Archive for the ‘Conflict of Interest’ Category

Service of Gray: Senate and the Supreme Court

Monday, March 21st, 2016

I was far stricter when young than I am now [though close friends and family might not agree]. Then I saw life as black and white, wrong and right, with little room for compromise. Today I can live with gray fairly comfortably on many subjects.

That’s why I’m surprised at the intransigence of Republican senators and their refusal to give Supreme Court nominee Judge Merrick Garland the courtesy of a hearing. Not all of these women and men are young—haven’t they learned anything in their years on this planet? What happened to the greater good and being strong enough to admit a mistake and change your mind and give the President respect and the judge a chance?

I find this heels-dug-deeply-in-the-ground stance, a child’s tantrum attitude of “we won’t recognize someone” [even if we respect him] conflicts with an easy-peasy nonchalance when it comes to what Supreme Court judges are allowed to do.

In “Scalia Was No. 1 on Court in Paid Trips,” Eric Lipton wrote “Among the court’s members, he was the most frequent traveler, to spots around the globe, on trips paid for by private sponsors.”

According to Lipton in his New York Times article, “Legislation is pending in the House and the Senate that would require the Supreme Court to create a formal ethics system, beyond the Ethics in Government Act, similar to the one that governs actions of all other federal judges. That system is known as the Code of Conduct for United States Judges.”

Lipton continued: “Chief Justice Roberts has argued that the Supreme Court, even though it generally abides by this judicial ethics code, is not obligated to do so. It restricts how much judges can be paid for private travel, and limits other activities outside the court, such as allowing private organizations to use ‘the prestige of judicial office’ for fund-raising purposes.”

Justice Scalia took 258 subsidized trips between 2004 and 2014, according to Lipton, who noted that he gave speeches, participated in moot court events and taught classes in Ireland, Hawaii and Switzerland to name a few places. When he died he was the guest of the owner of a company that had “recently had a matter before the Supreme Court.”

In addition, “Many of the justices are frequent expenses-paid travelers, a practice that some court scholars say is a minor matter, given that many of the trips involve public talks that help demystify the court. But others argue that the trips could potentially create the appearance of a conflict of interest, particularly when the organizations are known for their conservative or liberal views.”

So while the Republican Senators are avoiding the job they are paid to do—to select a Supreme Court Judge—do you think that at the least they should turn their attention to legislation that would require the court to create a formal ethics system?

Service of Conflict of Interest III: Link Between Executive Stock Options & Product Recalls

Monday, September 28th, 2015

Gretchen Morgenson shared highlights of a University of Notre Dame seven year study, “Throwing Caution to the Wind: The Effect of C.E.O. Stock Option Pay on the Incidence of Product Safety Problems.” It focused on two industries that represented 85+ percent of recalls reported by the Food & Drug Administration [FDA]: Consumer staples like personal care, food and drink and health care products such as medical devices and meds. In addition, the companies had sales and assets of $10 million or more. It did not name companies associated with the 386 chief executives in the study.

According to Morgenson, the authors concluded: “ ‘C.E.O. option pay was associated with both a higher likelihood of experiencing a recall as well as a higher number of recalls.’”

In her New York Times article, “Safety Suffers In Executive Pay Packages,” Morgenson observed that grousing about excessive executive pay packages is nothing new for stockholders. The significance of this study is that consumers are also losers with what Morgenson described as “This heads-I-win, tails-I-barely-lose arrangement [that] encourages executives to swing for the fences.” 

She explained: “Stock options have been the jet fuel propelling some of the biggest executive pay packages over the years. From an investor’s point of view, these instruments are problematic because they provide an executive with little downside if the company’s underlying shares fall but oodles of upside on the rise.”

Quoting one of the authors of the study, Adam J. Wowak, Morgenson wrote: “that he and his colleagues wanted to build on past analyses of how stock options induce risk-taking among executives.  ‘If options are generally causing C.E.O.s to be more aggressive, then it makes sense that more mistakes could occur and consumers could be affected,’ Mr. Wowak said. ‘Options could be making C.E.O.s ignore the downside potential of some of their actions.’”

Morgenson concluded that corporate boards “say they have gotten the picture that chief executives’ pay should be aligned with their owners’ interests. As this new study shows, directors should understand that executive pay needs to line up with consumers’ interests as well.”

I wonder whether the uptick in workplace fatalities reported recently in preliminary Labor Department statistics might also be related. According to Alexandra Berzon in The Wall Street Journal, “The preliminary estimates indicate an increase in fatal injuries last year, to 4,679, compared with 4,585 workplace deaths the year before. Including the expected revisions, the total number of deaths last year was likely higher than the approximately 4,700 deaths recorded in 2010 and 2011. It was the worst year for workplace fatalities since 2008, which had 5,214 deaths.”

Do you have faith that corporate boards and stockholders, many of whom think that they and theirs are immune to harm by faulty products, will acknowledge the relationship between product safety and stock option compensation for executives and lower or eliminate them? Do you think that  most executives who condone sloppy work to lower costs feel remorse or is this another case of “business is business, we’re hired to make a profit and benefit the stockholders, so lay off.”

Service of Conflict of Interest II: One Olympic Skating Coach for Top Two Winning Pairs

Thursday, February 20th, 2014

In the PR and marketing businesses clients are sensitive about conflict of interest and frown on it. For this reason agencies bringing in a bigger fish most often must resign the tadpole they represent.

