Category: Business Ethics

By Posted on Posted in Abundance and Prosperity, Business Ethics, Social and Economic Justice Tagged with , , , , ,

I’ve said it before, and I’ll say it again. It’s in incredibly bad taste to give out 7-figure bonuses to the execs who drove your company (and the whole economy) to ruin while holding your hand out to collect billions in government bailouts. Worse than the auto CEOs flying separate corporate jets to go begging in Washington, at about $20K a pop. This is simply an outrage. Bonuses are supposed to reward performance. This performance is not worth rewarding, and taxpayers shouldn’t be funding these bonuses.

President Obama ordered Secretary Geithner to use “every single legal avenue to block these bonuses and make the American taxpayers whole.” I totally support his call. And I look forward to seeing these thieving and clueless pretenders to the throne of economic wisdom grovel before Congress tomorrow.

Of course, if the execs are smart, they’ll donate their huge bonuses to the recovery effort. And if they’re not, it wouldn’t surprise me if they find themselves the victims of physical attacks on their homes or their persons. I don’t condone that kind of violence (in fact, I don’t condone violence at all), but it would be a predictable result of this kind of class warfare mentality, and they should not be shocked to see angry mobs at their gated communities. People have lost their homes, lost their jobs, because of the incompetence of these executives and the companies they operate. To take home bonuses several times the size of the typical American paycheck under these circumstances has no positive benefit, it only serves to incite.

This is OUR money these companies are squandering, after all.

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By Posted on Posted in Business Ethics Tagged with , , , , , ,

Bernard Madoff is, by his own admission, a despicable human being. Here’s the opening paragraph of his statement on sentencing:

Your Honor, for many years up until my arrest on December 11, 2008, I operated a Ponzi scheme through the investment advisory side of my business, Bernard L. Madoff Securities LLC, which was located here in Manhattan, New York at 885 Third Avenue. I am actually grateful for this first opportunity to publicly speak about my crimes, for which I am so deeply sorry and ashamed. As I engaged in my fraud, I knew what I was doing was wrong, indeed criminal. When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible, and as the years went by I realized that my arrest and this day would inevitably come. I am painfully aware that I have deeply hurt many, many people, including the members of my family, my closest friends, business associates and the thousands of clients who gave me their money. I cannot adequately express how sorry I am for what I have done. I am here today to accept responsibility for my crimes by pleading guilty and, with this plea allocution, explain the means by which I carried out and concealed my fraud.

You can read the whole confession at the AP site, here.

Well, I’m glad he’s finally decided to be transparent. Yes, it’s far too little, too late. But it’s better than we ever got from Ken Lay…or for that matter, George W. Bush, Dick Cheney, Donald Rumsfeld, and the other war criminals who brought us knowingly into war on false pretenses. They don’t seem to believe in admitting even mistakes, let alone frauds. And let’ face it–the cost of our fraudulent entry into Iraq has been far worse than the $65 billion that Madoff scammed. Economists Joseph Stiglitz and Linda Bilmes put the cost at a jaw-dropping three trillion–that’s 46 Bernie Madoff Ponzi schemes, and that doesn’t even count the human cost of the dead and the wounded and the broken families and those raised to commit terror to avenge the injustice they’ve experienced at the hands of the US.

When Bush was asked in 2004 what his biggest mistake had been since 9/11, he was unable to come up with an answer. Does that mean Iraq was a fully deliberate decision? And since that time, the litany of mistakes–or, Heaven help us, deliberately wrecking things–includes Katrina, wiretapping, attrition of civil liberties, blatant cronyism, and trashing the economy. Still no apology, not even an admission of being wrong.

So on that level, Madoff’s sudden case of candor is refreshing, if somewhat disingenuous. But I draw the line at “I knew what I was doing was wrong, indeed criminal. When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible.”

Hello! Where’s the personal responsibility here? It continued, because Mr. Madoff knowingly allowed it to continue. At any point, he could have stopped the juggernaut, admitted guilt, repaid the stolen money, and maybe served five or ten years in prison. In what way was he unable to stop? I don’t buy the argument that he was helpless in the matter, any more than I buy the argument that a wife-beater can’t seek help and stop committing violence. Help is available from lots of places, but it all starts with number one: take responsibility for your behavior.

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By Posted on Posted in Business Ethics Tagged with , , ,

An open letter to Bernie Madoff (how appropriate, that last name!)

Dear Mr. Made-off

Was it worth it?
$50 billion in your pocket–but the rest of your life in jail and your name disgraced forever?

