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AIG a case study in how greed breeds more greed

Thursday, March 26, 2009 | 6:00 a.m. CDT

I do not care what you thought about thepresident of the United States sitting in the "hot seat" on "The Tonight Show with Jay Leno."   Face it, Jay has been on the air forever, and if President Obama wants to have an evening where he can be himself, laugh, joke and have a serious one-on-one conversation about the economy and life in the White House that happened to be overheard by a few kadrillion people, so be it.

Almost one-half of the 25-minute interview concerned American International Group, AIG. Rose Nolen wrote about the multinational company on March 4. Her anger was a small example of the sentiment of the American people. I cannot pick up a newspaper, log onto a Web site or listen to the radio without a story about AIG’s financial disaster. Every television news channel, from liberal to conservative, is running the same story: AIG’s financial woes.

Even Congress is beyond angry. The testimony of Edward Liddy, chief executive officer of AIG, and Treasury Secretary Timothy Geithner caused more than a few cerebral hemorrhages. So when Liddy said he would “ask” that the recipients to return one-half of the bonuses, Congress blew its stack.  With a 392-93 vote, the House authorized a 90-percent tax on executive bonuses if their firm received federal bailout money.  The target – AIG.

The $165 million bonuses paid to AIG executives are only the tip of the iceberg, but endemic to the general problem of today’s business ethics. Ethics have fallen short and the citizens are mad as hell and will not take it anymore.

Ethics is an important subject for me, very personal and very academic. Ethics is the study of the secular and temporal norms of right and wrong. AIG’s wrongs started well before 2008.

The AIG story and its then-CEO Hank Greenberg is too complicated for 700 words.  In short, the company’s attitude was simple; the end justifies the means.  If the means is fraud and the end was investors getting rich, the fraud was justified.  Under the threat of prosecution by then-New York Attorney General Eliot Spitzer for multiple counts of alleged fraud, Greenberg was forced out and AIG paid huge fines.

In addition, AIG was to create the position of ethics officer for each of its divisions.  In 2006, I interviewed for that position with AIG Domestic, the property and casualty branch. When invited back for a second interview, I knew I was on the short list for the job. 

My major concern about AIG, even then, was the ethical culture of senior management, with whom I would have been working and with whom I interviewed. I asked each the same question, “What about Greenberg and the corporate culture concerning what he allegedly did?”  From each person I received the same answer: “Greenberg was not convicted, therefore he was not guilty. Anyhow, look at all the money Greenberg made for a lot of people.” End and means.

I did not get the job. I may not have taken it if offered.

The president said that AIG’s ethics spoke, “to a broader culture that existed on Wall Street where people had this general attitude to entitlement…” They still do.

These same people believe that American homeowner’s do not deserve a financial safety net and that the government should not provide jobs for the 8.1percent of American’s out of work and so on. How ironic. 

Greed is wrong, yet greed is the mantra of too many of the money handlers, and greed leads to unethical behavior. Every holy book warns against bondage to greed.  One job of the government, according to 18th century philosopher John Locke, is to help its citizens who need assistance, not the greedy.  Even Lee Iacocca talks about the evils of business greed.

“We've got to get back to an attitude when people know when enough is enough and have a sense of responsibility,” said the president, “and if we can get back to the values that built America, we’ll be OK.”

The American people have had enough and we will not take it anymore. Thank you, Mr. President.

David Rosman is a business and political communications consultant, professional speaker and college instructor in communications, ethics, business and politics. Besides the Missourian, David is also a featured columnist for MissouriTribune.comTRCB.com.  He welcomes your comments at ProfDave1011@netscape.net.

 


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