Michael Lissack  (July 28, 2002) 
　

Worldcom, Anderson, Merrill Lynch, Enron, Martha Stewart …. The list goes on and on.  American confidence in our largest corporations is at an all time low. Media pundits speak of the lack of ethics and the lack of standards.  But, there is a source of ethics and standards common to all these cases - Business Schools, suppliers of the MBA.  What kind of standards were Jeff Skilling and the Wall Street analysts taught while getting their MBA?  What kind of ethics?   That money was the measure of success.  That it is standard to focus on maximizing shareholder wealth.  That present value matters more than long-term anything including responsibility. That you “are a team of one” so focus on self (and maximize those stock options).    That responsibility is the “market's” not ours- and, anyhow, no one “like us” ever goes to jail.

Harvard claims it provides "a transforming experience that gave [its alumni] the tools and life lessons they needed to chart their own future"  This was done through courses that, for example, teach "financial engineering used to support marketing and production programs, signal information, structure incentives, tap different investor clienteles, minimize bankruptcy costs, and address tax and accounting concerns." As of today nowhere in the published content of such courses do we find discussions of how far is too far, what is the public's interest, where is the line and how to avoid grey areas etc.  Will this now change?  It is not enough to merely add "new" cases to the ethics course.  The problematic mindset is created within such course as "corporate financial engineering. "Will HBS and other business school faculty take any time from their vacations (or lucrative consulting assignments) this summer to revise their courses so as to take responsibility for the actions of their students? 

Martha and Bernie may not have MBAs but they are surrounded by them.  The people at Merrill, Anderson, Tyco and Enron are mostly MBA's themselves. If these were schoolchildren their teachers would be wondering what went wrong.  Will MBA faculty have the same concerns?  Or will they take cold comfort that “these are adults making their own decisions?”  True professions take responsibility for their teachings.  It is time for business school faculty to do the same.

Business schools in America have endowments in excess of $2 billion.  Gifts to business schools are considered charity.  And how the needy have been served. Thousands thrown out of work, trust in leadership destroyed, and confidence-- the very engine of our economy -- shattered.  Come September our business schools will teach accounting, finance, and management principles as if none these scandals ever happened except as examples of excess and of getting caught  Our MBA programs provided the common mindset behind the current corporate crisis. Without reform of climate and curriculum the next generation of MBA's is doomed to repeat these scandals.

Ethics in business needs to be taught as a way of life not as a required course. The notion of community responsibility before self needs to be instilled before MBAs are entitled to be part of a “profession” known as management.  The massive resources available to business schools need to be deployed with a focus on giving something to America rather than on gathering assets for self.  Harvard business school alone has resources enough to provide a free education to thousands annually (but charges $30,500 per student).

The current corporate crisis cannot be “blamed” on the business schools.  Selfish individuals acted in furtherance of greed.  But the climate that both produced and tolerated such behavior starts with the business schools.  So too must reform. Now.

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CAPITAL VIEWS: `Mad As Hell, Not Gonna Take It Anymore`
            (A Dow Jones Newswires Column)
                                                    
                                                                         By JOHN CONNOR

WASHINGTON -- The world is such these days that it didn't sound like a man-bites-dog development when Russian President Vladimir Putin praised U.S. President George W. Bush for raising concerns about the WorldCom mess at the Group of Eight economic summit in Canada.

Putin took Bush's attempts to buck up markets, to lecture U.S. corporate leaders about proper behavior, and to remonstrate with corporate miscreants to be "a very good signal."
Indeed, high voltage rhetorical signals suggest that the WorldCom larceny may mark a proverbial fork in the road in terms of official outrage with corporate shenanigans.

For example:
--Securities and Exchange Commission Chairman Harvey Pitt, criticized by some for allegedly not being aggressive enough in attacking corporate venality, sounded more agitated than any of his critics when, speaking of WorldCom, he invoked the line from the movie "Network" -"I'm mad as hell, and I'm not going to take it anymore."

--What happened at WorldCom, i.e., doctoring its bottom line, amounted to "accounting improprieties of unprecedented magnitude," the SEC said separately, around the time it filed a lawsuit in New York City accusing WorldCom of fraud.

--Treasury Secretary Paul O'Neill went on the tube Thursday morning to say that "the scope of what they've done at WorldCom requires complicity of quite a few people, I think, because the numbers are so huge, and the accounting technique they used is so fundamental, it's just mind-boggling." Restitution and jail were among the concepts discussed.

Bubble fans may be interested to know that Pitt said in a speech at the Economic Club of New York Wednesday evening that "our free markets have generated unparalleled growth, jobs, innovation and prosperity. But the bubble that inflated in the last years of that run has burst.

"The seemingly endless drumbeat of Enron, Global Crossing, Tyco, ImClone, Xerox, Andersen, Adelphia and now WorldCom, have caused investors around the globe to lose confidence in American business, and to question its basic integrity," Pitt continued. "If that is allowed to persist, a key pillar on which our capital markets are premised will crumble."

As for the Russian perspective, President Putin said: "During the general discussion at the G-8 meeting, the president paid attention to this (WorldCom) issue. And for me and my other colleagues, it was very important to listen to the president's opinion because under the circumstances of the globalize and the world, a lot depends on the state of the U.S. economy."

Who or what to blame for the current outbreak of corporate miscreancy other than the bubble or spoiled childhoods?
Onetime Smith Barney managing director Michael Lissack , who has had some problems of his own with authorities, wonders if Harvard Business School and other business school faculty will take any time from their vacations or consulting assignments this summer "to revise their courses so as to take responsibility for the actions of their students?"

According to Lissack , "Our MBA programs provided the common mindset behind the current corporate crisis. Without reform of climate and curriculum the next generation of MBA's is doomed to repeat these scandals."

Elsewhere on the blame game front, Presidential economic adviser Lawrence Lindsey has a candidate - a lack of enforcement in the 1990s when, uh, the Clinton Administration was in power.
"Remember," Lindsey said on CNBC this morning, most of this stuff didn't happen last year, this stuff was happening in the 1990s. We have to follow a lot of abuses and clean them up."

 (John Connor, a veteran observer of the financial markets and the Washington scene, is Washington bureau chief for Dow Jones Newswires. He can be reached by E-Mail at john.connor@DowJones.Com)

Updated June 27, 2002 2:18 p.m. EDT