10,000 words on ethics typed on one blackberry with two thumbs!

Its been amusing and frightening watching leaders of both parties compete on ethics ‘reforms’ the past few weeks.

Don’t you just love the way our leaders wait till they’re all caught to bring up the issue? I love how shamelessly they all pander.

Now they’re all competing to ‘out’ each other on every dirty trick. Who ever heard of ‘pocketing’ before and that it costs us $27 billion annually? And what a great idea to force the member proposing a special interest pocket to publicly attach their name as author?

We can only hope that these guys keep competing to discredit each other. Why they almost seem to be replacing the media as their own watch dog which is lucky since the media stopped ever reporting any of this stuff just after watergate.

This reminds me of the scandal that ocurred while I was attending harvard business school. that venerable institution was full of its own ethically challenged – namely investment bankers.

The school had this bullshit 3 week class called ‘ethics’ which we all took together at the outset of the program – guess it was to make sure we all had at least heard the term a few times and might feel more comfortable even using it.

I knew I was in for an interesting two yrs with my 800 new ‘best friend for life’ when we dove into our very first ethics case study.

This one dealt with the ‘tough’ decision faced by a morgan stanley banker when he was trekking in the himalayas and came upon a sick indian sardu. His ‘dilemma’ was whether to leave this man to die (there was another group that could have helped too) or give up his lifelong goal of climbing some mountain to save the sardu. Of course he chose to leave the man but then write a case study to help the next gen of bankers. The case was never clear whether he later regretted his actions or simply found it an interesting dilemma. See at harvard we were supposed to answer these tough questions for ourselves. After all, they were training the next gen of america’s ceo’s and we’ve all seen how ethical they are (can anyone say enron?).

Having been to the himalayas and spent a decent amount of time back country I was confused where the dilemma was. Isn’t it illegal to knowingly leave someone to die? Either way, you take it 100 times more seriously in the wilderness and very few humans would even consider such a decision.

I sat for 90 minutes listening to my classmates actually ‘debate’ this. It was touching to see the i-bankers show loyalty for one of their own and defend his actions with points like ‘its harder to think clearly at high altitudes’, ‘it was his lifelong goal’ and ‘maybe the korean group saved him’.

In the end I couldn’t stop myself from accusing them all of being as morally bankrupt as the banker which cemented my position for the next two years as a wacky outsider.

Anyway back to the bigger scandal story. It wasn’t many more months before we had a real life ethics question to deal with in our newly formed community.

See this kid murry gunty was actually caught ‘stuffing the ballot box’ for head of the finance club. At HBS this was a highly coveted position as you were guaranteed a job at goldman sachs, meaning you’d one day be really fucking rich.

I first met murry when he interviewed for a job at lazard freres (yes I was a self-hating i-banker. What’s that saying about having to do evil to know evil).

Murry was one of those annoying kids that was hated by his peers and loved by his bosses, also called suckups. We did our best to stop the firm from making him an offer but the partners just loved him. In the end, he came in to interview us and after telling the partners how ready he was to work 24×7 had the nerve to tell me we were now ‘in a beauty contest’ to win him. I’ve never tried harder to sell someone on not joining a company, telling him he would be brutalized (not far from the truth). Murry chose to go to trammel crow which soon after went bankrupt.

It was sinful how much joy I found in murry’s downfall. The guy had managed to be generally disliked at HBS too, driving around in a flashy BMW convertible (chick car:). The only question on his case once he plead guilty was whether he’d be expelled for life or get off with a year absence (which HBS was known to do for its worst offenders).

What happened next was shocking and strangely parallel to what was happening to white collar criminals like milken on the outside – pretty close to nothing. Murry wrote a tearful letter in the school paper, saying his only regret was embarassing his parents. the administration decided his emabarassment was bad enough and even asked him to write a case study to guest teach to the next year’s incoming students!

The only solice was seeing the WSJ pick up the story and accuse HBS of being lax on ethics.

I’d soo love to know where that kid’s career went and what he’s doing today. He must be a major leader as he soo gets our system.

Mo says I need to tie this all back to my original point so here goes…I guess we’ve never had any real commitment as a country to acting ethically in business or politics.

I am an optimist and believe that’s changing. we are moving from a ‘corporate culture’ where the individual has never had to be responsible for his actions to a ‘community culture’.

The culture around ‘corporate capitalism’ and ‘corporate politics’ was about the buck never stopping. The actions of the individual, whether manger or owner, were always protected by the ‘corporate veil’. The alumni of the former Drexel Burnham especially milken went on to even greater success. Enron traders are amongst the most sought after today.

