The Ethics of Misappropriation

Here's an interesting ethical question that came up a few times in my past. Suppose you are working with an organization that is operating under government funding, and you discover that the work they are doing is not the work their grant application (and subsequent award) specified; they have, in effect, misappropriated the funding for an unauthorized purpose -- which includes paying you. Let us further suppose that the work you are doing is having a real benefit in the community you serve; the management team has made the substitution because they genuinely believe that the service they are providing is more important than the one they had originally proposed. You point out that they are still violating Federal and State laws, but they tell you to just get on with the job; they will worry about the consequences. What are you going to do?

On the one hand, it's not as if the management team is spending the funds on yachts and luxury cars (which has also happened in recent years); they're making a genuine attempt to provide what their constituents actually need. Government funding programs are often oriented more toward political expediency than toward actual community needs, and it is possible that this is the only way this particular need will ever be addressed. If the population receiving services under the misappropriated funds is traditionally underserved, this may indeed be the only way they will ever receive such assistance...

On the other hand, misappropriation of government funds is against the law; depending on the terms of the contract and the agencies involved, the senior management team may just have committed a criminal offense, and as a law-abiding citizen, you have a civic duty to report them for doing so, even though doing so might deprive a deserving community of services it desperately needs, divert those same funds to some pork-barrel project that will materially benefit political patrons of whoever extended the money in the first place, and eliminate a job that you need in order to buy food and pay your rent...

What are you going to do? The obvious thing to do here is for the agency that received the funds to make contact with their grant officer and request permission to change the primary activities authorized under the contract. If they can demonstrate that their revised purpose is a better use of the funds (and has the same levels of political advantage) the grantor will probably authorize the change, particularly because no one want to be displayed in the media yanking back funds that are being used to make a real difference in the lives of deserving people. But if you are not a member of the management team (or, even worse, if you're a contractor working for the agency) you can't take such an action, and you probably can't force the senior managers to do so either...

I don't have any concrete suggestions for this situation; if you've pointed out the potential legal issues to the management team and offered to help them with the appeal to change the purpose of the program, and they're still insisting on staying the course, you're just going to have to vote your conscience. In the long run it probably is more important that the right things get done, even for the wrong reasons, but this situation is a slippery slope, and it's just one step from using public funds for something you think benefits the community more to using those funds for something that benefits YOU more. One quite small step, in fact. But does that mean you should be the one to report someone who is doing what he thinks is the right thing to the authorities, or would it be better to just quitely resign and slink away?

It's worth thinking about...

Republic of the Easily Offended, South American Edition

We’ve had a lot of cases pop up recently where the line was hard to draw, where the slope was slippery, or where the principles of the case were sound enough, but we still wouldn’t have wanted the exact events described to happen on our block. But there are also those events where we find ourselves shaking our heads at the antics of people who seem to have nothing better to do than take massive offense at every utterance that they think has the potential to cast them in a bad light, saying to ourselves “Come on, people; it was just a cream pie!” These are the events that make me want to re-name the society we live in as “The Republic of Nice” – as in we’re all required to be nice at all times or else! – or, less sarcastically, “The Republic of the Easily Offended…”

Although apparently we’re just the North American Republic of the Easily Offended; it would appear that other continents have their own version of our society. A story being reported today in The Associated Press online details a lawsuit being planned by The Colombian Coffee Growers Federation against a U.S. cartoonist and his syndication group over a cartoon that they feel "attacks the national dignity and the reputation of coffee from Colombia." The cartoon was one of a series printed last week that riffed on the story of the inventor of the Pringles can being buried in one, and included the comment that given the levels of violence observed in Colombia, perhaps the old sales slogan “There’s a little Juan Valdez in every can” should be taken literally…

The Federation is going to be seeking at least $20 million "for damage and harm, detriment to intellectual property and defamation.” Why, exactly, they feel that $20 million in harm has been done to them will be quite interesting to observe; why they feel they should be immune to the satire that every member of our society is subjected to should be even more so. There is no chance that any reasonable person would actually believe that Columbian coffee cans contain the slightest trace of human remains; there is also essentially no chance that anyone who has ever heard of Columbia doesn’t already know about the drug cartels and ongoing violence that have plagued that country. It is thus difficult to understand how this unassuming newspaper cartoon could actually harm the Federation’s business. And if there has been no damage to your business, you can’t demand money in compensation for that damage…

