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Why I Did Not Go To Jail

bhorowitz.com

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Re: Why I Did Not Go To Jail

#101

Post by ecuzzillo »

gohrt wrote: post #42

This looks one of those cases that could have gone like this: "Someone proposed an idea that was perhaps technically legal, but obviously failed the sniff test of ethics and spirit of the law. I reminded her of what I repeatedly tell our staff at welcome/training meetings: At this company, we do what is right, for our employees, our customers, our investors, and the public. We don't mislead one to help another. We do…

There are a lot of things that I think are morally completely correct that I still wouldn't necessarily be the happiest to see on the NYT.

Re: Why I Did Not Go To Jail

#102

Post by derekp7 »

ZachPruckowski wrote: post #77
EpicEng wrote: post #41

Earlier quoted context omitted.

Except they can't, which is why other people are hired to fulfill those roles. I can extend your argument and say that the CEO should be involved in every detail of the company because, after all, "if the CEO doesn't have time to make sure the company [is doing X properly], hey don't have time to be the CEO."

The CEO in the linked piece didn't need to get down into the weeds of the accounting laws, he just needs to know to get a second (outside/unbiased) opinion on anything that smells even faintly and remotely fishy that he's signing off on, and he needs to keep a general eye on principal/agent problems or conflicts of interest in the people he manages.

And he needs to know that the outside opinion is actually the same opinion that would be shared by a potential prosecutor / judge / jury. And he needs to have enough intuition to know that something smells fishy. And that it is a bad fishy smell, not a good fishy smell.

Re: Why I Did Not Go To Jail

#104

Post by memracom »

That was an excellent article. One of the best that I have read recently about company management. Of course to get the full impact you need to do a lot of reading between the lines, but Ben does us the favor of leaving some broad hints. This really does have the flavor of a manager skillfully navigating the business through shark-infested waters, and IMHO, that is exactly the job of senior management. Including CTOs. While a CTO may not have direct responsibility for legal and accounting issues, they need to be fully aware of what their colleagues are up to, because, as Ben pointed out, another executive might be subverting the law in pursuit of some number. If that is happening and the CTO does not notice it and call their colleagues on that type of behavior then the CTO is complicit and will at minimum get fired, and could even go to jail.

Taking public money in any form, comes with obligations to play fair, and however much you may disagree with the laws or the people who made those laws, they are the current standard for whether or not someone is playing fair.

Re: Why I Did Not Go To Jail

#105

Post by RockyMcNuts »

smsm42 wrote: post #75
ganeumann wrote: post #67

Earlier quoted context omitted.

There's a big difference between going to your general counsel and asking "Is this legal?" and going to your accountants and saying "Find me a way to make this legal enough." I think the options-backdating was an example of the latter.

In the case described in the story, I don't see any signs of the former. The CFO proposes certain practice, it is not obviously illegal (like not paying taxes or stealing office supplies from competitors at night), hundreds of companies do it, hundreds of lawyers approve it. If the CEO asks the council if it's OK and the council says yes, like hundreds others did, he goes to jail. If he's lucky and the council says n…

hmmh... a manager changing the date on a contract after the fact so it generates more money for him/her is actually pretty obviously a red flag. Kudos to Ben for doing the right thing. If the government couldn't prove beyond a reasonable doubt to a jury that it was wrong, she wouldn't have gone to jail. (Not saying innocent people never go to jail, but it's not like she was an indigent defendant, she had a lot of resources and incentives to fight if it was defensible)

Re: Why I Did Not Go To Jail

#106

Post by memracom »

bfe wrote: post #6

Just as it's hard to tell if someone's a good coder without yourself being a good coder, it's hard to tell if an attorney or financial expert is giving you good advice without seeking for yourself a basic understanding of the legal or financial issues. A good attorney or financial expert will help you understand the issues enough for yourself to see why their evaluation makes sense. It's not good enough to just compl…

One red flag in this case is that the CFO referred to PwC, a major accounting firm that her former company paid for some advice, as a reason why everything was OK. This amounts to "trust me" because you have no access to the terms under which PwC was retained by the other company and no idea who actually examined the options accounting or under what circumstances. Shady dealing is often obscured by appeals to a higher power.

If you run into this in your own company you should be suspicious and try to get the company to hire an independent expert to review the situation, which is exactly what Ben did. For an expert to be truly independent they need to be retained by someone outside the group under suspicion.

Suspicion is not a bad thing as long as you deal with it promptly. Dealing with it clarifies the situation and removes the suspicion, one way or another.

Re: Why I Did Not Go To Jail

#107

Post by iwasphone »

Nicholas_C wrote: post #13

I found more info on the CFO here: http://www.sec.gov/litigation/litreleases/2009/lr20964.htm >Abrams [the CFO in Ben's article] Also to be Barred from Serving as an Officer and Director of a Public Company I wonder what people who get caught up in these sort of things do afterwards?

Motivational speaking.

Re: Why I Did Not Go To Jail

#108

Post by Uhhrrr »

>The whole thing was a case of the old saying: “When the paddy wagon pulls up to the house of ill repute, it doesn’t matter what you are doing. Everybody goes to jail.”

I've never heard this saying, and Google comes up with nothing. Maybe this is a paraphrase of one of those raps Ben likes?

Re: Why I Did Not Go To Jail

#109

Post by chubot »

memracom wrote: post #106
bfe wrote: post #6

Just as it's hard to tell if someone's a good coder without yourself being a good coder, it's hard to tell if an attorney or financial expert is giving you good advice without seeking for yourself a basic understanding of the legal or financial issues. A good attorney or financial expert will help you understand the issues enough for yourself to see why their evaluation makes sense. It's not good enough to just compl…

One red flag in this case is that the CFO referred to PwC, a major accounting firm that her former company paid for some advice, as a reason why everything was OK. This amounts to "trust me" because you have no access to the terms under which PwC was retained by the other company and no idea who actually examined the options accounting or under what circumstances. Shady dealing is often obscured by appeals to a highe…

Not to be cynical, but isn't this why "consulting firms" exist? Part of their job is to just some "reputable" outside justification for something someone internally wants to do anyway. It's to cover their ass.

When there are mass layoffs, they hire "consultants". Because nobody inside wants to really take responsibility for the decision. It's better politically to have it come from some "outside objective analysis" (of course there is not such thing, and outsiders are often the worst people to make such decisions.)

Re: Why I Did Not Go To Jail

#110

Post by cperciva »

dandelany wrote: post #89
smsm42 wrote: post #75

Earlier quoted context omitted.

In the case described in the story, I don't see any signs of the former. The CFO proposes certain practice, it is not obviously illegal (like not paying taxes or stealing office supplies from competitors at night), hundreds of companies do it, hundreds of lawyers approve it. If the CEO asks the council if it's OK and the council says yes, like hundreds others did, he goes to jail. If he's lucky and the council says n…

Sorry to be a nitpick, but just FYI in the case of legal advice, it's "counsel" not "council" :)

Theoretically, your legal counsel might consist of a council of lawyers. ;-)
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