Is community capitalism coming? Well I’m encouraged that this century’s newest success stories are about authentic people taking responsibility and serving all stakeholders equally often to the short term detriment of shareholders.

Google is obviously the best example with their corny but effective ‘do no evil’ slogan. It may seem like a toss up today as to whether google or walmart will be more valuable but not which we’d rather work for and even buy from.

Beyond google there’s ebay and soon we’ll see craigslist too. All of these companies are nearly synonmous with their founders who have across the board devoted their newfound wealth to helping their communities.

Pierre omidyar of ebay has a stated goal of investing 150m this year alone in community. Google has created a foundation seeded with $1 billion. Bill gates has given away 58 % of his wealth.

Meanwhile the walton family has donated less than 1 % to charity and recently it was reported that they contributed a mere $5k to a multi million dollar fund established by their employees to help fellow walmarters displaced by katrina.

Will this community beats the corporation theme ever enter politics? We saw it in the last election with the campaigns of dean and gonzalez (for sf mayor) and I’m sure it will only get bigger.

What will happen to the murry guntys, jack abramoffs and tom delays in this new world? They’re all about winning so they’ll play by the new rules. I’m sure they’ll soon trump me in their outrage against walmart and corporate corruption everywhere and thatll be great because they’re all a lot better at selling than I am:) Sent wirelessly via BlackBerry from T-Mobile.

14 thoughts on “10,000 words on ethics typed on one blackberry with two thumbs!

  1. Sadly, they were still teaching that case in the fall of 1999.
    Even more depressing, there was a real back and forth about what to do about the sardu. A spirited debate, as it were.
    I’ve had this dialogue with several of my HBS classmates both during and after our time there: real world ethics cannot be formally taught in an academic setting.
    By the time you are 25 or 30 or whatver the median age of an HBS degree candidate is, you either know that dishonesty is wrong, or you don’t. And you certainly know whether it is immoral to leave a fellow human being in pain. Or you don’t.
    Great post!

  2. A couple of things:
    1. Take it from me, a name like “murry gunty” is eminently Google-able. Hope to hear a follow-up on what you find.
    2. Let me put on my amateur evolutionary psycho-biology hat: I tend to agree with the earlier commenter about the age at which we learn these things. It seems even most very young children are keen observers of others’ behavior, and keen imitators of it. They probably have to be — and we all probably evolved that way — since it’s tough to survive among social animals when you are socially clueless. Anyway, it suggests that cheating-type behavior is learned at a young age (right along with language itself perhaps, since language can be such an effective form of deceit in the hands of someone unscrupulous).
    3. Anyone care to comment on the difference between ethics and morals? I see this batted around all the time.

  3. Murry Gunty started up his own firm, Milestone Capital in Washington, DC and seems to be doing very well

  4. Murry Gunty runs a fund in Washington DC – Milestone Capital. But suffice it to say that his ethics/morals/etc. have contributed to a whole host of problems for him and that company. People don’t fundamentally change. He was a liar and a cheat at HBS, and he’s continued the same pattern at Milestone. He raised $88M w/ the help of some big DC banker Pincus, then bought a tile compnay that did something like 10x its original investment…but he pulled BS moves and lied his way thought the entire thing…and the investors apparently finally got a taste of his MO. Since then the fund has totally blown up. I spoke with an ibanker at CSFB about that tile deal. They hate him and say that he pissed off the seller so much that it damaged the bank’s reputation.

  5. Ethics and Morals?
    I’ve always understood morals as being dictated by a god or some supernatural entity. By choosing to live by the rules or morals of that entity, you choose a moral life.
    Ethics on the other hand are (openly or even open-source if you will) man-made rules of conduct. If you choose to live by them, you choose an ethical life.
    If you try to pick and choose according to convenience, then you choose neither.

  6. This is much more interesting than the murry
    (Ihave already forgotten his name) stuff.
    and its true!
    The Liberty ship ss richard montgomery is a time-bomb waiting for a terrorist to give Britain its first real tsunami and, maybe, worse. This film shows what can happen when a government conceals something very dangerous from its own people.
    Fact: The US explosives carrier Richard Montgomery sank in the Thames Estuary in August 1944. It was loaded with 1500 tons of explosive munitions. The Admiralty decided to leave the wreck and its dangerous cargo undisturbed. The wreck lies just a few hundred yards offshore between an oil refinery and the several towns. Southend on Sea is just a couple of miles away on the other side of the Thames estuary. Rumours about the ship and its cargo have circulated in these towns ever since. Denials have been issued by ministers in the House of Commons in response to MPs questions about the presence on board of biological, chemical and gas warheads. Nevertheless, rumours persist that the real reason the wreck was not made safe was because of the existence of ‘dirty weapons’ on board.
    (copy and paste into your browser)

