Ethics Sage tag:typepad.com,2003:weblog-86681374171043595 2013-05-21T03:00:00-07:00 Sharing my wisdom on accounting and business ethics, workplace and societal ethics. TypePad EthicsSagehttp://feedburner.google.com Wal-Mart and Violations of the Foreign Corrupt Practices Act tag:typepad.com,2003:post-6a0133f440106f970b01901c514a42970b 2013-05-21T03:00:00-07:00 2013-05-21T03:00:00-07:00 Bribery and lack of Full Disclosure Evidences Unethical Behavior at Wal-Mart Wal-Mart said last week that it spent $73 million on compliance with the Foreign Corrupt Practices Act (FCPA) during the first quarter of 2013. It had budgeted $40 million to $45 million. During its prior fiscal year, it spent $157 million for FCPA matters. It expects to spend $65 million to $70 million in the second quarter of 2013. The disclosures came during a conference call from Wal-Mart CFO Charles Holley to reporters. The company has said it can't tell when its internal investigation of fraudulent payments by a... Steven Mintz

Bribery and lack of Full Disclosure Evidences Unethical Behavior at Wal-Mart

Wal-Mart said last week that it spent $73 million on compliance with the Foreign Corrupt Practices Act (FCPA) during the first quarter of 2013. It had budgeted $40 million to $45 million. During its prior fiscal year, it spent $157 million for FCPA matters. It expects to spend $65 million to $70 million in the second quarter of 2013. The disclosures came during a conference call from Wal-Mart CFO Charles Holley to reporters.

The company has said it can't tell when its internal investigation of fraudulent payments by a Mexican subsidiary might end or when it will resolve the Department of Justice and SEC investigations. Wal-Mart started its internal investigation in 2011.

Last year, the New York Times reported in a Pulitzer Prize-winning story that the company's Mexico unit paid $24 million in bribes to speed up licensing and permitting for new stores. The paper said top managers in the U.S. covered up the bribery after learning about it.

During last week’s conference call, Wal-Mart said it spent $44 million on the investigation during the first quarter of this year and $29 million for a global compliance review, program enhancements, and organizational changes.

The details surrounding the Wal-Mart de Mexico bribery scandal include the stuffing of envelopes with cash handed off to mayors, bureaucrats and other government officials who wield the power to stand in the way of business. Wal-Mart is accused of not only participating in such bribery at its Mexican subsidiary, but also of sweeping it under the rug once it came to light.

On April 21, The New York Times published a lengthy article alleging that Mexico-based Wal-Mart officials participated in an ongoing bribery scheme several years earlier to achieve market dominance in the country, and that top executives had covered it up. The allegations are corroborated by internal company documents, according to lawmakers investigating the conduct.

A whistleblower -- a former Wal-Mart de Mexico executive -- informed a company attorney of the widespread practice via email in 2005. According to Reps. Elijah Cummings (D-Md.) and Henry Waxman (D-Calif.), who are investigating the allegations, Wal-Mart former general counsel Maritza Munich pressed the company to establish a stricter anti-bribery policy after being informed of the bribes. Munich recommended that a follow-up investigation look into "other potentially suspect transactions not yet identified." Three months after Munich resigned on Feb. 1, 2006, however, the new general counsel ended the investigation.

In its 10-Q form filed with the SEC on December 4, 2012, Wal-Mart admitted that the Company could be exposed to a variety of negative consequences as a result of the investigation into FCPA violations. These include:

  • There could be one or more enforcement actions in respect of the matters that are the subject of some or all of the ongoing government investigations, and such actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist orders, debarment or other relief, criminal convictions and/or penalties.
  • The shareholder lawsuits may result in judgments against the Company and its current and former directors and officers named in those proceedings. The Company cannot predict at this time the outcome or impact of the government investigations, the shareholder lawsuits, or its own internal investigations and review.
  • The Company expects to incur costs in responding to requests for information or subpoenas seeking documents, testimony and other information in connection with the government investigations, in defending the shareholder lawsuits, and in conducting the review and investigations. These costs will be expensed as incurred.
  • The Company has incurred expenses of approximately $48 million and $99 million during the three and nine months ended October 31, 2012, respectively, related to these matters. These matters may require the involvement of certain members of the Company’s senior management that could impinge on the time they have available to devote to other matters relating to the business.
  • The Company expects that there will be ongoing media and governmental interest, including additional news articles from media publications on these matters, which could impact the perception among certain audiences of the Company’s role as a corporate citizen.

As a professor of accounting ethics I was intrigued by this disclosure. It seems ironic that Wal-Mart cares about “the perception among certain audiences of the Company’s role as a corporate citizen.” This from a company that has been investigated for other bribery situations and the finding in 2006 that it violated the underage child-labor laws in its factories abroad.

