Bottom Line Ethics

I have been involved in some interesting discussions since my last blog, “I Miss the Hiss.” I certainly did not expect the level of back and forth that arose from writing it, but I can appreciate both sides of the argument. I know the yell leaders have put forth their view in The Battalion. I thought it was worth one more blog to address some of the concerns of those who dismiss the view that “hissing is a good thing.”

I see the horse laugh as part of passing on culture more than anything, and this process needs to be intentional in most cases. Though I don’t wear an Aggie ring, I do have some experience at passing on culture. Linda and I have raised five kids together, beginning when Jimmy Carter was president, and our youngest is in college. We have spent the last 37 years passing on a particular culture. As a result, if you meet my children, you are likely to be addressed in certain ways and afforded a measure of respect, even before you have “earned it” in the relationship. Many of the criticisms of my position on the hiss remind me of criticisms I received of my parenting skills. (Of course, both may be well founded.)

The first objection to the hiss is that it is hypocritical. You mean the same thing as a boo, so you are just being hypocritical to hiss, and it is actually more irritating than a boo is. This view makes some sense to me. But there are also a lot of ways to express anger in a marriage, and the way you do so says something about your character. My wife does not appreciate a snarky laugh when I disagree with her on something, but it is way preferable to shouting at her and calling her an idiot. I am trying to do better than a snarky laugh. But there are orders of magnitude to how we disagree that say a lot more about us as individuals than they do about the person on the other side of the relationship who is “wrong.” The hiss is not perfect self-control, but it has humor injected into the disagreement rather than pure anger.

The second objection is, “You’re wasting your time, Mike. You need to let go.” (This is usually accompanied by “smh.”) People said the same thing to us repeatedly when we were raising our kids, and I’m glad we decided not to listen to them. If you are going against the flow of culture, you do have to swim upstream to be unique. But that doesn’t mean the waters are not swimmable. And if that is true, how did the hiss last until 2015? Couldn’t you have made the same argument in 1985? Because it is going to end some day is not a strong argument that it ought to end today. “Some day” we’re all dead.

The third argument is that booing is my choice. You can’t tell me what to do. True. And I love that we are still a free country. Besides, I’m a professor. I’m used to people not listening to my suggestions.

Fourth, the team prefers the boo to the hiss. I saw one player’s Twitter post to that effect. I think that is one of the most legitimate arguments against my position. But if my kids were mistreated by classmates or a teacher, I didn’t go yell at that person, even though I might have felt that was the most effective thing I could have done. With teachers in particular, I generally gave them the benefit of the doubt that they were trying to get it right. I would express my disagreement whenever necessary. But my goal was to do it with respect. Were my kids happy? Not always. Did they feel supported? You would probably have to ask them. But I am confident that my yelling would not have made them more successful.

Finally, booing helps the team get calls later in the game. Officials can be intimidated. Again, that may be correct. It’s an empirical question, and I’ve never seen anything more than anecdotal evidence regarding officials’ behavior after a controversial call against the home team. So why not boo loudly after every innocuous encroachment or offside penalty (which they do in some stadiums)? Is that the culture we want?

I actually think the self-control demonstrated by the horse laugh helps restrain us from being that kind of culture. In all the discussions since my earlier blog post, I have not heard anyone argue, “I wish we were more like Tech fans.” (Of course, I admit that I did not view all of the memes of my position on fan sites.)

What is truly unique about our culture in Kyle Field is honor and respect. It is what bonds the Class of ’56 with the Class of ’86 and the Class of ’16. All throughout the game, we honor people – and we stand. We stand for an invocation, for the national anthem, for “Texas, Our Texas.” We stand for Bugle Call out of respect for someone who has had a significant life. And, if you are a student, you always stand as the 12th Man. The way we treat the other team, including inflammatory players and coaches, the way we treat their fans, and the way we treat the officials is simply an overflow of our love and respect for one another.

Linda and I don’t become different people when someone comes into our home, just because they don’t share our view of life. This is true even if they mock us for being Aggies or loving A&M. Without changing who we are, they get the benefit, while they are in our home, of the love that flows within our family. That includes respect and restraint on my part, even when they are disagreeable, or downright irritating.

Kyle Field is our home, and I will be rooting hard at every home game for the Aggies to clearly establish their position in the SEC West. I really want us to win. But, on Sunday morning, visiting fans will go home to their home state and I will wake up in Aggieland. Here’s hoping that the place I wake up in is always unique, a group of people who love one another and are unafraid to live by our core values.

Because those values are what brought me to A&M. What has happened to me as a result is what I hope will happen to many of our visitors. In fact, we sing it at every game: “Then they will come and join the best.” It will happen, not because we are the same, but because we do things differently.

