Leslie Moonves: CEO's and Sex Scandals (2018)

CONTROVERSY
CBS was founded by Arthur Judson in 1927. Unable to find work, Judson created his own network which combined with another to finally be signed on as the Columbia Broadcasting System in 1929, after being bought out by William S. Paley. Programming was free to the large audiences and by 1970 they were airing infamous shows such as M*A*S*H, 60 Minutes and All in the Family. The company developed itself to gain the interests of all generations of the country.

 

CBS Company Logo

The company has developed immensely as a result of their hard work and dedication that led them to a growth in various forms of entertainment. They offer viewers a choice of CBS media in Publishing, Local Media, Cable TV, TV Network, and internet based businesses. CBS is one of the largest mass media companies in America. They have continued their growth in the new generation, as well as in older generations, with their consistent development of TV shows aiming to all audiences. Until recently, there were not a lot of complaints of the values and intentions of the company, and then came Leslie Moonves.  

Leslie Moonves, Former CEO of CBS 

Over the past few decades rumors of sexual misconduct were presented to the staff at CBS, but many were without reliable support to back them up. A New Yorker story, written by Ronan Farrow, attacks Moonves with the claims that he “forced oral sex, exposed himself, committed violent acts." Many people knew of the allegations against Moonves, but they were deemed inadmissible due to the fact that they had fallen out of the statute of limitations. Moonves is finally under review by the company as they decide whether he will receive a settlement for his step down. As of now, he is looking to receive at least 100 million dollars, or nothing at all. This decision, made by the company, could change the way people view CBS. This is not in consideration of the many women affected by Moonves’ decision, or in the company’s best interest. Moonves acknowledged his past actions, and now more women have come forward to bring his true character into light. If he had done it in the past, it is possible he is still doing it today. The position Moonves held gave him an advantage over aspiring women in the work force. He also did not see a reason to hide from the publicity. 

INDIVIDUALISM

Individualists would view CBS as unethical. An individualist’s perspective states that business should maximize profits for a company, but do so within the law. The publicity of the Leslie Moonves scandal created a poor image of the company, and the way the company handled the allegations created potential long term damage of viewers. The actions of the company to not fire Moonves, but rather let him resign from his position, created criticism from Americans. This is considered ethically

News Clip of the Resignation of Moonves

wrong from an individualist perspective because in doing this the company lost profit. Viewers are boycotting CBS for their negligence to the stakeholder, and they will continue to lose money as viewer rates decrease. Moonves went against the code of conduct of the business when he used his position to negotiate sexual favors from women. He abused his power and caused the company to lose profits as a result of his actions. The main values of an individualist’s perspective is to maximize the profits for the owners. In the case of Moonves, individualist would say it is ethically wrong because it not only goes against the company’s code of conduct, but it also caused a loss for the owners of the company. 

UTILITARIANISM

A Utilitarian perspective would also evaluate the Moonves case as ethically wrong. A utilitarian belief states that business actions should aim to maximize the happiness in the long run for all

CBS Newscasters Discussing the Moonves Settlement

scandals. The consequences of the Moonves case are causing the Stakeholders pain, they are not happy. CBS as a company is not following the utilitarian code due to the fact that they are considering giving Moonves a settlement. This decision, if it is agreed to, will make the stakeholders feel as if they lost, and Moonves will get paid out by the company. When coming to a decision on giving Moonves a settlement, the company should follow the utilitarian perspective. They will need to consider the risks to the stakeholders; They will be humiliated if the company decides to grant Moonves a settlement, on top of the pain they are already feeling as a result of the actions of Moonves. 

