Accountability-Central.com AC Alert for March 27, 2012 Not Exactly a Grand Slam

Say what you will about major league baseball’s New York Mets; their existence as the “Big Apple's National League Baseball Franchise” certainly hasn't ever been dull. Maybe it’s a New York thing…or a baseball fan thing…or maybe there is something larger in the American society that is reflected in the team’s recent news…it’s about ethics and accusations claiming lack of ethics…and ties of fraudster Madoff.

Ah, the NY Mets – for NY fans, who could ever forget the bumbling team of the early 60's under Casey Stengel…the miracle 1969 World Champions under manager Gil Hodges…the heavily-favored 1986 Mets who came within a strike of losing the World Series to the Red Sox.

This year, with the first pitch of the regular season only a few days away, the Amazing’ Mets are back in the news again, but in a very different way: The ongoing story is certainly in the headlines – and not just on the sports pages.  The news is about the fraudster, Bernie Madoff…about the Mets’ team and owners’ investments with Bernie – and about who knew what and when.

Consider:  "The New York Mets' owners have scored an early-season victory, stabilizing the club's financial future in a deal with a trustee for Bernard Madoff's fraud victims that requires them to pay millions’ [of dollars] less than they might have. This lifts a dark cloud from a team whose dismal play seemed to mirror its misfortune in the owner's box.

“Mets CEO Fred Wilpon and team President Saul Katz, co-majority owners, emerged smiling from a Manhattan federal courthouse after a judge announced the agreement, which makes it likely they'll pay much less than the agreed-upon US $162 million, if any at all; guarantees they will owe nothing until the end of four years; and averts a high-profile civil trial…”

The news is about a lawsuit brought by a court-appointed trustee demanding US$1 billion from the Mets owners. Irving Picard [bankruptcy court Trustee] claimed that Wilpon and Katz had meetings with Madoff in his office at least once a year, and that Katz at times spoke directly with Madoff at least once a day. (Madoff is serving his 150-year prison sentence after confessing in December 2008 that he cheated thousands of investors of roughly $20 billion.)

So how did this end?  The judge ordered that neither side will disparage the other in the agreement and that trustee Picard will no longer accuse the Mets owners of being "willfully blind." The litigation could have forced the team's owners to pay up to US$383 million – and possibly lose control of the team. And now it’s time to…Play Ball!  (Source: Associated Press)

AC editors have been following this fascinating issue, providing news articles and commentary that we think have broader interest beyond NY sports fans in our Ethics section.

The association between baseball and ethics goes back far beyond this spring season, but certainly not back to 340 BC when the Greek philosopher Aristotle taught the world that ethos was very important for leaders to have in a democracy, and should be demonstrated if they want to succeed in shaping public opinion. The Greek phrase ethos traveled on through the centuries into the languages of western civilizations to become "ethics" in modern times.  And Ethics certainly is a headline element in many of today’s business – and sports – stories.

What are appropriate ethics for the 21st Century? A growing number of investors, corporate governance advocates, and social investors believe that corporate performance is closely linked to strong ethical commitment. Market performance usually follows. 

In the case of the beloved (or detested) NY Mets, will clearing the legal minefield of the Madoff lawsuit lead to better performance on the playing field? Guess we'll just have to wait and see how the baseball season shapes up. Meanwhile these recent selections from AC's Ethics section make for fascinating reading:

Mets’ Owners Agree to Settle Madoff Suit for $162 Million
(Source: New York Times) The owners of the Mets scored a major legal victory — one that might well preserve their control of the team — when the trustee for the victims of Bernard L. Madoff’s vast fraud agreed to abandon hundreds of millions of dollars in claims against them. In a settlement reached just before their federal trial was to begin, the owners agreed to pay the trustee $162 million, but that figure is likely to be reduced or possibly eliminated as the complex bankruptcy litigation involving Mr. Madoff’s investment operation unfolds.

Watchdog challenges spending by Fannie, Freddie on convention trip
(Source: Los Angeles Times)  Nearly half of the $600,000 that Fannie Mae and Freddie Mac spent sending 90 employees to a convention in October was of questionable value according to the inspector general of the Federal Housing Finance Agency. Their charges raise questions on how Fannie and Freddie used their money for the Mortgage Bankers Association annual convention in Chicago.

Georgia last in public corruption laws
(Source: AJC) A new report measuring states on the strength of their laws on public corruption and government openness ranks Georgia last in the nation. The study was conducted by the Center for Public Integrity and Global Integrity, two Washington-based nonprofits that champion government reform, and Public Radio International. The report scored states on 330 “corruption risk indicators” including open records law, campaign finance rules, and auditing and budgeting procedures. Georgia received an overall grade of F, only 49 out of 100.

Apple, book publishers facing potential US suit: WSJ
(Source: Associated Press) The US Justice Department is threatening to sue Apple and five major US publishers for allegedly colluding to raise the price of digital books. The Wall Street Journal, quoting people familiar with the matter, said several of the parties have held talks to head off an antitrust case but not every publisher is in settlement discussions.

Bank Officials Cited in Churn of Foreclosures
(Source: New York Times) Managers at major banks ignored widespread errors in the foreclosure process, in some cases instructing employees to adopt make-believe titles and speed documents through the system despite internal objections, according to a wide-ranging review by federal investigators. The banks have largely focused the blame for mistakes on low-level employees, but the report concludes that managers were also aware of the problems -- and did nothing to correct them.

Supreme Court to weigh ending foreigners’ ability to sue over rights abuses abroad
(Source: Washington Post) The US Supreme Court will consider whether American courts can hear lawsuits alleging human rights atrocities that were committed overseas without a direct U.S. connection. The court delayed a decision whether a 1789 law allows corporations to be held liable for human rights abuses committed abroad in which they might have been complicit. Instead, the justices said they will hear additional arguments about a broader question: whether anyone can be sued under the Alien Tort Statute for violations of international law that occurred in other countries.

This is just a sampling of the information in our Accountability-Central.com Alert. Go here for the full text of this alert, and more information on Sustainability, and other Accountability related topics.