Matters Column

Honesty, integrity always are the best policies

September 23, 2016
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If you are following the news regularly, you should be very concerned about the future of small business. The United States’ cultural advantage in the business world is based on honesty, and the cultural loss of integrity as a fundamental building block of our national makeup will cause drastic changes in how business is done — much to our detriment.

What's in the news that is so alarming? The events surrounding Democratic presidential candidate Hillary Clinton are an alarming indicator of our citizens’ willingness to tolerate a lack of fundamental integrity. Politics has never been an honorable profession, but this is a new low. We most likely will elect a pathological liar to the most powerful position in the world. I don't care if you are a Democrat, Republican or Independent, you cannot ignore the Clinton corruption. The Borgias would have been awed by the capability of the Clintons to wield such power and corruption with impunity. If you believe in reincarnation, Clinton must be the reincarnated spirit of Lucrezia Borgia, who was celebrated by the Blood Sweat & Tears song “Lucretia Mac Evil.”

Generally speaking, integrity refers to lying. Another form of integrity degradation is irrational thoughts or policies which, when exposed, cause the exposed to accuse the exposer of evil intent. Clinton’s evaluation of the makeup of Donald Trump supporters as being 50 percent deplorable is very dangerous. She listed the conditions which made these people deplorable, the main one being if you disagree with her, you suffer from a deplorable malady. So, if I object to my daughters finding themselves in the presence of a large, muscular male in a women's restroom at a Walmart store, I am a bigot.

I have no feelings about transgendered people. I just want my female family members free of concern about predatory males. I explained my concern regarding minorities who take jobs and refuse to perform, because it will cause employers who hear the story to be reluctant to hire people from that group. For that observation, I was branded a racist. I don't want terrorists to maim or kill my family, friends or anyone else for that matter, but I don't hate Muslims. The Irish Republican Army was a terrorist organization. Recognizing that does not mean I hate the Irish. That would make the holidays very tense when family came together.

Integrity also refers to credit card and IRS liability. If you owe the IRS, you have a fundamental duty to pay them. I am not talking about taxes that have arisen out of disputed application of the tax law. If you don't owe a taxing authority, fight it with every bit of your resources. If you owe it, pay it. When you use a credit card, you are borrowing money. Borrowed money must be repaid, otherwise a large segment of our economy will come to a screeching halt.

The use of credit has been one of the primary tools of building an economy that is the envy of the rest of the world. A person who borrows money and does not repay it is a thief. I don't like the IRS or credit card companies, but they are a necessary evil. If you don't want to deal with the IRS, pay your taxes and don't cheat. With credit cards, it is simple: If you don't like them, don't use them.

In the world of integrity gone amuck, we have seen lawyers take over the legal profession. There are two kinds of people engaged in the profession of law:  attorneys and lawyers. Attorneys are members of a proud profession of problem solvers. When an attorney enters a dispute, the likelihood of a fair and equitable settlement is enhanced. Then there are the lawyers; the lawyers’ code is to win at all costs. The best example of lawyers is the O.J. Simpson legal defense team. They are the legal eagles that enter a room causing all civility, integrity and decency to leave the room.

An attorney told me a couple of years ago about how attorneys perform their function. If the facts are on your side, pound the facts. When the law is on your side, pound the law. When neither is on your side, pound the table. What he failed to tell me was that the third option often is the most effective. Attorneys abide by the first and second statements, and lawyers abide by the third statement.

Attorneys and lawyers often work under the same roof. When you are engaged in a legal dispute, you may expect Clarence Darrow from a prestigious firm only to be confronted by Haystack Calhoun.  When you hire an attorney and the other party is represented by a lawyer, you are going to a gun fight armed with a knife. From what I have seen in courts and arbitration, we might be better off returning to a duel as a matter of settling legal issues. At least the winner would be the best shot instead of the best information deconstructionist.  

I have always loved the concept of the CPA as an impartial, independent and trustworthy professional. Like all concepts, reality falls short of the ideal. We have Enron, for example. Arthur Andersen, one of the finest business entities in American business, was felled by lies promulgated in the greed and corruption of a few in their organization. Think of the good, honest and highly skilled partners and employees who did not participate in the fraud but lost their jobs and, in many cases, their equity in the firm.

The people in the firm who cheated and lied made a gamble and lost. The honest, hard-working firm members lost even though they had no upside potential. The loss of integrity in the accounting profession would be cataclysmic. Investors, creditors, employees, government agencies and management depend on independent ethical accountants. Without ethical and accurate accounting, our whole economic structure collapses. Whereas the lawyers’ job is to win at all costs, the accountant’s job is to be accurate at all costs.  

You can take it to the bank. Ever hear that term used? Not if your bank is Wells Fargo. The recent revelations about fraud and corruption at that highly esteemed institution raises concerns over the number of employees involved and how high in the organization the corruption has risen. Look back. Prudential systematically cheated its clients by issuing new life policies to replace older policies. The agent got a big commission, and management got bigger bonuses. Its clients got the satisfaction their trusted agent was looking out for them. They felt that way until the law suits started. I asked an agent one time how he got away with switching out annuities, so that he could get another commission on the same funds. He said most of his clients were impaired by age, Parkinson's or Alzheimer’s, so they had no capacity to protect themselves.

I believe the rule of law and honesty played a major role in the development of the economy in the country everybody is trying to get into. Opportunity has prospered in the U.S. because of a financial network that allowed turning a good idea into a booming business that benefitted whole community. If we continue down this road of comparative moral relevancies in concepts of contracts and law, we will do so at our own peril. We won't become the next Zimbabwe, but we could become the next Greece.

People of my age have been blessed to live during the best time in the best country in the world. Look at your kids and grandkids and ask yourself if you want them to experience the same opportunities we had building our own business. Will they work in an environment of trust and openness or a world of deception and corruption?

Paul A. Hense is the retired president of local accounting firm Hense & Associates and past chairman of the Small Business Association of Michigan.

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