Sen. Grassley Calls Out Red Cross for Stonewalling Haiti Investigation

From NonProfit Quarterly, June 17, 2016.

Senator Charles E. Grassley of the Senate Judiciary and Finance Committees issued a letter on Thursday essentially declaring that the American Red Cross (ARC) is stonewalling his investigation on questions of accountability where its activities and spending in Haiti are concerned. The ARC received approximately $487 million dollars to provide food and shelter in the aftermath of the 2010 earthquake.

Eventually, questions began to be raised about the organization’s effectiveness in Haiti, with charges about inefficiencies and waste. Grassley mentioned that reports also surfaced about the ARC viewing the disaster as a public relations and fundraising opportunity.

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The Red Cross’ Secret Disaster

This joint ProPublica/NPR report is extremely troubling, raising questions about how the Red Cross managed relief efforts after Hurricanes Sandy and Issac.

From the report:

During Isaac, Red Cross supervisors ordered dozens of trucks usually deployed to deliver aid to be driven around nearly empty instead, “just to be seen,” one of the drivers, Jim Dunham, recalls.

“We were sent way down on the Gulf with nothing to give,” Dunham says. The Red Cross’ relief effort was “worse than the storm.”

During Sandy, emergency vehicles were taken away from relief work and assigned to serve as backdrops for press conferences, angering disaster responders on the ground.

Go to the report.

See also:

Black Lung Returns To Coal Country

This investigation by NPR and the Center for Public Integrity on the issue of black lung shows – once again – that industry can’t be trusted to police itself.  Workers are not being protected.  The coal industry has gamed the system through the exploitation of loopholes, as well as downright fraud.  Regulators are not doing their jobs, either; the analysis in this story shows that they have known for more than 20 years that miners are breathing excessive amounts of coal dust.

From the series:

From the very beginning, miners reported “irregularities” in controlling coal mine dust, says Donald Rasmussen, 84, a pulmonologist in Beckley, W.Va. Rasmussen says he’s tested 40,000 coal miners for black lung in the last 50 years.

“So many miners will say, ‘If you think the dust is controlled you’re crazy,’ ” he says.

Measuring coal mine dust is key to preventing overexposure. Excess dust can trigger citations, fines and even slowdowns in coal production. Mining companies enforce their own compliance by taking and reporting mine dust samples. Federal mine inspectors also test for excessive dust.

Donald Rasmussen, 84, a pulmonologist in Beckley, W.Va., says he has tested 40,000 coal miners in the last 50 years.

But NPR and CPI have found widespread and persistent gaming of the system designed to measure and control exposure.

Richard Allen, a federal mine inspector underground when the 1969 law first took effect, says he remembers a strange question from a Mine Safety and Health Administration (MSHA) investigator about a carpet’s color in a coal mine manager’s office.

“It was blue and [MSHA was finding] little blue fibers in each [mine dust] sample,” Allen says. “[Investigators] cross-referenced the fibers in these samples to that carpet and found that he was sampling in his office” and not deep inside the mine.

The mine manager was later convicted of defrauding the mine safety agency and served time in prison.

Federal records obtained by CPI and NPR describe 103 cases resulting in criminal convictions for fraudulent dust sampling from 1980 through 2002. Fines totaled $2.2 million, and some mining company officials went to jail.

In 1991, the Labor Department levied civil fines of more than $6.5 million against about 500 coal mines for tampering with mine dust samples.

Listen to the series or read the transcript here.

Kids Cheat Just Like Their Business Role Models Do

From the article:

A friend wrote me last week to say how troubled she was by this stunner from her 19-year-old: The freshman at a private liberal-arts college told her mom that cheating on exams was standard operating procedure at school, and that she fully expected that cheating would be an everyday thing once she got into the workplace, too.

“To really get ahead, and get what you want in the business world, it is absolutely necessary to cheat,” the student told her horrified mother. Forgo a chance to cheat and you’re foolishly transferring a perfectly good opportunity to some other cheater who will reap the benefits, she said.

Though she’s years from gainful employment, the young woman has something in common with lots of people already securing a paycheck in the job world.

Read the rest of the article here.

Sodexo awarded for ethics as workers make minimum wage

Read the full article here.

Excerpt:
Employee sources said that a significant percentage of workers live paycheck to paycheck; they are forced to frequent soup kitchens and charities to feed themselves and their families. The problem has been ongoing since at least fall 2008, when one employee estimated that between 65 and 70 percent of workers used charities to get food. Paul Kerns, general manager for Sodexo at BU, said he could not verify the statistics.

Sodexo partners with Community Hunger Outreach Warehouse (CHOW) to collect food donations on campus.

The Robber Barons of Social Change

I think I need to read this book: Small Change: Why Business Won’t Save the World by Michael Edwards. Read the review by Mark Engler and Arthur Phillips here.

Excerpt:
The Ben & Jerry’s story is but a small cautionary tale about the still-growing and already far-reaching field of “philanthrocapitalism.” This is the term that author Michael Edwards uses in his new book, Small Change: Why Business Won’t Save the World, to describe a wide range of activities. It includes Silicon Valley CEOs using “venture philanthropy” to fund new, business-minded nonprofits; stock market traders developing socially weighted investment funds; bankers extending microcredit loans to the poor; and “social entrepreneurs” aiming to simultaneously serve a “double bottom line” of positive public impact and shareholder return.

