Compliance officers can find good guidance in all sorts of places, but let’s not forget that supreme compendium of legal wisdom: old episodes of Law & Order.
The nugget of advice springing to my mind today came from an episode in 1999, “Gunshow,” where Assistant District Attorney Jack McCoy takes a gun manufacturer to court because its assault rifle was used in a mass shooting. McCoy wins a guilty verdict from the jury, but the judge immediately sets aside the verdict and acquits the company. Then he lectures McCoy with this zinger: “There is a difference between being right, and doing right.”
That is a powerful insight into ethics and human behavior, and one that corporate executives should take to heart—people like, say, arrogant twerps running pharmaceutical companies, exploiting the letter of the law to behave like a jackass.
The jackass in question, of course, is Martin Shkreli. You might be running behind on all the idiotic things he’s done lately to keep his name in the news, so let’s recap. Earlier this year he founded Turing Pharmaceuticals, and one of his first moves as CEO was to acquire a decades-old anti-malaria drug and promptly raise its price from $13.50 to $750 per pill. He endured the predictable withering public criticism with a PR counter-offensive, arguing that the price hike would pay for future research on other drugs and low-cost purchase programs for poor consumers (who are, essentially, everyone in the developing world who risks malaria every day).
Just last week, the Securities and Exchange Commission and the U.S. attorney in Brooklyn arrested Shkreli on fraud charges stemming from a hedge fund he ran earlier in the 2010s. Over the weekend, Shkreli returned fire in an interview with the Wall Street Journal, where he claimed (with the usual requisite outrage) that his arrest on fraud charges was retaliation for his price-gouging strategy—as if the feds’ use of this tactic were, you know, news.
And none of this should be confused with Shkreli’s recent taunting of fans of the Wu Tang Clan, that he is the one who paid $2 million for the sole copy of the Clan’s latest album. Or his social media conversations purportedly with a girl who is a senior at his old high school, which is never a wise idea when you are a 32-year-old man.
Still, let’s unpack all this boorish behavior. Shkreli is technically correct when he says Turing is within its rights to raise prices 5,000 percent. He’s also within his rights to accuse the SEC of prosecuting him on fraud charges because that price gouging isn’t illegal. The fraud allegations revolve around his management of a hedge fund from 2009 to 2014, before he took over at Turing, and apparently the SEC stepped up its investigation only several months ago—that is, after Shkreli became a poster boy for everything working-class America dislikes but can’t necessarily stop.
The Wu Tang Clan album purchase was fair, even if Shkreli’s arrogance and wealth send most Wu Tang fans into orbit. And his conversations with the high school senior might raise eyebrows, but they wouldn’t get even a PG rating.
There is a difference between being right, and doing right. That is a powerful insight into ethics and human behavior, and one that corporate executives should take to heart.
In other words, except for the original fraud allegations, Shkreli may be right about everything else he’s done: that it’s permitted and legal. But nobody anywhere would argue that he has done the right thing, in any form, for many months. He might be my choice for dumbest CEO of the year, and that is always a competitive contest. He is an awful leader (thankfully he stepped down from Turing on Friday), and a great example of how not to set tone at the top.
Now, I suspect most compliance officers already know that strong executives, good leaders who embrace ethics, do embrace the idea that they must toe a higher standard than what the letter of the law allows. Shkreli is a great example of poor leadership, but he is not a symbol of a rampant problem among CEOs.
Instead, the most important question for compliance officers may be this: how can you ensure that your company as a whole—that amalgam of financial targets, operating procedures, promises to investors, and humans striving for economic security—does not devolve to that least common denominator of what the law says? Because companies aren’t people, and companies don’t have morals.
That is a question to ponder another time. And speaking of the future…
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This is my last column as editor & publisher of Compliance Week. Our next editor, Bill Coffin, has been on the job for several weeks now getting acquainted with this world, and I have every confidence that he will do a fine job taking Compliance Week into the future.
I started the Big Picture column in August 2008. In the seven years since then I have written hundreds of columns on all manner of compliance, audit, and governance subjects. It has always been a privilege to write this column and an honor that compliance professionals read it.
The good news (I think; it probably depends on your opinion of what I write) is that I will continue to write columns twice a month for Compliance Week as senior contributing editor. You’ll be able to find them here starting in January, and in our monthly print magazine as well. I will continue to have that same broad purview, and I will still pester you all to send good gossip, information, and insight our way. I look forward to keeping the conversation going next year.