KANTIANISM
A Kantian theorist would be concerned with the process CBS took in handling the case of Moonves. They would look into the way the company took action in their own hands, and made a statement declaring their full corporation with the investigation. It is considering the actions of the company, and if they are using rational decision making in the process. The company did not cause the victims harm, it was an individual in the company that did this. When the case became public, CBS tried to do everything in their power to inform viewers that they would corporate, and they also did not lie to protect their employee. They were acting with honesty and acknowledgment of the allegations. This case also passes the Categorical Imperative test of the Formulation of Humanity. This test states that it is wrong to use someone to get what you want; CBS did not use anyone as a mere means, and therefore, it is morally acceptable. CBS was acting ethical under Kantianism because they spoke out and informed their viewers of the any information, and their stance on the case. 

VIRTUE THEORY
There are four main virtues that are followed under virtue theory: Honesty, temperance, courage and justice. The company was being honest with the corporation when discussing the case through the media. They showed temperance with their control to handle the allegations with no blame to the victims. They showed courage as they continued to air their program, and not let the loss of viewers scare them. Finally, the company is showing justice as they are not putting the blame on one individual or another. They are keeping everything fair until it is all settled. 

CBS did not violate any virtues necessary to judge one’s character. They aimed to comfort the public with their response of the issue and their cooperation with the scandal. They did not lie to the public, and they acted in good character when they gave their response with honesty. They are trying to regain the trust of their viewers and they continue to show that they are aiming to act ethical under virtue theory. 

These facts and analyses are based on an original research paper by Emily Sajdak, "Leslie Moonves: CEO's and Sex Scandals" 

WORKS CITED

About CBS Corporation. (n.d.). Retrieved from https://www.cbscorporation.com/about-cbs/

Farrow, R. (2018, September 10). Leslie Moonves Steps Down from CBS, After Six Women Raise New Assault and Harassment Claims. Retrieved from https://www.newyorker.com/news/news-desk/as-leslie-moonves-negotiates-his-exit-from-cbs-women-raise-new-assault-and-harassment-claims

Folkenflik, D. (2018, July 28). Report Details Sexual Harassment Allegations Against CBS CEO Les Moonves. Retrieved from https://www.npr.org/2018/07/28/633376943/report-details-sexual-harassment-allegations-against-cbs-ceo-les-moonves

Hagey, K., & Flint, J. (2018, September 11). CBS's Handling of Les Moonves Accusations Hampered by Battle for Control. Retrieved from https://www.wsj.com/articles/cbss-handling-of-les-moonves-accusations-hampered-by-battle-for-control-1536624692

Introduction – CBS Corporation. (n.d.). Retrieved from https://www.cbscorporation.com/diversity/about-us/introduction/

Keveney, B. (2018, September 10). CBS CEO Les Moonves becomes most powerful media exec to resign in wake of #MeToo. Retrieved from https://www.usatoday.com/story/life/people/2018/09/09/cbs-ceo-leslie-moonves-hit-new-sexual-misconduct-allegations/1249724002/

McDermott, M. (2018, October 02). Illeana Douglas: Les Moonves called my sexual assault 'a lot of fun'. Retrieved from https://www.usatoday.com/story/life/people/2018/10/02/illeana-douglas-les-moonves-called-my-assault-lot-fun/1498309002/

Salazar, Heather. The Business Ethics Case Manual. n.d.

Fox News: Chairman Faces Multiple Sexual Harassment Accusations (2016)

CONTROVERSY
Fox News Channel launched in October of 1996 by billionaire mogul Rupert Murdoch, who hired media consultant Roger Ailes as its founding CEO. Today, the company is worth upwards of $11 billion dollars, is available in 90 million homes, and is recognized as the dominant cable news network. The channel has been the most watched cable news network for fourteen years in a row, with more prime time viewers than MSNBC and CNN combined. Despite its massive success, the company's reputation has been tainted by accusations of bias, misrepresentation of facts, and most recently, fostering a work environment in which sexual harassment can easily occur.

