Legal or Ethical

A story in the New York Times this morning, the headline in the digest we get is Many Wall Street Banks Woo Children of Chinese Elites, reminds me of the hard-to-describe difference between legal action and ethical behavior.

What is happening here is that firms like Goldman Sachs, Merrill Lynch, and JPMorgan Chase hire the sons and daughters of politically high-placed Chinese leaders in the expectation that they will gain major favors in consequence, not least insider knowledge of how things are arranged in governing circles. Such actions are neither illegal nor yet hidden. (Doing it in the open would seem, indeed, quite beneficial—signaling that your company is well-connected.) At the same time, this sort of thing causes hair to rise up on my arm. It has ethical implication.

Once in my career I walked from the biggest contract one of the companies I was running could have snagged when a lawyer from Louisiana, who had arranged to meet me at O’Hare, where we would both be passing, suggested to me that our company should place some advertisement in a particular magazine. The job was worth half a million, the advertisement about five thousand. But that modest expenditure would have ensured approval of our contract by a Louisiana state agency. A relative of the head of that agency worked at the magazine. We needed that contract—like badly. And nothing would have been traceable. Nor was it illegal to advertise in that or any other magazine. Choking down my disappointment, I walked—and no, I did not first check with the layer above mine.

My own action, even then, would have been viewed as naïve. But, there you are. It all depends on where you live. Is it in the universe of the pragmatic or the universe of the ethical? These days, much the same. And, needless to say, the NYT article does carry the almost obligatory quote usually found in articles such as this one. “But everyone does it…”

Now an even more difficult-to-judge situation. Merrill Lynch manages our various holdings of what is usually referred to as our “wealth.” And Merrill Lynch is one of the Wall Street banks said to participate in Hire the Big Chief’s Child. So how much of that perfectly legal stain will stick to our skin?