In a Wall Street Journal editorial this morning, Sen. Kent Conrad (D. N.D.) defended himself against accusations that he got a “sweetheart” deal from Countrywide Financial.

Here are the facts: In 2002 I was looking for a mortgage and went to several lending institutions. I also called a close friend of mine who knew a lot about mortgages for advice. My friend happened to be with the head of Countrywide Financial when I called and put him on the line. I spoke with a gentleman by the name of Angelo Mozilo for about 30 seconds, and he referred me to a junior loan officer. No, I Didn’t Ask for Any Special Mortgage Deal - WSJ.com

I looked at Sen. Conrad’s website and he seems like a decent guy. When I read his editorial, however, my BS detector goes off left and right.

• I find it hard to believe his conversation with Angel Mozilo (the CEO of Countrywide Financial) only lasted 30 seconds. Five minutes–maybe. 30 seconds–no way. Exaggerations like this undermine credibility, especially when they are used to rationalize questionable behavior.

• There is no way the CEO of Countrywide passes a US Senator on to a  JUNIOR loan officer. I would bet big money that Mozilo refers his friends (or friends of friends) to the most experienced, best sales people in his company. Mozilo probably doesn’t even know the names of any junior loan officers.

• Suppose for the sake of argument, that Mozilo did refer Sen. Conrad’s to a junior loan officer. This presents the most troubling ethical issue yet. A very senior loan officer might have the organizational clout and experience to push back if something ethically fishy were going on, but a junior loan officer… These kinds of situations put junior people in terrible positions.

Unfortunately, Sen. Conrad missed the leadership point in all of this. As a leader, your actions speak louder than any words. You do not get the opportunity to explain the nuances of an ethically sensitive decision. When the troops see you trade off ethical standards in return for personal gain, they will conclude that ethical decisions favoring self-dealing are fair game and give it a try themselves.

Even if everything Sen. Conrad says is true, he shows a lack of appreciation for how his position as a U.S. Senator influences others. He has also shown a lack of appreciation for how the CEO of a company influences junior employees.

At worst Sen. Conrad blatantly used his position for personal gain. At best he was asleep at the ethical wheel. Either way, it’s a lesson in what not to do in ethical leadership.

Tags: Sen.Kent Conrad, ethical leadership, clint korver, ethics for the real world

Countrywide has recently been taking fire for CEO Angelo Mozilo’s Friend’s of Angelo program where the CEO would give special deals to his friends. Given that Countrywide is the poster child for the subprime meltdown, this program has been getting extra attention.

The Washington Post today showed this morning how it worked. Sen. Kent Conrad, D-N.D. upon advice from an old friend, called up Countrywide CEO Angelo Mozilo to obtain a $1.07 million loan for his Bethany Beach, Del. vacation home. Apparently they hit it off and Mozilo took up the cause of getting Sen. Conrad a good deal.

“[T]ake off 1 point,” Mozilo instructed a subordinate in a March 17, 2004, e-mail obtained by Condé Nast Portfolio magazine. In another e-mail that April about a Conrad loan, Mozilo wrote: “Make an exception due to the fact that the borrower is a senator.” Countrywide Gave Special Attention To Lawmakers - washingtonpost.com

I don’t see any ethical issues for Mozilo with the above activities — so long as  Mozilo was not being deceptive about this practice. In fact, it sounds like he was quite open with his special favors. “It was something he handed out like party favors. He was fairly forthcoming with it,” said Guy Cecala, publisher of Inside Mortgage Finance Publications. “As long as I can remember, he was offering that.”Countrywide Gave Special Attention To Lawmakers - washingtonpost.com. Mozilo wasn’t being deceptive, he wasn’t stealing (company’s give discounts to customers for all kinds of reasons), and he wasn’t hurting anyone.

Except for now being in the negative spotlight, this practice could easily have been a prudential (smart business) practice as well. Who wouldn’t want a US Senator as a happy customer telling their friends what a great experience they had buying your product.

The ethics of the Sen. Conrad is potentially a different story. The Senate ethics committee has a gift rule that frowns on Senators getting benefits of this magnitude. Sen. Conrad claims “I was never told I was given preferential treatment. I didn’t ask for it, didn’t seek it, and as far as I know, I didn’t get it,”

Give me a break. Sen. Conrad apparently thinks it is common practice for the CEO of the world’s largest mortgage lender to personally handle a mortgage transaction. Either Sen. Conrad is lying or he is completely out of touch with how the world works.

Tags: countrywide, ethics, ethics for the real world, clint korver, Sen. Kent Conrad

Sen. Barack Obama faces one of his biggest decisions yet over the next month or two–who to choose as his VP running mate. This choice is fraught with ethical and other issues. They come in a confusing jumble, so let’s sort them out.

