The Ethical Take

Published: March 21, 2014

By Jim Lichtman
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The Dow Jones on compliance and ethics; BP on doing the right thing; and an action-oriented entrepreneur top the list this month.

Who says nobody’s interested in Ethics? –

A full-page ad in The Wall Street Journal publicized The Global Compliance Symposium to be held next month in Washington, D.C. Organized by Dow Jones, the purpose of the two-day conference is to listen, share and learn “expert insights for Ethics & Governance Leadership.”

Just when you thought ethics was dead, there are individuals and companies who understand the true cost of not doing the right thing.

Among the topics discussed: “How to Identify, Monitor and Control Corporate Risk,” “Doing Business Wisely in the Post-Global World.”

“Good Governance and Ethics Begins With Individual Actions” asks, how would you respond if you are asked to do something that you believe is illegal or unethical?

One of the breakout session topics: “Who Should Say What and When Should They Say It? How a company responds publicly to crisis can influence the response of regulators, shareholders and consumers.”

Which brings me to BP –

The British multinational oil and gas company is the fifth-largest company in the world.

In 2012, the oil giant plead guilty to 11 counts of felony manslaughter, two misdemeanors and one felony count of lying to Congress. The charges stemmed from a preventable explosion of the company’s Deepwater Horizon, an oil rig off the coast of Louisiana which took the lives of 11 employees. As a result, the company agreed to pay a record of more than $4.5 billion in fines and penalties.

After the explosion, approximately 4.9 million barrels of oil leaked into the surrounding waters causing immediate and long-term damage to the ocean and local businesses that depend on fishing.

For months now, BP has been running full-page ads in both The Wall Street Journal and New York Times complaining that some local businesses have taken advantage of the negotiated payout agreement. “Unfortunately,” the latest ad reads, “that agreement has been implemented in a way that encourages people to exploit it… exaggerated, even fictitious claims…”
While I believe that anyone involved in such fraudulent activities should be prosecuted, what irritates me most is the headline to this latest ad:

We’ve tried to do the right thing.

Memo to BPReally? If you did the right thing to begin with, you wouldn’t be in the mess you’re in now! You point out that you have spent more than $26 billion in clean-up costs, $12 billion of which has gone to paying hundreds of thousands of claims.

My question to BP Execs: How much less would those costs have been if you had heeded the warning signs weeks before the well blew, as pointed out by Deepwater Horizon’s chief electronics technician Mike Williams in a CBS story running on60 Minutes?

“Williams says there was an accident on the rig that has not been reported before,” reporter Scott Pelley explains. “[Mike Williams] says, four weeks before the explosion, the rig’s most vital piece of safety equipment was damaged.

“[BP] knows that they are drilling into a very dangerous formation,” Pelley continues, “the formation has told them that and has cost them millions of dollars, and they know that BOP [blowout preventer] is broken; broken in a number of ways.”

Even more troubling to me are the questions that BP asks at the end of the ad as a result of their fraud complaints:

“What choice will other companies make when faced with the next industrial accident, product defect, or data security breach? Will they accept responsibility and do the right thing? Or will the lesson be that it’s better to deny, delay and litigate – with victims potentially waiting decades for compensation?”

This is the “veiled threat” excuse. It’s interesting to note that it was not until BP managers were proven to be involved in the decision-making that led to the explosion that the oil giant took responsibility.

While no one, including BP, should have to deal with fraud in such a disaster, the company would gain more sympathy – if any at all – if they focused their time and resources on prosecuting suspected individuals rather than run full-page ads that come off sounding disingenuous.

Howard does it again –

As reported by The Washington Times (Mar. 20), “Starbucks CEO Howard Schultz announced Wednesday that he’s donating $30 million to war veterans returning to the United States.

“The gift has been earmarked mostly for research into brain trauma and post-traumatic stress disorder, he told CBS News.

” ‘I think one thing that is necessary is a comprehensive mechanism for job training,’ he said. ‘But another is the fact that, depending on who you’re talking to, 20, 30, 40 percent of the two million people who have served are coming back with some kind of brain trauma or [PTSD]. So we’re going to fund the opportunity for significant research and for medical practitioners and science to understand the disease and, ultimately, hopefully, come up with some — a level of remedy.’ ”

Last year, Schultz announced plans to hire at least 10,000 veterans and military spouses over the next five years.

I’ve written about Shultz before. In 2012, he was my Ethical Hero of the Month for his Create Jobs for the USA initiative.

What I like most about Schultz is the fact that he focuses on individual positive solutions; solutions that do, in fact, change peoples’ lives.

In honor of your actions past, present, and I’ve no doubt, future, I raise a Grande Macchiato to you, Howard!


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