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	<title>Business Ethics &#187; Ethics</title>
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	<description>The Magazine of Corporate Responsibility</description>
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		<title>Among Global Corporate Executives, Wide Range of Views on Social Responsibility</title>
		<link>http://business-ethics.com/2012/01/11/1201-among-global-corporate-executives-wide-range-of-views-on-social-responsibility/</link>
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		<pubDate>Wed, 11 Jan 2012 17:01:21 +0000</pubDate>
		<dc:creator>admin2</dc:creator>
				<category><![CDATA[Business Ethics]]></category>
		<category><![CDATA[CSR]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Employment]]></category>
		<category><![CDATA[Ethics]]></category>
		<category><![CDATA[Financial Crisis]]></category>

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		<description><![CDATA[The concept of corporate social responsibility (CSR) — the idea that companies directly contribute to the common good — is gaining adherents throughout the business world.  However, what constitutes responsible corporate behavior is open to interpretation by the firms themselves and the larger cultures in which they operate.]]></description>
			<content:encoded><![CDATA[<p>by<strong> <a href="http://journalistsresource.org/author/margaret-weigel/" target="_blank">Margaret Weigel</a></strong>, <a href="http://journalistsresource.org/" target="_blank"><strong>Journalist's Resource</strong></a></p>
<p><a href="http://business-ethics.com/wp-content/uploads/2011/05/Deutsche-Bank-Towers_Frankfurt_Feature.jpg"><img class="alignleft size-medium wp-image-6991" title="Deutsche Bank Towers_Frankfurt_Feature" src="http://business-ethics.com/wp-content/uploads/2011/05/Deutsche-Bank-Towers_Frankfurt_Feature-279x300.jpg" alt="Deutsche Bank Towers_Frankfurt_Feature" width="234" height="273" /></a>The concept of corporate social responsibility (CSR) — the idea that  companies directly contribute to the common good — is gaining adherents  throughout the business world.  However, what constitutes responsible  corporate behavior is open to interpretation by the firms themselves and  the larger cultures in which they operate.</p>
<p>A 2011 paper from INSEAD Business School published in the <em>Socio-Economic Review</em>, <a href="http://ser.oxfordjournals.org/content/early/2011/11/16/ser.mwr026.short" target="_blank">“<strong>The  Spirits of Corporate Social Responsibility: Senior Executive  Perceptions of the Role of the Firm in Society in Germany, Hong Kong,  Japan, South Korea and the USA,</strong>”</a> surveyed 73 senior executives of  large corporations and asked them to articulate their thoughts relating  to corporate responsibility. The researchers focused on distinguishing  between two types of corporate charity: implicit (“our goods benefit  society”) and explicit (“we contribute to charitable causes.”)</p>
<p>Key study findings include:</p>
<p>- The senior executives of Germany, Japan, South Korea, and the United States espoused an implicit philosophy of charity: “A large majority of executives in each economy agreed on the importance of taking society into account in the running of the firm.” However, there was “no sense that responsibilities towards society represented voluntary corporate action. This suggests that executives in these four societies tended to view their relationships with society as ‘implicit.’ ”</p>
<p>- Hong Kong executives adhered to explicit standards of corporate responsibility, with 60% mentioning “charity” as an obligation of successful corporations. Charitable contributions were seen as supporting Hong Kong’s economic well-being and elevating the status of the contributors; however, charity still remained subordinate to a company’s ability to generate wealth for its stakeholders and create jobs.</p>
<p>- U.S. executives were “unusually clear in assessing societal concerns as secondary, with primacy accorded to shareholder interests,” and society was positioned as a “constraint” to be overcome. Corporate responsibility was seen primarily in relation to job creation and innovation; only 14% of U.S. executives mentioned charity directly. Overall, there was a “strong emphasis on the provision of employment as a contribution to society, a claim that may ring hollow in the aftermath of the U.S. financial crisis but was credible for most of the [2000s].”</p>
<p>- Only 40% of financial sector executives in the U.S. alluded to the importance of society or community: “at the root of the financial crisis may not only have been insufficient regulatory oversight, but also a proliferation of financial executives with possibly deviant value systems.”</p>
<p>- “Germany emerged as a unique case. While the other three societies with implicit CSR tended to focus on one type of stakeholder — the state and society as a whole in Korea, employees in Japan and shareholders in the USA — German executives chose to emphasize the societal value of production in itself. This is consistent with the high rate of engineering doctorates among German executives outside the financial sector, which is likely to condition executives’ views to focus on the productive function of the firm.”</p>
<p>The paper’s authors worried that corporate behaviors may be divorced  from broader societal benefits; they call for additional research to  refine the evolution of executive values and the link between cultural  context and corporate behavior.</p>
<p><em>Margaret Weigel is Policy Journalist and Editor at <a href="http://journalistsresource.org/" target="_blank"><strong>Journalist's Resource</strong></a>, a project of the Harvard Kennedy School's <strong><a href="http://www.hks.harvard.edu/presspol/index.html" target="_blank">Shorenstein Center</a></strong> and the <strong><a href="http://journalistsresource.org/about/carnegie-knight-initiative/" target="_blank">Carnegie-Knight Initiative.</a></strong></em></p>
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		<title>The Rise in Unemployment and the Loss of Civility</title>
		<link>http://business-ethics.com/2011/10/31/1434-the-rise-in-unemployment-and-the-loss-of-civility/</link>
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		<pubDate>Mon, 31 Oct 2011 18:34:00 +0000</pubDate>
		<dc:creator>admin2</dc:creator>
				<category><![CDATA[Business Ethics]]></category>
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		<description><![CDATA[An executive recruiter in the compliance field says he's recently noticed a disturbing trend: as the global economy stagnates and seemingly worsens, and job cuts are announced daily, tensions rise. "Frustration, irritation and the loss of common decency pervades," he says. "It has truly become a dog-eat-dog environment."]]></description>
			<content:encoded><![CDATA[<p><strong>by Jack Kelly<br />
Managing Director, <a href="http://compliancesearch.com/" target="_blank">Compliance Search Group</a></strong></p>
<p><strong><em> </em></strong>I have noticed an interesting correlation. As the economy worsens and  the job cuts intensify there is an increase in anger, irritation and  anti-social actions.</p>
<p>I am not referring to riots or violence. I refer to the gradual eroding of the basic social niceties.</p>
<p>Calls are not returned. Conversations are strained. Raises and bonuses are decreased with expectations of longer hours.</p>
<p><a href="http://business-ethics.com/wp-content/uploads/2011/10/Casualties-of-the-Recession_Headline_iStock_000008796369Small.jpg"><img class="size-medium wp-image-8222 alignleft" title="Casualties of the Recession_Headline_iStock_000008796369Small" src="http://business-ethics.com/wp-content/uploads/2011/10/Casualties-of-the-Recession_Headline_iStock_000008796369Small-300x224.jpg" alt="Casualties of the Recession_Headline_iStock_000008796369Small" width="240" height="214" /></a>As the global economy stagnates and seemingly worsens, and job cuts  are announced daily, tensions continue to rise. Frustration, irritation  and the loss of common decency pervades. It has truly become a  dog-eat-dog environment.</p>
<p>As an executive recruiter in the field of compliance, I find that the expectations of hiring managers and those of candidates are often  incongruous. Candidates have become increasingly disillusioned and  aggravated by their treatment during the job search process. Calls are  not returned, conversations are strained, and the potential for raises  and bonuses become fewer and far between, coupled with the additional  gift of much longer and more intense hours.</p>
<p>If this weren’t bad enough, external factors are making life even  more unpleasant. Fewer jobs equal less overall tax revenue and therefore  decreased social services. Our infrastructure, school systems and law  enforcement agencies, to name just a few examples, are all suffering.  The decline in the stock market means that 401ks are now 201ks. Houses  are increasingly underwater, both figuratively and literally. We are  seemingly bombarded with bad luck everywhere we turn.  This spills over  to the job market.</p>
<p>Firms are cautious, perhaps even afraid to hire. They interview more  people over a longer period of time, and typically do not give much  feedback, if any. Of course, this makes a certain amount of sense if the  firm is not interested in the candidate. This is not because firms are  inconsiderate, but rather because they are overwhelmed with applicants.  The crazy development is that now it is common for firms to not even  contact ideal candidates. More and more, firms are closing searches out  of fear of what the future may bring. Conversely, they may put searches  on hold until the next cycle of layoffs, hoping that maybe they can find  someone better for cheaper, someone who will be desperate for any  opportunity. Of course, the firms will not reveal this to the candidate,  unfortunately leaving the poor individual in the dark.</p>
<p>On the other side of the table, candidates seek more money than firms  are willing to offer because they are afraid to move to the next Bear  Stearns.</p>
<p>We’ve come to an impasse, where the worker loses out. Though everyone  ponders the frightening thought of working more hours for less pay for  more years, they are absolutely terrified of making a potential career  move should the new opportunity turn out to be a dud. Meanwhile, their  “secure” jobs may be cut or relocated to Mumbai. There is really no  recourse in this economy.</p>
<p>I am guilty as well. I receive more and more resumes each day, with  heartbreaking stories behind every page. I’d like more than anything to  be able to place each and every one of the hundreds of traders, brokers  and the vast array of other financial services professionals trying to  move into compliance because their jobs are sent abroad or replaced by  computer models, but I simply cannot. And that’s just it; these  candidates <em>are</em> professionals, all very intelligent, hard  working and certainly capable individuals. Yet it is impossible to keep  up with the demand, so much so that I often cannot find the time to even  chat with some of these individuals let alone find them jobs.</p>
<p>It is a challenging time. While I do not have all the answers, I am  confident in the bright prospects for Compliance professionals in an  otherwise dark environment. In light of the new rules and regulations,  backlash against Wall Street, and past scandals, there is and will  continue to be a demand for their services. Although the road may be  rocky, long, and not always straight forward there are opportunities.</p>
<p><em>Jack Kelly is Managing Director of <strong><a href="http://compliancesearch.com/" target="_blank">Compliance Search Group</a></strong> and Publisher of <strong><a href="http://compliancesearch.com/compliancex/current-affairs/the-rise-in-unemployment-and-the-loss-of-civility/" target="_blank">CompliancEX</a></strong>, a web site where<strong> <a href="http://compliancesearch.com/compliancex/current-affairs/the-rise-in-unemployment-and-the-loss-of-civility/" target="_blank">this article was first published.</a></strong></em></p>
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		<title>Economists Lack Ethics Code, Posing Challenges for Journalists</title>
		<link>http://business-ethics.com/2011/10/17/1522-economists-lack-an-ethics-code-posing-challenges-for-journalists/</link>
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		<pubDate>Mon, 17 Oct 2011 19:15:00 +0000</pubDate>
		<dc:creator>admin2</dc:creator>
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		<description><![CDATA[Unlike doctors, architects, dentists, building contractors, journalists and a wide range of other professions and trades, economists do not have a code of professional ethics. That would seem more of an internal matter for the profession if it weren’t for the fact that journalists rely on academic and applied economists as sources. ]]></description>