I also found it curious that Wal-Mart decided not to record a contingent amount for possible loss from the lawsuits and other legal actions. In its disclosure, Wal-Mart said: “The Company’s process of assessing and responding to the governmental investigations and the shareholder lawsuits continues. The review, inquiries and investigations are ongoing; and the Company cannot reasonably estimate any possible loss or range of possible loss that may arise from these matters. Although the Company does not presently believe that these matters will have a material adverse effect on its business, given the inherent uncertainties in such situations, the Company can provide no assurance that these matters will not be material to its business in the future.”

This is a classic narrow-minded view of materiality. In accounting a material event is not only one with a significant monetary impact on earnings, but also those with a significant qualitative effect on a company. That is where Wal-Mart falls far short of making an ethical disclosure about its bribery activities at Wal-Mart de Mexico.

Wal-Mart says it “can provide no assurance that these matters will not be material to its business in the future.” I never like negative statements of no assurance. Wal-Mart is looking at its own self-interest from an egoistic point of view and not the interests of its stakeholders – shareholders, creditors, employees, and so on. The Company’s statement includes no information on why the internal controls did not prevent or detect the illegal payments sooner. Major questions exist about corporate governance at Wal-Mart.

The Company needs to step up to the plate and be transparent about the bribery, violation of the FCPA, and possible long-term damage to the Wal-Mart brand. Some indication that the Company knows what happened was wrong would be nice rather than a ‘CYA’ approach. However, given my skepticism about corporate ethics, I never expect companies to act in an ethical mannerand once the cover-up is disclosed most companies rarely decide to fully disclose the details. History has taught us otherwise.

Blog posted by Steven Mintz, aka Ethics Sage, on May 21, 2013

 http://www.ethicssage.com/2013/05/wal-mart-and-violations-of-the-foreign-corrupt-practices-act.html What's Wrong with Eating Lion Meat? tag:typepad.com,2003:post-6a0133f440106f970b0191020557dd970c 2013-05-16T03:00:00-07:00 2013-05-16T03:00:00-07:00 Lion-meat tacos, with a side of controversy My nephew, I’ll call him Howard, is sometimes skeptical about the veracity of topics I choose for my blogs labeling some “urban legends,” so I dedicate this blog to him. I know he will be skeptical so I’ve included a photo of the taco with lion meat sold by a Tampa, Florida restaurant until last week. Well, all you taco lovers, for $35 dollars you can try lion as in the king of the jungle. "I thought the lion was good," said patron Lee Weiner. "It didn't taste too gamey to me, similar... Steven Mintz

Lion-meat tacos, with a side of controversy

My nephew, I’ll call him Howard, is sometimes skeptical about the veracity of topics I choose for my blogs labeling some “urban legends,” so I dedicate this blog to him. I know he will be skeptical so I’ve included a  Lion_meat_tacophoto of the taco with lion meat sold by a Tampa, Florida restaurant until last week.

Well, all you taco lovers, for $35 dollars you can try lion as in the king of the jungle.

"I thought the lion was good," said patron Lee Weiner. "It didn't taste too gamey to me, similar to steak."

Frankie Consoli commented that the lion meat is a bit tougher than steak. Consoli is a connoisseur of what many of us would think as ethically-challenged food choices.  He’s eaten rattlesnake and antelope before and if he didn’t want lion at Taco Fusion, Consoli could pick from other exotic meats on the menu: bison, shark, ostrich, gator, gazelle, rabbit, duck, camel and kangaroo.

Since Taco Fusion opened in February 2013, the restaurant has built a reputation for their unconventional taco filings. They have previously offered game like beaver and otter, but the controversy didn't start until lion meat made its way onto their menu.

"I really don't like that at all," said McKenzie Bremer who opposed the restaurant's decision and said that a threatened species should not be served at a taco place.

Brad Barnett, the owner of Taco Fusion, defended his actions by saying: "If you don't like it, don't eat it." However, he bowed to the pressure and removed the lion meat as one of a few exotic fillings for their tacos.

Meanwhile, Taco Fusion has even more unusual items coming: iguana, bear and zebra, which, on one level follows a trend in gourmet circles to use ever-more-exotic ingredients. It's not uncommon for the Food Network to broadcast cooking competitions where chefs use sea urchin, squab, quail eggs and bone narrow.

So why not eat lion meat? Why prohibit it when other "tasteless" food choices exist such as Biscuit Kite Spider, Tomato Frog, and Green Slug Caterpillar?

