indicating that it is cooperating fully with the FAA as well as the OIG office. The weight computation issue was reported by the Wall Street Journal, and Southwest will be implementing new procedures for baggage counting. Variations in onboard weight affect pilot’s calculations.

Some reports indicate that the issues spring from a changing culture in the FAA, with a battle of wills between those who believe in the old FAA mission of promoting aviation and those who believe that the FAA’s mission is one of safety in air travel. The maintenance investigation found that the FAA permitted about two dozen Southwest planes to continue flying despite the discovery that the planes had missed required structural inspections. There is a pull-and-tug dynamic at the FAA office that results in the whistleblower complaints by those who are concerned about safety issues.

Facebook’s announcement that it would be entered the cryptocurrency market with its Libra brings us one of these moments: What on earth are the people running this company thinking?

Oh, but Facebook says the Libra is an entire into loans and the credit world. If you have a Facebook page, the whole world knows what your BFF had for lunch. Again, what could possibly go wrong?