Copyright © 2018 by Barney Rosenberg President, Ethics Line, LLC™ barney@ethicslinellc.com The easiest word to say in business is also one of the shortest in the English language: NO Did anyone ever get into trouble for saying “No, let’s not do that deal.”  Or “No, legal says it’s illegal.” Or “No, those are not our kind of people.  I don’t have a good feeling about this.” Or “No, this is not an investment we are prepared to make at this time.” The challenge we face is finding ways to get to YES without a jail sentence hanging over our heads and respecting the organization’s constituents: our customers, our suppliers, our regulators, the prosecutors, and our co-workers.  It’s about conducting our business ethically while competing intensely. It’s about:

1. Yes, we can
2. Yes, we are
3. Yes, we will
4. Yes, of course

I have some ideas about how to get to YES.  They involve doing things the right way by following what we know is the right path.  We know it because there is an alternative definition of ethics that doesn’t come from the Greeks or the Romans.  That definition is: “this is how we do things around here.”  And it has served us well to do things this way, while remaining open to new approaches as business and the regulatory climate change. An early mentor in my career was fond of saying that the journey from A to Z may not be possible in a straight line.  It may be necessary to tack from A to D to P to arrive safely at Z.  There are often boulders in the path of progress.  We need to be able to anticipate and navigate around them.  We need to be able to look a little farther down the road to plan for our destination – how we will get there and what we will do when we arrive. I have never been one who believes it’s about the journey, not the destination.  I don’t love 10-hour flights.  I take them because I want to see Paris, or Athens or Rio de Janeiro.  The back of the seat in front of me doesn’t hold a great deal of interest, even if that’s what I stare at to see a movie. In business, we take many steps to get to a profitable result.  We have an idea; we sketch out what the finished product might look like; our engineers develop specifications and transition them to manufacturing; we have quality assurance involved at every step along the way; if we are good at what we do, we have customers who are willing and able to pay us for all the effort; we deliver the goods and stand behind them with warranties and customer service.  Does that look like what you do?  The process involves a lot of YESs along the way.  But the destination is a happy customer. To get to YES involves a lot of the ABCs of Ethics.  You know them.  You have come this far with me on our journey and we are almost at the destination.  Just one more letter to go: Z Stay tuned.