Wild animal advocacy group Born Free USA embarked on an undercover investigation into the lion meat trade in 2011, and as part of their campaign to curb the trade, have petitioned to have African lion listed as "endangered" under the U.S. Endangered Species Act. The U.S. Fish and Wildlife Service concluded that the petition presented substantial evidence indicating that listing this subspecies may be warranted, but has yet to issue a finding.

Here are my reasons for freeing the Lion as a food choice. Lions are considered “Vulnerable” in the wild, which is a step short of “Endangered,” according to wildlife conservation groups, and so importing or selling lion meat isn’t illegal. However the African lion - one of Africa's most iconic animals - has experienced an alarming population decrease since the 1960's. According to National Geographic, only 32,000 Lions remain out of 100,000 roaming Africa in the 1960s, and the actual number may be much lower.

Animal rights activists oppose lion meat for the same reasons they oppose any other meat: It infringes on the rights of the animals. This is the link to ethics. We accept that human beings have rights – freedom of speech, freedom to worship as we wish, freedom to assemble, and so on. Don’t animals have rights? Wouldn’t one of those rights be to roam the wild without fear of being killed for food?  ...Just food for thought… 

It has taken me a long time to accept that eating Bambi is routine in many parts of the world. However, I draw the line at Simba.

Blog posted by Steven Mintz, aka Ethics Sage, on May 16, 2013


 http://www.ethicssage.com/2013/05/whats-wrong-with-eating-lion-meat.html Have our Schools Become Laboratories for Violence? tag:typepad.com,2003:post-6a0133f440106f970b017eeafce4fc970d 2013-05-14T11:00:00-07:00 2013-05-14T11:00:00-07:00 Fighting in Schools Has Become all too Common Girl on girl violence; student on teacher violence; teacher on student violence. Where will it all end? It seems these incidents are increasing in number and raise serious questions about our role as a civilized society. Some of you may think I am overstating to make a point. Perhaps so. Nevertheless, those of us who grew up in the 1960s through the end of last decade rarely experienced the kinds of situations that should make all of us stand up and take notice of the decline in time devoted to academic instruction... Steven Mintz
Fighting in Schools Has Become all too Common

Girl on girl violence; student on teacher violence; teacher on student violence. Where will it all end? It seems these incidents are increasing in number and raise serious questions about our role as a civilized society. Some of you may think I am overstating to make a point. Perhaps so. Nevertheless, those of us who grew up in the 1960s through the end of last decade rarely experienced the kinds of situations that should make all of us stand up and take notice of the decline in time devoted to academic instruction and increase in monitoring of bad behavior (of both students and teachers) in the classroom.

I have read about some troubling incidents in the classroom recently. Here are a few examples.

Stockton, CA: On April 25, 2013, a high school student was arrested after getting into a physical fight with her teacher, but the student claims the teacher was the aggressor.

Marlina Martine was playing makeup in math class when her teacher, who authorities have not named, confiscated the makeup. Martinez called her mother on her cellphone to tell the teacher to return the makeup, but the teacher confiscated the phone.

At that point, the teacher and student began shouting at each other as a student recorded the action. In the video, the teacher pushed Martinez and the two began throwing fists, eventually falling on top of each other on the floor.

The student who recorded the video then posted it to his Facebook page, where it has since gone viral. [No surprise there.]

Fort Worth, TX: On May 1, 2013, a former elementary school teacher previously charged with fondling a child was arrested for a second time after two students told authorities he sexually assaulted them.

Fifty-year-old Max Marchelli is facing charges that include aggravated sexual assault of a child. Police say two second-grade girls at Western Hills Elementary School claimed Marchelli had assaulted them. Marchelli resigned from the school district and is free on $100,000 bond.

Bronx, NY: On December 9, 2010, a beloved teacher had a miscarriage after she was hit trying to break up a fight between two students in her fifth-period Spanish class at Exploration Academy.

Here is how it went down: A student arrived five minutes late, walked up to another student who was already seated and told him to get out of his desk.

When the seated student refused, the conflict escalated and the teacher tried to intervene. She was accidentally elbowed in the stomach and fell to the ground, crying.

"I can't believe it," said another student later on. "I can't believe she lost her child over a fight over a chair."

The two students involved in the incident have been suspended.

Other NYC Fights: A few days earlier, a 49-year-old teacher was punched in the eye by a 14-year-old eighth grader at a Junior High School in East Harlem. The teacher got a black eye and was treated at a medical center. The student was arrested for assault and has been suspended.

And in a third incident, fights in the hallways of Murray Bergtraum High School in Manhattan led to the principal becoming involved and threatening to stop issuing bathroom passes if kids kept getting into fights, prompting students to organize a riot between 5th and 6th period.

One student was injured and sent to the hospital, and several others are being disciplined.