Don’t dismiss the hiss.

One of the funniest traditions I encountered when I came to Texas A&M was the tradition of the “horse laugh.” As an alternative to booing, especially the officials at a sporting event, Aggies have traditionally yelled, “Riffety, Riffety, Riff-Raff! Chiffity, Chiffity, Chiff-Chaff! Riff-Raff! Chiff-Chaff! Let’s give ’em the horse laugh!” followed by hissing from the crowd. It actually makes me laugh and takes the edge off a bad call by the officials.

During the second quarter of Saturday night’s game, A&M wide receiver Ricky Seals-Jones was ejected for targeting after a crushing block on an unsuspecting Mississippi State defensive back. It was, to say the least, a controversial call, and the 12th Man was incensed. Boos rained down on the field as the penalty was assessed and Seals-Jones was ejected.

Kyle Field is viewed during an NCAA college football game between Ball State and Texas A&M, Saturday, Sept. 12, 2015, in College Station. Texas A&M won 56-23. (AP Photo/Bob Levey)

We had a string of disappointing losses in Mike Sherman’s last year, but the crowd never devolved into what I saw Saturday night, including after the phantom penalty on the last drive of the final Texas game. But the same chorus of boos happened after a controversial call in the LSU game last year, and I remember feeling regret over it. Perhaps I shouldn’t feel that way, since the same thing would happen in virtually any stadium in America, pro or college. Still, one of the things I admired about A&M even before I got here was the ability to express disagreement and anger, even disdain, in creative ways. The War Hymn makes clear how Aggies feel about Texas every time it is sung, but the locked legs sawing Varsity’s horns off are as much about school unity as they are about vanquishing a foe.

Saturday night you could hear a little hissing in the crowd, but it was overwhelmed by the boos and the invective, at least in my section of the stadium. Certainly it was a reaction in the moment by a large subset of the 104,000 in attendance, and I am not recommending an unemotional response. And I am probably not the right person to point it out, since this is only my 10th year as a season ticket holder. But it feels to me like we are losing something around here that is important.

This year we have put up a statue of our core values on the west side of the stadium, the same core values that are over the entries to the MSC across the street. Saturday night I saw five of the six celebrated throughout the game, and most of them demonstrated in significant ways: Excellence, Integrity, Leadership, Loyalty and Selfless Service. We paused numerous times during the game to recognize those who demonstrate these qualities—former players, generous donors, Bugle Call, outstanding alumni. The Big Event was celebrated as a national example of student service.

And, to be honest, there were many demonstrations of respect including, I think, the way Mississippi State fans were treated. But Kyle Field Saturday night was not the Kyle Field I have known and respected both as an outsider and as a part of the faculty. And I know that part of that is loyalty—to the team and to Seals-Jones—and part is a perceived lack of integrity in people’s minds from the officials. Part of it is also the desire to create the kind of intimidating atmosphere we encounter at Alabama or LSU, stadiums that are the proving ground for excellence. There is a lot at stake—money and image and recruits, and all the ancillary benefits those things bring to the university.

But in the midst of becoming the mega-university we are quickly becoming, I hope the yell leaders will provide direction to all of us admission-paying adults, and to the student body, on how to be an Aggie when things are the worst for us. It won’t be long before the next “worst call I have ever seen,” and it will be much more critical than the one Saturday night. How will we react then?

I am not foolish enough to believe that my words will move the needle on something like this. But I have a sense that this is one part of Aggie culture that can be quickly lost and, once it is lost, difficult to ever retrieve. And though I don’t wear the ring, I love this place, and all that it stands for.

I miss the hiss.

I was watching TV when a Volkswagen commercial came on. I found myself thinking, “Why on earth would I go in and test drive one of those?” You probably think this is irrational, because they are quality cars. But who trusts Volkswagen after this past week?

Volkswagen has admitted to installing software rigged to defeat emissions testing, apparently in 11 million vehicles. The software to blame for the scandal was intentionally designed. Unlike most automotive industry scandals, this was not a design flaw. In past controversies, whether it be Ford Pinto gas tanks or GM ignition switches or Toyota gas pedals, the car makers did not deliberately design systems intended to cause harm to customers. What has always been in question is what the companies did once they found out that they had a problem. And though the clarity of who is to blame has varied across cases, people have recoiled at evidence that car makers knew there was a problem, but decided not to act, because of a calculation that it would be less expensive to do nothing and to address lawsuits that might arise than it would be to recall cars or replace parts.

