February 9, 2005

Business Ethics Lecture Series

Paul Cadario Talks Ethics At Smith

On Wednesday, February 9, 2005 a diverse cross-section of the Smith community gathered to hear Paul Cadario from The World Bank discuss his views on Leadership, Ethics, and Compliance in an Era of Conflict. Cadario began by asking the audience, made up of undergraduates, graduate students and faculty to share their own ethical dilemmas with their neighbors. The twist was to discuss a situation in which one had handled an ethical dilemma well. Cadario then discussed common ethical and leadership issues in today's world, focusing on the idea that one needs to be a moral person as well as a moral manager in order to truly have a lasting impact. Creating and balancing trust in corporate and personal relationships, he stated, were the foundation of successful organizations. Conflicts of interest, managerial reluctance to use discipline to enforce appropriate behavior, and role modeling proper behaviors were outlined as key issues in organizations everywhere, including in corporate America. Cadario gave examples of such instances around the world in his engagements with The World Bank, and talked about how doing the right thing, in the right way has sustained the Banks ability to build and maintain relationships in all regions of the globe.

Corporate social responsibility (CSR) was another topic discussed by Cadario in particular, its role in reshaping organizational compliance. As part of an ongoing speaker series with The World Bank, Cadario put into perspective the changing role of CSR, citing organizations that have excelled at compliance in this area, and giving other examples of corporate social responsibility without added value. In parting, Cadario offered several lessons learned to the future leaders, focusing on morality in business and building organizations that can be run by average human beings for lasting value. He also fielded questions from the audience, ranging from multinational corporate behavior in underprivileged countries to specific situations where The World Bank has withdrawn or reduced support due to instability in the region.

Cadario is currently the senior manager for trust fund quality assurance and compliance within The World Bank. He has been there since 1975, beginning in the Western Africa Regional Office, then moving to the Asia/East Asia and Pacific Regional Office. Cadario has also served as operations advisor for the Network/Operations Policy and Country Services area and as chief administrative officer for the Europe and Central Asia region. Cadario has a masters in organizational development from American University, a BA in philosophy, politics and economics from Oxford University, and a B.A.Sc in civil engineering from the University of Toronto.

For further information about the topic of leadership, ethics and compliance, Cadario recommended the following articles and books on which he had drawn for his presentation:

  • Bakan, J. (2004) The corporation: The pathological pursuit of profit and power. Toronto: Penguin.
  • Dunphy, D., Benveniste, J. & Griffiths, A. (2000) Sustainability: The corporate challenge of the 21st century. London: Allen & Unwin.
  • Gunn, R. (2004) The Normalization of Deviance. Strategic Finance (85), 11, 8-9.
  • Lipman-Blumen, Jean. (2004) The allure of toxic leaders: Why we follow destructive bosses and corrupt politicians--and how we can survive them. New York: Oxford University Press.
  • Martin, R. (2002) The responsibility virus: How control freaks, shrinking violets--and the rest of us--can harness the power of true partnership. New York: Basic Books.
  • McLean, B, & Elkind, P. (2003) The smartest guys in the room: The amazing rise and scandalous fall of Enron. New York: Penguin.
  • Tapscott, D. & Ticoll, D. (2004) The naked corporation: How the age of transparency will revolutionize business. New York: Free Press.
  • The Economist (2005). The good company: A survey of corporate social responsibility. January 22, 2005
  • Trevio, L., Hartman, L., & Brown, M. (2000) Moral person and moral manager: How executives develop a reputation for ethical leadership. California Management Review (42), 4, 128-142.

Roger Barnes Talks Ethics at Smith

If you had to risk your career, your safety, and your reputation to do the right thing, would you? What if you would be giving up a significant amount of money in the process? Then would you?

These questions were the core of Roger Barnes speech, on Thursday, February 17, 2005. Barnes, a 'whistleblower' for Fannie Mae, was the second in a speaker series on Business Ethics, sponsored by the Smith School of Business. After a career spanning prominent firms such as Deloitte & Touche, Freddie Mac, and most recently, Fannie Mae, Barnes found himself in a moral and ethical predicament, which would forever alter the course of his life and career. While working with Fannie Mae, Barnes began noticing questionable accounting practices that drastically misstated the corporate finances. Of course, the practices were subtle and explainable by management at the beginning. Yet, over time, Barnes felt a sense of unease with the answers he received and the practices he observed repeatedly. Raised with small town values, and instinctively knowing right from wrong, Barnes gathered information over time to confirm his instincts beyond a shadow of a doubt, took care to ensure his competence could not be questioned, and ultimately took on one of the largest corporations in the United States. Since Barnes testimony before Congress, Fannie Mae has been investigated by the SEC, the FBI and the Department of Justice for misconduct resulting in a shareholder loss of over $20B, restatement of financial statements since 2001, increased capital requirements, and resignations of the CEO, CFO, Controller, and multiple Senior Vice Presidents. 

Roger BarnesBarnes key message to the audience was simple to understand, though sometimes difficult to execute: You must start by asking yourself what you will and will not do for money. He explored the ethical and moral questions behind this statement, by stating there is no one definition of ethics and that it is the choice of each individual to act in an ethical manner. Self assessment and integrity, he stated, were the cornerstones of knowing right from wrong. Barnes also mentioned that standing up for what one believes is right can often be a lonely responsibility. One needs courage to be the lone voice saying something differently in an organization used to working a certain way, and one must be willing to bear the consequences of that voice being heard. The impact of Sarbanes-Oxley, he stated, could not be underestimated in changing the American corporate landscape. If a person is aware of wrongdoing and does nothing to stop it, that person can be held liable for criminal and civil misconduct. Openness to investors was more than just a code of conduct, and students should be proactive in understanding the code of conduct at different companies prior to joining an organization.

Barnes had the following takeaways for his audience of faculty and students:

  • Establish your own personal values early on in your life
  • Be knowledgeable about business culture and technology
  • Exercise personal due diligence make sure the job you do is so top notch that no one can accuse you of incompetence or being disgruntled
  • Remember the integrity of the first person you see every day (YOU)

When asked about ways in which a company can recover from such a setback as Fannie Mae, Barnes offered the following:

  • New senior management for a clean slate start
  • New external auditors (Fannie Mae fired KPMG, its external auditors through this process
  • Development and rigorous execution of ethics programs and training throughout the company (not just posters on the wall)
  • Changes to the Board of Directors

Barnes made a lasting impression on his audience with his message. He took a preacher with him to Congress, offering the audience that without hope there is only despair. His parting comments on what to if faced with such a dilemma was to be safe, keep ones family safe, do your homework, but know that you have to do the right thing. One has to get through self doubt and recognize that individual integrity truly does make a difference.


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The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and flex MBA, executive MBA, online MBA, business master’s, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

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