Category: Business Ethics

Yesterday, ExxonMobil announced its 2005 profits–the largest of any corporate entity in any year in history.

$36.13 billion, of which $23.2 billion was distributed to shareholders (up $8.3 billion over last year’s distribution.

The company obviously feels embarrassed by its riches. The press release, linked above, is full of all sorts of justifications and rationalizations.

The simple truth is that this is simply an obscene amount of money, and ExxonMobil should be embarrassed!

Especially since this was the year where gas prices shot up by over 30 percent for a while, before settling down. Especially considering the impact in the Gulf of Mexico of environmental damage wreaked by hurricanes going through the offshore oil rigs. Especially considering the wretched fate of New Orleans’ poor. Even Wal-Mart, not exactly a paragon of corporate virtue, managed to dedicate significant resources to the relief effort. But for ExxonMobil, it’s just another chance to line the pockets of its shareholders.

While no oil companies have totally clean hands, I will continue to buy from more responsible companies like Citgo and BP whenever possible.

Let’s see…if I’m not mistaken, it is now 2006. If I recall correctly, we are talking about an indictment that was handed down in 2004, for crimes allegedly committed in 2001 and earlier.

You’ve got to wonder–would it have taken so long to come to trial if Ken Lay hadn’t had so many “friends in high places?”

Oh, and I think a fair punishment for Lay and his ilk would be some jail time and then strip him of all assets, use them to at least partially reimburse the innocent Enron employees who watched their retirement nest eggs go up in smoke, make him get a job in a factory somewhere, pay him minimum wage, and let him see if he could support himself in the style to which he’s accustomed. Oh yes, with community service in the form of unpaid presentations to b-school kids on how he “done us wrong” and what the human consequences were. It might be rather educational, don’t you think. And cheaper for us taxpayers than throwing away the key.

This from a financial currency exchange newswire:

A corporate scandal involving Livedoor, a Japanese high tech company caused such a big drop in the stock market that trading had to halt on the Tokyo Stock Exchange.

People get hurt when other people cheat. Ethics crimes are not victimless. Just ask those poor Enron employees who saw their retirement funds go up in smoke as the company stock turned worthless.

Run your company the right way… Sign the Ethics Pledge so you can brag about it. And build a company that grows itself and the economy instead of shooting it in the foot.

One could almost feel sorry for Wal-Mart. For all its vaunted IT structure, a theft as easy to spot as this, and so high up the ladder. Read the CNN story about former vice-chair Thomas Coughlin’s guilty plea. For falsely obtaining and using half a million bucks’ worth of store gift cards!

Just got to wonder what’s going on.

But
then again, this is the same company that routinely hires contractors
who use illegal aliens in near-slave-labor conditions…has a long
history of generating environmental lawsuits…exports jobs from the US
to China by demanding its suppliers cut prices substantially every
year…uses the US government to subsidize its employees’ healthcare,
and even then tries to get rid of workers who are most likely to submit
health claims. Oh yes, and runs roughshod over the local populace that
doesn’t want them. In my own town, we’re engaged in a battle to block a
Super-Wal-Mart that by the company’s own studies will completely
gridlock the main artery between the two college towns on either side
of us. There are already three Wal-Marts within ten miles of my house,
including one half a mile from this new project (that they will close
https://www.blogger.com/img/gl.spell.gifand likely abandon) and an
existing Super Wal-Mart two towns south. The proposal is to pave over
50+ acres of farmland and wetland with the largest building ever
constructed in our town (that’s a town with several shopping malls and
a large sports/concert venue). And did I mention that our town, Hadley,
Massachusetts, is considered to have the absolute best farmland in the
entire country?

The list of what’s wrong with Wal-Mart could go on much longer; there are several books on the subject.

Don’t get me wrong. I’ll praise Wal-Mart when praise is due. It’s happened once so far, in the immediate aftermath of Katrina.

But I do find it very enlightening to compare its business practices with Costco’s. Not surprisingly, Costco’s bottom line is more attractive, too.

In this Wikipedia article with a gazillion hotlinks.

Ken Lay has always had chutzpah; now he’s trying to paint himself as a victim.

The St. Petersburg Times rightly says that won’t wash:

Lay
said the villains in the Enron case are federal prosecutors, who have
hidden the truth in a “wave of terror.” Lay apparently equates the
deaths of innocent people at the hands of suicide bombers with his
indictment in the corporate scandal. Such hubris takes a lot of nerve,
but then Ken has plenty of that.

To which all I can
add is they are absolutely right. This man caused financial harship for
his loyal employees. I hope they make him pay back every penny of his
ill-gotten gains.

