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the breakfast table
entries
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from: Paula Throckmorton-Zakarai
to: Fareed Zakaria

Shame With Your Wheaties

Posted Friday, March 15, 2002, at 2:24 PM ET

Who are these people?

Dear Fareed:

Where are you? You said on the phone that you had e-mailed me from the hotel, but I don't have anything. I know that you are flying back from Florida, but can't you type on those airplane phones by now? Or beam me from your laptop. Being a modern wife, I can't wait for you, I need to move on to the next thing.

If I have to talk about the Middle East, you are going to have to churn something out on Arthur Andersen. The Justice Department indicted Andersen on an obstruction of justice charge. The feds are going after the entire firm, not just an office or a practice group. This is the most aggressive tack they could take. Boy, the Justice Department is really furious. And who can blame them? Andersen wouldn't plead guilty although there were dozens of witnesses who saw the shredding of documents. There must be a technicality that Andersen has on its side. Maybe Andersen hadn't yet received a subpoena when they started shredding. Somewhere I read that Enron's people called Andersen and said that the SEC was coming down hard and please shred all you have before they come to you. I don't know enough about law to comment on the legality of that, but it stinks.

The larger problem raised by Enron is that within the business community it is perfectly acceptable to toe the line with the law. I remember when I was at Harvard Business School, we had a finance case about a firm that borrowed a lot of money against their pension fund, entered a new business, and made millions. The chief financial officer had taken advantage of a loophole to borrow more debt than the company had ever had. Had the new business gone south, the pensioners would have lost nearly half their assets. When asked about the ethics of such a practice, the professor said that the job of the chief financial officer is to get the best deal at the best price, not to worry about right and wrong. If it is legal, just do it. We didn't discuss how these are complex issues or how, as leaders, these are the tradeoffs you need to consider. Our professor kept going back to the Nike tag: Just do it.

Did my professor mean that you are stupid if you don't do everything to increase shareholder value? Maybe not. But he made it clear that there is no code of conduct in the business community. Do it if the law will let you. With that kind of logic, incremental decisions get riskier and riskier, and all of a sudden you wind up calling your accountant and telling him to destroy evidence. I wonder how you change this except through social pressure, company values, and a good dose of shame with your Wheaties at the breakfast. Any ideas?

the breakfast table
entries
1234567891011
from: Paula Throckmorton-Zakarai
to: Fareed Zakaria

Shame With Your Wheaties

Posted Friday, March 15, 2002, at 2:24 PM ET
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Fareed Zakaria is editor of Newsweek International and the author of The Future of Freedom: Illiberal Democracy at Home and Abroad. Paula Throckmorton-Zakaria designs jewelry and writes occasionally for the Wall Street Journal and other publications. She was president and publisher of the Black Book, a photography journal and sourcebook based in New York.
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