Volkswagen’s dishonesty may not directly threaten lives in the short run, but the software was intentionally designed to mislead not just the regulators, but the public. Volkswagen has built a very successful advertising campaign around clean diesel vehicles that will get over 800 miles per tank of gas. What they did not reveal is that the truth is that you can have EITHER a clean diesel vehicle OR get over 800 miles per tank of gas. Playing on their deep knowledge of the regulatory environments in Europe and the United States, they rightly calculated that their deception would not be detected. In fact, it was only because private testers were able to evaluate several vehicles that the issue was discovered at all. The intent of the American testers was to find clean vehicles with results that would allow them to put pressure on European regulators to adopt tighter standards. The testers were reportedly the most surprised people of all at their results.

When regulators and those involved in the testing tried to confront Volkswagen about it, executives repeatedly denied that there were any issues and questioned the competence of the testers. The company’s persistence in resisting the questions of the testers, and their refusal to conduct their own investigation to support their claims, give the impression in hindsight that Volkswagen executives were being deliberately misleading. This is why CEO Martin Winterkorn’s expression of shock about the systematic dishonesty in the company rings hollow. It was only when the EPA threatened not to allow the company to sell Volkswagen and Audi diesel models in the U.S. that they admitted to the problem. The German transport minister says that 2.8 million vehicles sold in Germany are affected.

Former Volkswagen CEO Martin Winterkorn

Acting VW Chairman Berthold Huber stated, “I want to be very clear, the manipulation of tests for diesel engines is a moral and political disaster.” That is exactly the right term, but it is more than that. It is an indictment of the very culture that has driven Volkswagen to become the number one automaker worldwide, having surpassed Toyota only a few months ago. According to a New York Times article, it wasn’t until September 3 that “a group of senior engineers” admitted the truth. The truth is that a large number of people within Volkswagen knew exactly what was going on; this was not some rogue employee. It was a result of the culture.

And this is almost always true in major corporate scandals. The fact that so many are involved gives each individual an excuse that “this is not me” doing this, but management, or the market pressure, or the strategy. It is why the second half of the Aggie Honor Code so often ignored by students—“or tolerate those who do”—is critical to living out ethics in the business world or in the public square. We actually have immense tolerance for those who do when they are close to us, part of the same company or the same institution with the same goals we have. But we ought not to.

The results of this tolerance are inevitable, and oft repeated, crash and burn events. Instead of catching things early, we only find out when the results are devastating. Instead of being able to adjust and let the air out of the balloon slowly, we get an explosion.

The results include Volkswagen taking a $7.3 billion charge to earnings in the third quarter, and EPA fines that could (but likely will not) reach $18 billion. There will be shareholder lawsuits after a two-day drop of 35 percent in the company’s share price, and plaintiffs’ lawyers are lining up for their share of class action suits from car owners.

And, inevitably, we get more regulation. This is sure to come after the Volkswagen affair. Of course, there are good by products of that regulation—in this case, perhaps, more truth-telling and cleaner air. But the entire market will bear the cost of that regulation; unjustly, that includes those who tell the truth and compete honestly and, ultimately, the consumer.

I may get emotional about this type of deception, but the market is perfectly rational in its response. That 35 percent share price drop is simply a shift in predictions about two things—significant decreases in future cash flows and more risk in the stock. What is unclear at this point is the long-term effect on diesel car sales, which represent about half of VW’s market in Europe, and on the costs and rigor of future testing.

But you can be confident of this: Volkswagen created a culture of dishonesty at the highest levels. We can argue about who knew what, when. But there is no transparency there. In fact, apparently the American arm of the company was kept in the dark about what was going on until right before the EPA announcement. This is what a high competence, low integrity environment looks like.

And if you trust Volkswagen, you do so at your own peril.

It is the third week of Auditing class, and we have been discussing the seven threats to auditor independence from the client: familiarity, management participation, advocacy, self-review, adverse interest, financial self-interest and undue influence. Auditors, at all ranks, have to be particularly aware of being too familiar with or trusting a client too much. They also easily slip into participating in management to ensure their success if the client constantly asks for advice. At a firm level, auditors can undermine their independence by being advocates for or lobbying on behalf of their clients. There are relatively explicit rules regarding self-review, adverse interest (suing one another) and financial self-interest.

I explain to my students that professors, like auditors, also need to be independent of their students, even though the students are paying tuition. Like auditors, professors can fall prey to getting too familiar with their students, either in a deliberate compromising relationship or just by liking them. They may also try to ensure the success of students who ask their advice, and they often lobby for their students or provide recommendation letters to employers and grad schools.

But the threat that can be most damaging to both auditors and professors is the undue influence threat. Unlike familiarity, management participation, and advocacy, auditors and professors do not choose the undue influence threat. It is an outside hazard thrust upon them. It may be a gift, a threat or simply pressure applied to influence behavior. And the more important the person applying the pressure, the more effective it is. Resisting it usually requires a system designed to short-circuit the attempt, and a spine.

