Date: September 8, 2008
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“It’s hard to believe, but this all could lead to impeachment…”
So says a high-level political appointee in the administration of Eliot Spitzer, Governor of the State of New York. Most observers consider impeachment a long shot, but there’s more to come in this latest man-bites-dog ethical reversal featuring the man who came the poster boy for ethics in business.
It was only a few years ago that Eliot Spitzer struck fear in corporate boardrooms. He was everywhere. He attacked the self-serving practices of investment bankers on Wall Street, he forced Maurice Greenberg from the top job at AIG and he challenged New York Stock Exchange President Richard Grasso over compensation – some of the highest-profile investigations of corporate ethics in decades. Largely as a result it all, Spitzer got himself elected New York’s Governor in a landslide election last November.
But these days, Spitzer is scrambling as the result of investigations into his staff’s attempts to discredit the Republican leader of the state Senate, Joseph L. Bruno. According to a scathing report by N.Y. Attorney General Andrew Cuomo, Spitzer’s staff misused state police to collect information about Bruno. The New York Times reports that there are now no less than four separate inquiries into the behavior of Spitzer’s staff.
While there are no indications (yet) that a law has been broken, New York pols are chuckling over the fact that two of Spitzer’s top staffers refused to make statements under oath. And Spitzer, known for being a micro-manager, maintains that in this case he wasn’t aware of what his staff was up to.
The investigations will go on for some time, sucking political good will from Spitzer’s fledgling administration.
It doesn’t help that in his first seven months as Governor, Spitzer has continued with the bulldozer-like techniques he employed as Attorney General. He’s made few friends in the state capitol.
It all goes to show how quickly ethical trains can run off the tracks, even when seemingly competent and honest executives are in charge. Stay tuned. Instinct
says there’s much more to come.
What Would You Do?
NOTE: The following characters, events and places are fictional.
David Taylor is the Chairman of a football (soccer) club in the United Kingdom called Barnford Town. The club have recently finished their league season, and finished in the bottom-half of their league in 21st (out of 24) position.
The club, sadly, is currently a shadow of its former self with dwindling attendances, falls in merchandise sales and general discord and disharmony among supporters. Only a few years ago, the club was in administration only to be bailed out at the last minute by the current consortium/owners. Revenue channels are starting to dry up, and there is a real fear that the club could dip into administration within a few seasons.
David is a honest, professional and solvent individual who cares deeply about the club, from the groundsman and youth team to his fellow boardroom colleagues.
One day, David hears from his secretary that a Mr. James Thomas has contacted the club, and is interested in putting a quite substantial sum of money into the club, (half a million pounds sterling). Mr. Thomas is quite keen to arrange an appointment at the club with David and the other board members (there are five more board members, incidentally) so that he can discuss his plans and so that he can transfer his money into the club's account.
To David, this is music to his ears and understandably he is very excited and happy at this good news. He telephones Mr. Thomas later that night and they have a brief chat about Mr. Thomas's plans which seem very sound, forward-looking and optimistic.
Mr. Thomas says he can prove who he is, he has a bank statement which states that he has the funds on him and agrees to fax to the club and he also has a letter from his accountant and solicitor.
Mr. Thomas is not local to Barnford (infact he lives over 100 miles away from the town) but his Grandparents lived in the town, and he spent many holidays in the town. He also states that despite not being a local, he understands the club's predicament, and has the best interests of the club at heart.
All seems well, and David and Mr. Thomas agree a date and time to meet in the club's office so that they can agree this deal.
However, after the initial elation, David sits down and all sorts of questions begin to manifest in his mind:
Why has this Mr. Thomas chosen to invest so much money at Barnford Town, apart from he enjoyed his time in the town as a youngster?
What does this Mr. Thomas hope to achieve with this cash injection?
What does Mr. Thomas do for a living and how did he get to have the money in his bank account?
Is this a wind-up?
Is this a one-off investment or will Mr. Thomas invest more money in the future?
Is this deal going to have any strings attatched?
Will this deal compromise the future safety and ethics of the club, and is the deal itself ethical (remembering the penalties imposed by SOCA for money laundering etc.)
Will Mr. Thomas want his money back if the club fail to make progression in the next few seasons?
The amount offered by Mr. Thomas is close to the overall financial value of the club (£525,000). Mr. Thomas has said he realises this, but does not want to take the club over - rather he would like a 'benefactor' role at the club, should David accept his offer, and a place on the club's board.
Now the question (and thanks for reading through all this, by the way!)
David invites you to step into his shoes for a minute. Looking at all the above information, would you be happy to conclude the deal between the club and Mr. Thomas? If yes, what convinces you this is a good deal and if no, why did you turn Mr. Thomas's offer down?
G. M. Williams