The Ethical Barometer

Mark Baiada, the founder of Bayada Home Health Care, announced at an employee luncheon that he was giving employees $20 million from his personal funds. New hires will get $50 and some of the long-term employees will be getting five figures. Mr. Baiada explained that it was a gift of gratitude after he thought through what got the company to where it is today.

Baiada started his business in 1975 with $16,000 in savings. Today, all 26,000 employees will receive part of the $20 million.

Bayada does have two lawsuits pending on the failure to pay employees the overtime they say they were entitled receive. And unions are at the door. Bayada says it follows state and federal laws. ‘Tis the nature of the employment relationship — there is always some tension, personal gifts aside.

The little cherubs just scarf those things up! But, we teach our children to, “Be nice. Share!” Do what I say, not what I do.

Lou Anna K. Simon, former president of Michigan State, was charged with two felony counts of lying to investigators. The investigation into the allegations of sexual abuse by Dr. Larry Nassar (the USA Gymnastics team physician) resulted in criminal conviction of Nassar, who is serving a 175-year sentence. Dr. Simon stepped down from her position under pressure, and Michigan State settled suits by the young women against the university for $500 million.

The alleged lies center on Dr. Simon’s statements to investigators about her knowledge of the investigation of Nassar, including the Title IX complaints. Dr. Simon’s lawyer has called the charges “completely false” and “criminal.” He said of the prosecutors, “Shame on them.”

The indictment is similar to those in the Penn State sexual abuse cases that resulted in the conviction of a former assistant football coach, Jerry Sandusky and the termination of legionary head football coach, Joe Paterno. former Penn State president, Graham Spanier, was convicted of a misdemeanor of failure to report child abuse allegations involving Sandusky.

During Nassar’s legal proceedings, Dr. Simon was asked by reporters what she would say to the abuse victims and their parents, she said, “I think there are steps being made towards accountability. And there are other steps that will follow.And some of if will have to occur in a setting that’s rule of law. Others will occur in other forms.”

The Barometer can only respond to that response with, “This is the kind of gibberish that gets academic studies recalled,” or, in other words, “Say what?”

The Indianapolis office of the FBI was headed by Jay Abbott. That office declined to investigate gymnasts’ sexual abuse allegations against Larry Nassar, the longtime physician for the USA Gymnastics women’s team. The refusal to investigate is now the focus of an investigation by the Inspector General of the Justice Department. Nassar is now in prison for sexual assault of dozens of young woman during their exams.

However, in one of the civil suits against the United States Olympic Committee (USOC) discovery yielded an interesting e-mail. The then-president of USA Gymnastics, Steve Penny, who has now been charged with evidence tampering in this whole sordid series of events, wrote to the head of USOC security about Mr. Abbott.

The head of USOC security, Larry Buendorf, was retiring soon, as was Mr. Abbott, and Mr. Penny’s e-mail explained to Mr. Buendorf that he had “found a great guy who might be the perfect fit for your role.” Mr. Buendorf told Mr. Penny to tell Mr. Abbott to “watch for the advertisement next year.”

Mr. Abbott did not get the job, and Mr. Penny’s lawyer says that Mr. Penny had no ability to hire and that there was no promise of a job. As is often the case, there is no smoking gun, but the appearance brings no credit to any of them or their organizations.

The Sears story just gets curiouser and curiouser. Sears has filed for Chapter 11 bankruptcy. The former chairman and CEO, Edward Lampert, resigned from those positions because his hedge fund, ESL Investments, Inc. is the only bidder for the purchase of Sears. This past week, Sears lawyers filed a request with the bankruptcy court to pay &8.5 million in bonuses to 18 executives, including the CFO and presidents of the various Sears operations. These executives were already the beneficiaries of pay-to-stay salary increases generally given to executives to get them to stay when a company is in Chapter 11.

The outcry from employees who lost their jobs, will lose their job, or have not been paid has been has been substantial. A court will review the decisions by Sears and the actions of the officers in accepting these assignments.

Under Chapter 11, the bankruptcy court (who can throw the case over into another court system), will need to. determine whether the goals are sufficient and whether those goals will help the company.

Funny how companies want to desperately hang on to those who drove the company into the ground. And doesn’t/didn’t Mr. Lampert have a conflict? Ah, the sophisticated ethics of high finance and low performance.

Ghosn’s co-chairman at Nissan said of the charges of using company money for personal expenses and under-reporting his earnings, “Looking back, the concentration of power was something we needed to deeply reflect on.”

Actually, you just needed to audit the expenses of the CEO. That is the Barometer number one tip for curbing what is called in the field of business heretics, “The Bathsheba Syndrome,” as in David &, in the Old Testament. Charismatic leaders (and both King David and Ghosn had that in spades), when they are unchecked, by little things such as their expenses, and without “yes” people around them do tend to get a little loosey goosey with the rules. As in the rules do not apply to them.