Which brings us to Rutgers University Head Football Coach Kyle Flood, who has apparently admitted to emailing and meeting with a professor in an attempt to get a better grade on a writing assignment for one of his players, Nadir Barnwell. Barnwell has since been arrested for aggravated assault, among other charges. According to the Rutgers investigative report, Flood communicated with the professor using a personal Gmail account “to ensure there will be no public vetting of the correspondence,” despite the professor’s earlier complaint to an academic advisor that Barnwell was “badgering me to change his grade.” The professor’s response to Flood’s email was responsive enough to trigger four more emails and a scheduled meeting at a site off campus.

The email exchange and planned meeting led to a call from Flood to an academic advisor on how a grade could be changed, and the advisor told Flood he could not have contact with the professor. The advisor claims that Flood said that their conversation was to stay between the two of them, and the advisor responded, “We never had this conversation…I want no part of this.” Flood claims that the advisor did not tell him he could not have contact with the professor. But Flood made sure not to wear Rutgers gear so that he would not be recognized when he went to the meeting. Quoting from the report, “The Professor conveyed to the investigator that she felt unable to resist the implied pressure from someone like Coach Flood and thus felt uncomfortable not agreeing to an additional assignment to allow the Student to become eligible.” This is the definition of the undue influence threat. The investigators concluded that “…it appears Coach Flood’s contact with the faculty member potentially violated the University Ethics Policy which generally prohibits a University faculty or staff member from using his position at the University to secure unwarranted privileges or advantages for himself or others.” Rutgers president Robert Barchi suspended Kyle Flood for three games and fined him $50,000. Ironically, President Barchi said, “Our faculty must have complete independence in executing their duties . . . .”

But Kyle Flood should have been fired. What he did, he did deliberately. He did it repeatedly. And he did it even though he was warned not to do it. That is cause for firing. However, the clincher is that he intentionally tried to cover up what he was doing by multiple means, making firing him a no-brainer. And the fact that the student-athlete was just arrested and charged with multiple felonies makes President Barchi’s choice a real head scratcher.

This is not the first time this has happened. Many corporate boards enable the behavior of top executives, but they usually do so only for successful ones. It is interesting to see President Barchi risking his reputation on Kyle Flood the same way Kyle Flood risked his reputation on Nadir Barnwell. But whether you are an auditor or a professor, it takes a spine to be independent. And when the system fails you, sometimes a spine is all you have to rely on.

Perhaps I have been teaching auditing and ethics too long, but it seems like my life consists of reading story after story about rule benders and enablers. The latest and greatest example in the world of sports is the allegation by ESPN that NFL commissioner Roger Goodell ordered evidence destroyed that implicated the New England Patriots and coach Bill Belichick in a long-term cheating scandal prior to the famous Spygate game in 2007. The allegation is that if the public knew that the Patriots’ filming of other coaches’ signals was a multiyear, not a one-time, event, it would damage the image of the league and of one of its bellwether franchises. Goodell’s recent harsh punishment of quarterback Tom Brady and the Patriots for deflating footballs prior to last year’s AFC Championship Game was seen as him fulfilling his promise to harshly punish anyone who stepped over the line again. But Brady’s punishment was overturned by an arbitrator.

In this saga, the Patriots are the rule benders and Roger Goodell is the enabler. But the other 31 NFL owners, who allegedly knew of the document destruction, were also enablers if they acted to protect the value of the league and, thus, their own franchises. In my world, it is audit firms that enable their clients to misstate their financial statements and refuse to exercise the necessary professional skepticism to prevent frauds, like the recently announced sanctions against the auditors of General Employment Enterprises.

Major League Baseball seems hesitant to marshal any strong response to the FBI investigation of the St. Louis Cardinals’ hacking of the Houston Astros’ player evaluation database. The Cardinals fired their scouting director in early July, about two weeks after the hacking was announced. But two days after the announcement, an attorney hired by the Cardinals months before to investigate the hacking called a press conference to assert that there was no link to upper management. Major League Baseball waited until that investigation was done before the accusations became public. Of course, the FBI investigation and the Cardinals’ own internal review may lead to identifying all the culprits.

But I am not holding my breath. Stories indicate the fired scouting director may accuse Jeff Luhnow, the Astros’ general manager, of stealing the database from the Cardinals. If so, these issues would be in the papers for months. Major League Baseball and its owners, perhaps with the exception of one, want to move on and clear the decks. They appear ready and able to enable cheating in baseball, just as the NFL is alleged to have done with the Patriots. Who wants to talk about cheating with the playoffs coming up? They might do what’s right. But I am skeptical.