Now, I don’t mean to suggest that the Federation has no right to be irritated. Consider, for example, how you would feel if someone implied (even in jest) that your company’s products were tainted with traces of human remains. More to the point, the Federation has spent a vast amount of advertising establishing Columbian coffee as a brand, and we all know what happens if you don’t defend both your brand name and reputation against anyone who implies that it’s not worth what you’re charging for it. If the Federation ignores this once, it will be harder for them to quash the next joke made at their expense, and eventually their carefully-built (and expensive) brand name will just be another mixed-media joke, resulting in heaven only knows how much lost sales and lost revenue…

Clearly, the cartoonist in this story did not intend to create an international incident, let alone touch off a $20 million lawsuit naming both him and his syndicate as parties. As his response in the AP story makes abundantly clear, he merely thought it was an amusing reference to other world events during this same time, and did not expect anyone to notice, let alone take massive offense. But, just as clearly, this mostly harmless and certainly non-malicious joke was taken quite seriously by the people whose business, country, brand, and tag line he was mocking. Given the way U.S. civil laws regarding satire of public figures/groups are usually interpreted, it’s unlikely that this case will amount to much, even assuming the cartoon syndicate doesn’t just settle the matter and make it go away quietly. But it’s still something you might want to keep in mind before you make your next public joke at the expense of somebody’s business…

Drawing the Line

The famous (or infamous, depending on your point of view) anti-pornography crusader and U.S. Postal Inspector Anthony Comstock was, at one point, asked to give a practical definition of pornography, so that other people (notably including local Postmasters) could be on the lookout for mailings that would violate the anti-pornography law that bore his name. Comstock replied that he couldn’t define porn, but he knew it when he saw it. This attitude led not only the anti-censorship groups of the time but most liberal thinkers in general to denounce Comstock and his namesake law, and launched the feud between free-speech advocates and decency advocates that continues today. One can only imagine what Comstock would have made of the Internet, and the vast oceans of pornography it makes available to anyone who cares to log on and view them…

Anyone thinking (or hoping) that the issues are clearer or the lines are easier to draw a century later will probably have their hopes dashed when they learn of a case that came up in Hopkinton, MA this week. According to the story in the Metrowest Daily News online site, the town’s manager was forced to resign after a town employee claimed that his viewing of pornography on a town-owned laptop constituted sexual harassment. This would appear to be a relatively simple matter, except for two points: First, no one on either side of the matter has made any claim that the town manager showed the questionable web pages to the employee raising the sexual harassment issue or anyone else; and Second, the town manager was actually at home when the web viewings in question occurred…

Now, no one, least of all me, is going to argue that free speech extends to the right to view pornographic materials while at work or while using a computer or network system owned by one’s employer. One must wonder why the town’s manager could not afford his own laptop (and his own high-speed network connection) if he wanted to engage in this particular leisure activity, and why he failed to realize that anything viewed over the town’s network would be tracked (and probably visible) by the town’s IT personnel. By the same token, however, it’s really difficult to understand why, exactly, catching a municipal employee making improper use of a town computer and the high-speed network constitutes a crime as personal as sexual harassment. Particularly when he was doing so in the privacy of his own home...

As a miscarriage of justice it hardly compares to the case last year where a town employee (in a different state) was hit with a virus that hackers use to stash porn on an unsuspecting user’s hard drive, and never even knew he’d been hacked until a city employee removed the virus and found the porn files, whereupon he was fired. This is more of a tragic case of someone lacking the tech-savvy to understand that he was leaving himself open to detection, or the common sense to realize that he needed to keep his questionable leisure activities off his employers’ computer network. Still, it begs a few questions from those of us who are reading about the case…

At what point does it stop being invasion of privacy and start becoming sexual harassment? If the employee claiming harassment is someone the “offender” has never met, never spoken to, and does not know the identity of, can we really consider these actions to be “harassment?” If an employer has failed to inform its employees that using company equipment for recreational purposes (e.g. surfing for Internet porn) is a termination offense, can they reasonably terminate an employee for such conduct? If the employer has such a policy and HAS informed all personnel of that policy, why can’t they just fire anyone who engages in such activities for violating the organization’s computer use policies, without bringing sexual harassment into it?