  7. Look, Pincus is highlighting a guy whose ethics are completely dubious. It is an interesting experiment to see if a tiger changes its stripes. Let me tell you that I know for a fact Milestone is a powder keg. The guy has done things there that will eventually come to light and that are consistent with his former behavior. All those who know him despise him and his partners stay with him only because he writes checks with dirty money to those he needs to keep. He surrounds himself with scoundrels that only care about the dollar, but they loath him too. He is unanimously despised by all of his counterparts at Milestone and when the truth and shit hits the fan, they’ll all go running and he’ll have to face the music himself. His own actions will destroy him, not this blog.
    Gunty is very important, because it shows how are highest level of academic institutions will continue to support people of dubious character who then go out in the world and steal and cheat. In this day and age, could there be anything more important in the business community?

  8. Great catch, a liar is a liar for the rest of his life, the lies grow bigger instead of smaller and they even progress into more terrible crimes as they further erode the morals of the liar. Investors in his comapny will look at similarities in ethics failures that caused Enron and Worldcom to fall.

  9. All of the above regarding Gunty confirms my experiences with him and his fund. I saw him up close and personal at the tile company. He milked the cash from the inventory and real estate and took everything of any value away from the employees.
    He brought in an executive team that promptly froze wages, stopped manegement bonuses for everyone under the 3 top execs, cut out the 401k and cut health benefits in half.
    But the new execs (still there) still pull in monthly bonuses (none for the rest of managment) and each pocketed more than 7 figures for getting the company sold to an italian firm. They have yet to turn a true profit in any month and don’t even provide their middle management with departmental financial statements.
    If anyone ends up involved with a company that Gunty gets his fingers into, don’t walk away — RUN AWAY.

  10. I am the current CEO of the tile company mentioned above and I would like to respond to some of the comments made about our company, Murry Gunty, and Milestone’s ownership.
    First, regarding the tile company, most of the comments about our company on this blog are factually inaccurate. I also have a different view about the circumstances involving Murry and the company.
    This was not a standard private equity deal. Prior to the Milestone deal, this company was in terrible shape and headed for certain liquidation. When Milestone bought the company it had been totally neglected and severely mismanaged by its previous owners for 20 years. The company had been for sale, on and off, for the previous 10 years and the employees were in total shell shock. None of the logical strategic buyers would consider a deal because they all knew the condition of the company.
    Murry saw the value, on and off the balance sheet, and figured it was a risk worth taking. He made money for his investors because he saw value where no one else did and he took a calculated risk where no one else would. The sellers didn’t have to sell to Murry on his terms, but they didn’t want to own the company because they couldn’t fix it.
    I was recruited by Murry to come in and try to save the company. We knew it was going to be a tough job and had no plans to sell so soon. Most industry people thought the task was impossible.
    In order to give the company a chance, we had to make some tough decisions and act quickly. We pruned some unprofitable operations, managed working capital better, changed out most of the management team and implemented a huge number of systemic improvements. The new strategic buyer would not have bought the company, if these major improvements hadn’t been made.
    By doing the deal with the new strategic buyer we saved 500 jobs and gave the employees and the company a certain future. We also provided a foreign buyer with a perfect platform to enter the US market. The new strategic buyer is investing additional capital for a new state of the art tile plant and creating new jobs in the US. Without Murry’s assumption of risk none of these good things would have happened.
    The problem I se here is that some people may read and believe things on this site that aren’t true or are out of context. I am also concerned that intentional distortions of the truth can be created by people that might have an agenda. Lives can be unfairly affected by half truths and innuendos written by people who want to remain anonymous. That just doesn’t seem fair to me and I needed to give a different view.
    I hope that I have provided an alternative perspective. Murry has always been straight with me and I think he made all the right decisions at all the critical points in the tile deal. He’s tough, but he’s investing other people’s money and I would do another deal with him.
    Non-anonymous legitimate constructive questions and comments can be directed to: fltileinc@gmail.com.

  11. this would be him then…
    i don’t know which you are more disappointed/surprised with…gunty or the waltons…to me they appear the same
    perhaps they are related…you know…the way you guys love to be related to anyone anywhere/someone somewhere…perhaps a sardu payback is looming…so it goes
    interesting read though…

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