What triggered me writing this blog was a Twitter post claiming that it was unfair that last year’s U.S. Little League champions were stripped of their title for using players a mile out of their district, but Tom Brady got away with cheating. Those who bend the rules to their own ends rarely worry about the common good, and the way their stories are used by others to excuse their own cheating. But the Patriots and the Cardinals are simply the insider traders of professional sports. With insider trading, there is a stock exchange that is persuaded not to enable this behavior, and there is an SEC to investigate the traders, and to punish the stock exchanges if they cooperate with the traders. Unfortunately, in professional sports, the league is both the potential enabler and the investigator.

We already have an idea how well that worked with the NFL, and Major League Baseball is in the on-deck circle. But in a competitive world, cheaters get rich, and enablers get rich off the cheaters. For those people, it often smells like success. But for a society that values justice and fair play, it is corrosive. And, in my book, the enablers are just as bad as the cheaters.

I love Blue Bell ice cream. When we lived out of state for a number of years, I remember it being a legitimate choice to consider having it shipped to us in dry ice rather than settling for Blue Bunny, or some other inferior northern brand. On one visit home to Texas, driving between Austin and Houston, we stopped at a barbecue place in Brenham. We asked if they could make us milk shakes out of Blue Bell. Barbecue places don’t make milk shakes. But on that day, for a displaced Texas family, that one did. And it was the highlight of our trip.

I also love baseball and Texas A&M, and you cannot think of the two of those together without thinking of our beautiful Blue Bell Park. The Kruse family has been a great friend to this university, and Blue Bell CEO Howard Kruse even spoke to my son personally when he was considering his college choices.

But today, in real time, Blue Bell is grappling with one of the biggest crises in its long history. The presence of listeria in food is not a new thing, and it is one of the risks a food creating and food handling business develops systems to guard against. Obviously, at some level, those systems have not been effective enough at Blue Bell, and that is true in multiple locations. And when people are harmed, any corporation can expect its motives to be questioned and probed.

But corporations do not have motives; people do. The people who run Blue Bell have built up tremendous goodwill over the years through the way they have run their business. Still, as news stories develop over weeks and months, light will be shone on the best and the worst of habits in the company, because that is what makes interesting news. The evidence that seems to point to slow moving calculations of effects will be criticized. Aggressive assumption of duties will be lauded.

Blue Bell’s overriding duty in this situation is to prevent harm from coming to people through the company’s products. That is why the decision to recall all Blue Bell products has been generally praised. It is a defensive decision, one that is designed to prevent harm at any cost. But this is not what companies like Blue Bell are normally designed to do.

Companies that produce ice cream are designed to maximize pleasure, not minimize harm. And companies that are designed to maximize pleasure run on calculations. Some companies are more utilitarian, calculating the greatest good for the greatest number, and these are often viewed as socially responsible. A stadium or theater venue that holds certain numbers of seats at a low price, or those that give back to their communities, fall into this category. Others only calculate the benefit for the company and its shareholders, generally with the goal to maximize profits. Even if they are involved in charitable giving, it is only as a means to protect the bottom line. But whether they are utilitarian or egoistic, virtually all companies that maximize pleasure run on calculations.

Blue Bell is one of these, and the initial response to the evidence of listeria was guarded; it was targeted to head off the harm without unnecessarily disrupting operations. It was the rational response of a pleasure maximizing entity. But there was a point where Blue Bell’s role changed, since they were effectively put in a position where they were the only party that effectively could prevent harm. The question at that point is, “Will the corporation shift its point of view and assume its overriding duty to prevent harm to consumers?” More precisely, will the people who run the company assume that overriding duty and bear the costs that go with it?

When companies make decisions like Blue Bell did, people will still say that companies are calculators, and that they pull their product to avoid lawsuits. While this is potentially true, it is hardly a criticism to say that people are rational. When the calculation aligns with the overriding duty, the decision is an easy one.

Had it reached that point at Blue Bell? No one can say for sure. But since there is obviously no motive to harm consumers, and management progressed rather quickly from a broad partial recall to a total recall, the decision looks to be one of willingly assuming that overriding duty rather than risking further harm to consumers. Blue Bell changed its role from pleasure maximizer to harm minimizer.

There are other duties that Blue Bell needs to fulfill in order to prevent future harm, and their press releases indicate that they are aware of those. I would imagine that systems put in place in the next six months will be markedly different than the ones that have been there for decades. Until these are completed, the public will be wary.

But doing this well will allow Blue Bell to return to doing what it does best—maximizing pleasure. And that includes providing milk shakes for all those Texans who wander home and remember why it is they love this place.