			<content:encoded><![CDATA[<p><strong>By Craig Silverman</strong></p>
<p>Unlike doctors, architects, dentists, building contractors, journalists and a wide range of other professions and trades, economists do not have a code of professional ethics.</p>
<p><a href="http://business-ethics.com/wp-content/uploads/2011/10/Ethics_Magnifier_iStock__Feature_000016707944XSmall.jpg"><img class="alignleft size-full wp-image-8103" title="Ethics_Magnifier_iStock__Feature_000016707944XSmall" src="http://business-ethics.com/wp-content/uploads/2011/10/Ethics_Magnifier_iStock__Feature_000016707944XSmall.jpg" alt="Ethics_Magnifier_iStock__Feature_000016707944XSmall" width="170" height="182" /></a>That would seem more of an internal matter for the profession if it weren’t for the fact that journalists rely on academic and applied economists as sources. Economists are viewed as credible, authoritative experts. Their words carry weight. So should the lack of an ethical code change the way journalists deal with economists? Or is it irrelevant to the quality of commentary and information they provide?</p>
<p>There’s a scene in “Inside Job,” the 2010 documentary about the financial crisis, in which Frederic Mishkin, a former member of the Board of Governors of the Federal Reserve System and a professor at Columbia Business School, is rendered speechless.</p>
<p>It comes after director Charles Ferguson questions Mishkin about his co-authorship of a 2006 report, “<a href="http://www.vi.is/files/555877819Financial%20Stability%20in%20Iceland%20Screen%20Version.pdf" target="_blank"><strong>Financial Stability In Iceland</strong>,</a>” which painted a very positive picture of the country’s banking system. Ferguson notes that Mishkin was paid six figures by the Icelandic Chamber of Commerce to deliver the document — yet nowhere in the text is this information disclosed. The exchange is captured in<a href="http://movieclips.com/KCct-inside-job-movie-financial-stability-in-iceland/" target="_blank"><strong> this clip</strong></a>, which concludes with Mishkin fumbling for a response.</p>
<p>It’s a damning few minutes of cinema, and has become a frequently-cited piece of evidence in a growing debate about the lack of formal ethical requirements of economists.</p>
<p><strong><a href="http://www.du.edu/korbel/facultyresearch/faculty/DeMartino_George.html" target="_blank">George DeMartino</a></strong>, a professor in the global, finance, trade and economic integration program at the University of Denver, said in an email interview that the lack of a code poses a problem for journalists:</p>
<p style="padding-left: 30px;">“Up until now (and by now, I mean up until the release of Ferguson’s film and the subsequent reporting and studies), journalists tended to presume that academic economists have no significant interests outside of their university appointments — no financial entanglements that might in any way affect their judgments. …</p>
<p style="padding-left: 30px;">[I]t’s now clear that leading economists can and do make substantial sums from consulting, lectures, service on boards of directors and the like. And yet, when they give testimony before Congress, say, or take other positions on pressing policy matters, they do not routinely make full disclosure of their financial entanglements. That’s a problem — for our profession, and for those who rely on economic expertise.”</p>
<p><strong>Advocating for a code</strong></p>
<p>DeMartino isn’t alone in thinking the lack of a code is a problem for his profession. Earlier this year <strong><a href="http://economix.blogs.nytimes.com/2011/01/04/letter-calls-on-economists-to-adopt-code-of-ethics/" target="_blank">a letter signed by roughly 300 economists</a></strong> was sent to the president of the <strong><a href="http://www.aeaweb.org/" target="_blank">American Economic Association</a></strong>. It called upon the AEA to adopt a code of ethics. The organization responded by creating an Ad Hoc Committee on Ethical Standards for Economists, which<strong> <a href="http://www.nobelprize.org/nobel_prizes/economics/laureates/1987/solow-autobio.html" target="_blank">Nobel laureate Robert Solow</a></strong> is leading.</p>
<p>When contacted, the AEA said it could not provide additional details about the committee’s work. But AEA associate treasurer-secretary Peter L. Rousseau said in an email that a draft report will be sent to the AEA Executive Committee for its January meeting.</p>
<p>“This draft will be for internal discussion only,” he said. “When the report is finalized it will be made available on the association’s website. At this time we do not know when exactly this will occur but we anticipate sometime by late Spring of 2012.”</p>
<p>In the meantime, economists operate without a code of ethics. At the very least, it’s something journalists need to be aware of, according to Stephen Ward, director of the Center for Journalism Ethics at the University of Wisconsin-Madison.</p>
<p>“Without a code, the public has trouble knowing how to keep professionals accountable because they can’t cite specific principles and standards that the professionals accept and have violated,” Ward said by email. “Unethical practitioners have great space in which to operate if rules are never written down. So codes are not everything in ethics, but they are not nothing, either.”</p>
<p>When I contacted Reuters financial blogger Felix Salmon to offer an opinion about the lack of a code, he answered my questions <a href="http://blogs.reuters.com/felix-salmon/2011/09/01/how-journalists-deal-with-economists-ethics/" target="_blank">in a blog post</a>. Salmon offered a blunt assessment of the problems posed by the lack of a code, and the way sources deal with disclosure.</p>
<p style="padding-left: 30px;">All too often economists and other professionals feel comfortable with lies of omission when talking to journalists, simply not mentioning a fact that they know is germane … A good code of ethics should address this: even if there’s a disclosure somewhere about a conflict, the onus should not be on the journalist to find it, but rather on the economist to proactively mention that conflict to the journalist.</p>
<p>Ward said the job of every journalist is to “make sure they know who their sources are, what political perspectives they may have, and what conflicts of interest may be hidden in the background; and to convey that understanding to the public.”</p>
<p>As a result, he said we have a responsibility to perform due diligence on our sources, rather than expecting them to speak up about any potential conflicts.</p>
<p>“Journalists should investigate the integrity, expertise and possible biases of their expert sources in the same way that they investigate any other source of information,” he said. “In fact it may be more important to investigate economists and other experts given their power in shaping public discourse.”</p>
<p>Warren Watson, executive director of the <strong><a href="http://sabew.org/" target="_blank">Society of American Business Editors and Writers</a></strong> and a former business journalist, said in a phone interview that his organization’s <strong><a href="http://sabew.org/about/codes-of-ethics/sabews-code-of-ethics/" target="_blank">code of ethics</a></strong> has become an important touchstone for members. However, he doubts business journalists consider whether a source is bound by a similar code.</p>
<p>“I don’t think business journalists would routinely ask a source if he or she has a code of ethics,” he said. ”… It might be one of those questions that come up at an awkward time in an interview, and it might be off-putting [to the source].”</p>
<p>Watson said codes of ethics are important for all professionals, and it’s key to keep them current.</p>
<p>“I think we all need something like this,” he said. “This kind of stuff is good to have and good to freshen up from time to time and make sure it’s still applicable and relevant.”</p>
<p><strong>Questioning the need for a code</strong></p>
<p>While the movement toward a code for economists appears to have momentum, some prominent economists question the utility and importance of having one.</p>
<p>Lant Pritchett <a href="http://www.economist.com/economics/by-invitation/guest-contributions/code_conduct_would_undermine_rigor_economic_discourse" target="_blank"><strong>made the argument in an online discussion hosted by “The Economist”</strong> </a>that a person’s clients, race, gender or other characteristics should not be a defining factor in evaluating the value of their arguments.</p>
<p>“People should be able [to] put ideas, arguments and evidence into the public sphere of economics discourse to be evaluated on their disciplinary merits, not based on their author and his/her peculiar bundle of biases,” wrote Pritchett, professor of the practice of international development and faculty chair of the masters in public policy in international development program at Harvard’s Kennedy School of Government. “To help readers fairly assess my ideas, arguments, and evidence I should voluntarily disclose about myself … nothing.”</p>
<p><strong><a href="http://www.economist.com/economics/by-invitation/guest-contributions/code_conduct_good_idea_probably_wouldnt_help_much" target="_blank">In an Economist article earlier this year</a></strong>, economist Tyler Cowen questioned the utility of a code. As evidence, he said he believes ethical codes for journalists have little impact.</p>
<p>“Newspapers already have conflict of interest policies for many (or all) of their writers, but I don’t see they are much enforced or have much improved the quality of most op-ed pages as policy advice,” wrote Cohen, author of “The Great Stagnation.” (He didn’t respond to a request to expand on that thought.)</p>
<p>Of course, journalists can be guilty of making poor ethical decisions, but that doesn’t mean ethics codes don’t help. The challenge is making sure newsrooms talk about the codes they have and put them into practice — not just when an ethical issue arises but in their day to day reporting.</p>
<p>A code is not a panacea, be it aimed at economists, journalists or anyone else. DeMartino, author of “The Economist’s Oath: On the Need for Content of Professional Economic Ethics,” acknowledged that while some people will violate a code, its existence provides important guidance and increases the overall level of ethics and disclosure.</p>
<p style="padding-left: 30px;">Would some people still cheat? Of course. But my sense is that most economists want to do good work, work with integrity, and to do it honestly; and this alone would lead most economists to make full disclosure, were they simply asked to do so. And for the rest — their self-interest would also have them give full disclosure, since failure to do so would imperil their standing in the halls of power, and with the media.</p>
<p style="padding-left: 30px;">Economists want influence — and so they are apt to be careful to conduct themselves in ways that allow them to stay in the game, so to speak. Right now, there are no rules for them to follow, and so each economist is left to figure out when to make a disclosure, and how forthcoming to be in doing so.</p>
<p>Not surprisingly, DeMartino added one last item before signing off by email.</p>
<p>“BTW: I receive no salary outside of the university, and have no outside financial earnings other than occasional honoraria for giving lectures, paltry book royalties, and my 403b earnings (and losses!),” he said. “See? That wasn’t hard…”</p>
<p><strong>Three tips for interviewing economists</strong></p>
<p>1. For academic economists, check the CV listed on his or her university profile page. For applied economists, find a detailed biography. Review these documents prior to the interview. Focus on the boards they sit on, the companies or organizations they advise and the entities that sponsor their research and retain them for consulting. Who pays them for their expertise, and do they have any financial arrangements related to the topic you want to discuss? “My sense is that it would be good to check CVs and the like (though not all financial entanglements might be listed there),” DeMartino said.</p>
<p>2. Ward suggests checking economists’ previous public statements and their books or major articles to get a sense of who they are and what their perspectives are. Coverage of their work may include information that helps place their perspective in context.</p>
<p>3. During interviews, ask if they have any experience — such as sitting on boards or consulting — that helped form their opinions on this topic. You can then follow up their response with a direct question about whether they have any engagements or relationships that should be disclosed. “It is perfectly legitimate for a journalist to ask economists directly whether they have any potential conflicts to disclose,” Ward said. “In academia and elsewhere, experts are asked to disclose any potential conflicts.”</p>
