Wednesday, August 30, 2006

DO ERRANT EXECUTIVES DESERVE A SECOND CHANCE?

[In light of Barry Minkow's appearance this past Sunday, August 27, on "60 Minutes," I'm posting a column that originally ran on October 19, 2003 in the Sunday New York Times.]

''AT some point in our lives, as imperfect human beings, we find ourselves in need of forgiveness,'' says Barry Minkow. In 1989, at age 23, Mr. Minkow was sentenced to 25 years in prison for defrauding investors in ZZZZ Best, a carpet-cleaning company he started when he was 16. All told, he fabricated more than 20,000 documents related to the business, which grew into a public company worth more than $200 million.

Mr. Minkow was released after serving seven and a half years of his sentence, and he seems to have turned his life around. Since 1997, he has been the senior pastor of the Community Bible Church, a nondenominational church in San Diego. He also helped found the Fraud Discovery Institute, a consulting firm that helps detect corporate fraud. But he still owes millions of dollars in restitution to the victims of his crimes.

Mr. Minkow's past raises the question of whether people are always entitled to second chances, or if there are some acts that are beyond redemption. For example, does Michael R. Milken, the former junk bond financier, deserve to be forgiven? He pleaded guilty to charges of securities fraud in 1990, served almost two years in prison, and is barred from working in the securities industry for life. Is it enough that he has re-established himself as a philanthropist and the chairman of Knowledge Universe, a company he founded that markets the LeapFrog line of children's educational products?

Samuel D. Waksal, the former chief executive of ImClone Systems, is serving a seven-year jail sentence, while L. Dennis Kozlowski, the former chief executive of Tyco International; Frank P. Quattrone, a Silicon Valley investment banker; and Franklin C. Brown, the former chief counsel for Rite Aid, sit on trial. Countless other executives caught up in recent scandals either await trials or possible charges. Does this fresh batch of alleged wrongdoers deserve a second chance?

''If somebody is honestly contrite, of course you say you forgive them,'' said Bart Victor, a professor of moral leadership at the Owen Graduate School of Management at Vanderbilt University in Nashville. ''But people need to step up and say, 'This was wrong for me to do.'''

The urge to forgive may stem in part from the fact that many people believe they ''were just as guilty as the ones who were caught,'' Professor Victor added.

It doesn't pay to be unbending if the guilt of others hits too close to home. ''I don't think anyone would want all of their actions in the business environment to come to light,'' said David Batstone, a professor of social ethics at the University of San Francisco and the author of ''Saving the Corporate Soul -- and (Who Knows?) Maybe Your Own'' (Saving the Corporate Soul--and (Who Knows?)... ).

But is a ''there but for the grace of God'' attitude enough of a reason to forgive? Just as it is possible to want to forgive people because their crimes reflect on our own shortcomings, it is understandable to rage against those whose misdoings eviscerate our personal fortunes.

''All corporate sins are forgivable,'' said Daryl Koehn, director of the Center for Business Ethics at the University of St. Thomas in Houston. A failure to forgive, she said, is unethical: ''It imprisons us in our rage and impedes our development.''

Perhaps, but there is a difference between forgiving and forgetting. Business deals are built on trust. When someone violates that trust, we choose carefully how we deal with that person in the future.

Mr. Minkow, who is banned from being an officer or director of a public company, said he not only recognized others' wariness toward him, but he also felt it about himself. ''I realize that I have a propensity to not handle money well, so in my new leadership positions at the church and the fraud company I do not sign checks,'' he said. ''This is true accountability in that I realize, given the best of temptations, I could commit the worst of sins.''

Forgiveness signifies that we have faith that people can make amends and transform themselves. But it also acknowledges that most of us won't allow ourselves to be defined by someone else's transgressions. In the long run, our capacity for forgiveness says more about us collectively as human beings than the shameful behavior of a handful of wrongdoers ever could.

2 comments:

britishsix5a said...

Everyone deserves a second chance to earn trust back and prove they are truly living a new life. That does not mean that all is forgiven and business as usual.

If the errant executive proves over time true character, committment to do the right thing in the future,has verbalized his wrong doing to those he caused pain and damage, and has paid back losses to those he frauded, then and only then should society gradually accept the executive back in to normal transactions.

Patricia said...

In Judaism, at the opening of the New Year, we ask G-D's forgiveness. Before we can do so, though, we must first make amends to, and ask forgiveness of, those we have wronge It is not enough merely to say that we are sorry; we must find a way of showing it -- and not repeating whatever wrong we have committed. Once one has truly repented and sought forgiveness, refusal to accept the apology is, in itself, a sin.

While it is, obviously, best to conduct business by the Golden Rule, remembering that we are all fallible reminds us to accept the true apologies of others. We can but hope that they will do the same for us.

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