Barry Minkow is a classic rags-to-riches American story. Or maybe it’s more like a rags to riches to orange jumpsuit to crime fighter to clerical collar to fraudulent short-seller to multimillion dollar church embezzlement story. He is currently serving a sentence for insider trading related to false accusations against homebuilder Lennar Corp. that drove its stock down while he shorted it. But he also pled guilty last week to embezzling $3,000,000 from the church he pastored, San Diego Community Bible Church. Even now, after all I have known about Minkow through the years, his chutzpah floors me. He was able to convince the court that he committed the Lennar fraud to fund his addiction to Oxycontin, potentially shortening his sentence because of his participation in a drug treatment program. If I was a guard, I would be checking his cell every thirty minutes.

About the time Minkow was pulling off his first major scam by taking the company he started as a teenager, ZZZZBest, public, I was busy in a Ph.D. program learning the ins and outs of accounting ethics and fraud. His very public fall, and the subsequent video interview he gave in prison to Joe Wells, helped to jump start Wells’s Association of Certified Fraud Examiners and the CFE designation. His folksy discussion of how easy it was to fool people, particularly auditors, brought home the need for serious attention to forensic accounting. He was the face of fraud for CPAs, giving a dry science a red-blooded American mythical character. And he was able to build on that reputation after he was released from prison by helping search out numerous frauds and founding the Fraud Discovery Institute. He also rebuilt his personal reputation by serving first as a pastor of evangelism in one church, and then as the senior pastor in the San Diego church.

And he wrote books. Oh, did he write books. Ever the self-promoter, Minkow was involved in numerous book projects that all told essentially the same story of his rise and fall. I found a number of copies of one of his books in a second-hand bookstore and gave several away to my graduate students to read. Of course, he was always the hero in the books, whether he was the bad guy pointing out how incompetent financial professionals were, or the repentant criminal mending his ways. Throw a little gospel in there and you broaden your audience. In fact, before the Lennar conviction, Minkow was the star in a motion picture about his own life that was about to be released. The movie co-starred James Caan, Mark Hamill (Luke Skywalker), and Talia Shire (Rocky Balboa’s wife). It is quite possible that he used church funds to support the Fraud Discovery Institute and church members to fund the movie.

I have to admit, even though I teach professional skepticism, I fell for some of his shtick after he got out of prison the first time. He spoke broadly, but I never invited him to class, in part because of the cost, and in part because of a nagging feeling about him. There are reasons for people to tell their failure stories, and I have found that my students are able to identify with what many of them have gone through. One speaker I had last spring gave what was clearly the most influential talk of the semester by sharing her story and accepting responsibility for her choices. But Minkow has always had a different feel to him; none of the others I have come across has been as obviously self-interested as he is.

Yet even now, after he has done untold damage to the two groups I most closely identify with, CPAs and Christians, I find it hard to be angry with him. I am not sure why that is true, because it seems like I ought to be very resentful. He has besmirched the names of many trusting people. He also loves to talk about himself, which must be extraordinarily irritating to those who have known him well.

But his career has paralleled mine, and it is like having the thread of a single life that is hopelessly intertwined with my own story. I was warned in graduate school about pursuing accounting ethics as my research emphasis because it would marginalize me in my field of accounting. But when I looked around at the choices I had for investing my intellect and my research skills, the only one that I could see holding my attention for decades was accounting ethics.

And that, indeed, has held true for me. I have dabbled in several other areas of research, even overinvesting myself in one or two of them in the hopes of being seen as more mainstream. But only accounting ethics has consistently awakened my passion for research, and it does so because of the complexity of the stories involved. Accounting ethics is at the nexus of rational markets and human failure, and studying it has invariably led to rich stories that are easy to make into parables. I suppose that I have a liberal arts flavor to what I teach that is largely unavailable to many of my business school colleagues.

Sometimes these stories play out as Greek tragedy and sometimes as farce, but the truth is that my life would be incomplete without the Barry Minkows of the world. While my faith always makes me hope for redemption in people’s lives, Minkow has already lived the cat’s proverbial nine lives. I have not seen the movie, but I am guessing it is both interesting and a lie. Its investors were only one more group of suckers Barry Minkow left in his wake. They should have known that it was a film that would never be completed. Because with a Barry Minkow movie, you can never really write an ending.

I often write about establishing and maintaining values, but I rarely speak about passing on values. Last weekend afforded me a remarkable opportunity to observe what values have been passed on to my children, and made me reconsider who I need to be today. My wife and I gathered with our five children to attend a University of Nebraska home football game, something we had not done since I was an assistant professor there 20 years ago.

The trip allowed me to wrestle with what it is to be content, to look regret in the eye and stare it down. But mostly, it made me thankful for what I had then, and for what I have now. And it helped me to focus on three things I hope will guide me in the last third of my life.