Roger Ailes
 Former Chairman and Founding CEO of Fox News

On July 26, 2016 Gretchen Carlson, a former anchor for Fox News, filed a sexual harassment lawsuit against long time Fox News Chairman Roger Ailes. The lawsuit alleged that Carlson was terminated for rejecting Ailes' sexual advances. Later that week, New York Magazine reporter Gabriel Sherman reported similar accounts from six other women who also alleged sexual harassment at the hands of Ailes. Ailes and his representatives vehemently denied all allegations, claiming that each story was fabricated. However, upon an internal review into Carlson's claims, Fox News owner Rupert Murdoch apparently found enough information early into the review to conclude that Ailes needed to be let go. Murdoch decided to give Ailes an ultimatum, asking him to either resign by August 1 or be fired immediately. Ailes chose to resign on July 21, but not without a $40 million dollar check from Fox News and a public thank you for his time with the company. Additionally, he was able to stay on as a consultant for the parent company, 21st Century Fox, for another two years.

In August 2016, following Ailes’ resignation, reporter Andrea Tantaros also filed a lawsuit against Fox News for sexual harassment, accusing Ailes as well as two other men on the Fox News Team. Her suit claimed that she had spoken to Fox News executives about Ailes' inappropriate behavior toward her in 2015, and that her allegations got her demoted then later taken off the air. One month later, 21st Century Fox announced it had settled a lawsuit with Gretchen Carlson over her allegations of harassment against Ailes for $20 million dollars. The company also made at least two other settlements, the names and details of which were not publicly disclosed.   

Gretchen Carlson
Reporter, Most Public Ailes Accuser

STAKEHOLDERS
This controversy involves many stakeholders, more of which seem to be discovered every few weeks. Fox News itself is a stakeholder, as the allegations were made from several employees about another employee. The allegations make for embarrassing headlines and have led to millions of dollars spent on behalf of the company in court. Roger Ailes is an obvious stakeholder, for he was accused of the harassment and asked to resign. Additionally, Gretchen Carlson and Andrea Tantaros, as well as the other six victims who anonymously filed complaints and any woman working for Fox News as a reporter, consultant, or recurring guest are all stakeholders because they either have been or could have been victims of sexual harassment in this workplace. Fox News reporter Megyn Kelly and other women on the Fox News team have also been affected by this case, as they were asked to defend the accused and discredit the accusers.

INDIVIDUALISM

Example of a Potentially Damaging Headline

Individualism states that a business's only goal should be to make as much profit as possible, so the only obligation that a business person has is to maximize profit for the owner and stockholders of a company while obeying the law. Individualism analyzes the outcome of a decision rather than the intention of it. Fox News paid out at least $20 million dollars to Gretchen Carlson, one of Ailes' accusers. The company also settled with at least two other women for undisclosed amounts, and paid Roger Ailes $40 million dollars upon his resignation. Additionally, the company incurred other fees such as paying its legal teams and private investigators, plus paying Ailes a salary for at least two more years as he advises another area of the company. The company also broke laws by allowing sexual harassment to occur and continue to occur within the workplace. According to individualism the owners and stockholders of the company were stolen from, as their profits were spent on costs that could have been prevented. In sum, the company did not obey the law or maximize profits for its owners, and did not act ethically according to this theory.

UTILITARIANISM
Utilitarianism argues that happiness is the only thing of intrinsic value and therefore people must impartially bring about happiness in all beings capable of feeling it. A utilitarian would consider a decision ethical if it maximized happiness and minimized pain for all stakeholders. Fox News suppressed claims of sexual misconduct in the work place, failed to investigate early on, and fired women who came forward. This created a hostile work environment in which a powerful man was allowed to behave inappropriately for allegedly at least a period of one year without consequence, and any young female employee was expected to endure it or leave the company. The company's decision did not impartially bring about happiness, as it appeared to only maximize the happiness of one man, while hurting the company's own reputation, the victims, and other employees. Their behavior does not fit the criteria of utilitarian ethics, and so it cannot be considered ethical under this theory.