Legal: Obama is not obligated by law or the rules of the democratic party to choose Sen. Hilary Clinton or anyone in particular. There are few if any legal considerations.

Prudential: There are many prudential considerations including who will give Obama the best chance of winning the presidency and who will do a good job as VP if they get to office. Most of Obama’s search committee time will most likely be spent on prudential issues.

Ethical: There are a host of potential ethical issues which could come up in surprising ways.

• The Obama Camp is currently discounting the likelihood of Hillary as VP. If this is just posturing to keep Bill Clinton in check and to show Hillary her place, then there are serious ethical issues of deception here.
• There is the issue of Obama’s promise of bringing “change” to D.C. As a central member of the DC power scene over the last 16 years, Hillary hardly represents change. By putting Hilliary on the ticket, does he sell out on his vision for change?
• Then there is the issue of Hilliary waiting until Saturday to concede — not to mention dragging this contest out when the only hope of her winning would be for Obama to  suffer an Elliot Spitzer level implosion. Was this a matter of principle or a matter of selfishness? Not sure if there is an ethical issue in here or not, but it smells funny.
• Then there is Bill Clinton. He has so far refused to release records of his financial dealings and details of his presidential library donors. Financial transparency is traditional in the VP vetting process. Of course, what people are looking for is undue quid pro quo–someone with a particular agenda makes a major contribution to Bill Clinton and then Bill turns around and lobbies for that agenda.

Needless to say, my ethical antenna is up.

Tags: ethics, Barack Obama, Hillary Clinton, Clint Korver, ethics for the real world, government ethics

Today the California Supreme Court affirmed the right of Gay and lesbian couples to marry. What started in 2004 as a San Francisco initiative by Mayor Gavin Newsome has just become a statewide right. In many ways, the debate is just beginning.

Gay and lesbian couples in San Francisco rejoiced Thursday over a California Supreme Court decision affirming their right to marry even as political leaders on both sides of the issue girded for an extended fight in the courts and at the ballot box.

Gay Couples Celebrate California Ruling - New York Times

What are the ethical implications of gay marriage? It depends on how you define ethical. I define ethics as your personal standards of right and wrong. Morals, on the other hand, refer to behavior that is accepted in society at large. Morals can change as you move from one society to another. Ethics do not change. Your personal standards are your personal standards regardless of what society you are in.

If ethics are individual views on right versus wrong, then different people can legitimately have different ethical points of view on gay marriage. Personally, I do not find anything ethically wrong with gay marriage. It is a voluntary relationship between consenting adults. it is not deceptive. And it does not physically threaten any peaceful honest people.

For those who say gay marriage is ethically wrong, the next relevant question is do you feel strongly enough about your ethics that you willing to use force (e.g. the law) to impose your ethics on others? This is the nub of the current debate.

Tags: ethics, gay marriage, ethics for the real world, clint korver

Yesterday I wrote about the potential problems that could result from the Justice Department pushing toward situational ethics. Today the WSJ ran an article, showing a specific example of this at Guantanamo.

Col. Morris Davis, for two years the chief Guantanamo prosecutor, is expected to testify that the operation he once led has been infected with political agendas and corrupted by the Achilles’ heel of military justice — unlawful command influence. Free Preview - WSJ.com

This article goes on to say that Col. Davis claims his decision to bar use of statements obtained through waterboarding was overturned by Gen. Hartman, his former boss. “Col. Dvis says that Brigadier Geneneral Hartmann told him ‘there were opinions out there that there was nothing unlawful about waterboarding these guys, and these decisions are made at a much higher level.”

Talk about a blatant use of authority to shut down someone expressing a concern about what they felt was wrong. I bet other military personnel (perhaps even most of them) at Guantanamo felt waterboarding and some of the other interrogation tactics being used were unethical, but when a brigadier general says these decisions are above your pay grade, whose going to argue.

In the best organizations, front line staff (e.g. the legal team and interrogators at Guantanamo), would have cultural support to push back on orders they believed were unethical. A clear code of ethics gives staff permission to have the conversation. Examples of their leaders doing the right thing when tempted not to, gives them the courage.

Col. Davis sounds like an unusual individual. He spoke up for what he felt was right despite Guantanamo’s culture of situational ethics.

Tags: Col.Morris Davis, Guantanamo ethics, situational ethics, government ethics, ethics, ethics for the real world, clint korver, waterboarding ethics

The war on terror continues to claim more victims–this time interrogators and agents.

The Justice Department has told Congress that American intelligence operatives attempting to thwart terrorist attacks can legally use interrogation methods that might otherwise be prohibited under international law.
…

“What they are saying is that if my intent is to defend the United States rather than to humiliate you, then I have not committed an offense,” said Scott L. Silliman, who teaches national security law at Duke University.

