Ethics Newsline®

Wachovia said to be ready to settle government claims that poor oversight cost customers money; survey says MBA students value ethics but contend their coursework may not prepare them for moral challenges; convicted felons find big business in speeches to business schools; and “ethical hackers” get a new business association in Britain

VARIOUS DATELINES
From allegations of bad management to prior bad acts used to turn a profit, the week’s news in business ethics focused on a variety of stories. Among the coverage:

• Wachovia Corp. reportedly will pay up to $144 million to settle government claims that its poor management allowed telemarketers and payment processors to improperly withdraw millions of dollars from customers’ accounts. Bloomberg reports that the biggest chunk of the settlement — as much as $125 million — will be earmarked for reimbursing customers. Another $9 million is expected to be directed toward consumer-education programs. Wachovia, the nation’s fourth-largest bank, did not admit any wrongdoing when agreeing to the settlement.
• More than three-quarters of MBA students surveyed by the Aspen Institute Business and Society Program say strong ethics and values are integral to company performance. But the Rocky Mountain News reports that only 43 percent of respondents said their MBA courses were sufficiently preparing them for values conflicts later in their careers.
• Business schools are fostering a new cottage industry, according to BusinessWeek: Paying felons to talk to students and scare them straight. The publication profiled Walter Pavlo, Jr., who served two years in federal prison on money-laundering charges and now tells his story to business students. BusinessWeek’s Jane Porter writes: “Pavlo, who lined up his first (albeit unpaid) gig before he was released from jail in 2003, is one of the busiest convicted felons on the B-school speaking circuit. He’s given 25 lectures since January and expects to keep up that pace through the year. ‘Here’s a real person telling students what happened to his life. I don’t think there is any substitute for that,’ says Linda K. Trevino, a professor of organizational behavior and ethics at Penn State Smeal College of Business, where Pavlo has appeared several times. He speaks at companies and conferences, too, but says that most of the $100,000 or so he earned last year came from his B-school lectures. Part of the money goes to restitution for his crime.” But Porter notes that some critics say paying ex-cons further rewards them for their offenses, and some observers say that there is not a system for adequate verification of the stories that ex-cons tell during their appearances.
• An industry association for “ethical hackers” was created last week, reports the technology network ZDNet. The Council of Registered Ethical Security Testers aims to standardize the ethics of tests conducted to penetrate corporate security. Such tests are aimed not at damaging corporations, but at finding and fixing security holes before ill-intentioned hackers can exploit the weakness. The group also will set qualifications for certified members.

Sources: Bloomberg, Apr. 25 — Rocky Mountain News, Apr. 25 — BusinessWeek, Apr. 26 — ZDNet, Apr. 24.

For more information, see: Related Newsline story, Apr. 7 — Related Newsline story, Apr. 7 — Related Newsline story, Mar. 31 — Related Newsline story, Mar. 24 — Related Newsline story, Mar. 17.