            THE EMOLUMENTS CLAUSE(S) AND PRESIDENT DONALD J. TRUMP Copyright © 2018 By Barney Rosenberg President, Ethics Line, LLC United States Federal District Judge Peter J. Messitte and I have been friends for more than 50 years. We served as Peace Corps volunteers together in Brazil in the 1960s, became law partners upon our return to the States, and have been the closest of friends ever since. I am delighted to have an opportunity to discuss the landmark case that he recently decided relative to possible corruption on the part of U.S. President Donald J. Trump. One Clause of the U.S. Constitution, the Foreign Emoluments Clause, provides that no person holding an office of profit or trust under the United States shall receive any present, emolument, office or title of any kind whatsoever from a foreign government, unless Congress approves. The Domestic Emoluments Clause, which refers to the federal and state (not foreign) governments, says specifically that the President’s salary shall not be increased by an emolument. Until the 52-page Opinion of Judge Messitte was written just a few weeks ago, neither of those Clauses had been interpreted by a Federal Court. It is well known that Donald Trump, a billionaire, has a far-flung business empire of hotels, restaurants, meeting spaces, and on and on, throughout the world. One of his prized properties is the Trump International Hotel in Washington, D.C. which, during the short time of its existence, has brought in millions of dollars in revenue.  Even before President Trump took office, many commentators were citing his likely violation of the Foreign Emoluments Clause by reason of ownership of these facilities, many of which specifically cater to patronage by foreign governments. Eventually the Attorneys General of the State of Maryland and the District of Columbia decided that the hotel and event space facilities in their jurisdictions were being unfairly disadvantaged by the glittery Trump International Hotel in the District of Columbia, so they undertook to file a lawsuit against the President based on the Emoluments Clauses. The President’s attorneys argued that the Clauses have no application to him because he is giving a service through his hotel and only getting fair payment in return.  The Attorneys General, in contrast, argued that the word “emolument” in both Clauses referred not just to payments in addition to the President’s salary; it included any “profit,” “gain” or “advantage” that he might receive from a foreign, the federal, or state government, regardless of whether it was in connection with his office as President.  The Plaintiffs pointed to the fact that a number of foreign governments had made statements to the press that they were staying in the Trump International Hotel expressly in order to curry favor with the President. The matter first came before Judge Messitte, who has been a Federal Trial Judge for 25 years (for 8 years before that a State Court Trial Judge), to decide whether the State of Maryland and the District of Columbia had “standing,” to pursue the claim. In an earlier Opinion, the Judge decided that they did. The issue then became, what did the word “emolument” mean? Very few Americans have ever used the word “emolument” in a sentence until now, and most have no idea what it means.  As a true scholar, Judge Messitte enlightened us all.  The Plaintiffs mustered a mountain of historical evidence including studies of hundreds of dictionaries from the 17th, 18th and 19th centuries that defined the word “emolument” as any “profit,” “gain” or “advantage.”  Only a few dictionaries of the same period tied the term directly to employment.  And there were numerous other uses of the term by Founding Fathers, legal scholars, and others of the period (e.g. Adam Smith), that were fully in accord with the Plaintiffs’ view.  The case was vigorously argued by both the Plaintiffs and the President’s attorneys. Six weeks after hearing oral argument from the attorneys, Judge Messitte issued his 52-page Opinion, adopting the Plaintiffs’ view. The word “emolument,” he concluded, means essentially any “profit, gain or advantage” so that, insofar as the President might be receiving revenues from foreign governments through the Trump International Hotel, Plaintiffs had stated viable claims of violation of the Foreign Emoluments Clause and, insofar as the President might be receiving revenues from State governments staying at the hotel, they had stated a viable claim of violation of the Domestic Emoluments Clause as well. The ruling was immediately hailed as historic and almost universally praised in the national press and other media. Undoubtedly titanic battles lie ahead. What will the defense of the President be?  Will he attempt to delay the proceedings by filing an emergency interlocutory appeal?  What kind of inquiry (i.e. discovery) will the Plaintiffs be allowed into the financial affairs of the President?  He has been notoriously resistant to disclosing any private financial information, including his tax returns.  Until President Trump, this sort of information had been invariably provided by all Presidents. These and other questions besides these remain. But it is fair to say that, since Judge Messitte’s ruling, the door has been opened to exploration of possible inappropriate financial activity on the part of the President who, we are reminded, as President Nixon was to learn the during Watergate scandal of the early 1970's, is clearly Not Above The Law.  

                Copyright © 2018 by Barney Rosenberg President, Ethics Line, LLC™ barney@ethicslinellc.com As someone who spends a lot of time on airplanes, I try not to think about quality as being anything but absolute perfection.  Someone said “Perfection is a direction, not a destination.“  I’m not buying it! When people who mean well ask me “How was your trip?” my typical, smart aleck, aerospace answer is “It was my favorite kind.  The same number of takeoffs and landings!” Suppose your bank told you that they had a great business record.  They were right about your account 98.5% of the time!  Would you say “That’s great.  Congratulations!”  Or would you move your account to a different bank? So, as people who care about business ethics, how should we process the very notion of “defects per million”? How about the food we eat.  What’s a little botulism or salmonella among friends?  Most of the time the food in that restaurant’s salad bar is just fine. In the USA and many other countries, there are government agencies that inspect food, equipment, pharmaceuticals and many other products for safety and quality.  Why do we need them if the manufacturer/merchant is responsible for the quality of what they sell us? I think quality is an essential element of integrity.  It goes a long way to defining what kind of business we are and what we care about.  By the way, the same applies to service industries like accountants, lawyers, dry cleaners, and yes, the medical profession.  But don’t get me started on that.  You are hereby invited to share with us your examples of medical malpractice.  And while you’re at it, why is it called practicing medicine?  Aren’t they supposed to have mastered the craft before they lay a hand, stethoscope or scalpel on us? OK, maybe that’s a little harsh but I am feeling a little hostility as I think about Q is for Quality!  As I have said in earlier articles, the best managers can be blunt about the messages they deliver.  It’s OK to say “Do it right, now!”  It’s never OK to say “Do it right now!”  What a difference a tiny comma makes. Another way to think about this is that nobody’s perfect.  True.  And nothing is perfect.  But let’s at least make a serious commitment to doing everything we can think of to keep people safe.  That means no “normalization of deviance.”  No using old, out of date analog test equipment when the specifications call for digital equipment.  And it means delivering the message in our policies, our procedures, our training and our communications to customers, suppliers, regulators, and each other that “This quality thing is important to us.  It’s our badge of honor.  And honor is an essential element of ETHICS.”  