<p><em><strong><a href="http://www.craigsilverman.ca/" target="_blank">Craig Silverman</a></strong> is a journalist, author and media critic in Montreal, Canada.  He serves as editorial director of <strong><a href="http://openfile.ca/" target="_blank">OpenFile</a></strong>, an online news startup, and also writes weekly columns for <strong><a href="http://www.cjr.org/regret_the_error/" target="_blank">Columbia Journalism Review</a></strong> and the Toronto Star. He is the founder and editor of <strong><a href="http://www.regrettheerror.com/" target="_blank">Regret the Error</a></strong>, an award-winning site that tracks and reports on accuracy and media corrections.</em><em> This article was first published on <a href="http://www.poynter.org/" target="_blank"><strong>Poynter.org</strong></a> and is re-published with permission.</em></p>
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		<title>Financial Considerations Often Trounce Ethics in NCAA Sports</title>
		<link>http://business-ethics.com/2011/08/30/7702-college-sports-financial-considerations-often-trounce-ethics-in-ncaa/</link>
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		<pubDate>Tue, 30 Aug 2011 18:12:27 +0000</pubDate>
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		<description><![CDATA[Violations and cover-ups in college athletics are beginning to rival the headlines for investigations of corporate malfeasance.  Columnist Gael O'Brien says that at the heart of both types of investigations is the question of how leadership perceives and executes its role in creating a culture -- and what that culture says about how things are actually done in an organization.]]></description>
			<content:encoded><![CDATA[<p><strong>by Gael O’Brien</strong></p>
<p>Violations and cover-ups in college athletics investigated by the <a href="http://www.ncaa.org/" target="_blank"><strong>National Collegiate Athletic Association (NCAA)</strong></a><a href="http://www.ncaa.org/"></a> are beginning to rival the headlines that the <a href="http://sec.gov/" target="_blank"><strong>Securities and Exchange Commission (SEC)</strong></a> receives for investigations of corporate malfeasance.</p>
<div id="attachment_7705" class="wp-caption alignleft" style="width: 269px"><a href="http://business-ethics.com/wp-content/uploads/2011/08/Jim-Tressel_Ohio-State_Flickr_2087469651_9907293aa5.jpg"><img class="size-medium wp-image-7705   " title="Jim Tressel_Ohio State_Flickr_2087469651_9907293aa5" src="http://business-ethics.com/wp-content/uploads/2011/08/Jim-Tressel_Ohio-State_Flickr_2087469651_9907293aa5-288x300.jpg" alt="Former Ohio State University football coach Jim Tressel.  December 2007." width="259" height="287" /></a><p class="wp-caption-text">Former Ohio State University football coach Jim Tressel.  December 2007.</p></div>
<p>At the heart of both types of investigations is the question of how leadership perceives and executes its role in creating a culture -- and what that culture says about how things are actually done around there. Unfortunately, as happens all too often in business, the push for short-term results, measured here by the cash cow of college athletics, too easily can obscure ethical considerations.</p>
<p>University presidents, in their role as institution leaders as well as directors of the NCAA, are doubly accountable for making real a commitment to “integrity,” a word the NCAA espouses as one of its core values. However, all too many examples suggest the word has lost meaning when applied to college athletics.</p>
<p>Complicating the issue of an athlete’s or coach’s behavior and a university’s own capacity to enforce a code of conduct are NCAA rules and the question of whether, as a governing body, the organization can adequately <a href="http://sports.espn.go.com/espn/commentary/news/story?id=5420728" target="_blank"><strong>address ethics and enforce consistent compliance</strong></a>.</p>
<p>While much has been and will be written about <a href="http://www.usatoday.com/sports/college/2011-01-03-ncaa- professionalism_N.htm" target="_blank"><strong>problems with the NCAA</strong></a>,  in August the organization announced <a href="http://www.ncaa.org/wps/wcm/connect/public/NCAA/Resources/Media+Center/Presidential+retreat." target="_blank"><strong>it is considering sweeping reforms</strong></a>.    Most would argue the <a href="http://www.washingtonpost.com/sports/colleges/fixing-college-sports-requires-less-talk-more-action/2011/08/18/gIQARLJkNJ_story.html" target="_blank"><strong>reforms are long overdue</strong></a>.</p>
<p>The biggest splash in recent NCAA investigations was its announcement of <a href="http://www.usatoday.com/NEWS/usaedition/2011-08-18-1A-cover-Miami-Hurricanes_CV_U.htm" target="_blank"><strong>violations in the University  of Miami’s athletic program</strong></a> -- football players alleged to have accepted gifts, cash and prostitutes.  This came on the heels of the NCAA taking final testimony from The <a href="http://www.csmonitor.com/USA/Sports/2011/0531/Ohio-State-football-scandal-Is-coach-or-hypocritical-NCAA-to-blame/%28page%29/2" target="_blank"><strong>Ohio State University (OSU) about its football scandal</strong></a>,  which the governing body is <a href=" http://www.cleveland.com/livingston/index.ssf/2011/08/ncaas_final_judgment_wont_chan.html" target="_blank"><strong>expected to rule on next month</strong></a>. OSU grabbed headlines for broken rules, the lies and cover-up of its head football coach and how the university president responded. The revelations were less a public relations disaster than an indication that “integrity” and “character” seemed without a campus sponsor.</p>
<p>The scandal unfolded by accident: the federal government notified OSU’s athletic department in December 2010 that <a href="http://blog.cleveland.com/metro/2011/07/tattoo_parlor_owner_in_ohio_st.html" target="_blank"><strong>its investigation into the drug dealings of the owner of a Columbus tattoo parlor</strong></a> also found football memorabilia from current football players. OSU then conducted an investigation and confirmed that several players had exchanged jerseys, rings, and other materials for cash and tattoos. Revered <a href="http://sports.espn.go.com/ncf/news/story?id=6606999" target="_blank"><strong>football coach Jim Tressel</strong></a> said he hadn’t known about this and the university reported the player violations to the NCAA.</p>
<p>However a few weeks later, OSU discovered emails revealing that Tressel had lied. He had known about the violations eight months earlier and hadn’t reported it to the university or NCAA. He’d made false certifications to the NCAA, engaged in a cover-up and didn’t suspend the violators (who were some of the team’s best players) from playing in games.</p>
<p>President <a href="http://president.osu.edu/bio.php " target="_blank"><strong>Gordon Gee </strong></a>stood behind Tressel, whose <a href="http://bleacherreport.com/articles/567923-ohio-state-football-ranking-jim-tressels-buckeye-teams-2001-2010" target="_blank"><strong>winning record</strong></a> <a href="http://bleacherreport.com/articles/567923-ohio-state-football-ranking-jim-tressels-buckeye-teams-2001-2010"></a>(106 wins to 22 losses) over the last decade had fueled alumni donations, lucrative TV contracts, and national visibility. Tressel had also built a <a href="http://wysu.org/commentary.php?recnum=140" target="_blank"><strong>reputation for how his religious faith  shaped his coaching</strong></a>.</p>
<p>Being caught in this kind of dilemma isn’t easy, but then Gee is no rookie. He has served as a college president for 31 years at five institutions including Brown, Vanderbilt and OSU twice. He has served also on <a href="http://people.forbes.com/profile/e-gordon-gee/35923" target="_blank"><strong>several corporate boards</strong></a>.  Gee admitted he discounted <a href="http://espn.go.com/college-football/story/_/id/6843627/college-football-ohio-state-president-gordon-gee-recent-football-scandal-espn-magazine " target="_blank"><strong>advice to fire Tressel</strong></a> saying he subscribes to a three bullet theory. He didn’t want to take one of the bullets for Tressel; the coach had friends among OSU’s trustees.</p>
<p>In March when a sports reporter broke the story about the NCAA violations and Tressel’s cover-up, OSU held a press conference to respond. <a href="http://www.youtube.com/watch?v=_wyQwtXvCC4" target="_blank"><strong>Tressel’s statement </strong></a>enumerated the hospital visits and other good deeds done by the football team. He said he hadn’t known who in the university to tell about the player violations because he’d been told the federal investigation (unrelated to OSU players) was confidential. He also didn’t apologize.</p>
<p><a href="http://www.youtube.com/watch?v=A_bnSqF7mLs&amp;NR=1" target="_blank"><strong>Gee’s statement</strong></a> covered over Tressel’s lack of apology by saying he knew how much grief there was in Tressel’s heart. Saying Tressel had made a mistake, Gee praised him for chairing the library campaign, contributing to the medical center, visiting the troops in Iraq, contributing to hunger relief, having success on the football field and building the character and reputation of the university. He said he was proud to call the coach his friend. When asked if he planned to fire Tressel, <a href="http://www.thelantern.com/campus/tressel-s-vest-isn-t-bulletproof-1.2206415?pagereq=2" target="_blank"><strong>Gee joked</strong></a> he hoped the coach wasn’t going to dismiss him.</p>
<p>At the end of May, when Sports Illustrated let the university know they had <a href="http://sportsillustrated.cnn.com/2011/magazine/05/30/jim.tressel/index.html" target="_blank"><strong>information</strong></a> that the NCAA violations in Tressel’s tenure were more pervasive, Tressel <a href="http://msn.foxsports.com/collegefootball/story/Text-of-Jim-Tressels-resignation-letter-053011" target="_blank"><strong>announced his resignation </strong></a>(Gee’s support, and presumably that of trustees, having evaporated).</p>
<p>(Tressel has since taken a position as game day consultant for the NFL's Indianapolis Colts.  The Colts announced that Tressel would start on the seventh game of the 2011 season after <a href="http://latimesblogs.latimes.com/sports_blog/2011/09/jim-tressel-suspended-fo r-six-games-by-colts.html" target="_blank"><strong>sitting out the first six</strong></a> to try and avoid controversy as former OSU quarterback Terrell Pryor was required by the NFL to take a five game suspension<a href="http://espn.go.com/nfl/story/_/id/6885024/terrelle-pryor-oakland-raiders-sup plemental-draft" target="_blank"><strong> when he was drafted by the Oakland Raiders</strong></a>.  Terrell, one of the players involved in the football scandal last season, left OSU forgoing his senior year to join the NFL.)</p>
<p>In the wake of the scandal, the Trustee Audit and Compliance Committee recently undertook a university-wide <a href="http://beta.wosu.org/news/2011/07/22/osu-to-develop-new-compliance-and-crisis-management-protocol/" target="_blank"><strong>review of all compliance policies</strong></a> . In January 2012, OSU expects to implement new standards for the university and new rules for crisis management as well.</p>
<p>Gee acknowledged <a href="http://espn.go.com/college-football/story/_/id/6843627/college-football-ohio-state-president-gordon-gee-recent-football-scandal-espn-magazine" target="_blank"><strong>in an interview</strong></a> this month he had sent a signal he didn’t want to be bothered: “None of us want to hear bad news. We hear what we want to hear. It's not just about people being forthcoming. It's about us being receptive, and I start with myself."</p>
<p>In the tsunami of OSU’s damage control efforts, the question is whether a best practice compliance program will impact tone at the top and if ethical violations will be seen as such and defended against. Or will those who deliver football or basketball glory continue to seem too big to fail?</p>
<p>College presidents, like CEOs, have countless demands on their time as they seek to build great organizations. The challenge is that “integrity” is just a nine letter word until leaders give it life by choosing to use one of their bullets to uphold it. Legendary UCLA basketball coach <a href="http://theweekinethics.wordpress.com/2010/06/05/the-ethics-of-ceo-leadership-the-message-of-john-wooden-1910-2010/" target="_blank"><strong>John Wooden said it best</strong></a>:  “Be more concerned with your character than your reputation, because your character is what you really are; your reputation is merely what others think you are.”</p>
