CEO Resignation Raises Ethical Issues
Barclays Bank CEO Bob Diamond resigned recently. Initial reports focused on his role in helping to manipulate a measure of interest rates known as LIBOR. After that, reports focused on his testimony before British regulators.
What we didn't see much of were the ethical issues associated with this event.
Apparently, before becoming CEO, when he was a mere investment banker, he lied. He and a group of other Barclays bank employees lied in order to manipulate the LIBOR rate. Manipulating that rate would make Barclays Bank look financially stronger than it really was. There were some reports that mentioned this activity. But there's more to this.
By making Barclays look stronger than it really was, Diamond and his other investment banker colleagues would get a leg up in pursuing investment banking deals. That translates into earning bigger fees and commissions for the bank, hence bigger bonuses for them.
Looked at this way, you can see that they lied to make more money.
I'm not minimizing the effect these activities may have had, or may have, on the banking and financial services industry, but the more important issue - the ethical issue - has been glossed over.
As Catholics, we understand that lying in any form is wrong. At work, we can face the temptation to lie in order to make ourselves, our products, or our services look more attractive. We know this is wrong. These temptations can be strong when our employer either looks the other way, or perhaps even encourages us to exaggerate, or even lie about the benefits of the products or services of the firm.
This fellow Diamond and others in the financial services industry who engage in this sort of activity aren't really being held accountable for their lying. For example, as far as I know, Barclays has said nothing about the possibility that Diamond and others lied to make the bank look good, nor have they said anything about having no tolerance for such unethical activity.
My suspicion is that the bank looks the other way at such activities, as long as everyone makes money. It's only a suspicion, but I can tell you from first hand experience that it does go on at financial services companies.
In one company I worked for, this fellow was legendary for his sales results. He made far more than his colleagues in the same area. The company made "mucho dinero" from his activities. Frankly, it was an open secret that this guy was probably doing things to generate sales that were unethical. But as long as the revenue flowed into the company's coffers, no one looked under the covers to check on exactly what this guy was doing.
At some point, revenue began to dry up. Within months, the guy was being escorted out of the building between two guards. Rumors flew about what he was doing, but the company said nothing and whatever was going on was effectively kept secret.
I don't know if this guy kept his commissions, but suspect he did. (I also know that the company kept the millions it made from this fellow's activities.) The state of his personal finances remained sound, far as I knew. As for the state of his soul...
Everyone made money and no one asked questions.
If you work in this sort of environment, you need to protect your soul from getting sucked into activities that might lead you to exaggerate or - Heaven forbid - lie. If you're under pressure to lie by your boss or company, you must resist. Your soul is more important than your pocketbook.
As for Diamond, he's forgoing $32 million in bonuses that he was due to receive. Can you imagine how much he actually has made? I doubt if he'll have to give any of that back.
But more important for our purposes is that the man apparently lied and cheated, and it's not ruffling any feathers that he made millions because of it. The whole focus is on "damage control" at this point. The company wants to put this behind it. The regulators want to get the spotlight off their inadequate oversight, or even complicity in these activities.
As for the financial services industry, much of the criticism it receives regarding unethical activity is deserved. You can see it in the way this is being handled.
Finally, as for us Catholics, if we're going to work in these sorts of environments, we've got to make ethical behavior an absolute priority no matter the temptations, no matter the pressure.
To state the obvious again, your soul is more important than your pocketbook.
What we didn't see much of were the ethical issues associated with this event.
Apparently, before becoming CEO, when he was a mere investment banker, he lied. He and a group of other Barclays bank employees lied in order to manipulate the LIBOR rate. Manipulating that rate would make Barclays Bank look financially stronger than it really was. There were some reports that mentioned this activity. But there's more to this.
By making Barclays look stronger than it really was, Diamond and his other investment banker colleagues would get a leg up in pursuing investment banking deals. That translates into earning bigger fees and commissions for the bank, hence bigger bonuses for them.
Looked at this way, you can see that they lied to make more money.
I'm not minimizing the effect these activities may have had, or may have, on the banking and financial services industry, but the more important issue - the ethical issue - has been glossed over.
As Catholics, we understand that lying in any form is wrong. At work, we can face the temptation to lie in order to make ourselves, our products, or our services look more attractive. We know this is wrong. These temptations can be strong when our employer either looks the other way, or perhaps even encourages us to exaggerate, or even lie about the benefits of the products or services of the firm.
This fellow Diamond and others in the financial services industry who engage in this sort of activity aren't really being held accountable for their lying. For example, as far as I know, Barclays has said nothing about the possibility that Diamond and others lied to make the bank look good, nor have they said anything about having no tolerance for such unethical activity.
My suspicion is that the bank looks the other way at such activities, as long as everyone makes money. It's only a suspicion, but I can tell you from first hand experience that it does go on at financial services companies.
In one company I worked for, this fellow was legendary for his sales results. He made far more than his colleagues in the same area. The company made "mucho dinero" from his activities. Frankly, it was an open secret that this guy was probably doing things to generate sales that were unethical. But as long as the revenue flowed into the company's coffers, no one looked under the covers to check on exactly what this guy was doing.
At some point, revenue began to dry up. Within months, the guy was being escorted out of the building between two guards. Rumors flew about what he was doing, but the company said nothing and whatever was going on was effectively kept secret.
I don't know if this guy kept his commissions, but suspect he did. (I also know that the company kept the millions it made from this fellow's activities.) The state of his personal finances remained sound, far as I knew. As for the state of his soul...
Everyone made money and no one asked questions.
If you work in this sort of environment, you need to protect your soul from getting sucked into activities that might lead you to exaggerate or - Heaven forbid - lie. If you're under pressure to lie by your boss or company, you must resist. Your soul is more important than your pocketbook.
As for Diamond, he's forgoing $32 million in bonuses that he was due to receive. Can you imagine how much he actually has made? I doubt if he'll have to give any of that back.
But more important for our purposes is that the man apparently lied and cheated, and it's not ruffling any feathers that he made millions because of it. The whole focus is on "damage control" at this point. The company wants to put this behind it. The regulators want to get the spotlight off their inadequate oversight, or even complicity in these activities.
As for the financial services industry, much of the criticism it receives regarding unethical activity is deserved. You can see it in the way this is being handled.
Finally, as for us Catholics, if we're going to work in these sorts of environments, we've got to make ethical behavior an absolute priority no matter the temptations, no matter the pressure.
To state the obvious again, your soul is more important than your pocketbook.
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