David saw this problem in King Saul. Upon Saul’s death, David wrote, “How are the mighty fallen.” 2 Samuel 1:19. Indeed, for David and Bathsheba and for Carlos Ghosn and personal expenses. They are fallen for the failure to stay within the basic norms. A good auditor and a staff willing to speak up can help.

The clearest messages that an organization sends come through hirings, firings, promotions, bonuses, and all items HR. What organizations tout and say actually matter very little when it comes to ethical culture. What they do is who they are.

Enter the University of Louisville. In 2017, the school had a heck of a scandal when the NCAA uncovered nefarious activities in the student-athlete dorm. Call girls were present for purposes of, well, you know, but the NCAA focus was on the participation of basketball recruits in the dorm activities. Basketball Coach Pitino used the Sgt. Schultz (Hogan’s Heroes)defense, “I know nothing.” Louisville kept Pitino and the NCAA stripped the school of its 2013 Division 1 championship in 2017.

Fast forward to later in 2017 and the FBI basketball bribery scandal emerged. Criminal convictions resulted from the payment of cash by Adidas to the parents of recruits. Coach Piino did not survive that one and was fired in October 2017.

Enter football coach Bobby Petrino. His journey to Louisville came through his stint as head coach at the University of Arkansas. Here was a man who had a motorcycle accident with a young football staffer along for the ride. The two scrambled, and she quickly left the scene because the two were having an affair. As details emerged and the coach recovered from the accident, some lies were tossed hither and yon, and Coach Petrino was fired in 2012. However, Louisville picked him up as head coach that year. There were various events during his tenure, such as two football players and a cheerleader being shot as they celebrated the school’s Heisman trophy winner (Lamar Jackson). Nonetheless, these kinds of things bounced off Coach Petrino.

But, this week, Louisville put its foot down. The Coach was 2-8, and enough was enough. Vince Yyra, the athletic director, fired Coach Petrino with these words, “We owe it to our student-athletes and fans to turn this thing around.I did not have the confidence that it was going to happen next season without a change, and it needs to start happening now.” We will have none of this losing stuff.

Prostitution, bribery, scandal at previous jobs — those kinds of things bring mixed or delayed signals when it comes to athletic department personnel. However, one losing season and they are out (although exiting with $14 million takes away some of the ignominy). Everyone at Louisville understands how the game is played there — not football, obviously from the record, but the ethics thing. The rules of that game are clear and the result is one sad culture.

Over the past month, the Barometer noted two articles that presented a stunning contrast. The first, by Bob Greene, in the October 20-21, 2018 Wall Street Journal. Mr. Greene told a story that unfolded during a Sunday morning walk. An elderly couple pulled up at a medical complex, parking in a lot that had 100 parking spaces. When the couple got out of their car, they realized that they had parked over the white line on one side of their parking space. Rather than take up two spaces, the man got back into the car as his wife directed him on moving the car within both white lines. They then went into the medical building. Mr.Greene rightly observed that no one would have minded if they had not reparked. No one would have been affected or inconvenience by a single car taking up two spaces. Yet, they followed a small rule because they had in their minds the thought that you just don’t do those kind of things. It was a small but inspirational act of doing the right thing — a random act of courtesy.

In the New York Times, there was the story of the death of Professor Kurt Salzinger, a professor and scholar of behavioral psychology at Hofstra University. He was 89, a native of Austria who had fled the Nazis and come to the United States. Having survived the horror of the Nazis, Professor Salzinger was the victim of a random act of physical rudeness. While Professor and Mrs. Salinger were waiting on a subway platform to go to Macy’s Herald Square when hurried straphanger pushed them aside as he hurried to catch the southbound train to Brooklyn. The Salzingers were knocked to the ground, and Professor Salzinger suffered bleeding in his brain from being knocked to the ground. He subsequently died when he contracted pneumonia in the hospital as they struggled to save him. Someone in such a hurry that others’ lives did not matter rudely pushed aside two tender human beings and now one of them is no longer with us. A random act of brutality committed in the name of time pressures. What drives someone to be so unaffected by the lives of others? What has happened to common courtesy? The Barometer need not have graciousness from all, just common courtesy, the kind that would never take human life in the subway rush.

Two different stories with the common thread of courtesy — in one courtesy was inspirationally present, and in the other shockingly absent. One cannot help but wonder in which direction we are headed.

