Waseem Sayegh

For better or for worse, ordinary citizens expect more from public and high profile figures. Not only do they expect more, but they also forget that these figures are mortals and want them to behave as infallible gods. Once a public or high profile figure steps out of line, the masses shout: Foul! There is a whole industry that thrives on public and high profile figures stepping out of line. You will see it and read it all if you tune into Entertainment Tonight on CTV, or flip through a tabloid such as the National Enquirer at the supermarket’s checkout isle. Luckily these media outlets report on Hollywood Boulevard celebrity mishaps that typically do not affect our way of life, investments, pensions and savings. That said the masses should be more concerned about Wall Street, Bay Street and Downing Street “celebrities” mishaps that make it to the front page of the Financial Times and Wall Street Journal. When political and business leaders step out of line the ramifications of these events are much dire. Our readings, which included cases about Conrad Black, Brian Mulroney and the Sub Prime Fiasco, are all mishaps and disasters that made it to the front page of the Financial Times and Wall Street Journal. This paper will enumerate and discuss the main issues highlighted in our readings and what we should learn from them.

Where is the Line in “Stepping out of Line”?
We previously mentioned the term “stepping out of line” several times. Though, where is the “line” that cannot be crossed? We learn from our readings that the higher you rise in the corporate ladder the more thought you have to give about your actions. From our readings we learn that the pundits are split on whether the actions of Conrad Black and Brian Mulroney are legitimate or illegal. That said the pundits seem to agree that their actions were questionable. “Crossing the line” for a public figure or leader is doing anything that might be considered as questionable judgment. Leaders should not only avoid questionable actions, but they should also distance themselves from anyone who carries out questionable actions.

Ensure that your Dealings are Ethical
Public figures should be expected to be scrutinized at any point in time. For this point, all their dealings should pass the “sunshine test”. The sunshine test can be described as: “if my decision or action would become known to other people, would it cause embarrassment?” If the answer to this question is “yes”, then that decision or action is most probably unethical. Had Brian Mulroney asked himself this question he would have not accepted to receive the cash payments he received.

Your Credibility is Your Biggest Asset
Leaders should not forget that their credibility is their biggest asset. Once your credibility is compromised it is never fully regained. The fact of the matter is that Conrad Black is not only serving a “6 year 6 months (sentence) at a low-security jail in Florida,” but a life-time sentence in the eyes of everyone that once trusted him. The same applies to Brian Mulroney. Peter C. Newman highlights this point when he says: “although he says he (Conrad Black) hopes to re-emerge as an investment dealer, it defies gravity to believe that many people will want to place their money with him.”

Challenge Your Assumptions
The sub-prime fiasco teaches us to challenge the underlying assumptions. The models that were used to value subprime mortgages were built on false assumptions. These assumptions were overly rosy and were based on the early years of the housing boom, where the default rates on all mortgages were unusually low. Investors never stopped and challenged these assumptions. Had investor banks challenged these assumptions they would had either not gotten into the subprime mortgages all together, or had charged a rate comparable to the risk they were taking.

The Age of Rubber Stamping is Over
Do you want business to be more regulated? If your answer is “no,” which is most probably the case, then expect to ask or be asked tough questions. The role of the board member keeps on getting more and more complex. Prior to Enron and Sarbanes-Oxley, a board member’s job was to rubber stamp managements decisions. This is no longer the case. Corporations should embrace a culture that allows board members to be skeptical of management decisions and allow them to ask tough questions. Board members are not responsible for a company’s day to day operations, but should ensure that management does not step out of line, deals ethically, maintains its credibility, and challenges assumptions.