Palm Beach, FL: On December 1, 2010, a middle school boy was beaten by another student while, according to the parents, the teacher did nothing but sit by his computer while the fight raged in his classroom.

Video of the fight between Joshua Poole, 13, and his Jeaga Middle School classmate shows Poole swinging wildly as he is punched repeatedly before falling to the floor. The teacher's inaction was reportedly due to a school policy that staff can only intervene after undergoing training, according to the school district.

That type of "policy run amok" is a growing problem in schools across the country, according to Carol Kochhar-Bryant, a professor at George Washington University's Graduate School of Education and Human Development. Part of the problem is in the past there have been many instances where if the child gets injured in any way by an intervention by a teacher, the teachers have been reprimanded. "Those policies protect the school, they protect the teacher, but we are realizing now they don't protect the child in those situations."

The root cause of the school violence problem is two-fold. First, there has been a decline in ethics in society. All too many young people do not know right from wrong and what is worse, they don’t seem to care. Moreover, a lot of kids of all ages seem to think right and wrong is whatever they decide it to be. This ethical relativism approach to decision-making leads to acting out one’s aggressions rather than keeping feelings in check because such behavior is not acceptable under societal standards.

It is all too easy to blame social media for the problem. Perhaps some youngsters create mayhem to have their outburst videoed and go viral on You Tube. Maybe some even aspire to be on a reality TV show. That does not explain away the lack of parental oversight of what their kids are doing; who they are doing it with; and why.

I sometimes think parents find it easier not to care; not to discipline their kids. They don’t want to argue with their kids on what they can (should) and cannot (should not) do. It’s easier to let the kids decide what is in their best interests even though all too often those same kids fail to consider the interests of others and how their actions may affect others before deciding how to behave. As the old expression goes, this is like allowing the inmates to run the asylum.

Blog posted by Steven Mintz, aka Ethics Sage, on May 14, 2013

 http://www.ethicssage.com/2013/05/have-our-schools-become-laboratories-for-violence.html Space Crooner Chris Hadfield Returns to Earth tag:typepad.com,2003:post-6a0133f440106f970b017eeb215d24970d 2013-05-13T16:08:00-07:00 2013-05-13T16:08:00-07:00 A True Space Oddity and Inspiration to ALL -- Chris Hadfield Astronaut Chris Hadfield, the first Canadian to command the International Space Station, is preparing to make the return voyage to Earth after almost five months in orbit. Hadfield, along with flight engineers American Tom Marshburn and Russian Roman Romanenko, have boarded a Soyuz spacecraft for the journey home. It marks the first time Hadfield will come back from space in the Russian capsule — during his previous space missions, in 1995 and 2001, he travelled aboard one of the now retired space shuttles. "Reviewing Soyuz procedures onboard, but I... Steven Mintz

A True Space Oddity and Inspiration to ALL -- Chris Hadfield

Astronaut Chris Hadfield, the first Canadian to command the International Space Station, is preparing to make the return voyage to Earth after almost five months in orbit.

Hadfield, along with flight engineers American Tom Marshburn and Russian Roman Romanenko, have boarded a Soyuz spacecraft for the journey home. It marks the first time Hadfield will come back from space in the Russian capsule — during his previous space missions, in 1995 and 2001, he travelled aboard one of the now retired space shuttles.

"Reviewing Soyuz procedures onboard, but I wanted to thank every person at the Cdn Space Agency," Hadfield tweeted earlier today. "Your work takes Canada into orbit. Be proud."

NASA mission control relayed that hatches between the capsule and the space station were reported closed at 3:50 p.m. ET. The capsule is now on autonomous power as the astronauts work their way through a pre-departure checklist.

Bob McDonald, the host of CBC Radio's Quirks & Quarks, said the astronauts and ground control will verify that everything in the capsule and space station is airtight.

'They have to make sure all systems are tight and clear before they actually let go of the space station," he said.

At 7:08 p.m. ET -- right about the time I am posting this blog -- the Soyuz will undock from the space station.

During his time aboard the International Space Station, Hadfield has been a popular Internet figure, doing a lot on social media channels and YouTube to promote space science. From chatting on the phone with William Shatner  to posting breathtaking photos of Earth to his Twitter and Tumblr pages to explaining why you can't cry in space, Hadfield has been a constant expression of the sheer joy of being in outer space.

Hadfield is an inspiration to all of us who can only dream of going to space. Whats more he produced this poignant cover version of David Bowie’s Space Oddity. He recorded the vocals and guitar while on board the International Space Station. Piano and other musical accompaniment were provided by folks down on Earth. The video itself is gorgeous, featuring some amazing shots of Earth through the windows of the space station as Hadfield sings Bowie’s famous tune.

ENJOY!