But a senior Justice Department official strongly challenged this interpretation on Friday, saying that the purpose of the interrogation would be just one among many factors weighed in determining whether a specific procedure could be used.
Letters Give C.I.A. Tactics a Legal Rationale - New York Times

Either way the CIA is laying the foundation for situational ethics. This means that the the ethics of an interrogation procedure must be determined in the moment.

In the moment is the worst time to think about ethics. Emotions, time pressures, and complexities conspire to prevent clear thinking. Psychological studies such as Milgram and Ash show that under authority and peer pressure people set aside their independent thinking and do shocking things they later regret.

Imagine you are a CIA interrogator and your supervisor asks you to use an interrogation method you deem unethical. What do you say?  “It is prohibited under international law” doesn’t seem as compelling anymore. When your supervisor says “the security of the US is at stake–do you want to be responsible for another 9/11?”, my guess is few if any agents will make a fuss, regardless of the nature of the request.

The Justice Department’s recent findings mean interrogators and agents even less support in standing up for what is right. Without clear institutional support, the emotions and rationalizations of these difficult situations are likely to trigger cognitive biases, bad decision making and ethical compromises. In addition to the detainees, CIA agents could become victims.  

Tags: CIAehtics, ethics, clint korver, ethics for the real world, interrogation ethics

Mrs. Clinton and her campaign staff have been frustrated over the last few months by the steady stream of what they see as defections by formerly loyal supporters. Mark Leibovich in a New York Times article today examined the dynamics of this exodus. He nicely summarizes the frustration in the Clinton camp in a quote by Leon Panetta, a White House chief of staff under Mr. Clinton, and a supporter of Mrs. Clinton’s campaign.

“These are people that the Clintons gave an opportunity to serve,” said Mr. Panetta, speaking generally. “They helped give them the titles they now have, and made them a lot of money. I think the Clintons probably feel they are owed something.”

Clintons Sort Friends: Past and Present - New York Times

Personally, I’m not a fan of loyalty. It probably once served as a valuable survival skill when being a member of a tribe provided easier access to resources, mates, and security. Today, I believe it is more likely to cause problems.

First, in-group loyalty often brings out-group hostility. Why do supporters of Mrs. Clinton so adamantly criticize new supporters of Mr. Obama? “Demonstrating hostility to those in the out-group is a very easy way of demonstrating loyalty to your in-group”.Ingroup loyalty - Outgroup hostility | Long Live Science.

Second, loyalty can lead to ethical compromise. Suppose Bill Richardson, the Governor of New Mexico who was tarred as “Judas” by James Carville for endorsing Mr. Obama, chose instead to be “loyal” and support Mrs. Clinton even though he really believed Mr. Obama was the best candidate. This would be a misrepresentation of his beliefs. He might have good reasons for the deception, but it would still be deception.

Finally, and most importantly it can cloud thinking. Governor Richardson, in an attempt to rationalize the inconsistency between his public stance and his true beliefs would most likely attempt to rationalize his deception. Maybe he “owed it to the Clintons” or maybe “so many others do this as a political necessity” or maybe this is the “best way to further his career.” As soon as you start fooling yourself, you put your integrity and character at risk.

In the interests of full disclosure, I am not a supporter of Obama, Clinton, or McCain. However, they all provide such great material for an ethical blog, I’m sure I will be talking about them more in the future.

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Tags: ethics, campaign ethics, clint korver, ethics for the real world, politica ethics

The Olympic-Torch relay is certainly getting its share of the world’s attention–but not the attention China wanted. The Chinese government had hoped the torch relay would be in part a worldwide celebration of China’s emergence as a global power. Instead it has turned into a high-profile forum for criticism, bringing China’s treatment of Tibet, its record on human rights, and other issues into the spotlight.

In London, pro-Tibetan demonstrators disrupted the torch’s progression, resulting in numerous scuffles and 35 arrests.

In Paris, the torch was extinguished multiple times, had to be moved into a security protected bus for part of the journey, and the last leg had to be canceled at the last minute.

In San Francisco, the mobilization, protests, and arrests are just beginning. Three people have been arrested for hanging a Tibetan flag and two banners to the Golden Gate Bridge.

Are the protesters acting appropriately? Let’s take a look:

From a prudential point of view, these protests seem quite effective. They are garnering world wide attention to an issue that has been around for decades with only modest attention.

From a legal point of view, some of these protests (even the non violent ones) are illegal. However, so long as the protesters are willing to accept the consequences of being arrested and prosecuted, I do not see this as ethically problematic.