               

Copyright © 2018 by Barney Rosenberg President, Ethics Line, LLC™ barney@ethicslinellc.com

We’re friends so I can tell you about the time I almost got arrested.  It was a typical weekday morning.  I was driving to my office with nothing in particular on my mind except getting there through the city traffic.  It was about 6:15 AM when my mobile phone rang and a tentative voice said: “Um, Barney, where are you now?”  I explained that I was heading to the office and asked, “What’s up?”  The caller asked, “Is there any way you could swing by the factory first?”  I assured him that I could and asked again, “what’s up?” I don’t remember if I pulled over and stopped or speeded up to get there faster because what he said had both effects on me.  “Well, there are 60 armed Federal agents with a search warrant, all sorts of reporters, and 3 TV satellite trucks.”  Over the pounding of my heart, I did hear myself say “I’ll be right there!”  15 minutes later I was.  And I didn’t get home until 11:30 that night! Let me diverge for a minute and tell you that this is the “P is for Peril” part of the story!  Only the P is for 3Ps.  You see, I have always maintained that we are better at solving our problems than the 3 Ps: the Police, the Press, and the Prosecutors.  But someone has to tell us there’s a problem!  If they tell any of those 3, solutions become much harder.  In this case, all 3 were involved.  The 60 armed Federal agents were from at least 4 different law enforcement (investigative) agencies.  The Press, obvious. Print and broadcast.  And the Prosecutor, lurking in the background, had issued the search warrants. And the peril is: huge fines and penalties; suspension and debarment from future government business; long stretches of time wearing an orange jumpsuit in a federal prison (not a country club); oh yes, and your reputation? Forget about it.  That’s why we fight so hard, especially when the accusations are false! When I got to the factory, I found a spot in the employee parking lot and made my way to the General Manager’s office as fast as I could.  I found him and in my fakest, calm voice asked, “So where are they all?”  He showed me the search warrant – a legalistic and totally intimidating document, signed by a Federal judge with the ability to lock people up who got in the way.  Our GM explained what he thought was going on.  And I said, “OK, show me.” Together, we walked out to the factory floor.  But before we did, I made a short, important phone call. On our way to see the extent of the “damage” we walked past a small office where one of our supervisors was sitting with two rather large men.  I had watched enough TV shows to know that they were cops.  Only these cops were Feds.  Side note:  I live in Hollywood and there really is a company called “Central Casting”.  FBI agents are all out of Central Casting.  The men are 6’2” tall; invariably handsome; well-educated; smart; armed and dangerous!  The female agents…maybe just a few inches shorter! I stuck my nose into that office and asked “What’s this about?” and to our supervisor I said, “Why aren’t you working?”  At that moment, I could feel the testosterone level rise in the veins of the Feds, who took one look at me and in their nicest TV voices said: “Who the hell are you?” I calmly (yeah, right) said “I am this company’s Vice President of Litigation and Investigations.  I know that you are here with a search warrant and I will help you with that.  But you do not have the right to lock my colleague in this room and interrogate him.  If you have a problem with that, call the United States Attorney downtown.  I just got off the phone with him and he’s expecting your call!”  And to my colleague I said,  “Get back to work!”. I don’t know how high my blood pressure went as the Feds reached in the direction of the government issued side arms (handguns) but I was sure I would be in a jail cell shortly.  I spoke up and said, “Gentlemen, shall we get started.  I can help you with that search warrant now.” I didn’t go to jail.  With some help, they did execute their search warrant but didn’t find what they thought they would find.  The TV trucks lost interest and shut down the antennas. The reporters moved on to the next big story.  The 60 armed agents vanished in time and order was restored. The headlines the next day were: “X is a bad company that does bad things!”  You see someone told the Feds that we had failed to perform a critical test on key components of military hardware.  Only nobody told them that the test was called out in an early draft of the specs but deleted as not required in the final, signed contract documents.  And there never was a retraction saying “Apologies, X is a good company that makes great products to protect us all.”  But those were tough times in our business.  Bounty hunters could blow the whistle on their company and grab a share of the money the government recovered in the case.  I could go on about qui tam litigation, but not here. A few years later, I found myself on a panel with two other lawyers experienced in the dark arts of “White collar criminal defense.”  One of them was our Prosecutor of factory search warrant fame, an Assistant United States Attorney.  He was not armed but was still dangerous.  At one point in the panel discussion, he turned to me and asked, “Barney, I never understood, with all the cases we were looking into, why your company never pleaded guilty.”  I turned to him and said in my most professional and only mildly pissed off voice “Did it ever occur to you that we didn’t because we weren’t?” Needless to say, it had never crossed his mind! There are many lessons here.  The one I rely on most often is that we are better at solving our problems than the 3Ps, but we have to know about them.  That’s why we have (or hope we have) the kind of managers people can talk to; and policies that protect people from retaliation when they raise their hands to voice questions or concerns; and hotlines when all else fails. That’s why you have heard me say “Ethics is a team sport.  We are all in this together!”  