It’s worth thinking about…

Helmet Law

Some time last year Nigeria passed a new helmet law, which apparently took effect New Year’s Day. Readers from California may remember the controversy that surrounded a similar law passed in that state, pitting advocates for the right of motorcyclists to ride with the wind blowing freely through their hair against advocates for the rights of everyone else not to have to pay for expensive medical care (and burials) for uninsured motorcyclists who would die from head injuries that could be prevented with the use of helmets. Eventually the helmet law passed, and that should have been the end of the matter, if not for a handful of stubborn bikers and enterprising businesspeople…

In response to the law, several companies began manufacturing helmets that conformed to the very minimum requirements of the helmet law – that is, which provided just enough coverage to prevent a policeman from being able to ticket the rider. It seems that the law hadn’t specified that the rider’s whole head and face had to be covered, just that their headgear provide a certain level of crash protection. The resulting designs were vaguely reminiscent of military helmets used in the early 20th Century (German or British styles, depending on the brand) and didn’t provide the same level of protection that a full-coverage helmet would have, but allowed the user an increased feeling of exposure to the elements over a conventional helmet…

In Nigeria, a somewhat different solution is being used by motorcyclists who can not afford to purchase a conventional helmet: dried pumpkin shells. A story being reported on the BBC News Africa website tells the unusual story of improvised motorcycle helmets being adopted by Nigerians who make their living transporting people on the back of their motorcycles (motorcycle taxis, another service that would never occur in the U.S.). Nigerians are also protesting the helmet law on the grounds that it is possible for someone to put hostile magic in a helmet, which would permit the taxi driver to rob unsuspecting passengers…

Why does he tell us about this? I hear some of you asking. No one reading this post is ever likely to move to Nigeria and invest in a motorcycle taxi business, and if you did you’d certainly make sure that you have enough startup capital to afford TWO helmets, one for your and one for your passenger. So why am I wasting your time with this exotic tale of business and government regulation once again coming into conflict? Because, you guessed it, this situation plays out in one form or another every day in ever country in the world, and sooner or later you, too, are going to have to deal with the equivalent in your own business…

I’m not sure what aspect of your business our government is going to decide is unsafe, environmentally unfriendly, too expensive for your poorer customers to afford, or otherwise displeasing to the powers that be (or to some hyper-liberal advocate group with a really strong lobby); I only know that if you stay in business long enough, sooner or later there will be some form of safety law passed that will require you to spend money you can’t afford on safety provisions that will not make your business any more safe (but will generate a lot of money for whatever company makes the safety equipment). In your next strategic planning cycle you should probably add the possibility of blue-sky government safety laws being passed to the list of potential threats in your business environment; and if you don’t already go through a regular strategic planning cycle, you might want to consider starting…

Alternately, I suppose, you could look into shifting your production capabilities into making safety equipment…

Fact Checking?

Anyone who was reading the newspapers three years ago will remember the curious case of James Frey, whose memoirs of drug addiction and rehab were powerful enough to draw Oprah’s attention and sell millions of copies before somebody finally got around to checking his background and discovered that Frey was lying through his teeth. The supposedly true story turned out to be more fiction than fact, and the author was eventually berated by Oprah herself (on national television) for his betrayal of millions of readers. No reasonable person blames Oprah for being taken in; any reasonably sane publisher would have fact-checked the book before publishing it – or at least warned the author that if any of these facts weren’t true, SOMEONE would notice, and eventually call him on it…

Unfortunately, there appear to be a great many people out there who don’t really mind being exposed as a fraud so long as they get to keep the money they made while people actually believed their stories. Regular readers of this space will recall posts I’ve written about two Food Network personalities who fall into this category, and a quick check on the Internet will yield literally hundreds of parallel cases, ranging from the relatively harmless (the dozens of “fifth Beatle” pretenders) to the completely horrific (the Madoff case and ongoing outrages), and yet people seem to continue to be willing to trust that someone is telling the truth, simply on the grounds that not doing so would be insane, damaging to their personal credibility, or just not nice…