Remember the Past

Our trip to Lincoln included a tour of old sights, including homes, schools and restaurants that were important to us. We were able to renew faithful friendships that have endured through the years and have significant conversations with people important to us. We laughed at old memories as a family, some that were triggered just by driving by a location. We searched in the half-light of dusk to find a brick on campus dedicated to my mother shortly after she died. I wrestled far less with regrets and mistakes than I might have expected, perhaps because there was such joy in what we were doing together as a family, and in part because I am so happy doing what I do today.

Embrace the Present

I soaked up every moment of 36 hours I spent with people, drinking long and deeply of relationships. Everywhere we went, from our first night’s dinner with old friends to the last gathering of 25 of us for pizza after the football game, was rich with laughter and remembrances. We were even witnesses to a Hail Mary miracle touchdown on the game’s last play that secured victory for the home team and set off bedlam in the stadium. The word serendipity came to mind.

Anticipate the Future

My wife and I became empty nesters less than three months ago after 35 years of children at home, and we are still navigating what it means for it to be just the two of us. Recent health challenges in our family have reminded us of the brevity of life and of how important it is to live each day fully. But while we cannot insure a life free of pain, we can live with anticipation that the ways that we have invested our lives over the last three-and-a-half decades will bear fruit in beautiful ways. I couldn’t help but think that was true as I stared at my precious 3-year-old granddaughter who was on the trip, and thought of her brother and two cousins. I have lived to see – and enjoy – my children’s children.

But I said this column was about passing on values, and these are the values I observed in my children. First, people are more important than things. The kids sacrificed financially in significant ways to be there, and there was not a note of regret that this might have been as expensive a trip as they had taken on a per-hour basis. Second, listening is more important than telling. I looked around the room at Valentino’s Pizza’s party room and saw all my children engaged in deep conversation, just as their mom was. (Obviously I wasn’t, since I was looking around the room.) I think they realized that some of these conversations were ones they might not have the opportunity to enjoy again.

And, importantly, remembering where you come from matters. My children have attended five different universities, and they have each developed their own allegiances, just as I have. But there was a time when we all wore the same color on Saturdays, when we were together in every sense. Our two youngest, one of whom was born in Lincoln and one just after we left, were able to experience for a few hours something of what that unity felt like. Nebraska didn’t give us our faith or our core values, but our older children will say it is where we became, fully, a family. And this trip was a tip of our cap to that place, to that time and to those people.

There is no place I would rather be today than Aggieland, but last weekend I was reminded that there was a different place that helped shape my children into who they are today. In remembering, I found myself overflowing with gratitude.

Helen Sharkey is a felon. That sentence seems in every way to be wrong, even as I write it. Helen Sharkey is a mom of Tae Kwon Do twins, a loving wife, a faithful friend. She is a diminutive dynamo, energetically expressing truth, thoughtfully responding to questions. She is a star, a top accounting graduate of Southwestern University with a Big 4 pedigree who had a rising career in the energy industry. But, there it is again. Helen Sharkey is a felon.

In perhaps, the most eloquent expression of remorse that I have heard in many years, Ms. Sharkey told the story in my Ethics class of her fall from grace at Dynegy a decade ago. She spoke of the people who influenced her, of the pressures she felt, of the key turning points when failing to “listen to her gut” diverted her life in ways she could never have imagined. She became, with her decisions, what in retrospect is the one thing she never wanted to be: Googlable.

And that Googlability is what triggered the introspection necessary to allow her to speak about her experience to a broader audience. Since she got out of federal prison in late 2006, she has quietly raised her children with her husband and led a “normal” life out of the public spotlight. She has established the connections that have allowed her to flourish, perhaps influenced by a reticence to trust broadly that comes both from being “perp walked” and from watching others more involved in your crime never get indicted.

But her eyes were opened to the fact that in a fully searchable world, her sons were quickly coming to the age where she would have to explain that, in her own words, “Mommy is a felon.” This not only permitted introspection, it made that process urgent. Ms. Sharkey needed to understand her story so that she could explain it to two boys coming of age. And the result of walking through that process is a lucidity to her message that few people can match.

Being in that room was like watching a match dropped on dry tinder. In the midst of a draining week, I was locked on each word of her story, as was virtually everyone in the room. She spoke in measured tones, but she was able to convey the changing emotions of each stage of her ordeal in her voice and in her eyes. Standing behind a podium meant to protect her, she opened her heart and her life to a group of students I am asking to examine theirs. And she opened them to me as well.

