Firing bad federal government workers should not be difficult
The parable of Bernie Madoff
Monday begins a new semester at the University of Maryland. With spring semester comes my recurring assignment to teach four sections of the Robert H. Smith School of Business' required Ethical Leadership course in our eighth-ranked online MBA program.
Why is ethics required in an MBA program?
Because ethics and culture play a significant role in the daily operations of most businesses, nonprofits and government organizations. Ethical failures can have substantial impact on the bottom line of business profit and can play a critical role in product distinction and brand identity to consumers at large.
Importantly, an ethical corporate culture can lead to retention of employees, loyalty to mission and a more resilient organization as a whole. A large ethical failure can lead to crisis, outflow of employees and ultimately to questions of whether the enterprise may continue.
With this introduction to why the study of ethics is required in an MBA program, I am forced to confront dark thoughts each January as I prepare for class.
About two years ago, in the development of our new online MBA ethics course, I became the beneficiary of an unusual pen-pal relationship with Bernard L. Madoff. Bernie Madoff is presently serving the remaining 120 years of his prison sentence in Butner Federal Correctional Institution Medium I in Butner, N.C.
Most of our correspondence has been by email, but on occasion, especially when the topic is too complicated for the Bureau of Prison's email system CorrLinks, it is by old fashioned snail-mail, in Madoff's own blue ink ballpoint.
As the Securities and Exchange Commission's (SEC's) former chief investigator, and a Jewish son of Manhattan, we have much in common, yet our paths diverged.
My ethics course requires MBA students to keep a digital diary for the duration of the course. This first week, the diary assignment is to consider and prepare an ethical credo for their current and future use. We know that corporations should have policies in place long before crisis to help guide decision-making.
This is why as of 2003, all public corporations in the United States are required to have codes of ethics. But in my view, having seen all sorts of poor decision-making over my career, all leaders must have their own ethical credo, and this is something that cannot be taught by the SEC or Congress.
I first came to this conclusion when reading the Harvard Business Review classic, "The Parable of the Sadhu." In the article, Bowen H. McCoy, then a Wall Street titan, along with others, was attempting the life-long goal of climbing a mountain in Nepal.
There, they encountered a dying holy man (the Sadhu), and they had to make a snap decision of whether to continue or to halt their once-in-a-lifetime excursion to attempt a rescue with no guarantee that the man would survive. The climbing party had divergent views.
My students in week one are forced to discuss what they would do in our live, synchronous class as well as in their private diaries.
I ask the MBA candidates whether their credo would assist them in their decision-making. Their answers, both public and private, diverge substantially. (Interestingly, the answers also diverge among the very same students based on whether the answers are public or private, anonymous or not).
So two years ago, via email, I asked Bernard L. Madoff what he would do with the Sadhu. I figured he might have some views on the subject, having once been a titan of Wall Street himself. I snail mailed him the Parable of the Sadhu article, which he received about a week later.
Madoff's response opened a direction of study into his fraud, which I had not known about previously. The Parable of the Sadhu was cathartic for Madoff; he emailed me about it repeatedly.
He told me the story of his own father having gone bankrupt, of having watched his mother be forced to work. His father was impacted by the steel industry. During the Korean War, Madoff explained, a steel shortage caused the failure of his father's business. He vowed then, as a young man, to never allow himself to suffer such embarrassment or impecuniousness.
Surprisingly in turn, I was somewhat knowledgeable about this steel shortage. It resulted in the Steel Seizure Cases, which I studied as a law student and later grappled with in the real world as a Treasury Department lawyer.
In those cases, the Supreme Court rejected the view that the president had the unitary power as the commander in chief to seize private property absent some congressional or constitutional power to do so.
The Steel Seizure Cases are now being bandied about on talk shows regarding the power of the executive to declare a national emergency.
Perhaps the president has the power to build a wall, without legislative authority or appropriation, and during a partial government shutdown, including no pay to the very Bureau of Prison Agents guarding Madoff. How the world turns.
Now you probably have less time on your hands than Madoff, but what would you do in the Parable of the Sadhu? Do you believe that the study of ethics has bearing on our current and future leaders?
As to what Bernard L. Madoff said about rescuing the Sadhu, you will have to visit my ethics class.
David P. Weber is an attorney, certified fraud examiner, and registered private investigator. He is a professor at the University of Maryland's Robert H. Smith School of Business, where he teaches fraud examination and ethics. He is the former assistant inspector general for investigations at the U.S. Securities and Exchange Commission. Follow Professor Weber on twitter @umd_dpweber.