Another case that has hit the news wires this week parallels the Frey case almost exactly, right down to the appearance on the Oprah show and pending book deal – although this one has some rather more serious overtones. It turns out that a highly anticipated book by a Holocaust Survivor who was helped to survive by a young woman living outside the wire, who many years later met and married her in New York City is a complete fabrication. You can find the Seattle Post-Intelligencer story here if you’d like to; alternately, you can read about the MSU professor who helped to debunk the story here if you like. Now the publisher has cancelled the release of the book (and is seeking to get the author to return the advance he was given), and no one knows exactly how Oprah is going to respond. But the case still does not inspire me to any light-hearted mockery. In fact, it’s making me rather angry…

Now, I realize that it’s highly unlikely that the author meant any harm in this action. Indeed, the stories that have (this time!) been checked out clearly indicate that the couple had been telling this story to everyone they knew for roughly the last 50 years. No one had ever bothered to call them on it, and over the passage of a half-century, they’d more or less forgotten that it was just a touching (or sappy, depending on your point of view) romantic yarn they’d been spinning to explain why their feelings for each other were so powerful, magical, unique, and so on. It’s really quite unfortunate that they decided to enter the tale in a story contest…

So if it was just a harmless yarn that got out of control, why is it irritating me so much, and driving hundreds of Holocaust scholars and Survivors into a relatively genteel fury? Simply put, because it’s cheapening the experience. Because it’s making the death camps seem like quaint, charming places where you might (if you were lucky) encounter a heroic ministering angel who would one day turn out to be the girl of your dreams. Because it’s turning one of the most horrific atrocities in all of human history into nothing more than the setting for a Hallmark Hall of Fame movie special, and giving aid and comfort to Holocaust Deniers, people who make the Nazis themselves look good…

And all because somebody at Penguin Berkley (and, to be fair, in Oprah’s production company) failed to do any fact checking, despite such embarrassing recent examples as Margaret Seltzer, James Frey, Benjamin Wilkomirski or Robert Irvine. Believe me, it’s far from being the worst thing anybody ever did to make a buck, and it hardly compares to the malfeasance of criminals like Madoff. But I can virtually guarantee that there will be many more parallel cases coming until people finally start doing their jobs and checking the facts before they put them on the air…

Specialty Business, Specialty Problems

I could never understand what the big deal was with the Hooters chain. Possibly this stems from the fact that I was raised in Los Angeles and took my undergraduate degree in Santa Barbara, two cities in which one can observe women dressed far more revealingly than any Hooters waitress merely by going to the beach on a sunny day. And while I grasp the concept that many women find the infamous Hooters uniform offensive, the great American custom of voting with one’s feet seems to take care of this situation, in the sense that these women do not patronize Hooters restaurants, and the people (male and female) who do are not those who find the uniform offensive…

In fact, Hooters is hardly the only company that selects its personnel in accordance with a specific image; one can find similar (if less blatant) examples throughout the service and retail sectors. Many jobs actually have much more extensive physical requirements than those placed on the Hooters wait staff, who are, after all, only required to maintain a “glamorous appearance,” whatever that means. Specialty job functions may place requirements on the height, weight, girth, age, or physical abilities of the employees selected for those jobs, and no one seems to mind. Unfortunately, specialty businesses that require the services of specialty personnel experience a series of problems that will never occur in a mainstream firm…

There is a case being reported in The Des Moines Register this week that illustrates the point rather well. It seems that a waitress at the Hooters in Davenport was unable to report for duty after a domestic violence incident that left her temporarily unable to present a “glamorous appearance,” whatever that means. The waitress wasn’t fired or even laid off; she was just told that she wouldn’t be put back on the work schedule until her injuries healed. Unfortunately, the waitress was unable to just go without pay for several weeks, and had to file for unemployment – which left the company in a really unpleasant situation…

If they refused to pony up their share of the unemployment benefits the waitress would receive, they ran the risk of being lambasted in the media, mocked by bloggers and Fark readers, and sued for any number of discriminatory offenses, real and imagined. But if they paid the claim to someone who had not, actually been fired they ran a very real risk of having to pay those same benefits to anyone who quit their jobs, or being lambasted and sued for quite real discriminatory practices (e.g. providing benefits to attractive women, but not other employees who might have chosen to quit for other reasons)…