From an ethical point of view, so long as the protests are peaceful and the protesters do not harm innocent people or destroy other’s property, they are acting ethically (according to most people’s ethics).

As soon as violence enters the equation, the situation becomes ethically sensitive. For the sake of this analysis, let’s assume that the people carrying the torch and the police protecting them are not the individuals repressing Tibetans. They are peaceful, honest people carrying out what they believe to be a worthy endeavor and have the right to be left alone. Left alone means free from harm or threats of harm. Harming innocent people, for any purpose, raises significant ethical issues.

However, Olympic-torch bearers, and those involved in this process, do not have any right to expectations beyond this. There are few ethical sensitivities regarding creating inconveniences and even downright annoyances to the people in this process. Some of these activities, such as blocking a route, may be illegal, but that does not mean an action is unethical. In fact there have been historic and effective acts of civil disobedience that were illegal, but ethical by figures such as Gandhi and others.

I’m with the Dali Lama on this one — keep it peaceful but have the courage to say your peace.

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Tags: olympics, china, dali lama, clint korver, ethics for the real world, ethics

The WSJ today ran a major expose on the cozy relationship between Southwest and the FAA.

Southwest’s Ties Triggered Tumult: Allegations made by two FAA inspectors that Southwest Airlines was trying to pick and choose which inspectors regulated it have rattled the industry and sparked broad debate about the adequacy of airline regulation.

Business Financial News, Business News Online & Personal Finance News at WSJ.com - WSJ.com

While the focus of this article and many others on the topic is on Southwest exerting inappropriate influence, the most troubling ethical issue is the conduct of the FAA.

Here is the short story: two FAA inspectors, Bobby Boutris and Douglas Peters, claim the FAA looked the other way as Southwest flew 46 planes long past their mandatory inspection dates — without them being inspected. After much back and forth (I’ll get to that in a moment) Southwest finally had the 46 aircraft inspected to find that 6 planes had cracks in the fuselage, or skin, and dozens more were long overdue for checkups of the backup rudder-control mechanisms.

The WSJ and others assert that Southwest exerted undue influence in which inspectors were assigned to their case and then in how the inspectors reported (or did not report) violations.

Certainly Southwest’s attempts to deceive people about their compliance with maintenance requirements is an ethical issue. We can speculate on how it happened — Southwest probably had “really good reasons” to deceive. The Southwest compliance team might have been thinking “we have a great track record, FAA inspections is useless bureaucracy–we do far superior inspections ourselves, and it is prohibitively expense for no value other than checking the box.” Or, explantion 2: perhaps the compliance team just forgot the structural inspections on these planes.

Let’s go with explanation 1 for the moment, because here is where the really scary ethical stuff happens. It would appear that the FAA (or at least some key individuals in the FAA) engaged in a fairly vigorous effort to keep this deception and possible others from being uncovered.

- When Mr. Boutris initially found evidence that the inspections may have been missed, Southwest four days later issued a “voluntary disclosure” claiming falsely that all the inspections had been performed. Now it would be one thing for Southwest to mislead on this issue, but the disclosure was co-authored by a Mr. Gawadzinski, Mr. Boutris’s supervisor no less!

- After receiving an anonymous complaint about his work on this matter, Mr. Boutris was taken off his inspection duties and was ordered to turn over all his Southwest work to Mr. Gawadzinski.

- In a prior issue regarding a lightening strike to a Southwest aircraft, Southwest was required to pay a civil penalty but it really did not want the FAA to issue the normally required press release. According to Mr. Peters, his supervisor, again Mr. Gawadzinski, “suggested to Mr. Peters, with a wink, that he had used a ruse to have a press release on the reduced penalyt put out briefly, but then had rescinded it due to at ‘typographical error,’ according to Mr. Peterer’s statement. Mr. Peters said Mr. Gawadzinski told him the agency had met its legal requirement, and ‘another release wasn’t going to be put out.’”

It is not reported what else Mr. Boutris did to bring these issues to the attention of his management, but by last fall, he became so fed up with his management’s approach that he brought this situation to the attention of the Office of Special Counsel who, after finding the allegations credible, alerted Congress and here we are.

It would be easy, but inappropriate, to lay all of this at the feet of a few bad individuals inside the FAA. Transgressions such as these are often indicative of the culture of an organization. Mr. Boutris, in his statement to the Office of Special Counsel wrote “[for three years] the message I have been getting is not to ‘rock the boat.’”

Rep. James Oberstar, the Minnesota Democrat who is chairman of the House Transportation and and Infrastructure Committee investing this matter, has it right when he said “we need a change of attitude at the highest levels of the FAA.”

Tags: southwest, FAA, ethics, truth, telling, airlines, clint korver, ethics for the real world, ethical culture,