<p><em>(Update 12/20/2011: The NCAA Committee on Infractions ended its investigation of OSU and <a href="http://www.latimes.com/sports/la-sp-ohio-state-20111221,0,1741685.story" target="_blank"><strong>cited OSU for "failure to monitor."</strong></a> Sanctions include a one-year bowl ban and losing nine scholarships over the next three years.   Gene Smith, OSU's Athletic Director said, "We are surprised and disappointed  with the NCAA's decision."  OSU indicated it would not appeal the NCAA sanction.)</em></p>
<p><strong>Photo </strong>by <a href="http://www.flickr.com/photos/avinashkunnath/" target="_blank"><strong>avinashkunnath</strong></a>, via Flickr</p>
<p><em><a href="http://business-ethics.com/wp-content/uploads/2011/04/Gael-OBrien_ID_Crop.jpg"><img class="alignleft size-full wp-image-6864" title="Gael OBrien_ID_Crop" src="http://business-ethics.com/wp-content/uploads/2011/04/Gael-OBrien_ID_Crop.jpg" alt="Gael OBrien_ID_Crop" width="42" height="52" /></a>Gael O’Brien is a Business Ethics Magazine columnist. Gael is a     thought leader on building leadership, trust, and reputation and writes <a href="http://theweekinethics.wordpress.com/" target="_blank"><strong>The Week in Ethics.</strong></a></em></p>
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		<title>Facing Bribery Inquiry, News Corp. Lawyers Up With Former Federal Prosecutors</title>
		<link>http://business-ethics.com/2011/07/21/1711-facing-bribery-inquiry-news-corp-lawyers-up-with-former-federal-prosecutors/</link>
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		<pubDate>Thu, 21 Jul 2011 21:03:58 +0000</pubDate>
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		<description><![CDATA[The embattled media conglomerate News Corporation and its independent directors have not only hired top criminal defense lawyers, they’ve also hired former Justice Department prosecutors well-versed in U.S. bribery law.  The new hires are a sign that the company is taking the Justice Department’s preliminary investigation rather seriously.]]></description>
			<content:encoded><![CDATA[<p><strong>by Marian Wang, <a href="www.propublica.org" target="_blank">ProPublica</a></strong></p>
<p>The embattled media conglomerate News Corporation and its independent directors have not only hired <a href="http://dealbook.nytimes.com/2011/07/14/news-corp-hires-top-criminal-defense-lawyer/" target="_blank"><strong>top criminal defense lawyers</strong></a>, they’ve also hired former Justice Department prosecutors well-versed in U.S. bribery law.</p>
<p>The new hires are a sign that the company is taking the Justice Department’s <a href="http://www.reuters.com/article/2011/07/15/us-newscorp-usa-probe-idUSTRE76E0IK20110715" target="_blank"><strong>preliminary investigation</strong></a>—and the potential that the inquiry may turn specifically to bribery—rather seriously. (Read <a href="http://business-ethics.com/2011/07/12/1608-how-murdoch-reporters-bribes-to-british-cops-violate-u-s-law/" target="_blank"><strong>our story</strong></a> on why News Corp. may have good reason to worry.)</p>
<p>The company has hired Mark Mendelsohn, who until <a href="http://blogs.wsj.com/law/2011/07/19/news-corp-hires-fcpa-expert/" target="_blank"><strong>last year</strong></a> was the Justice Department’s top enforcer of the Foreign Corrupt Practices Act—and an aggressive one, at that.</p>
<p>Here’s FCPA expert Richard Cassin, writing on the <a href="http://www.fcpablog.com/blog/2010/4/14/goodbye-mr-mendelsohn.html" target="_blank">FCPA Blog</a> about Mendelsohn’s enforcement record:</p>
<p style="padding-left: 30px;">Mendelsohn's view of the FCPA and American anti-corruption policy wasn't complicated. He pushed enforcement against corporations of any size and from any country. … He also led the government's charge against individual FCPA defendants—among them KBR's Jack Stanley, entrepreneur Frederic Bourke, and the 22 shot-show defendants.</p>
<p>As the UK’s <a href="http://www.guardian.co.uk/media/2011/jul/18/news-corp-global-investigation-bribery" target="_blank">Guardian notes</a>, a full investigation of possible FCPA violations would likely drag other News Corp. subsidiaries into the mess—a costly and time-consuming process, but one that Mendelsohn will be able to help the company navigate.</p>
<p>The company’s independent directors, meanwhile, have hired former federal prosecutor Mary Jo White, who in 2007 conducted a<a href="http://www.reuters.com/article/2011/07/20/us-newscorp-lawyers-idUSTRE76J00720110720" target="_blank"><strong> major internal investigation of Siemens</strong></a> when it faced bribery allegations. News Corp. has also hired former U.S. Attorney General Michael Mukasey, who in addition to having experience with internal investigations also has an unusual connection to the FCPA.</p>
<p>As <a href="http://www.propublica.org/blog/item/as-mideast-lashes-out-against-corruption-chamber-of-commerce-lobbies-to-wea" target="_blank"><strong>we've noted</strong></a>, Mukasey was hired in March as a lobbyist for the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce. His lobbying registration shows he’s working specifically to roll back aggressive enforcement of the Foreign Corrupt Practices Act.</p>
<p>The inquiry into News Corp. is still very early. So far the Justice Department has said that the FBI, in response to media reports and a request from lawmakers, is investigating whether News Corp. tried to <a href="http://online.wsj.com/article/SB10001424052702303795304576456231475009622.html?mod=googlenews_wsj" target="_blank"><strong>hack into the voicemails of 9/11 victims</strong></a> and whether its <a href="http://dealbook.nytimes.com/2011/07/18/news-corp-braces-for-legal-trouble-in-the-u-s/" target="_blank"><strong>payments to U.K. law enforcement</strong></a> violated the FCPA.</p>
<p><em><strong><a title="ProPublica-Home" href="http://www.propublica.org/" target="_blank">ProPublica</a></strong> is an independent, non-profit  newsroom  that produces  investigative                       journalism in the public  interest.   This  article   is             republished      with    permission under a <strong><a title="Creative  Commons License" href="http://creativecommons.org/licenses/by-nc-nd/3.0/us/" target="_blank">Creative Commons</a></strong> license.</em></p>
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		<title>How Murdoch Reporters&#8217; Bribes to British Cops Violate U.S. Law</title>
		<link>http://business-ethics.com/2011/07/12/1608-how-murdoch-reporters-bribes-to-british-cops-violate-u-s-law/</link>
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		<pubDate>Tue, 12 Jul 2011 20:15:12 +0000</pubDate>
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		<description><![CDATA[As the phone hacking scandal continues to unfold, British press reports say more than $160,000 was paid by News of the World reporters to police officers in the U.K.  News of the World is owned by Rupert Murdoch's News Corp. - whose stock is listed in the U.S. - and the alleged bribes could cause the company serious trouble with U.S. prosecutors or the Securities and Exchange Commission.]]></description>
			<content:encoded><![CDATA[<p><strong>by Jake Bersntein, <a href="http://www.propublica.org/" target="_blank">ProPublica</a></strong></p>
<p>Imagine you're a Fleet Street reporter at a British tabloid with a pocketful of cash. You meet a trusted source at a pub, a police officer who tells you about the royal family's confidential schedule in exchange for a small gratuity. You hand over a few quid and rush off with a photographer to stake out a health club where Camilla Parker-Bowles is toning her abs.</p>
<p>Guess what: If you work for Rupert Murdoch, you may have violated U.S. law. What the government nails you for could depend on how you and your bosses account for the sketchy deal with the cop.</p>
<p>If you're entirely honest in the company's internal books and enter the payment as a "bribe," you've just created an irrefutable piece of evidence that can be used against you and your company in a prosecution by the Justice Department for violating U.S. statutes against overseas bribery. If, as is more likely, you file an expense account which refers to the cash payment as "taxis" or "office supplies," you stand a chance of being pursued by the Securities and Exchange Commission for keeping fake records.</p>
<p>News International Limited, the British arm of the Murdoch empire, is a subsidiary of News Corp., a publicly traded American company which also owns The Wall Street Journal and Fox News (not to mention the Sunday Times of London, The Times of London, and the British tabloid The Sun.) Because of this, experts say, News Corp. and all of its subsidiaries come under the Foreign Corrupt Practices Act, a Watergate-era law which makes it a crime for U.S. companies to participate in bribery abroad.</p>
<p>The scope and number of payments remains unclear. British press reports say more than $160,000 was paid by News of the World reporters to police officers. The issue came to light last week after News International turned over a trove of internal emails to authorities.</p>
<p>"A small number of officers may have taken illegal payments. That is fundamentally corrupt," Met Commissioner Sir Paul Stephenson told the BBC. "If true, I will be determined to root them out, find them and put them in front of the criminal court."</p>
<p>After years of relative quiet, the United States has substantially stepped up the resources to prosecute companies for violating the bribery law. There are 150 open investigations of American companies, according to the law firm Gibson Dunn &amp; Crutcher. In 2005, the Securities and Exchange Commission and the Department of Justice combined for a total of just 12 FCPA enforcement actions. By 2010 that number had jumped to 54, the law firm reports. We've written previously on this subject when it involved payments by<strong> <a href="http://www.propublica.org/article/kbr-exec-plea-widens-probe-909" target="_blank">Albert Jack Stanley</a></strong><span> </span>, a former executive at KBR.</p>
<p>Unless information emerges that News Corp. executives in the United States were aware and condoned illegal behavior, it is doubtful whether the company or individual executives would face criminal prosecution in the United States, several defense lawyers said.</p>
<p>A prominent academic, Michael Koehler, who tracks prosecutions on his blog the <a href="http://fcpaprofessor.blogspot.com/" target="_blank"><strong>FCPA Professor<span> </span></strong></a>, is not as sure the global news giant will escape criminal prosecution.</p>
<p>"Look at the 2011 enforcement actions on my blog," he says. "None of these involved high level officers or board members."</p>
<p>But lack of evidence of executive complicity in bribery doesn't protect the parent company from civil actions. Where News Corp. may be most vulnerable is under the "Books and Records" and "Internal Controls" provisions of the FCPA, according to lawyers who practice in this field.</p>
<p>Even if News Corp. subsidiaries recorded the bribes accurately in their books, it could land the company in difficulty with the SEC. Since the bribery was permitted in the first place, the charges would also open up the company to questions about its internal controls.</p>
<p>Fines for these violations can be steep. In 2009 and 2010 combined the Justice Department charged over 50 individuals and collected nearly $2 billion in criminal fines, said Assistant Attorney General Lanny Breuer in a recent <a href="http://www.justice.gov/criminal/pr/speeches/2011/crm-speech-110525.html" target="_blank"><strong>speech</strong></a>. In 2010, the SEC brought in almost $530 million in corporate FCPA settlements, according to Koehler's blog. Part of what makes it so lucrative for the government is that the SEC often requires the companies "disgorge" the gains they made from illicit activities and pay interest on them.</p>
<p>How the SEC would calculate the value of a scoop or a racy headline that resulted from a police bribe is an open question. Does one include a bump in weekly circulation? The long-time loyalty of readers? Until it was abruptly closed last week, The News of the World, the Sunday paper most closely linked to phone hacking, had Britain's largest daily circulation, with 2.7 million readers.</p>
<p>"What was the increased revenue because of this sensational headline is more art than science," says Koehler. "You could come up with some ballpark number."</p>
<p>Another cost to News Corp. would be the company-wide review the SEC or DOJ would likely demand. The company would have to satisfy the Feds that similar payments weren't made to government officials in other countries. These company reviews are part of the reason why FCPA inquiries can last for years, according to Koehler.</p>