Now, I know some of you are saying “It’s their own fault; they chose to have this idiotic dress code for their servers, they can live with the consequences!” And, in fact, you’re quite right. If Hooters hired people based entirely upon their abilities as servers and dressed them in, say, white long-sleeved shirts and black trousers, the waitress in our story could have been back on the job as soon as she was well enough to stand up. It is only because they have chosen to occupy a specialized business niche and provide a specialized version of casual dining with specialty personnel that they are experiencing this monetary expense and public relations nightmare. The point here is that, sooner or later, every specialty business is going to face a similar or identical problem…

Maybe a business that needs very tall people will have to deal with injuries sustained on the overhead fans; maybe a business that requires very small people will be sued by someone who was pulled off a roof while trying to pull something up on a rope; maybe a business that requires people with exceptional senses of smell will be sued for using the wrong brand of disinfectant in the restrooms. Unless your workforce is an exact cross-section of the people who live in your community, your business will have this same problem, albeit in a less cosmetic sense, sooner or later…

How are you going to deal with it?

Happy New Year 2009

I’m not sure if I’m going to start each new year off with a post about the changing of the seasons; it might get old after a while. But this particular New Years is being hailed as a change in the world, far more so than the rather anticlimactic “Millennium” celebrations of 2000 (or 2001), and even in business terms it seems like there are a few things worth talking about this week…

To begin with, the year seems to be showing at least a passing resemblance to another Inaugural year: 1933, to be specific. The current recession hasn’t yet become as dramatic as the economic crisis of that time, although there are still reasons to believe that it might, but it is clearly the economy hitting the bottom after a long fall that should not have surprised anyone, but somehow does. Specifically, we’ve been hearing a lot of talk about the decline in the stock market mirroring the Crash of 1929, and the potential/ongoing failure of financial institutions mirroring the bank failures of the Great Depression era, but no one seems to have connected the recently popped Real Estate Bubble with the failures of that time, particularly the Crash of 1929…

In the 1920s, insane greed and lack of judgment DID send the Stock Market spiraling up to unreasonable levels, much like the dot-com boom and Real Estate Bubble of our time did to tech stocks and real properties, respectively. This was facilitated, if not exactly caused by, several unsound investment practices, notably including buying securities on the margin (using a stock holding as collateral to borrow the money to purchase another stock holding, then repeating the process) which have subsequently been outlawed by both Federal law and common business practice. None of these were any more insane, in the wide view, than some of the lending practices that were going on just a few years ago – and some of them were essentially the same insane process…

None of those things can happen today, of course. In fact, the very idea of running a business in such a fashion would invite massive public ridicule for the few minutes you would have before the SEC descended on your company like a pack of hungry wolves on a cheeseburger. What I am suggesting is that the same kind of fundamental changes on how banks (and investors) do business is going to have to happen in the next few years. Just as all of the reformers trying to prevent the sort of unsound investment practices that resulted in the Crash of 1929 were finally proven right by a national disaster, so, too, will all of the people who have been campaigning against Predatory Lending and related practices see the reform they wanted – after the disaster they were trying to prevent has already devastated the country…

Then we have the inevitable comparisons between the Dust Bowl and the pending destruction of several American industries, starting with the Auto Companies. Will the new Presidential administration be able to prevent the loss of over 3 million jobs? Will they be able to stave off the losses in all of the other related industries, including ripples that really could return us to a time when a third of the country was out of work? If not, will they be able to recreate the New Deal programs that pulled the country back from the brink long enough for the economic recovery provided by the run-up to World War II to take effect? And if so, where will the next war come from, and will the country (and Planet Earth) be able to survive THAT calamity, whatever it turns out to be?

Once again, I’m quite sure I don’t know. But I’m fairly certain that we can learn from the mistakes of the past, and also that the man who will be (at least nominally) running the country in a few weeks knows enough history to recognize these parallel cases. I must therefore disagree with both the people who think they new year will bring with it doom and destruction as well as those who believe that the Millennium is finally upon us and Utopia is about to be realized in our time. From where I’m sitting, the new year is dawning upon a time of uncertainty, when both the best and the worst our nation has ever seen are possible. Stay tuned, folks; this could get interesting…