Was it worth it to have kicked the legs out from under some of the worthiest charities in the country, not to mention thousands of individual investors for some quick personal gain?

And why does anyone need $50 billion to begin with? Couldn’t you have lived lavishly enough stealing just a few million?

You are a disgrace to the business community! Thank goodness there are those who think differently about business, who accept the consequences of their actions, and who use business to advance the common good. Business at its best is a laboratory for innovation, a funnel for economic improvement, and the engine of the economy.

Bernard Madoff, How great you could have been if you’d used your considerable skills toward better ends! Do you feel any guilt and shame? Or just frustration that you got caught?

Shel Horowitz is the award-winning author of Principled Profit: Marketing That Puts People First and the founder of the international Business Ethics Pledge.

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By Posted on Posted in Business Ethics, Ethics in Government, Peace and War Tagged with

We’ve known for quite a while that the reconstruction effort in Iraq is rife with incredible corruption. Under the Bush administration, there were basically no safeguards, and stories of money diverted into the pockets of US looters were legion.

Still, I had no idea it was this bad. According to Patrick Cockburn of the respected UK newspaper The Independent, when you add up all the thefts of a few billion here, a few million there, it totals around $125 billion. That is two-and-a-quarter times as much as Madoff’s $50 billion Ponzi scheme.

Perhaps the saddest part is that of course, this money is NOT being used to rebuild Iraq. And therefore, not creating some good will to mitigate the horrific effects of our totally unjustified invasion and occupation. A proper rebuilding effort would have gone a long way toward demonstrating that the US had at least some altruistic motives. Instead, the rubble grows, the infrastructure fails, and Americans are hated more than ever.

I hope the Obama administration cracks down on these crooks, gets the troops out (I notice the timeline just got longer, from 16 to 18 months), and shows the Iraqi people that we are made of stronger stuff, and take seriously the mission to help undo the calamity we created.

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By Posted on Posted in Business Ethics, Ethics-International, Social and Economic Justice

Editor’s note: Holly McCarthy submitted this provocative guest post, and I’m running it in the hope of starting some dialogue. I share some of Holly’s concerns about outsourcing (particularly about using it to duck around environmental laws), but also believe there can be ethical ways to do it, and that when done properly, it can be an important leg up to the hardest-pressed communities at the bottom of the world’s pyramid. Curious as to what others think.
–Shel Horowitz

Guest post by Holly McCarthy When we talk of business ethics, we’re generally referring to the right way to do business, the moral way that leads to principled profit. But the advent of globalization has brought on a new kind of ethical value that we must bow to, but one which we tend to ignore because it doesn’t concern us directly. I’m talking about the process of outsourcing, a practice that’s pretty common these days because of the low cost of labor in countries like India, China and the Philippines.

Issue number one: The first unethical aspect of outsourcing is that we’re ignoring our own talent and paying people overseas just to cut costs. Our people are languishing without jobs and yet we’re shifting more and more jobs overseas. There are times when we even tend to hand over sensitive information to unknown faces who are connected to us through just a computer and an Internet connection, thus putting at risk our customers’ privacy and identity. Besides this, we are closing down offices in our country only to open new ones in other countries, thus effectively contributing to development on foreign lands and stagnation in our own.

Issue number two: We’ve also taken to shifting our manufacturing operations overseas, not only because of lower costs, but also because these countries do not have effective anti-pollution laws. We are luring them to ruin with huge amounts of money, and the sad part of this whole shady situation is that those who gain from this venture are not the ones who are affected by the effluents that result from the manufacturing process. It’s the poor and indigent people who live off the land who are hurt the most – they cannot afford bottled water like the rest of us and so must still drink from the stream that’s been polluted; they cannot afford to sit inside air-conditioned rooms and so must breathe in the polluted air; they cannot afford medication, and so they must suffer respiratory illnesses and other ailments in silence.

Outsourcing is and has always been a sore point with developed nations like the USA and the UK. The burgeoning of talent in developing countries, talent that is available at a fraction of the cost incurred in hiring local labor, had made organizations take the easy way out. Of course, when there’s money to be made, it’s understood that you want to be among the profits. But there’s an ethical line that cannot be crossed, and it’s up to you to decide where you want to draw it.

This post was contributed by Holly McCarthy, who writes on the subject of online universities. She invites your feedback at hollymccarthy12 at gmail dot com

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By Posted on Posted in Business Ethics, Customer Service as Marketing, Transparency vs. Secrecy, Web 2.0/Social Media Tagged with

Just yesterday, I blogged about the massive user outcry over Facebook’s new Terms of Use. Last night, CNet reported that the social networking giant had retreated.