<p>The statute of limitations on civil FCPA charges is five years. Reports about the illegal bribes seem to date back to 2006 so regulators would likely be mindful of the calendar. Companies are often rewarded for cooperating with the inquiries. "Raising a statute of limitations defense is not exactly cooperation mode," says Koehler.</p>
<p>News Corp also depends on the government for its broadcast licenses. Fox Television Stations Inc. has 269 active licenses with the Federal Communications Commission, according to the agency's website. An agency spokesman would not comment on whether FCPA violations might put those licenses in jeopardy as well.</p>
<p><em><strong><a title="ProPublica-Home" href="http://www.propublica.org/" target="_blank">ProPublica</a></strong> is an independent, non-profit  newsroom  that produces  investigative                      journalism in the public  interest.   This  article  is             republished      with    permission under a <strong><a title="Creative  Commons License" href="http://creativecommons.org/licenses/by-nc-nd/3.0/us/" target="_blank">Creative Commons</a></strong> license.</em></p>
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		<title>Think Like an Entrepreneur, Act Like a Leader</title>
		<link>http://business-ethics.com/2011/06/28/1603-think-like-an-entrepreneur-act-like-a-leader/</link>
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		<pubDate>Tue, 28 Jun 2011 20:19:36 +0000</pubDate>
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				<category><![CDATA[Business Ethics]]></category>
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		<description><![CDATA[Columnist Gael O’Brien thinks that in these increasingly uncertain times it’s worth examining the basic methodology used by many serial entrepreneurs.  The process of taking small steps to “act, learn and build from,” she says, offers models for navigating the unknown, building trust and handling potential ethical conflicts.]]></description>
			<content:encoded><![CDATA[<p><strong>by Gael O'Brien</strong></p>
<p>In a Gallup <a href="http://www.gallup.com/poll/148163/americans-confident-military-least-congress.aspx?version=print" target="_blank"><strong>poll released last week</strong></a>, 64 percent of Americans surveyed expressed a great deal/quite a lot of confidence in small business compared to 19 percent who felt the same about big business. This isn’t new information – small business has consistently inspired more trust than corporations.</p>
<p><a href="http://business-ethics.com/wp-content/uploads/2010/12/CEO_iStock_000012013232XSmall_Feature.jpg"><img class="alignleft size-full wp-image-5930" title="CEO_iStock_000012013232XSmall_Feature" src="http://business-ethics.com/wp-content/uploads/2010/12/CEO_iStock_000012013232XSmall_Feature.jpg" alt="CEO_iStock_000012013232XSmall_Feature" width="140" height="145" /></a>In increasingly uncertain times globally, how serial entrepreneurs (those who are continually putting ideas in action) think and act offers models for navigating the unknown as well as handling potential ethical conflicts.</p>
<p>Emerging <a href="http://www.fastcompany.com/1755314/extreme-us-tornadoes-in-2011" target="_blank"><strong>extreme weather patterns</strong></a>, erupting political unrest and global financial market volatility are some of the issues that are forcing business leaders to operate against the backdrop of the unknowable, where using the past to help predict the future is increasingly inadequate. This is far less of an issue for serial entrepreneurs.</p>
<p>Take for example <a href="http://hbr.org/2011/07/adaptability-the-new-competitive-advantage/ar/1" target="_blank"><strong>an article in the latest Harvard Business Review</strong></a> offering adaptability as the new competitive advantage for big business in an era of risk and instability. It advocates experimentation, as a way around the current limits of forecasting, and embracing failure’s lessons.</p>
<p>These are concepts that are part of serial entrepreneurs’ DNA. The inevitability that these approaches may be seen as increasingly valuable within large companies – and how that will impact more traditional cultures – offers corporations, not already doing so, the opportunity to approach challenges differently.</p>
<p>The extensive research and writing about how serial entrepreneurs think and solve problems done by <a href="http://www.darden.virginia.edu/web/Faculty-Research/Directory/Full-time/Saras-D-Sarasvathy/" target="_blank"><strong>Saras Sarasvathy</strong></a> shifted focus away from the story of highly individualistic founders and the companies they created to common aspects of their thought process. This invites the question of whether the process that works for serial entrepreneurs can apply to the rest of us.</p>
<p>When <strong><a href="http://president.babson.edu/biography.aspx" target="_blank">Leonard Schlesinger</a></strong> became president of <a href="http://www3.babson.edu/About/" target="_blank"><strong>Babson College</strong></a> in 2008, he invited Sarasvathy, who teaches at the <a href="http://www.darden.virginia.edu/web/Home/" target="_blank"><strong>Darden School of Business</strong></a>,<a href="http://www.darden.virginia.edu/web/Home/"></a> to campus to meet with him and faculty members as part of the ongoing conversations Babson began on what entrepreneurial thought and action can mean at the institution.</p>
<p>There have been many byproducts of this focus, including a book due out this fall by several faculty, <a href="http://www.amazon.com/New-Entrepreneurial-Leader-Developing-Opportunity/dp/1605093440 " target="_blank"><strong><em>The New Entrepreneurial Leader</em></strong></a>, which captures <a href="http://www3.babson.edu/ESHIP/outreach-events/symposia/babson-insight/developing-entrepreneurial-leaders.cfm" target="_blank"><strong>entrepreneurial thought as a method</strong></a>.</p>
<p>Another outcome is a book Schlesinger has been writing. His process actually mirrors entrepreneurial thought in action: in the face of the unknown, take a small step forward, pause to see what is learned, determine what you can afford/want to pay to play, bring others along, incorporate that learning into the next step, and build off the unexpected. The bottom line: Act, Learn and Build.</p>
<p>For example, Schlesinger and his<strong> <a href="http://actiontrumpseverything.com/about/about-the-authors/" target="_blank">co-authors</a></strong> Charles Keifer and Paul Brown tested their ideas, language, and listened to stories in a series of free two-day courses taken by 300 entrepreneurs. Armed with that information, the three men collaborated on a book that was written in seven weeks which they called, <em>Action Trumps Everything: Creating What You Want in an Uncertain World</em>. It was made available as a <a href="http://actiontrumpseverything.com/" target="_blank"><strong>free PDF on the website</strong></a> and readers were encouraged to leave feedback.</p>
<p>In December 2010, they published a limited edition of the book for Babson alumni and friends, again encouraging feedback on the website. They have coined the expression CreAction -- acting your way into the future you desire by taking small, smart steps. Expanding and revising the book, this year, they’ve added input from another 200 course participants. They will turn the manuscript over to Harvard Business Review Press next month and the book will be published in February under a new title.</p>
<p>In an interview with Schlesinger this month, I asked if there was anything different about how the first 300 men and women, who were course participants, responded to ideas or provided insights on how men and women entrepreneurs might lead differently.</p>
<p>He indicated it was a lot easier for the women to extend the ideas to all aspects of their life. Whereas the men were more focused on using the ideas either for their current venture or a transitional venture, wanting to know exactly how those ideas would help them.</p>
<p>“As we got into the conversations,” Schlesinger said, “women found much more in the way of natural linkages of action not only to their ventures, but to their friendships, relationships, to their families; and really enriched the conversation in meaningful ways that quite honestly got me to the point of thinking quite seriously about my presidency, about my own role, that what we are talking about is a way to live, not a way to work.”</p>
<p>I asked Schlesinger how ethics impacts entrepreneurial thought and action. While there are many answers, something that cuts across curriculum and life is a program, <a href="http://business-ethics.com/2010/09/15/1323-speaking-up-for-values-in-business/" target="_blank"><strong>Giving Voice to Values</strong></a>,  he brought to Babson two years ago when he recruited <a href="http://www.givingvoicetovaluesthebook.com/about/" target="_blank"><strong>Mary Gentile</strong></a>.  The curriculum is being taught in universities on six continents.</p>
<p>Embedded in Action Trumps Everything<em>,</em> and Giving Voice to Values, Schlesinger said, is the notion that practice makes better.  In addition to advancing what is going on in ethics education, he indicated, Gentile’s work builds a practiced-base methodology that goes alongside the discussion method; it increases the likelihood that when people confront a real situation, they will have had enough practiced-based scenarios that they’ve worked through from their own experience and reflected on that natural behavior comes more easily.</p>
<p>“I don’t think 25,000 more hours of teaching people the difference between right and wrong is going to make much progress,” Schlesinger said. “Most of these people actually do know at the core the difference between right or wrong and they know what to do with it. They know how to intellectualize what they would do with it. They just don’t know how to deal with it in real time in a real place. When confronted by a situation and no experience and no practice, they default to places where they have never been. That is where you find people cutting corners, taking short cuts, and doing stupid things.”</p>
<p>Referring to Malcolm Gladwell’s pronouncement in <a href="http://www.gladwell.com/outliers/index.html" target="_blank"><strong><em>Outliers</em></strong></a> that greatness in any profession comes from 10,000 hours of practice, Schlesinger added, “there is a certain truth there and that truth is embedded in Mary’s program and its adaptability for use across different platforms.”</p>
<p>Serial entrepreneurs have a thought methodology that is available to any of us that can be used in the face of an increasingly unknowable future. The process of taking small steps to act, learn and build from essentially thwarts paralysis, being overwhelmed or being stopped by obstacles – three circumstances where good decisions are not likely to be made.</p>
<p>The key is that action provides evidence, and with the evidence of experience, as well as a practiced-based approach in curriculum and in how one approaches one’s life, there is greater clarity around self-knowledge, purpose, trade-offs, and one’s boundaries. With the clarity, greater transparency is possible, which can lead to a greater capacity to earn others’ trust.</p>
<p>Evidence allows the road ahead to seem more knowable.</p>
<p>Entrepreneurial thought and action -- becoming a way to live, not just a way to work.</p>
<p><em><a href="http://business-ethics.com/wp-content/uploads/2011/04/Gael-OBrien_ID_Crop.jpg"><img class="alignleft size-full wp-image-6864" title="Gael OBrien_ID_Crop" src="http://business-ethics.com/wp-content/uploads/2011/04/Gael-OBrien_ID_Crop.jpg" alt="Gael OBrien_ID_Crop" width="42" height="52" /></a>Gael  O’Brien is a Business Ethics Magazine columnist. Gael is a      thought  leader on building leadership, trust, and reputation and writes <a href="http://theweekinethics.wordpress.com/" target="_blank"><strong>The Week in Ethics.</strong></a></em></p>
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		<title>In Boeing Dispute, Growing Controversy Clouds Facts</title>
		<link>http://business-ethics.com/2011/06/17/in-labor-board-dispute-with-boeing-growing-controversy-clouds-facts/</link>
		<comments>http://business-ethics.com/2011/06/17/in-labor-board-dispute-with-boeing-growing-controversy-clouds-facts/#comments</comments>
		<pubDate>Fri, 17 Jun 2011 19:07:00 +0000</pubDate>
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		<description><![CDATA[One of the U.S.’s largest manufacturers, Boeing, has been sued by the government for allegedly punishing union workers by shifting a proposed new plant to another state. Republicans and other critics have charged that the government is overstepping its authority and creating a dangerous precedent.]]></description>
			<content:encoded><![CDATA[<p><strong>by Marian Wang, <a href="www,propublica.org" target="_blank">Pro Publica</a></strong></p>
