By DENNIS GRUBAUGH
Corporate America has lost its moral compass.
I’m not sure when it happened exactly. I really noticed it in 2008 when America’s biggest banks began to answer for their years-long, greedy quest for profits. They were loaning money to people they knew to be credit risks, and at the same time underwriting the process by investing in complex, unproven financial options. It was a high-stakes, mortgage-backed shell game that ended up with the bursting of the housing bubble, recognized today as the biggest contributor to the Great Recession.
And yet, once banks began failing, flailing and merging, needing a bailout by taxpayers, when the markets tumbled in response and investors lost half of their life savings, no one was really held accountable. Only one guy connected to the financial mismanagement went to prison, and he wasn’t a CEO of a bank nor from a top-tier institution.
The U.S. Department of Justice, after aggressively rooting out fraud during the savings and loan debacle of the 1980s, basically sat on its hands during the 2000s. Financial settlements, not individual convictions, became the new norm. Perhaps crime was getting too difficult to prove … .
I grew up in a less complicated time, I suppose. Merchants knew your name. You trusted them in return. They charged fair prices, with a modest markup. They weren’t out to take advantage.
Today, though, unless the media deceives me, there are an awful lot of businesses who are out to deceive us, if not kill us altogether.
When Volkswagen officials admitted late last month that they had purposely altered 11 million vehicles so that they could “cheat” emissions systems tests, it was a clear sign of a new age. When the world’s biggest carmaker openly admits corruption, it’s time for some business introspection.
Volkswagen is going to pay dearly. At this writing, the company’s acknowledged “screw-up” is going to cost it $7.3 billion in funds set aside for recalls. And stockholders are going to pay the tab.
Good, I say. That will at least serve to clean one corporate house of rapacious influences.
The horizon is littered with similar, recent debris. Last month, a peanut company executive in Georgia was sentenced to 28 years in prison after being convicted of fraud and conspiracy for telling his staff to ship products he knew to be tainted. Nine people died as a result. That’s murder, folks — profits over lives. It’s the kind of thing you would associate with drug cartels.
What’s wrong with this picture? In a few words, it’s getting worse.
Each new day brings us a scandal, a company or organization that has swindled, fooled, lied or somehow covered up its actions.
The stories are a corporate who’s who compendium. General Motors and its faulty ignition switches. FIFA, the federation representing the world’s most popular sport, soccer, rocked by bribery allegations that have Nike shaking in its own shoes. And, leading up to those, Enron, WorldCom, Freddie Mac, Lehmann Brothers and many others.
They all have two things in common: They had executives willing to break a moral code by putting money ahead of the truth. And they suffered greatly as a result.
Businesses that put ethics and consumers above selves are to be praised and patronized. Those that do otherwise are to be vilified. And their executives forced into the woods to refind that moral compass.
Dennis Grubaugh is editor and partner of the Illinois Business Journal. He can be reached at [email protected] or (618) 977-6865.