So I was fascinated that nobody blinks an eye about Marina Zoueva who coached the gold and silver medalists in this year’s Olympic ice dancing competition as well as at the Vancouver games. The same pairs–Meryl Davis and Charlie White for the US [who won this year– in the photo above] and Tessa Virtue and Scott Moir from Canada [who won four years ago–in the photo below, right]—both also earned silver at alternate games.

Julian Linden, who wrote “Olympics-Figure skating-Zoueva coaches gold and silver winners” for Reuters pointed out that Zoueva has coached these skaters for 10+ years “but [they] have completely different routines and styles, each as spellbinding as the other,” he observed.

I can’t think of many other instances in which competitors welcome counsel from the same source. As I wrote, it doesn’t happen in advertising or public relations.

When a team of physicians, either in the same or allied specialties, collaborates to diagnose and cure a patient you could say competitors are working for the same client/patient. But the same thing can happen in marketing or PR when a corporation brings in several agencies to practice a specialty for one brand–so this example doesn’t hold up.

I admire this trust in the fiercely competitive world of sports. Does the Olympic spirit shine on the dynamic?  In what other industries are relationships that are considered a conflict of interest by most thought of as copacetic?


Service of Cures That Don’t

Monday, June 4th, 2012

Fire retardant fabrics have been around for ages, though you wonder why as they seem to do harm, prevent little and serve no good purpose. If you’ve attended a home furnishings trade show in a windowless space, soon your eyes will sting and your throat will feel scratchy–a clue that something’s up. Could it be all that upholstery and carpeting?

In “Are You Safe on that Sofa?” in The New York Times, Nicholas D. Kristof writes that if there is a fire, toxic smoke is all you can expect from the so-called fire prophylactic.

He praises The Chicago Tribune for superb journalism for its investigative series, “Playing with Fire.” Kristof credits the series for revealing that these retardants were inspired by the tobacco industry: “A generation ago, tobacco companies were facing growing pressure to produce fire-safe cigarettes, because so many house fires started with smoldering cigarettes. So tobacco companies mounted a surreptitious campaign for flame retardant furniture, rather than safe cigarettes, as the best way to reduce house fires.”

Kristof continues: “The documents show that cigarette lobbyists secretly organized the National Association of State Fire Marshals and then guided its agenda so that it pushed for flame retardants in furniture. The fire marshals seem to have been well intentioned, but utterly manipulated.”

The plot thickens as he reports that the advocacy group, Citizens for Fire Safety “pushed for laws requiring fire retardants in furniture.” This group has three members, notes Kristof: The three major manufacturers of flame retardant chemicals. He notes that the group paid a doctor to lie about children who died in fires because there was no fire retardant on sofa cushions in their house. The kids didn’t exist.

He quotes a toxicologist who points to growing evidence that retardants “don’t provide safety and may increase harm” and who asks why they aren’t used in planes if they are so effective. Children who play on the floor breathe in dangerous dust from the chemicals and they can alter brain development in a fetus.

Kristof wraps up his op-ed piece saying that the purpose of these flame retardants is to make three companies rich. “The lesson is that we need not only safer couches but also a political system less distorted by toxic money.”

If there are laws that require furniture to use fire retardants this means that a manufacturer can’t sell a line of clean, organic fabric-covered sofas and chairs. Apart from paying someone to reupholster your sofa with untreated textiles and keeping children off the floor near upholstered furniture, what to do?

Service of Conflict of Interest

Thursday, October 20th, 2011

Some who practice public relations give it a bad name. Because it’s one of those industries that lots of people don’t “get,” it can have a harder time than others justifying itself. And then there are the high profile sleazes. They exist in every industry from medicine and hedge fund management, banking to politics.

How do I handle the splash from PR people who don’t conduct themselves ethically and land in the spotlight? I avoid any hint of conflict of interest as do my associates and millions of doctors, hedge fund managers, bankers and politicians.

Years ago, an acquaintance asked me to help promote his friend’s business. His friend was a furrier in New York’s garment district. I interviewed the owner, he showed me how the coats were made, and we addressed his challenges. His comment to our mutual contact after our meeting was surprise: “She didn’t ask to try on a coat or for a discount.”

So this is why my nose is out of joint when a reputable news source known for business reporting offers to sell me its top stock picks. It smacks of conflict of interest. I don’t mind when it offers me discounts on wine. It’s not known for wine reviews. Used to be that reporters at a news source such as this returned holiday gifts and would not accept even a cup of coffee from a business or PR person. This place isn’t alone.

The New York Times  reported last month that magazines are selling fashion picks in online stores and one through its website. Eric Wilson notes that GQ sells its selections through Park & Bond; Esquire sends readers to and the Vogue website is the place to buy select items from this season’s runways. Wilson quotes the website: “Vogue may receive a commission on some sales made through this service.”

Wilson notes the potential friction between these venues and stores like Saks, Neiman’s and Barneys. The impact of editorial conflict of interest is worse.

How many times have I told a client adding beige to a lackluster, generic product line or planning an open house where nothing will be different that day from any other: “No reporter, editor or blogger will consider sharing this with their readers. To get out this information you’ll need to buy an ad.” With a change in editorial policy, how this might change, and not for the better for readers.

PR people tout the value of third party endorsement when a reporter or magazine features a product or service. It’s the ultimate sales tool. Do you think that smudging of roles for magazines and newspapers, where they sell some of their picks as well as feature them, will affect their credibility and validity with readers? Might it eventually accelerate their demise, the ultimate irony as one of their arguments is that they are trying to stay afloat through such sales?

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