<p>Just months after fights to limits labor rights <a href="http://www.npr.org/2011/05/24/136610879/collective-bargaining-curbs-spread-across-the-u-s?ps=cprs" target="_blank"><strong>in Wisconsin and other states<span> </span></strong></a> grabbed national attention, another messy labor dispute is getting headlines.</p>
<div id="attachment_7419" class="wp-caption alignleft" style="width: 310px"><a href="http://business-ethics.com/wp-content/uploads/2011/06/Boeing_787.jpg"><img class="size-medium wp-image-7419  " title="Boeing_787" src="http://business-ethics.com/wp-content/uploads/2011/06/Boeing_787-300x200.jpg" alt="787 Dreamliners in the final assembly facility in Everett, Wash." width="300" height="220" /></a><p class="wp-caption-text">787 Dreamliners in final assembly facility in Everett, Wash.</p></div>
<p>One of the nation’s largest manufacturers, Boeing, has been sued by the government for allegedly punishing union workers by shifting a proposed new plant to another state. Republicans and other critics have charged that the government is overstepping its authority and creating a dangerous precedent.</p>
<p>The dispute has <strong><a href="http://blogs.wsj.com/washwire/2011/05/12/boeing-labor-fight-takes-over-harkin-hearing/" target="_blank">taken over</a></strong><span> </span>congressional hearings, prompted <strong><a href="http://www.washingtonpost.com/politics/federal-government/16-state-ags-most-republicans-weigh-in-on-nlrbs-action-against-boeing-sc-plant/2011/06/09/AGwDeiNH_story.html" target="_blank">more than a dozen states</a></strong><span> </span> to chime in on Boeing’s side, and has even become a talking point for Republican presidential candidates. Tim Pawlenty compared the case to “<a href="http://thehill.com/blogs/blog-briefing-room/news/165895-pawlenty-nlrbs-boeing-case-evokes-soviet-union" target="_blank"><strong>the Soviet Union circa 1970s or 1960s or ‘50s<span> </span>.</strong></a>”</p>
<p>Amid all the rhetoric, we’ve decided to step back and lay out the facts.</p>
<p><strong>What the controversy’s about</strong></p>
<p>The National Labor Relations Board <a href="http://www.nlrb.gov/boeing-complaint-fact-sheet" target="_blank"><strong>has alleged</strong></a> that Boeing scrapped its plans for a new plant in Washington state to punish union workers there for going on strike. The company opened up a nonunion plant in South Carolina <strong><a href="http://thehill.com/blogs/transportation-report/aviation/165787-despite-lawsuit-boeing-opens-south-carolina-787-plant" target="_blank">last Friday</a></strong>. If the claims are true, Boeing broke federal labor law.</p>
<p>The complaint was originally brought by the machinists union in 2010. The NLRB investigated and ultimately decided that the allegations were well-founded, and it sued. Cases like this often settle before going to a judge. That <a href="http://online.wsj.com/article/SB10001424052702304259304576375940769488316.html?mod=googlenews_wsj" target="_blank"><strong>hasn’t happened</strong></a> here. And this week, Boeing and the NLRB faced off in court for the first time.</p>
<p>The administrative hearing this week is a hearing on the facts. If the decision is appealed, it will go to the NLRB’s board, which serves as a quasi-judicial body and acts independently of the agency’s general counsel. (As the agency <a href="http://www.nlrb.gov/news-media/fact-check" target="_blank"><strong>explains it</strong></a>, the general counsel functions as a prosecutor, and the board functions as a court.)</p>
<p>Though the issue hasn’t yet come before the board, Republican critics have worried that it will rule in favor of the union because it has a <strong><a href="http://www.nytimes.com/2011/04/23/business/23labor.html?pagewanted=1" target="_blank">Democratic majority at the moment</a></strong>.</p>
<p><strong>Why the law’s simple, but the facts in the case aren’t</strong></p>
<p>Federal labor law—specifically, the National Labor Relations Act—protects workers from retaliation or threats of retaliation for exercising the right to form a union, bargain collectively, or go on strike.</p>
<p>“There’s nothing particularly extraordinary about this case as a matter of the legal principles at stake,” said Catherine Fisk, a University of California-Irvine law professor and former Justice Department attorney. Fisk has <strong><a href="http://www.law.uci.edu/faculty/profile_c_fisk.html" target="_blank">written extensively</a></strong> about labor law and the NLRB.</p>
<p>According to Fisk, the question is whether the labor board can prove that the dispute with the workers in Seattle was Boeing’s primary reason for moving its planned plant. Companies may legally shift work for reasons such as labor costs, but they may not do so out of retaliation against workers for past strikes or to prevent future strikes.</p>
<p>But at least two former NLRB chairmen have said that the case is <strong><a href="http://www.foxnews.com/politics/2011/04/26/ex-labor-board-chairman-union-backed-case-boeing-unprecedented/" target="_blank">unprecedented</a></strong> and have <a href="http://www.slate.com/id/2294834/" target="_blank"><strong>taken issue</strong></a> with the agency’s conclusion about Boeing’s motive.</p>
<p><strong>Why establishing motive is tricky</strong></p>
<p>In <a href="http://seattletimes.nwsource.com/html/businesstechnology/2011228282_albaugh02.html" target="_blank"><strong>an interview last year</strong> </a>with the Seattle Times, Boeing executive Jim Albaugh said the following about the decision to relocate: “The overriding factor was not the business climate, and it was not the wages we’re paying people today. It was that we can’t afford to have a work stoppage every three years.”</p>
<p>NLRB’s general counsel took that statement—and others—to mean that Boeing was trying to avoid the union, which had a history of strikes dating back to the 1970s.</p>
<p>However, the company <strong><a href="http://seattletimes.nwsource.com/ABPub/2011/05/04/2014962951.pdf" target="_blank">has argued</a></strong> that Albaugh’s quote was taken out of context and have noted that his full statement went on to say more: “We can’t afford to continue the rate of escalation of wages as we have in the past. You know, those are the overriding factors. And my bias was to stay here but we could not get those two issues done despite the best efforts of the Union and the best efforts of the company.”</p>
<p>The Seattle Times had <a href="http://seattletimes.nwsource.com/html/businesstechnology/2011228282_albaugh02.html" target="_blank">this take</a> on Albaugh’s statements about the work in Seattle:</p>
<p style="padding-left: 30px;">He repeatedly made clear that those two things—first, no strikes; second, lowered escalation of wages in the future—remain deal breakers for placing future work here.</p>
<p>Here’s the NLRB’s complaint against Boeing, <strong><a href="http://www.nlrb.gov/sites/default/files/documents/443/cpt_19-ca-032431_boeing__4-20-2011_complaint_and_not_hrg.pdf" target="_blank">filed in April</a></strong><span> </span>[PDF]. Boeing has argued that it did not make the decision to open the plant in South Carolina <a href="http://seattletimes.nwsource.com/ABPub/2011/05/04/2014962951.pdf" target="_blank"><strong>out of retaliation against unionized employees<span> </span></strong></a>. The company has also argued that the workers in Seattle weren’t adversely affected by the opening of the South Carolina factory because no jobs in Seattle were lost.</p>
<p><strong>What’s happening now</strong></p>
<p>An administrative law judge will have to decide whether the NLRB’s lawsuit against Boeing has merit. That hearing began Tuesday in Seattle.</p>
<p>Boeing kicked off the hearing by <a href="http://www.google.com/hostednews/ap/article/ALeqM5jRQ1ir0h7yJ6Gk0OIy8VigWUxJ_Q?docId=504def2014aa4c17a87f12e93be9429d" target="_blank"><strong>asking the judge to dismiss the case</strong></a>. Judge Clifford Anderson urged Boeing and the NLRB to <a href="http://seattletimes.nwsource.com/html/businesstechnology/2015319935_boeingnlrb15.html" target="_blank"><strong>work out a settlement</strong></a>, stressing that the case could take years if the decision keeps getting appealed: “I’ll be retired or dead,” he said.</p>
<p><strong>How the process has become politicized</strong></p>
<p>What was initially a dispute between one company and its workers has ballooned into a <strong><a href="http://seattletimes.nwsource.com/html/businesstechnology/2015269434_boeingnlrb09m.html" target="_blank">broader political fight</a></strong>. Republican politicians on both the state and congressional level have criticized the NLRB and rushed to Boeing’s defense, framing the NLRB’s action as an attack on what are known as <a href="http://www.nrtw.org/en/b/rtw_faq.htm" target="_blank"><strong>right-to-work states</strong></a>, or states that bar employers or unions from making union membership a condition of employment. South Carolina is a right-to-work state.</p>
<p>Last week, Rep. Darrell Issa, chairman of the House Oversight committee, announced that his panel would investigate whether the NLRB was overreaching and trying to force workers into unions. Several House Democrats said the investigation was an attempt to influence a legal proceeding, but Issa said such hearings “<strong><a href="http://thehill.com/business-a-lobbying/165713-dems-defend-nlrb-against-gop-pushback-on-boeing-suit" target="_blank">are not inherently improper</a></strong> by virtue of exploring a pending administrative matter.”</p>
<p>South Carolina politicians—from the <a href="http://www.scag.gov/archives/5451" target="_blank"><strong>state’s attorney general</strong></a> to its governor to its congressional representatives—have also sought to influence the court. The state’s governor, Nikki Haley, is slated to testify tomorrow at Issa’s hearing. “There’s no secret that I don’t like the unions,” <a href="http://abcnews.go.com/Business/wireStory?id=12725834" target="_blank"><strong>she has said</strong></a>. Haley has vowed to <strong><a href="http://seattletimes.nwsource.com/html/localnews/2015337523_apscboeingunions1stldwritethru.html" target="_blank">keep up the political pressure</a></strong> in order to stop the lawsuit.</p>
<p>Sen. Lindsay Graham of South Carolina has threatened to block the Obama administration’s Commerce Secretary nominee <a href="http://www.greenvilleonline.com/article/20110613/NEWS/306130032" target="_blank"><strong>until </strong><strong>President Obama supports Boeing</strong></a>: “Tell the country we think Boeing’s a good, ethical company and they’ve done nothing wrong,” Graham said this week. (Obama’s pick for Commerce Secretary happens to be a former Boeing board member.) Graham’s colleague, Sen. Jim DeMint, also filed a <strong><a href="http://www.sanluisobispo.com/2011/06/06/1631572/demint-seeks-nlrb-communications.html" target="_blank">public records request</a></strong> last week for any communications the agency had with the union and Obama administration officials. DeMint had previously called the labor board “<strong><a href="http://www.newsmax.com/InsideCover/demint-labor-relations-board/2011/04/21/id/393722" target="_blank">a bunch of thugs</a></strong>.”</p>
<p>And South Carolina’s attorney general—joined by the attorneys general of 15 other states—<strong><a href="http://www.scag.gov/wp-content/uploads/2011/03/6.9.11-NLRB-Boeing-Sixteen-AG-Amicus-Brief.pdf" target="_blank">filed an amicus brief</a></strong><span> </span>[PDF] last week alleging that the NLRB’s action against Boeing could harm job growth in the United States.</p>
<p>Even Republican presidential contenders have weighed in on the issue. As The Hill notes, Mitt Romney, Newt Gingrich, and Tim Pawlenty have <strong><a href="http://thehill.com/blogs/blog-briefing-room/news/165895-pawlenty-nlrbs-boeing-case-evokes-soviet-union" target="_blank">all criticized</a></strong> the labor board.</p>
<p>The White House meanwhile, has mostly stayed quiet about the matter. A White House official told Fox News that the case is “<a href="http://www.foxnews.com/politics/2011/05/05/senate-republicans-threaten-fight-nlrb-nominations-boeing-complaint/#ixzz1PGoE6Ep9" target="_blank"><strong>an independent agency’s enforcement action</strong></a>,” and “the White House does not get involved in particular enforcement matters.”</p>
<p>But the White House <strong><a href="http://www.huffingtonpost.com/2011/03/09/nlrb-white-house-muzzled-_n_833354.html" target="_blank">did tell the NLRB to back off</a></strong> in March when the agency issued a statement criticizing House Republicans’ proposed cuts to the NLRB budget. An official from the Office of Management and Budget ordered the labor board to <a href="http://www.huffingtonpost.com/2011/03/09/nlrb-white-house-muzzled-_n_833354.html//" target="_blank"><strong>remove the statement</strong></a> from its website. “Administration positions on proposed legislation are provided by the White House,” an OMB spokeswoman told Huffington Post.</p>