She did not have to dramatize, because the room was walking with her through her boss’s detachment from correspondence related to the structured finance transaction that was her downfall, and through the New York meeting that sealed the deal when her boss did not backstop her. Her stomach in knots, she said, “For the first time in my life, I gave up on myself.” We could feel the impact of the Wall Street Journal article revealing the transaction, the subsequent criminal investigation, the tightening noose of the indictment, with the U.S. attorneys referring to her as “smart and articulate,” as an “alchemist.” What followed—Dynegy cutting off legal funding, losing her job at Chevron, being alongside of her father as he died of cancer—are the things that make any reasonable person shudder. She did not have to serve the five-year sentence that could have been her fate based on her guilty plea. But she felt the incalculable pain of leaving her twin babies to walk into a federal prison.

It was hard to pull the students away from her after class. I heard one say that she would stay all day if she could. Until she came to my class, I had never met Helen Sharkey. I have dealt with these issues professionally for many years. I am not purely clinical, because I care deeply about people’s outcomes. I am always rooting and praying for my students to avoid these paths. But, if they walk down them, I want to be a redemptive voice who gives them hope that there is more to life than their failure.

I have never known how to do that effectively. But I know someone who does. Her name is Helen Sharkey.

As an NBA fan, officials are not high on my favorites list. As a San Antonio Spurs fan, one official, in particular, draws the ire of all Tim Duncan supporters: Joey Crawford. Crawford is famous for throwing Spurs star Tim Duncan out of a late 2007 season game against the Mavericks for laughing at his officiating calls from the bench. But the referee was suspended for the rest of the season and playoffs, apparently for challenging Duncan to a fight in the confrontation. Crawford has recently said that the event caused him to reevaluate the way he refereed and to seek more extensive counseling to deal with anger management.

What Crawford, a skilled, veteran referee had lost with respect to Tim Duncan was objectivity. This week a similar incident came to light when former NBA referee Ed Rush, now the supervisor of basketball officials for the Pac 12 Conference, allegedly offered $5000 or a trip to Cancun to any official who would give a technical to or eject Arizona coach Sean Miller during the Pac 12 tournament. It may have been in jest, but according to one official, Rush reiterated the focus on Miller during a meeting on the tournament’s second day. In fact, official Michael Irving called a late-game technical on Miller for yelling about a double-dribble call, and UCLA went on to beat Miller’s Wildcats, 66-64. While Pac 12 Commissioner Larry Scott agreed that it was “completely inappropriate” and reflected “very, very poor judgment,” he concluded that it was not an offense worthy of Rush being fired. In fact, he concluded that “[t]here was nothing unethical or a breach of integrity.” His conclusion is dead wrong.

Actually, these comments are not unprecedented for Rush. After he finished his NBA officiating career, he served as the league’s director of officials. In January of 2002, Dallas Mavericks owner famously said of Rush’s leadership, “Ed Rush might have been a great ref, but I wouldn’t hire him to manage a Dairy Queen. His interest is not in the integrity of the game or improving the officiating.” Cuban tweeted after the latest incident, “Not surprised…It will get worse.” Former NBA referee Tim Donaghy, who famously sacrificed his own objectivity and career by gambling on NBA games, accuses Rush of making comments about Cuban to NBA officials similar to the ones he made about Miller. Of course, Donaghy’s own lack of credibility comes into play here.

Whether the comments were made in jest or not, Rush provides strong evidence that he has lost his objectivity. And the power that he wields over Pac 12 officials gives the appearance that his loss of objectivity contributed to unequal treatment in a tournament game. The issue is not that Miller was treated badly; it would have been just as bad if he had been favored by officials, or an insinuation had been given that someone should be helped. What is wrong here, and what drew Larry Scott’s ire, is that Ed Rush was not objective.

It makes no sense for Scott to claim that integrity was not sacrificed; in officiating, integrity and objectivity are inseparable. You cannot be “whole” or “true” in your evaluations as a referee if you are biased, or if you introduce that bias as a person in authority.

The same is true for auditors, the people I train for our profession. It is not enough to be technically competent, as all three referees in this story arguably are, or were. You must also be a person of integrity and objectivity. And, what is critical, you must be objective not just in fact, but in appearance. If you lose the appearance of objectivity, you have lost the trust of those who rely on you for unbiased judgments so that they are not misled, whether in the financial statements or in the final score of a basketball game.

The bigger danger with auditors, and with those who supervise them, is to lose objectivity by becoming cheerleaders for their clients, not by harshly and unfairly judging them. Many accounting firms have found out that juries are apt to punish auditors harshly in the case of audit failures when it is obvious that they have lost objectivity and become their clients’ advocates.

The jury may still be out on Ed Rush’s objectivity. But, if the accusations are true, Commissioner Scott’s conclusion that Rush did not sacrifice his integrity by making those statements may come back to haunt him.