Facebook CEO Mark Zuckerberg acknowledged the controversy, saying, “we have decided to return to our previous terms of use while we resolve the issues that people have raised.”

And better still, this time the process will be collaborative–which is especially appropriate, given that Facebook exists because of content its users create:

If you’d like to get involved in crafting our new terms, you can start posting your questions, comments and requests in the group we’ve created—Facebook Bill of Rights and Responsibilities. I’m looking forward to reading your input.

I think I’ll sign up for that group!

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By Posted on Posted in Business Ethics, Transparency vs. Secrecy, Web 2.0/Social Media Tagged with ,

Facebook’s recently adopted Terms of Use are attracting harsh attention in the online world.

Ownership; Proprietary Rights

Except for User Content and Applications/Connect Sites, all materials, content and trademarks on the Facebook Service are the property of Facebook and/or its licensors and are protected by all relevant IP laws and other proprietary rights

OK, no problem so far; user content remains the property of those posting it, and Facebook quite correctly maintains its rights to its own intellectual property. But then a little later, the kicker. An apparent transfer of rights to Facebook, to use your content any way it wants, with no compensation to you.

Licenses

You hereby grant Facebook an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to (a) use, copy, publish, stream, store, retain, publicly perform or display, transmit, scan, reformat, modify, edit, frame, translate, excerpt, adapt, create derivative works and distribute (through multiple tiers), any User Content you (i) Post on or in connection with the Facebook Service or the promotion thereof subject only to your privacy settings or (ii) enable a user to Post, including by offering a Share Link on your website and (b) to use your name, likeness and image for any purpose, including commercial or advertising, each of (a) and (b) on or in connection with the Facebook Service or the promotion thereof. You represent and warrant that you have all rights and permissions to grant the foregoing licenses.
(snip)
Submissions

You acknowledge and agree that any questions, comments, suggestions, ideas, feedback or other information that you provide to Facebook (“Submissions”), are non-confidential and non-proprietary. Facebook will be entitled to the unrestricted use of any such Submission for any purpose, commercial or otherwise, without acknowledgment or compensation to you.

Say, what? By my reading, this not only gives Facebook the right to sell our content without even telling us, let alone cutting us in on the revenues, but also could be interpreted–it’s a stretch, but lawyers exist as an industry because of these sorts of stretches–as allowing the company the right to use any content that includes a please-link-back utility that includes Facebook.

Writing in The Consumerist, Chris Walters says this means “anything you upload to Facebook can be used by Facebook in any way they deem fit, forever, no matter what you do later.”

As Amazon, Google, and other content platforms have claimed in the past, Facebook responds that it’s just claiming the rights necessary to operate the service:

We are not claiming and have never claimed ownership of material that users upload. The new Terms were clarified to be more consistent with the behavior of the site. That is, if you send a message to another user (or post to their wall, etc…), that content might not be removed by Facebook if you delete your account (but can be deleted by your friend).

Quoted in the Chicago Tribune, Facebook CEO Mark Zuckerberg put it this way:

We wouldn’t share your information in a way you wouldn’t want,” Zuckerberg said. “The trust you place in us as a safe place to share information is the most important part of what makes Facebook work.

Still, like those other platforms, this response seems thin and inadequate. Surely a lawyer could easily create language that fully protects Facebook while at the same time making it completely unambiguous that user-posted content belongs to its creators, who are merely providing Facebook the right to display and link to it. Without sublicensing, monetary or other compensation, or other seizure of rights the company doesn’t need.

Meanwhile, I’m not a lawyer (and this is not legal advice), but here’s my gift to the Internet community. I freely grant anyone the right to use or modify the following paragraph (which will be posted to Facebook, since my blog automatically feeds into Facebook notes):

I hereby note that I was not presented with the option to sign or decline Facebook’s February 4, 2009 Terms of Use revision, and that while I allow Facebook to display my content on any page where I post it or on any page where another Facebook user links to it, I do not transfer ownership of my intellectual property, nor do I agree to allow Facebook to relicense or reprint my content outside these uses without my approval. I am willing to negotiate licensing and revenue-sharing agreements with Facebook, but I explicitly do not grant blanket permission.

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By Posted on Posted in Business Ethics, Frugality/Frugal Fun, Social and Economic Justice

Some random thoughts about the economy and ethics today.