<p><em><strong><a title="ProPublica-Home" href="http://www.propublica.org/" target="_blank">ProPublica</a></strong> is an independent, non-profit  newsroom  that produces  investigative                     journalism in the public  interest.   This  article is             republished      with    permission under a <strong><a title="Creative  Commons License" href="http://creativecommons.org/licenses/by-nc-nd/3.0/us/" target="_blank">Creative Commons</a></strong> license.</em></p>
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		<title>More Scrutiny for Doctors Profiting From Medical Devices</title>
		<link>http://business-ethics.com/2011/06/11/1359-more-scrutiny-for-doctors-profiting-from-medical-devices/</link>
		<comments>http://business-ethics.com/2011/06/11/1359-more-scrutiny-for-doctors-profiting-from-medical-devices/#comments</comments>
		<pubDate>Sat, 11 Jun 2011 17:58:52 +0000</pubDate>
		<dc:creator>admin2</dc:creator>
				<category><![CDATA[Business Ethics]]></category>
		<category><![CDATA[Featured Story]]></category>
		<category><![CDATA[Recent Stories]]></category>
		<category><![CDATA[Regulation & Legislation]]></category>
		<category><![CDATA[Doctors]]></category>
		<category><![CDATA[Dr. Vishal James Makker]]></category>
		<category><![CDATA[Ethics]]></category>
		<category><![CDATA[Medical Devices]]></category>
		<category><![CDATA[Medicare]]></category>
		<category><![CDATA[Omega Solutions]]></category>
		<category><![CDATA[The Wall Street Journal]]></category>

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		<description><![CDATA[Five U.S. senators are calling for an investigation into a system that gives surgeons a financial stake in the devices they use on their patients. The inquiry comes after a Wall Street Journal investigation of Dr. Vishal James Makker, a surgeon with a questionable track record for performing multiple spinal operations on his patients.]]></description>
			<content:encoded><![CDATA[<p><strong>by Braden Goyette, <a href="www.propublica.org" target="_blank">Pro Publica</a><br />
</strong></p>
<p>Five U.S. senators are <strong><a href="http://online.wsj.com/article/SB10001424052702304778304576373592455703056.html?mod=WSJ_hps_sections_news" target="_blank">calling for an investigation<span> </span></a></strong> into a system that gives surgeons a financial stake in the devices they use on their patients. The inquiry comes after<a href="http://online.wsj.com/article/SB10001424052748703858404576214642193925996.html" target="_blank"><strong> a <em>Wall Street Journal </em>investigation</strong></a><span> </span>of Dr. Vishal James Makker, a surgeon with a questionable track record for performing multiple spinal operations on his patients.</p>
<p><a href="http://business-ethics.com/wp-content/uploads/2010/04/Doctors_GettyImages_56384186.jpg"><img class="alignleft size-full wp-image-2592" title="Doctors" src="http://business-ethics.com/wp-content/uploads/2010/04/Doctors_GettyImages_56384186.jpg" alt="Doctors" width="136" height="115" /></a>An <a href="http://online.wsj.com/article/SB10001424052748704425804576221090879848516.html" target="_blank"><strong>analysis of Medicare data<span> </span></strong></a> revealed that, among physicians who regularly performed these kinds of operations for Medicare patients, Makker had the highest rate of repeat surgeries in the nation -- nearly 10 times the national average. Makker operated on patients up to 7 times; many patients complained of additional health problems as a result of the extra surgeries. (These findings came from a Medicare claims database that is still not available to the public, though two senators are pushing to change that -- more on that <a href="http://online.wsj.com/article/SB10001424052748704013604576249090982504246.html?mod=WSJ_WSJ_US_News_6http://online.wsj.com/article/SB10001424052748704728004576176760451957274.html"><strong>here</strong></a><span> </span>).</p>
<p>Makker told the<em> Journal</em> that he never convinces patients to have surgery, and that all the procedures he performed were medically necessary. He said that he has a high rate of repeat surgeries because people with particularly difficult cases are often referred to him. We reached out to Makker for comment through his office yesterday, and haven't heard back.</p>
<p>An unnamed source told the <em>Journal</em> that <strong><a href="http://online.wsj.com/article/SB10001424052748704336504576259142044058726.html" target="_blank">Makker told colleagues he was a partner</a></strong> in a physician-owned distributorship, or POD, called Omega Solutions. Documents show Omega paid surgeons up to $500,000 a year to use its spinal implants. Though Makker and Omega both denied he was part of the POD, the Journal's coverage brought this kind of arrangement between physicians and medical device makers to national attention.</p>
<p>PODs are groups that give doctors a financial incentive to use certain medical devices. From the <em>Journal</em>:</p>
<p style="padding-left: 30px;">Distributorships act as links between medical-device makers and hospitals: In exchange for marketing and stocking the devices, they get a cut of each sale. When surgeons own a distributorship, that commission goes into their pockets. Since surgeons often dictate to their hospitals which devices to buy, surgeons involved in PODs can effectively steer business to themselves.</p>
<p>The current inquiry focuses on whether PODs violate the law, in particular whether they <strong><a href="http://online.wsj.com/documents/MartinMemorialbansPODs.pdf" target="_blank">may violate a federal anti-kickback statute</a></strong>. According to an <a href="http://online.wsj.com/article/SB10001424052748704336504576259142044058726.html" target="_blank"><strong>earlier <em>Journal</em> article</strong></a>, the Office of Inspector General of the Department of Health and the Centers for Medicare and Medicaid Services had both previously flagged some PODs as potential violators of the anti-kickback statute and other laws.</p>
<p>The issue of conflicts of interest potentially affecting doctors' recommendations goes beyond PODs. Earlier this year, <strong><a href="http://articles.chicagotribune.com/2011-05-22/health/ct-met-medical-devices-patients-20110522_1_antonitsa-vlahoulis-medical-device-inventions" target="_blank"><em>The Chicago Tribune</em> reported</a></strong> on a surgeon who implanted devices in patients without telling them he had invented them himself, that he made a profit every time one was used, and that the devices hadn't yet received FDA approval.  The<em> Palm Beach Post</em> found that <strong><a href="http://www.propublica.org/blog/item/in-florida-doctors-with-drug-company-ties-prescribe-drugs-for-jailed-youth" target="_blank">a third of doctors</a></strong><span> </span>who prescribe antipsychotic drugs to youths in Florida's juvenile jails have received payments from pharmaceutical companies.</p>
<p>And at ProPublica, we've been reporting extensively on the issue too.</p>
<p>Last month, we detailed <a href="http://www.propublica.org/article/cardiac-society-draws-bulk-of-funding-from-stent-makers" target="_blank"><strong>a few high-profile cases</strong></a> shedding light on the overuse of stents, devices that are surgically implanted into the heart to keep arteries open.</p>
<p>Earlier this week we also reported on a body imaging company that uses pressure sales tactics to convince people to sign on for <a href="http://www.propublica.org/article/cardiac-society-draws-bulk-of-funding-from-stent-makers" target="_blank"><strong>unnecessary heart scans</strong></a>, without mentioning the associated risks.</p>
<p>We also have our long-running series on <a href="http://projects.propublica.org/docdollars/" target="_blank"><strong>Dollars for Docs</strong></a> detailing pharmaceutical companies payments to doctors.</p>
<p><em><strong><a title="ProPublica-Home" href="http://www.propublica.org/" target="_blank">ProPublica</a></strong> is an independent, non-profit  newsroom  that produces  investigative                    journalism in the public  interest.   This  article is            republished      with    permission under a <strong><a title="Creative  Commons License" href="http://creativecommons.org/licenses/by-nc-nd/3.0/us/" target="_blank">Creative Commons</a></strong> license.</em></p>
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		<title>Financial Ties Bind Medical Societies to Drug Makers</title>
		<link>http://business-ethics.com/2011/05/06/6960-financial-ties-bind-medical-societies-to-drug-and-device-makers/</link>
		<comments>http://business-ethics.com/2011/05/06/6960-financial-ties-bind-medical-societies-to-drug-and-device-makers/#comments</comments>
		<pubDate>Fri, 06 May 2011 20:42:01 +0000</pubDate>
		<dc:creator>admin2</dc:creator>
				<category><![CDATA[Business Ethics]]></category>
		<category><![CDATA[Featured Story]]></category>
		<category><![CDATA[Recent Stories]]></category>
		<category><![CDATA[Regulation & Legislation]]></category>
		<category><![CDATA[American Society of Hypertension]]></category>
		<category><![CDATA[Boston Scientific]]></category>
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		<category><![CDATA[Cleveland Clinic]]></category>
		<category><![CDATA[Conflicts of Interest]]></category>
		<category><![CDATA[Doctors]]></category>
		<category><![CDATA[Drug Companies]]></category>
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		<category><![CDATA[Health Care]]></category>
		<category><![CDATA[Heart Rhythm Society]]></category>
		<category><![CDATA[Journal of the American Medical Association]]></category>
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		<category><![CDATA[Medical Reserach]]></category>
		<category><![CDATA[Medtronic]]></category>
		<category><![CDATA[Pharmaceutical Companies]]></category>
		<category><![CDATA[Physicians]]></category>
		<category><![CDATA[Sen. Charles Grassley]]></category>
		<category><![CDATA[St. Jude Medical]]></category>

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		<description><![CDATA[From the time they arrived to the moment they laid their heads on hotel pillows, the thousands of cardiologists attending this week's Heart Rhythm Society conference in San Francisco have been bombarded with pitches for drugs and medical devices.  Who arranged this commercial barrage? The society itself, which sold access to its members and their purchasing power.]]></description>
			<content:encoded><![CDATA[<p><strong>by   																		<a title="View Charles Ornstein's other articles" href="http://www.propublica.org/site/author/charles_ornstein/">Charles Ornstein</a> and 						<a title="View Tracy Weber's other articles" href="http://www.propublica.org/site/author/tracy_weber/">Tracy Weber</a>, <a href="www.propublica.org" target="_blank">ProPublica</a></strong></p>
<p>SAN FRANCISCO — From the time they arrived to  the moment they laid their heads on hotel pillows, the thousands of  cardiologists attending this week’s Heart Rhythm Society conference have  been bombarded with pitches for drugs and medical devices.</p>
<p>St. Jude Medical adorns every hotel key card.  Medtronic ads are splashed on buses, banners and the stairs underfoot.  Logos splay across shuttle bus headrests, carpets and cellphone-charging  station</p>
<p><a href="http://business-ethics.com/wp-content/uploads/2010/04/Doctors_GettyImages_56384186.jpg"><img class="alignleft size-full wp-image-2592" title="Doctors" src="http://business-ethics.com/wp-content/uploads/2010/04/Doctors_GettyImages_56384186.jpg" alt="Doctors" width="168" height="158" /></a>At night, a drug firm gets the last word: A promo for the heart drug Multaq stood on each doctor’s nightstand Wednesday.</p>
<p>Who arranged this commercial barrage? The society itself, which sold access to its members and their purchasing power.</p>
<p>Last year’s four-day event brought in more than $5 million,  including money for exhibit booths the size of mansions and  company-sponsored events. This year, there are even more “promotional  opportunities,” as the society describes them.</p>
<p>Concerns about the influence of industry money <strong><a href="http://www.amsascorecard.org/executive-summary">have prompted universities</a></strong><span> </span>such as Stanford and the University of Colorado-Denver to ban drug  sales representatives from the halls of their hospitals and bar doctors  from paid promotional speaking.</p>
<p>Yet, one area of medicine still welcomes the largesse: societies  that represent specialists. It’s a relationship largely hidden from  public view, said David Rothman, who studies conflicts of interest in  medicine as director of the Center on Medicine as a Profession at  Columbia University.</p>