Copyright © 2018 by Barney Rosenberg President, Ethics Line, LLC™ barney@ethicslinellc.com

Let me begin with a short story that will provide a little context for our conversation about Integrity. Not too long ago I received an email from a co-worker.  He was the senior executive on site at a manufacturing location.  We had not met before but he was up-to-date on his ethics training and had a question. He had been surfing the Internet and came across a public web site belonging to one of our competitors.  He decided to dive a little deeper on the site and to his great surprise he came across documents labeled “proprietary” and “confidential”.  There were even manufacturing drawings with factory process drawings.  Remember, this was information that was out there!  Available to anybody. When the email arrived on my screen, outlining what I just told you, I called him.  After brief exchanges of nice-to-finally-meet-you, he asked “Barney, what do you think I should do?”  I knew what I wanted him to do but I asked “What do your instinct and experience tell you?” He said “I think I should contact them and tell them that their valuable information is exposed.  I also want them to know that I did not make copies of anything I saw and would not use their information, at all.” I agreed. A couple of days later he sent me a letter.  It was from the president of the competitor and said “I can’t thank you enough for bringing this situation to our attention.  It’s one thing to compete fiercely for customers and business.  It’s a whole other thing to do so with integrity and honesty.  We have taken that information down.  I only hope that someday I can do something like what you have done for somebody else.  Sincerely….”

1. One more story:

We had recently launched an online training course on the importance and sanctity of quality assurance “stamps” used on the shop floor.  The stamps indicate that a QA technician has personally completed a testing step in the manufacturing process and that the part has passed the test.  Only then can it move down the production line toward completion. A particular manufacturing drawing contained the customer’s requirement that a certain piece of digital test equipment be used for the testing.  Well, the tech used the equipment and the part repeatedly failed.  The tech contacted his supervisor who seemed quite annoyed with the tech and said “D..n it! Just use the old analog test gear.  We know it will pass with that!” The tech declined the invitation.  He took his duty seriously.  His stamp on the “traveler” that moved down the production line with the part, meant something.  He was a little afraid of the wrath of his supervisor, but he knew the right thing to do.  He had also just completed that training course.  He called me.  I stuck my nose in it.  I went to the site President and guess what.  The tech was applauded for doing the right thing.  The supervisor was NOT.  And a small step in the manufacturing sequence was adjusted to meet the contract requirements.  From then on, the parts cleared the digital test equipment. When you love what you do and you admire the people you do it with, there should be a better word than “work” to describe it. Please share your examples of Integrity.