By Ritch Eich on September 23, 2011

Have we lost our moral compass?

Though scandal is hardly new in business, government or college athletics, the past few years are particularly difficult to fathom in terms of scale and utter disregard for rules and standards. Not unlike Paris Hilton and Lindsay Lohan, our supposed-to-be-grown-up leaders have become repeat offenders, unable to learn the lessons of the past and loath to believe that what happened to Madoff, Lehmann, WorldCom and Jim Tressel could happen to them as well.

Consider in the last two years alone:

• News of the World. Though Rupert Murdoch claims to have known nothing of his organization’s phone hacking activities, the scandal has damaged forever his once sterling reputation. Lesson: Know what’s going on in your organization.

• The endless sex scandals: Arnold Schwarzenegger’s previously unknown child by a past lover, Anthony Weiner’s sexting fiasco, Eric Massa’s tickle fights with pages, and the very sad John Edwards saga have shown ethics breaches that have caused the public to wonder if these leaders have misunderstood the meaning of the phrase “political party.” We have seen them all face deep, personal consequences for their abuses. Lesson: If Tiger Woods can’t get away with it, you probably can’t either!

•  BP’s Deepwater Horizon oil spill has turned out to be a catastrophe that could have been avoided simply by following basic safety measures and paying attention to test results. BP leaders compounded the damage of the spill by making callous statements to victims and denying the enormity of the catastrophe. Lesson: Don’t cut corners where it counts.

• Former Congressman Tom DeLay, R-Texas, has been in and out of trouble for years, suspected of fraud and moving campaign money illegally. Finally convicted of money laundering and sentenced in January 2011, he is still walking the streets, pending his appeal of the charges. Lesson: TBD.

• The Foreclosuregate scandal that broke in 2010, but apparently had been in the works for many years, threatens to affect a huge number of people and possibly pull down the world economy into devastation. Will these criminals be prosecuted for showing utter contempt by knowingly committing fraud on a scale that makes Bernie Madoff look like a small timer? Lesson: We shall see.

• Ironically, the organization involved in one of the biggest ethics scandals of 2010, Wikileaks, could turn out to be a deterring force for unethical behavior in the future. Governments are finding it hard to prosecute the organization, whose founders and board remain anonymous, except for spokesman Julian Assange, because of free-speech protection. But the ethical dilemma remains: Should any secret that can be obtained be fair game for publication? Lesson: Know your boundaries.

• As I write this piece, we read that the NCAA has been investigating the University of Miami football program partly based on allegations of an imprisoned ex-Hurricanes booster. If substantiated, it will make the sanctions imposed for rules violations committed by Ohio State, USC, North Carolina and others look like child’s play. Lesson: As a former college varsity letter-winner, I say to the NCAA — take control and reform, reform, reform.
One positive outgrowth of all of this shameful behavior is that the leadership community is taking note. Corporations have begun implementing ethics retraining or hotlines that employees can use to anonymously report dangerous practices. A few CEO’s at major companies are even beginning to make some modest sacrifices in the form of personal pay cuts.

After S&P downgraded the nation’s credit status, top business leaders decided to go public with statements that indicate a turn in thinking.
Warren Buffet recently called for lawmakers to “stop coddling the rich” and increase the tax rate for millionaires and billionaires. Starbucks’ CEO Howard Schultz announced he is withholding political contributions until lawmakers can stop bickering and come up with a plan for debt and runaway spending. These measures are rapidly winning support.

Now it will be up to all Americans to decide what happens next. If we can unite and make our outrage heard, there is a chance of curbing corporate and government corruption.

But if we remain complacent and factious, how can we expect any better from our leaders?  It is time for the American public to demand the system hold leaders accountable for breaking the rules and wrecking the system on which everyone depends.

• Ritch K. Eich is the author of “Real Leaders Don’t Boss,” which will be released in January. He is the principal in Thousand Oaks-based Eich Associated and is an adjunct professor in the California Lutheran University School of Management.