The activities covered under the umbrella of philanthrocapitalism are diverse enough to offer exceptions to any generalization about the category. But its practitioners would almost uniformly describe themselves as “results-oriented,” implicitly critiquing the ineffectiveness of existing nonprofits and voluntary organizations. Their unifying idea is that business is more efficient and outcome-driven than government and civil society, and that unleashing market forces is the best means of addressing entrenched problems such as poverty, malnutrition, preventable disease, and poor education.

In Edwards’ words, “the basic message of this movement is pretty clear: Traditional ways of solving social problems do not work, so business thinking and market forces should be added to the mix.” During his nine-year tenure as a director at the Ford Foundation, Edwards saw the popularity of this argument skyrocket. He writes, “if I had dollar for every time someone has lectured me on the virtues of business thinking for foundations and nonprofits, I’d be a philanthropist myself.”

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Good Intentions

Bubble On Green
Photo by Limbo Poet

The Wall Street Journal seems to take great delight in the idea that the corporate social responsibility “fad” might be passing. Hmm. An 8% reduction in corporate donations in 2008? By what percentage did sales fall in that year? More importantly, it’s been quite awhile since anyone advanced the idea that a company’s commitment to corporate social responsibility should measured simply by its donations. Read the article here.

Excerpt:
When the going gets tough, costly good intentions can go out the window. Company spending has been squeezed by the global recession and budgets for corporate social responsibility have suffered disproportionately.

A survey of U.K. businesses by KPMG and Business In The Community found a third of companies cut their corporate social responsibility budgets in 2009. Corporate philanthropy has also been hit, with a study by the Giving USA Foundation revealing that charitable donations by U.S. companies fell by 8% in inflation-adjusted terms in 2008.

Perhaps this is not so great a loss. There is a growing feeling among company executives that marginal initiatives, which can so easily be dispensed, are not enough to alter corporate behavior. In a speech last year, Stephen Green, chairman of U.K. bank HSBC, said: “There has been a tendency to compartmentalize so-called corporate social responsibility activities as an adjunct to the mainstream business activities.” Mr. Green believes in replacing corporate social responsibility with a new focus on “corporate sustainability,” which, rather than being an add-on to a business. “is about the raison d’être of the company itself.”

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Toyota’s Tylenol moment

Read the article here.

Excerpt:
For guidance — and perhaps inspiration — Toyota should do some research on the Johnson & Johnson Tylenol recall of 1982.

That year, seven people in the Chicago area died from taking Tylenol capsules poisoned with potassium cyanide. The case remains unsolved, and no suspects were ever charged.

But Johnson & Johnson (JNJ, Fortune 500) didn’t wait around for the authorities to act. It stopped production of Tylenol and issued a nationwide recall of 31 million bottles already in circulation with a retail value of over $100 million.

The murders stopped, and J&J’s actions led to changes in packaging — those annoying seals on everything from aspirin to milk — as well as federal anti-tampering laws. Through its prompt action, J&J was able to actually enhance the value of the Tylenol brand by making product safety one of its attributes.

Toyota has a much tougher job ahead of it. That’s because the problems in its cars are not the result of a crazed individual but are systemic to the product development process. Fixing the system that allowed the defects to occur will be complex and expensive.

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“Walking away” not immoral, prof says

Sign Of The Times - Foreclosure
Photo by respres
“Strategic default” is the term used to describe the decision to walk away from an underwater mortgage. The terms of a mortgage contract spell out the responsibilities of all parties, and include a list of consequences for borrowers who fail to live up to their part of the bargain. Some homeowners, after looking at the terms of the contract, are concluding that they are willing to live with those consequences. But are there moral and ethical implications to this? Read the article here. You can download the discussion paper referred to in the article here.

Marketplace Money had an interesting piece, with Henry Blodget, CEO of the “Business Insider,” and Megan McArdle, of the “Atlantic” magazine debating the propriety of walking away. You can hear that piece and read the transcript here.

Excerpt from the Arizona Republic article:
Arizona law professor Brent White says the only thing standing between many “underwater” homeowners and a better financial future is a misguided sense that walking away from a loan commitment is morally wrong.

White, an associate professor at University of Arizona’s James E. Rogers College of Law, has spent the past few months presenting his argument to other lawyers, real-estate professionals and the national media.

It started with a 50-page discussion paper he published in October, in which White argues that underwater homeowners, those whose unpaid loan balance exceeds the value of their home, are being manipulated into picking up the tab for a real-estate crash that borrowers and lenders created equally.

“I’m all for a society where people must take personal responsibility, but that should also apply to the banks and financial institutions,” he said.

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UK Business schools put ethics high on MBA agenda

It’s good to see a renewed emphasis on ethics in UK business schools. But what about here in the US? Read the article here.

Excerpt:
As the bodies responsible for teaching so many of the “masters of the universe” who did so much to cause last year’s economic meltdown, it is perhaps not surprising that business schools have spent the past year doing some serious soul-searching about their culpability for the recession.

Go back to the 1980s and 1990s, when many of today’s corporate leaders were studying for their MBAs, and business ethics and sustainability – in other words, issues around corporate governance, social responsibility and long-term decision-making – played ­little part in business school curricula.

Pre-credit crunch, the need for MBAs to be “ethical” as well as show you how to fast-track your career and make a load of cash was not that high on the agenda, concedes Mark Stoddard, accreditation projects manager of the Association of MBAs (Amba).

“Schools have recognised there have been gaps and they have needed to make changes in the way MBAs are taught,” he says. “Three to four years ago you might have got students complaining about having to take ethics courses. You don’t now.”

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