A federal grand jury had indicted former Tesla purchasing manager, Salil Parulekar, for operating a $9.3 million embezzlement scheme. In a nutshell, here’s what happened:

1. Mr. Parulekar, part of Tesla’s supply management group, was in charge of Tesla’s relationships with certain suppliers
2. Tesla had ended its relationship with supplier, Schwabische Huttenwerke, in 2016.
Tesla’s new supplier was Hota Industrial Manufacturing.
3. During 2016 and 2017, Hota’s payments went to Schwabische.
4. Mr. Parulekar was able to funnel the $9.3 million to Schwabische by stealing a Hota employee’s identity and switching the bank account information.
5. Mr. Parulekar then falsified documents showing that Hota had been paid.

It is not clear how or if Mr. Parulekar benefited from the deal, and he is not returning calls. Neither is anyone from Schwabische.

One must never assume, for there are always human running companies and their supply chains. The foolproof method of direct bank deposits is not so foolproof. The lapse in internal controls here (and the new chairman of Tesla may want to chat with audit about this) is that there was no check on the person supplying the bank information for the direct deposit. The direct deposit method is only as solid as the person who gave you the information, or if that person really did give you the information.

Although the media coverage seems determined to attribute Tiger Woods’s decision to decline $3.5 million to play in a Saudi tournament to age factors, more than a few of us have been able to drag our old bones out for pay. Mr. Woods, with the usual reticence that has accompanied his professional golf career, has not given an explanation. However, he should be given some credit for declining. Not many people would turn down that kind of money. In fact, the list of celebrities who have graced thugs, dictators, and human rights violators for cash includes Nicki Minaj, Kayne West, Jennifer Lopez, Beyonce, Mariah Carey, Sting, and Usher. Many were urged to return the money. They did not — that would have the odor of attic atonement come too late anyway. Better to refuse. A tip of the golf cap to Mr. Woods.

She remains unidentified, but the young White House aide who was pushed away by CNN reporter, Jim Acosta, is owed an apology. The president had ended his question time, and her job was to take the microphone. Mr. Acosta refused, she grabbed the mic, and he touched her to pull it away as he pushed her. In a professional setting, in the Barometer’s simple world, folks do not treat others this way. That the aide was female allows her a #metoo moment because physical contact was a disgraceful and infantile.

Mr. Trump and Mr. Acosta and their issues aside, someone should have stepped up and stepped in to preserve the dignity of this young woman. She deserved better. She showed great restraint in adhering to professionalism in circumstances that would have given her license to give Acosta a Barbara Stanwyck slap across the chops.

Per company e-mail, Under Armour employees can no longer charge strip-club visits on their corporate credit cards. These are the times that try men’s souls. They follow on the heels of the times that tried the souls of the women who worked at Under Armour and witnessed the behavior.

As if GE did nor have enough troubles: CEO ousted, flaws in its power-plant turbines, dividend cut yet again, and now the Justice Department has announced criminal probe into its accounting. The SEC is already there on accounting issues. The new CEO has not commented on the accounting issues except to say that a CEO should never say that “there is nothing in the woodpile.” Conjures up some powerful images.

Apple — no longer going to disclose unit sales on iPhones, iPads, and Macs. Generally, when companies change sales reporting methods, there is a decline. When Coach no longer identified outlet sales vs. retail store sales it was because the brand was in a dip. Apple remains mute about unit sales, explanations, and insights. More probably coming.

Tesla — how exactly did Tesla make its biggest profit ever? Not entirely from care sales. Tesla booked $189.5 million in sales of government credits. The government credits are earned by Tesla by producing clean-energy products. Tesla can sell those credits to other companies. Not the core business, and a tribute to a government that subsidizes car purchases by the wealthy.

Accounting remains more art than science.

Question asked of The Ethicist in the New York Times on Sunday, November 4, 2018.

Like shopping at Tiffany’s, if you have to ask the price, you cannot afford it.

If you have asked the question, you already have the answer.

The circumstances of the parents in this situation are severe (auto accident that left the parents severely disabled), trying, and demanding for their son/daughter (name was withheld). This is a tragedy, but the resentment in the description (of lost career opportunities), the discussion of cultural differences between the immigrant parents and their child, and the disgruntled acknowledgment of the parents’ sacrifice for the child’s education all point to a desire to walk away.

The advice given in response? Don’t further derail your life because then another life is lost. Is a life ever lost in making what will be the short last years of a loved one’s time on earth a bit more comfortable? Will the experience enrich the child? Is it possible that the child can reconnect with mom and dad? Just thinking through the issues beyond the derailed career.

Having raised a child with significant disabilities, the Barometer witnessed first-hand the number of philanthropic and other resources available for families trying to care for the severely disabled. With the help of those who feel we owe something to those who cannot care for themselves, we can shoulder the burden and still have a life.

For an ethics expert to fail to point out the human side in response is sad for the recipient of the advice as well as the expert. John Stuart Mill, quoted in the response, may not be the best source for a situation that requires a heart.