1. President Obama took a small but welcome step toward curtailing corporate abuses yesterday, restricting CEO pay for those companies taking government bailouts to a “measly” half a million dollars. Tom Peters, author of In Search of Excellence, endorsed the idea but said it didn’t go far enough, noting that the myth of the irreplaceable CEO was just that, a myth. He’d like to max out CEO pay at the same level a top general or admiral receives. Not a bad idea!

2. For those CEOs who can’t imagine living on that amount, I assure you that it’s possible to live comfortably, even luxuriously, on far less. I remember when $10,000 per year felt like an enormous sum of money to me. I actually had a job in New York City as recently as 1980 that paid $82 per week of hard work–that was part of the “research phase” for my e-book on having fun cheaply, The Penny-Pinching Hedonist: How to Live Like Royalty with a Peasant’s Pocketbook. In fact, if you’re a CEO who finds this new “limited” income a hardship, contact me. I’ll give you a free copy of the e-book, and the $8.50 you save will be your first step toward frugality. ;-). It’ll save the typical reader between $500-$2000 per year. In your case, it might save you a million or so.

3. Talk about sleeping at the switch! Whistleblower Harry Markopolos not only claims (and, I understand, documented during his recent testimony) that he gave the Securities and Exchange Commission (SEC) enough info to break up Bernie Madoff’s Ponzi scheme as far back as 2000, but also laid it out for a Wall Street Journal reporter who was interested, but couldn’t get the go-ahead from brass, back in 2005. Markopolos had some pretty harsh words for the SEC:

I gift wrapped and delivered the largest Ponzi scheme in history to them and some how they couldn’t be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority.

4. The left-of-center political action group MoveOn is jumping into the fray with a petition opposing the use of bailout dollars for executive bonuses. This is from the message you can send to friends after signing, which you can do at https://pol.moveon.org/bonus/?r_by=15503-5426570-ynLMRyx&rc=comment_paste:

Did you hear that Wall Street gave out $18.4 billion in bonuses in 2008? $18.4 billion to the people who crippled our economy with their recklessness and greed and then took $700 billion of our money. Outrageous, right?

Not only did I sign, but I feel any company that took our tax money and then paid even a dollar in bonuses should be made to pay it back. Just because the Bush administration was too incompetent to specify how this money was spent does not mean we have to tolerate this outrage. And forgive me for being out of touch, but I always thought bonuses were something you earn through stellar performance–not for running your company, and the economy, into the ground.

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By Posted on Posted in Business Ethics, Web 2.0/Social Media

Apparently, paying $2,715 a month rent for a two-bedroom apartment doesn’t even come with the slightest bitching privileges.

That’s what Katy and David Griffiths paid to live in a luxury apartment owned by Rockrose Development Corporation. But they were asked to leave, the lease not renewed–apparently because they tried to ask some pretty basic questions in a public forum, like why they were being assessed $600 per year to pay for a gym that wasn’t yet open. When David Griffiths’ post on that topic was refused by the building’s Internet forum administrator, he started a Google group for tenants; he suspects the company was monitoring.

The company claims he was one of only about 10 problem tenants out of 6000 units it controls around the city–but the action created a climate of fear. One tenant is quoted as saying,

Another tenant has circulated a petition asking Rockrose to keep the gym open later. It closes at 10 p.m., too early for some tenants, who pay a mandatory $600 annual amenities fee.

But she is unsure whether to deliver the petition. “I’m scared,” she said. “What if I need to renew?”

Ironically, the building was supposedly set up to encourage community. But this heavy-handed action makes you wonder.

Hmmm, almost sounds like Facebook.

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By Posted on Posted in Abundance and Prosperity, Business Ethics

After the Madoff scandal, the collapse of the stock market, and all the rest, we need recession-busters and we need a business culture of ethics and sustainability. Here are three simple steps that could make it happen:

1. Sign the Business Ethics Pledge–demonstrate your understanding that ethical businesses work better, and your commitment (which your customers will love) to conduct your business ethically.
2. Tell at least 100 others (you’ll get a resource guide offering a dozen easy ways to do this, once you sign). better yet, tell a few thousand.
3. Take advantage of the option you have as a Pledge signer to get my award-winning sixth book, Principled Profit: Marketing That Puts People First, at a very deep discount ($9.95 instead of $17.50).
4. Read a chapter a week and put at least one idea into practice.

By around May, you’ll have finished the book–and chances are good that your business will be thriving as you implement these life-changing strategies and demonstrate to the world–and your own financial team–that these ways actually work.

Why not give it a try?

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