Ever wonder why so much fraud, self-dealing and ethical skulduggery keeps happening in the business world?
Because we let it.
Because, too often, we rap the knuckles but do not insist on owning up to the wrong.
We better get off this path fast.
Federal regulators this month fined Countrywide Mortgage founder Angelo Mozilo for insider trading and misleading investors, but he did not have to admit he did anything wrong.
The feds in July zinged Wall Street hotshot Goldman Sachs for $550 million for pitching a mortgage security to public investors while secretly letting a giant hedge fund bet against the investment. But Goldman Sachs did not admit to doing anything wrong.
Last year, Bank of America agreed to pay $33 million for misleading investors when it bought Merrill Lynch. Did BofA admit to any wrongdoing? Nope.
Even Tampa's own WellCare Health Plans, which provides managed-care services for Medicare and Medicaid, agreed to pay $137 million to settle claims of a whistle-blower who taped a thousand hours of WellCare conversations detailing how to flimflam the government.
WellCare acknowledged it was overpaid, the company said, because of changes in how the government made its payments. But it never had to admit or deny wrongdoing in the other counts against it.
Too many people and corporations that did wrong — too often rich executives or well-connected companies — are given a pass on taking responsibility. Sure, a CEO or business may get fined, publicly criticized or even sued. But when caught red-handed in some scheme that filled their company's (and their own) pockets at a cost to shareholders or taxpayers, too often they pay their fines while — get ready for one of the worst phrases ever invented — neither admitting nor denying wrongdoing.
What does that mean, anyway? If you don't admit wrongdoing and if you don't deny it, what's left?
Somehow, we've institutionalized the process of fining people for bad things they do not admit they did.
This country would be far better off if more people and corporations that do something wrong actually admit it. It's an astonishing message to society that they don't — a message, I believe, that contributes mightily to the nation's cynicism and distrust.
Maybe those surveys that show Americans have so little confidence in business leaders (and politicians and lawyers and, yes, even some of the media) would show improving numbers if those who did wrong admitted so and suffered real consequences.
Take a look at Mozilo, founder and ex-CEO of the subprime mortgage machine Countrywide Mortgage and who is on Time magazine's list of the "25 people to blame for the financial crisis."
Charged by the Securities and Exchange Commission with insider trading and misleading investors, Mozilo on Oct. 15 agreed to pay a $67.5 million fine. Sounds hefty. But of that sum, he will pay $22.5 million in civil penalties. The remaining $45 million will be covered by Bank of America, which bought Countrywide in 2008, and the bank's insurers.
Is that a big fine? Mozilo earned $250 million at Countrywide from 1998 to 2007, and another $406 million from sales of the company's shares. So that's $656 million landing in his pocket in just the past 12 years, minus $22.5 million to the SEC … and no admission of doing anything wrong.
Suddenly that fine seems like pocket change.
Yes, Mozilo's banned for life from serving as an officer or director of any public company — I see loopholes here he could drive a Mack truck through. But the guy's 71 with big bucks to burn. He probably doesn't mind.
Not to pick on Mozilo. He's just the latest in a long, long series of wrongdoers never needing to own up. The real harm is in the frequency and volume of these events.
It's the same story with the past summer's fine imposed on Goldman Sachs. To most of us, a $550 million penalty should stop anybody in their tracks, right? Goldman Sachs posted $1.9 billion in profits in the third quarter alone. Since the start of 2010, it has reported $5.4 billion.
So that hefty fine is really just about 10 percent of what the Wall Street firm earned in nine months. Big whoop.
If the federal government believes fines charged against the superrich are a deterrent, our elected leaders are in la-la land. Paying penalties has evolved into one more cost of doing business. It is not a financial weapon to influence corporate behavior.
Remember that 1988 feel-good book All I Really Need to Know I Learned in Kindergarten? In addition to "don't hit people" and "flush," the book touched on a few basic lessons many folks apparently still have not grasped.
1. Play fair.
2. Clean up your own mess.
3. Say you're sorry when you hurt somebody.
Maybe too many executives skipped that grade.
Robert Trigaux can be reached at firstname.lastname@example.org.