If the actions of Ken Lay disgust you, consider signing the Business Ethics Pledge to make a public (and marketable) stand for business ethics.

​​​​The big dustup over GWB’s admission that he broke the law in having
the NSA spy on American citizens has gotten even a lot of prominent
Republicans upset. Columnist George Will, about as conservative as they come, called it a “mistake” the other day. And several GOP Senators (Spector, McCain, Hagel, and Snowe, among them) are saying, “hey, wait a minute!”

Oh
yes, and Senator Barbara Boxer (D-CA) quotes no less an authority on
presidential misconduct than John Dean, Nixon’s counsel during the
Watergate affair, as saying GWB is the first president to actually admit to an impeachable offense.

And
yes, I think it’s appalling that Bush not only condones illegal spying,
but does so enthusiastically and repeatedly. To show just how much they
don’t get it:

At the White House, spokesman Scott
McClellan was asked to explain why Bush last year said, “Any time you
hear the United States government talking about wiretap, it requires —
a wiretap requires a court order. Nothing has changed, by the way. When
we’re talking about chasing down terrorists, we’re talking about
getting a court order before we do so.” McClellan said the quote
referred only to the USA Patriot Act.

(The above quote is from a Washington Post story by Carol D. Leonnig and Dafna Linzer, dated Wednesday, December 21)

But…I think there are far more serious high crimes and misdemeanors that are worth going after.

Congressman John Conyers points some of them out in his just-released report, “The
Constitution in Crisis; The Downing Street Minutes and Deception,
Manipulation, Torture, Retribution, and Coverups in the Iraq War.”
With over 2000 US soldiers dead, by some estimates much more than
100,000 Iraqis in fresh graves, and countless wounded, that’s where I’d
start the impeachment proceedings, if it were up to me. And continue
through corporate corruption, election rigging, shredding the
environmental and economic safety nets, and a bunch of other stuff. In
the context of all this, the spying scandal is the least of it.

Call me old-fashioned, but when I read stuff like this quote from Business Week’s Talk Show column (November 14, 2005)

After
the Securities & Exchange Commission launched a probe of accounting
irregularities at Dollar General, Cal Turner Jr. in 2002 returned $6.8
million that he had been paid for results that were eventually
restated; he then stepped down as CEO. The gesture was lauded by
BusinessWeek and others. But in the two years since, Turner has
remained employed by — and paid by — Dollar General, based in
Goodlettsville, Tenn. After retiring as chairman in June, 2003, Turner
stayed on as an adviser to the board: In 2004 he received $275,000 plus
$113,000 in perks.

On Oct. 18, Turner fully retired and got
another big payout. In an SEC filing reported on the Web site
Footnoted.org, Dollar General disclosed that Turner is getting a
lump-sum retirement payment of $1 million, access to the company’s box
suite at Tennessee Titans games, title to a company-owned 2004 Audi A8
that he drives, and up to $100,000 to cover legal and consulting
expenses. Dollar General also is making a “gross up” payment to cover
taxes on the package. Turner directly owns 3.3% of its shares, worth
$200 million.

I get pretty disgusted. Why do corporate boards persist in rewarding
ethically questionable and/or poor management decisions? Is this the
model we want to present to the next generation? I don’t think so, and
I think he should give any penny of the cash and gifts back to the
stockholders, and the board that allowed this should all resign.

My thanks to David Batstone for calling my attention to this.

Interestingly,
the same Business Week column notes that every Ecuadorian employee at
Occidental Petroleum’s Ecuadorian facilities got a bonus of $130,000 to
$150,000, thanks to that country’s profit-sharing law. Yes, the
janitors, the secretaries, the field technicians. With an average
annual income of just $2180 nationwide, these 350 individuals could
make a significant dent in the quality of life in their families and
villages.

And don’t feel sorry for Oxy; its $464 million in
locally-generated profits can easily fund the 15 percent payment to its
workers. The US, with its rampant overpayment of poorly-producing CEOs
(as cited above), could learn some lessons here.

Shel Horowitz’s Business Ethics Pledge models a different–and healthier–way to conduct business.

The State of New Hampshire gets a $5 million settlement from Tyco–and it’s using it to start a business ethics education program.
The program will be administered by Myron Kandel, who has many
connections in media (especially CNN, which he co-founded), government,
and business. Kandel has already announced that he’ll use the program
to help focus political candidates on questions of ethics as the
barnstorm through the state during the run=up to the presidential
primaries.

Seems like a win all around.

Ethics expert and ward-wining author Shel Horowitz is the initiator of the Business Ethics Pledge campaign.