Posts Tagged ‘Ethics’

Communication Ethics Violated in Taming of Merrill Lynch

  

Bank of America CEO Ken Lewis retired from his position at the end of the 2009 year, a full year earlier than expected. Lewis, who was responsible for the acquisition of Merrill Lynch at the height of financial crisis, last year, has been accused of withholding shareholder information regarding the now controversial purchase. Three months following  his departure, financial world is still left with pending questions, including the impact Bank of America acquisition of Merrill Lynch had on Mr. Lewis’ decision to resign, the ethical controversy regarding the acquisition itself and the fate of Bank of America post Mr. Lewis’ exodus. Lewis has been a target of critics for months, and the decision surrounding the end of his four-decade career raises questions about  legal and ethical violation that might have taken place.

During Lewis’ tenure as CEO, Bank of America more than doubled its deposits and expanded its credit card and mortgage operations. Lewis was named Banker of the Year in 2001 and 2008. In addition, he was listed among the 100 most influential people in the world by Time Magazine.

On September 15, 2008, Bank of America announced its intention to purchase Merrill Lynch in an all-stock deal worth approximately $50 billion. At the time, Lewis was believed to be a savior of Wall Street and the acquisition made Bank of America the largest financial services company in the world.  The bank, in its January earnings statement, revealed massive losses at Merrill Lynch in the fourth quarter, which necessitated an emergency government bailout in amount of $20 billion to keep the bank solvent. The bank also disclosed that it tried to terminate the deal in December after the extent of Merrill’s trading losses surfaced, but was forced to complete the merger by the U.S. government. According to sources, Mr. Paulson and Mr. Bernanke (Federal Reserve Chairman) persuaded Lewis to stick by the deal terrified that pulling out of it might set off renewed panic in financial markets. Lewis later testified before Congress that federal officials pressured him to proceed with the deal or face losing his job and endangering the bank’s relationship with federal regulators.

The revelation of the $20 billion rescue package in January angered some long-term BofA investors, who filed suit against Mr. Lewis and mounted a successful campaign to strip him of his title as chairman. Angry shareholders held him accountable for what they view as a series of missteps that forced the bank to accept two government bailouts.

Under communication ethics, four general categories are at play when evaluating existence of an ethical issue: Truthfulness, ethics of running a business, ethics of representation and helping clients behave ethically.   In the case of Lewis and BoA, one can argue that he violated the category of truthfulness, by failing to disclose losses and executive bonuses at Merrill Lynch to the bank’s shareholders BEFORE they voted to approve the deal. His action also takes a form of deception, since the omission to submit previously-mentioned material information to the shareholders disabled them from being able to completely evaluate the situation and act accordingly.

We’ll never know what would have happened if Bank of America had canceled the Merrill deal. Merrill Lynch would probably have been in a horrible position, akin to Lehman Brothers fate and the government would have likely had to spend an awful lot more than $20 billion to save it. Given that the system didn’t melt down last December, it seems reasonable to assume that the decision by Mr. Paulson and Mr. Bernanke to convince Mr. Lewis to proceed with the merger was the right one.

Analyzing Ken Lewis and his actions inside Bank of America, it is very difficult to say with certainty whether he was looking to deceive his shareholders, or if his actions were a result of pressure exerted from the U.S. government. Furthermore, when assessing communication ethics in the case, it is almost impossible to know whether he lacked the ethical instinct when making his decisions, or he truly had a long-term vision for the success of the Bank.

Ethics and Morality in the Media Representation of Serbia? Don’t Make Me Laugh.

        

Ethics stands for patterns of right behavior according to the norms of a society. Morality, on the other hand, tends to be more personal, as it exemplifies one’s distinction between good or bad conduct. As I consider both, I cannot help but re-visit the media representation afforded to Serbia during NATO bombing of Belgrade back in 1999. For reasons apparent to those that read about the instability weighing in the region at the time, I am of strong belief that Western media violated both ethical and moral principles in covering the warfare.

 Officially a Serbian province, Kosovo was stripped of its constitutionally granted autonomy by Serbian leader Slobodan Milosevic in 1989. Until 1999 exodus, 90% of Kosovo population was made up of ethnic Albanians.  In 1992 the Kosovars declared their independence from Yugoslavia, which refused to recognize its decision.  The conflict came to a head with NATO forces stepping in to launch strikes on Yugoslavia as a means of forcing Milosevic to accept a peace deal for Kosovo.

While NATO tried to quickly enforce peace in Kosovo, the way that NATO carried out its action received harsh criticism.  Just because Milosevic’s regime was clearly violating many international laws didn’t justify any reaction without close examination and analysis.  The role of mainstream media, in the West, has been less objective than expected, not verifying various claims and then using them as a major weapon in the form of propaganda to collect support for the war against Serbia. Violation of ethics, one could argue.

The headline over a New York Times (NYT) dispatch from Belgrade on March 24-the first day of bombing read-“U.S. negotiators depart, frustrated by Milosevic’s hard line (New York Times, March 24, p.A1). But the evidence posted in”Forgotten coverage of Rambouillet Negotiations” suggested that it was U.S. negotiators, not the Serbs, who blocked the agreement.  The Kosovo delegation was pressured to accept the agreement though it did not have explicit terms regarding independence.  For Serbia, the agreement had provisions that would let NATO go anywhere in Yugoslavia as they pleased, which was regarded as military occupation and could not be accepted. When the Kosovo Albanians accepted, it became represented as how they supported piece, whilst Serbians rejected it.
The media portrayal of this issue didn’t mention or analyze objectively the actual military and civilian provisions of the peace deal.  The military provision talked about military control of other unspecified nations on Serbian territory.  Any country, with a ruthless leader or not, would not accept such a deal, especially when the U.N is not involved in it. In addition, British Broadcasting Corporation (BBC) documentary on January 5, 2003 (“The Fall of Milosevic”) revealed some important aspects to the negotiation process at Rambouillet.  The documentary interviewed many NATO leaders and ministers involved at the time in the negotiations.  In that documentary, the Italian Foreign Minister Dini revealed that the peace agreement that had been drawn up was the means to justify war; that NATO had to get Kosovars to accept it so that the Serbs would be shown to be in the dark side.

The claim by Clinton and company that they have been moved to action over Kosovo because of their humanitarian concern has not the slightest bit of credibility.  Before the bombing began, estimates of the civilian death roll in Kosovo were in the range of 2,000 and the number of refugees somewhat over 300,000.  These are terrible number and they are surely an indication of Milosevic’s brutality.  But they are hardly different from-and in some cases they hardly compare with violence around the world that hardly evoked any kind of humanitarian concern from Washington. Media promote the view that there is a good violence over an evil violence.  “The West’s moral justification was that, over one year, 2000 people had been killed, 250.000 people displaced and that 45 people had been killed in Racak.  After three weeks of bombing, at least 350 civilians have been killed, an additional 500.000 have fled and NATO remained determined to reduce the welfare of 10 million Yugoslavian citizens for years” (Plilger John; Morality? Don’t make me laugh, The Guardian, April 12, 1999)

Something to think about ??