<p>Professional groups such as the Heart Rhythm Society are a logical  target for the makers of drugs and medical devices. They set national  guidelines for patient treatments, lobby Congress about Medicare  reimbursement issues, research funding and disease awareness, and are  important sources of treatment information for the public.</p>
<p>Dozens of such groups nationwide encompass every medical specialty from orthopedics to hypertension.</p>
<p>“What you’re exploring here is the subtle ways in which the  companies and professional societies become partners and — wittingly or  unwittingly — physicians become agents on behalf of the interests of the  sponsoring company,” said Dr. Steven Nissen, chair of cardiovascular  medicine at the Cleveland Clinic.</p>
<p>“It has a not very subtle effect on medicine,” said Nissen, an expert on the impact of industry money.</p>
<p><strong>‘This is our business’</strong></p>
<p>Nearly half the $16 million the heart society collected in 2010 came  from makers of drugs, catheters and defibrillators used to control  abnormal heart rhythms, the group’s website disclosed.</p>
<p>Officials of the Heart Rhythm Society say industry money does not  buy influence and is essential to developing new treatments. Still, on  Thursday the group unveiled a formal policy that, among other things,  requires more detailed disclosure of board members’ industry ties.</p>
<p>“This is our business,” said Dr. Bruce Wilkoff, the incoming society  president. “We either get out of the business or we manage these  relationships. That’s what we've chosen to do.”</p>
<p>The society is one of a handful of groups that make public details  about their finances. Most don’t. As non-profits, they must disclose  their tax returns but not their specific sources of funding.</p>
<div style="float: left; margin: 0pt 10px 10px 0pt;"><a href="http://www.propublica.org/documents/item/88087-hrs-fy10-revenue-external-sources"><img src="http://propublica.org/images/HRS-coffers-chart.png" alt="Nearly half of the Heart Rhythm Society's annual revenues come from corporate sponsorships, exhibits or grants." width="369" height="439" /></a><span> </span><span><br />
</span></div>
<p>Sen. Charles Grassley, R-Iowa, <strong><a href="http://grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=24413">requested the information</a></strong> from the Heart Rhythm Society and 32 other professional associations and groups that promote disease awareness and research.</p>
<p>Their responses and reporting by ProPublica showed wide disparities  in money the groups accept from medical companies, what they disclose  and how they manage potential conflicts of interest.</p>
<p>With billions of dollars at stake, companies can court entire  specialties by helping to bankroll doctors’ groups. The Heart Rhythm  Society’s 5,100 members represent a particularly lucrative market.</p>
<p>One implantable cardioverter defibrillator — a device that jolts the  heart back to a normal beat — can cost more than $30,000. A single  electrophysiologist, a physician specializing in heart-rhythm disorders,  can implant dozens a year. World sales of the devices totaled $6.7  billion last year, according to JPMorgan.</p>
<p>All the defibrillator manufacturers are at this week’s conference,  including market leaders Medtronic, Boston Scientific and St. Jude  Medical, which together gave the society $4 million last year.</p>
<p>These companies and others not only provided financial support to Heart Rhythm but paid many of its board members: <a href="http://www.hrsonline.org/About/Governance/upload/bot-5-4-11.pdf"><strong>Twelve of 18 directors</strong></a><strong></strong> are paid speakers or consultants for the companies, one holds stock,  and the outgoing president disclosed research ties, according to the  society’s website, which does not specify how much they receive.</p>
<p>Board members at other medical societies have similar arrangements.  The American Society of Hypertension does not post disclosures on its  website, but records provided to Grassley show that 12 of its 14 board  members had financial ties to medical companies.</p>
<p>Grassley, the top Republican on the Senate Judiciary Committee, said  these groups commonly say the money doesn’t affect what they do, but he  has doubts. “I don’t think it’s believable,” he said. “There are a lot  of incestuous relationships that really bother me.”</p>
<p><strong>Big Booths Boost Devices</strong></p>
<p>As competition among cardiac-device makers has intensified, so have  questions about whether their products are being used and marketed  appropriately.</p>
<p>In January, a study in the Journal of the American Medical Association found that <strong><a href="http://jama.ama-assn.org/content/305/1/43.short">more than one in five patients</a></strong><span> </span>who received cardiac defibrillators did not meet science-based criteria for getting them.</p>
<p>Weeks later, the Heart Rhythm Society disclosed it was <strong><a href="http://www.hrsonline.org/News/Media/press-releases/HRS_DOJstatement.cfm">assisting a U.S. Justice Department investigation</a></strong><span> </span> of the issue.</p>
<p>Two of the society’s biggest funders — Boston Scientific and St.  Jude Medical — have paid millions since 2009 to settle federal  allegations that they improperly paid kickbacks to unidentified  physicians to use their cardiac devices. Neither company admitted  wrongdoing.</p>
<p>Top sponsor Medtronic also has disclosed to shareholders that the  Department of Justice is investigating the advice it gave purchasers on  how to bill Medicare for defibrillators and payments it made to buyers  of the devices.</p>
<p>In a statement, Medtronic said societies play an important role in  educating physicians about their devices. Boston Scientific declined to  comment, and St. Jude did not respond to questions.</p>
<p>At this week’s conference, <strong><a href="http://www.sjmprofessional.com/Education/us/2011/%7E/media/Cardiac%20Pro/Professional%20Education/United%20States/Convention-Congress/HRS2011%20Floor%20Plan.ashx">Medtronic is front and center</a></strong><span> </span>with a 12,000-square-foot booth to demonstrate its products and allow physicians to examine them.</p>
<p>Medtronic spent $543,000 at last year’s meeting on a similar  exhibit, part of $1.6 million it paid to prominently display its name  around the conference and fund educational grants. The Minnesota device  maker also paid unspecified speaking or consulting fees to eight of the  society’s 18 board members.</p>
<p>The spending befits the company’s dominance of the world market for  implantable defibrillators. It sold more than $3 billion worth last  year.</p>
<p>Next booth down is the 8,100-square-foot spread of rival Boston  Scientific, with $1.6 billion in defibrillator sales last year. The  company spent $1.5 million on the society in 2010 and paid speaking or  consulting fees to seven board members.</p>
<p>Physicians must traverse <strong><a href="http://www.sjmprofessional.com/Education/us/2011/%7E/media/Cardiac%20Pro/Professional%20Education/United%20States/Convention-Congress/HRS2011%20Floor%20Plan.ashx">these and other booths</a></strong><span> </span> to reach “Poster Town,” where the latest research findings, a big draw  of the gathering, are displayed. “It’s very hard to get through there  without being accosted,” said Dr. Paul D. Varosy, director of cardiac  electrophysiology at the Department of Veterans Affairs’ Eastern  Colorado Health Care System.</p>
<p><strong>‘Tag and Release’</strong></p>
<p>Through the years, groups such as the Heart Rhythm Society have  expanded the range of sponsorships they offer to drug and device makers.  Companies can now fund Wii game rooms or put their names on conference  massage stations and on the shirts of the masseuses.</p>
<p>Some deals give companies more than name exposure. Last month, the American College of Cardiology <strong><a href="http://blog.cardiosource.org/post/Using-Technology-to-Better-Understand-ACC-Meeting-Attendees.aspx">attached tracking devices to doctors’ conference ID badges</a></strong>.  Many physicians were unaware that exhibitors had paid to receive  real-time data about who visited their booths, including names, job  titles and how much time they spent.</p>
<p>Dr. Westby Fisher, an Evanston, Ill., electrophysiologist, <strong><a href="http://drwes.blogspot.com/2011/04/implications-of-physician-tag-and.html">called the practice “Tag and release.”</a></strong><span> </span>College officials say they’ll do a better job of notifying doctors next year.</p>
<p>Attendees at the Rhythm Society conference also have tracking  badges. Society officials say exhibitors are not getting doctors’  personal information.</p>
<p>Two years ago, the American Society of Hypertension<strong> <a href="http://www.ash-us.org/assets/news/2009/ASH%20Accreditation%20Press%20Release%20FINAL%204%2021%2009%20SENT.pdf">teamed with its biggest donor, Daiichi Sankyo</a></strong>,  to create a training program for drug company sales reps. The society  says about 1,200 Daiichi reps have graduated — at a cost of $1,990 each —  allowing them to put the “ASH Accreditation symbol” on business cards.</p>
<p>In fiscal 2009, Daiichi gave the society more than $3.3 million —  more than 70% of its total industry funding — according to financial  records it provided Grassley. Daiichi makes four hypertension drugs.</p>
<p>“I think it’s an obscenity,” said former ASH president Michael  Alderman, professor emeritus at Albert Einstein College of Medicine in  New York City. “I can see how it would play out in the doctor’s office:  ‘I’m a Daiichi sales rep. But let me tell you something: The American  Society of Hypertension is backing me.’”</p>
<p>Alderman and some other prominent members of the group quit after a dispute in 2006 about industry influence.</p>
<p>Current ASH President George Bakris said the training program is  science-based and doesn’t focus on specific drugs. The reps “ought to  know what they are talking about,” he said.</p>
<p>The 1,900-member group has revised its policies since 2006, he said.  Financial conflicts disclosed by board members, however, are available  only to members, <strong><a href="http://www.ash-us.org/about/disclosure_protocol.htm">who must request them in writing and explain why they want them</a></strong>, according to the group’s conflict of interest policy.</p>
<p><strong>A Question of Influence</strong></p>
<p>Bakris and leaders of several other professional groups say industry  funding is essential for much of what they do. It reduces conference  registration fees, subsidizes the cost of continuing medical education  courses and provides money for disease awareness.</p>
<p>Dr. Jack Lewin, chief executive of the American College of Cardiology, said the money is helping <strong><a href="http://chapteraffairs.acc.org/quality/accreg/Pages/default.aspx">build registries of cardiac procedures</a></strong><span> </span>that track side effects and flag whether physicians are using devices in the right patients.</p>
<p>The “circus element” of the exhibit booths doesn’t unduly influence  attendees, Lewin said. “I don’t buy a soft drink just because of the  advertising… I buy it because I like it.”</p>
<p>Researchers say companies are not spending millions solely for  altruistic reasons. “If it weren’t influencing the doctors, they  wouldn’t be doing it,” said Dr. Gordon Guyatt, a health policy expert at  McMaster University in Ontario.</p>
<p>There are fledgling efforts to push medical societies toward  stricter limits on industry funding: 34 groups have signed a voluntary  code of conduct calling for public disclosure of funding and limits on  how many people on guideline-writing panels have industry ties.</p>
<p>“The general feeling is that the societies need to be independent of  the influence of companies,” said Dr. Norman B. Kahn Jr., chief  executive of the Council of Medical Specialty Societies, which helped  draft the code.</p>
<p>Grassley, too, is continuing his efforts to make the groups publicly  accountable. In initial responses to his December 2009 request for  information, some said they planned to post financial information on  their websites. This week, the senator followed up with letters to some  groups, asking why they hadn’t done so.</p>
<p>He hopes the political pressure succeeds: “You might conclude that  maybe they don’t want to give the information out because it might be  embarrassing.”</p>
<p><em><strong><a title="ProPublica-Home" href="http://www.propublica.org/" target="_blank">ProPublica</a></strong> is an independent, non-profit  newsroom  that produces  investigative                journalism in the public  interest.   This  article is        republished      with    permission under a <strong><a title="Creative  Commons License" href="http://creativecommons.org/licenses/by-nc-nd/3.0/us/" target="_blank">Creative Commons</a></strong> license.</em></p>
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