KANTIANISM
The basic principles of Kantian ethical theory are to act rationally, allow and help others to act rationally, respect others and their individual needs, and be motivated by the Good Will. Good Will refers to doing what is right simply because it is right. Kantianism does not allow deception or manipulation, for these behaviors cheat others out of receiving complete information which is necessary to make their own rational decisions. This theory also includes the Formula of Humanity, which requires that people act in such a way that they treat others always as both an end and a mean. The term "end" according to Kant refers to something that is valuable in itself, or a goal, while the term "means" refers to a way to get something else. Essentially what this formula means is that people cannot use other rational people simply as tools to get what they want. Fox News violated some of the key principles of this theory. The company did not respect Roger Ailes' accusers when they fired or demoted them. They were not motivated by the Good Will - Fox News only let Ailes go to avoid further harm to the company's reputation, not because it was the right thing to do. Furthermore, the company never issued an official statement regarding the controversy, instead they issued a kind 'thank you' to Roger Ailes for his decades of service with the company. This, coupled with the secret law suits and anonymity of other victims, left viewers and other stakeholders not fully informed. Fox News did not behave ethically according to Kantian ethical theory.

VIRTUE THEORY
Virtue Theory is derived from Aristotle's Functionalism, which states that a good person fulfills their function well, and that a person is happy when that function is fulfilled. Virtue Theory focuses on virtues, which are good characteristics that enable things to function properly, versus vices, which enable things to malfunction. There is a plethora of each, but the theory highlights four main virtues. These four main virtues include courage, honesty, temperance, and justice. In business, courage means risk-taking and a willingness to stand for what is right. Honesty refers to agreements, hiring, and employee treatment. Temperance means having reasonable expectations and justice means hard work, fair practice, and quality products. Fox News did take a risk by continuing to employ Roger Ailes amidst the various accusations, but it is not considered virtuous because it inhibited others from doing their jobs. The company was not honest in hiring, as Ailes allegedly offered jobs to women in return for sexual favors and the company did not treat him the way it treated others. Fox News did not exhibit temperance, for its expectations for women to remain silent were not reasonable. Finally, the company did not practice justice when it paid Roger Ailes tens of millions of dollars upon resignation. Fox News violated each of the four main virtues of business in this theory or allow all employees to fulfill their duties well and therefore did not behave ethically.

JUSTIFIED ETHICS EVALUATION

Fox News Logo

Upon researching and analyzing the facts of this case, I personally believe that Fox News’ gravest ethical violation was initially siding with him over his accusers with little investigation. In some ways, it appears as though Ailes was even rewarded for his behavior in the form of a $40 million dollar exit deal - twice the amount granted in Gretchen Carlson's settlement - and public praise for his professional career. This behavior reflects poorly on the company's values and priorities. In addition, they suppressed victim claims and even punished those who tried to seek justice by firing, demoting, or discrediting them. Fox News failed to provide a workplace offering fairness, equality, safety, or comfort. My opinion is separate from the ethical theories examined above and could be changed with new information.

UPDATE APRIL 13, 2017

Although Roger Ailes has been removed from the position of Chairman and Chief Executive Officer, the controversy involving the culture of sexual harassment at Fox News is ongoing. On April 1, 2017 the New York Times published an investigation on Bill O’Reilly, star of cable news’ most popular program, “The O’Reilly Factor.” The story detailed how over $13 million has been paid out to address complaints and settle law suits from women about O’Reilly over the past decade. The complaints alleged either verbal abuse, sexual harassment, or sometimes both. Most recently, Wendy Walsh, a former recurring guest on “The O’Reilly Factor,” was just granted an internal investigation by Fox into her sexual harassment claims.

Since the story broke, the show’s ad time has decreased from just over fifteen minutes to less than seven minutes. This is because advertisers such as Mitsubishi, Aleve, Mercedes-Benz, Allstate, Subaru, and BMW have pulled their ads slated to air during his show. On April 11, amid this exodus of advertisers, O’Reilly announced he would be taking a voluntary, two week vacation to an undisclosed location. As of April 13, O’Reilly is expected to return to his show on Fox News on April 24 with no punishment by Fox or changes to his program.

RESOURCES

Byers, Dylan. "Megyn Kelly Outlines Harassment Allegations against Roger Ailes in New Book." CNNMoney. Cable News Network, 3 Nov. 2016. Web

Byers, Dylan. "Bill O'Reilly taking vacation amid scandal, advertiser exodus." CNNMoney. CNN Media, 11 Apr. 2017. Web.

Kelly, Megyn. Settle for More. S.I. Harper Collins, 2017. Print.

Kurtz, Howard. "Gretchen Carlson Harassment Suit against Roger Ailes Settled." Fox News. FOX News Network, 6 Sept. 2016. Web.

Kurtz, Howard. "Roger Ailes Resigns as Fox News Chairman, Rupert Murdoch Assumes Acting Role." Fox News. FOX News Network, 21 July 2016. Web.

Link, Taylor. "Here’s how Fox retaliated Against a Local Reporter." Salon. Salon Magazine, 11 Apr. 2017. Web.

Reilly, Katie. "More Women Accuse Fox News CEO Roger Ailes of Sexual Harassment."Time. Time, 9 July 2016. Web. 31 Jan. 2017. Web.

Steel, Emily. "Fox Faces New Lawsuit Claiming Harassment by Roger Ailes." The New York Times. New York, 13 Dec. 2016. Web.

Sherman, Gabriel. "How Fox News Women Took Down Roger Ailes." Daily Intelligencer. New York Magazine, 2 Sept. 2016. Web.

Sherman, Gabriel. "6 More Women Allege That Roger Ailes Sexually Harassed Them." Daily Intelligencer. New York Magazine, 9 July 2016. Web.

Steel, Emily, and Michael S. Schmidt. "Bill O’Reilly Thrives at Fox News, Even as Harassment Settlements Add Up." The New York Times. The New York Times, 01 Apr. 2017. Web.

Citigroup, Inc. Pleads Guilty to the FX Scandal (2015)

Controversy

Citigroup Inc. logo

In May of 2015, Citigroup, Inc. as well as three other major banks, pleaded guilty to attempted to manipulate foreign exchange rates. Citigroup is facing one of the largest fines along with JPMorgan Chase & Co. According to Corkery and Protess (2015), Citigroup's fine of $925 million is the largest single fine ever to be given as a violation of the Sherman Antitrust Act. This scandal itself is often referred to as the "FX Scandal". The Forex (otherwise known as FX) is "a decentralized foreign exchange market that trades in the world's currencies" (Royden, 2014). The foreign exchange market is one that goes on 24/7, except in London. In London, at 4:00 P.M. the market stops for exactly one minute. This is called the "fix rate". In the FX Scandal, traders of five major banks came together and fixed the fix rate though online chatroom with names like "The Cartel" and "The Mafia".
This case marks the first time in decades that the parent or main banking unit of a major American financial institution pleaded guilty to criminal charges. However the bank has not stopped operations once throughout this whole process. Is it possible that large fines are considered a slap on the wrist for large companies such as Citgroup, Inc.? Attorney General Lynch argues “the penalty all these banks will now pay is fitting, considering the long-running and egregious nature of their anticompetitive conduct.” (Freifeld, Henry, and Slater 2015). It is hard to think though, that if this had been a small bank that they would be able to continue on with normal day-to-day business operations.

Stakeholders
Many people were affected because of this scandal. These people are referred to as stakeholders. Stakeholders include Citigroup, Inc. employees, customers, those who participate in foreign exchange (other large companies), the government, and small banks. In worse circumstances, the bank could have gone bankrupt and many jobs would have been lost. Instead, employees are now under very close watch, even though they were not all involved in the scheme. Customers and those participating in foreign exchange will now be extremely untrusting of Citigroup, Inc. as they have lied to their clients. The government as a stakeholder, had to deal with the repercussions of the criminal charges and now have to constantly monitor these large banks. Small banks are stakeholders as they expect to deal with fair competitors in the bank industry. 

Timeline of Citigroup/FX Scandal

Individualism

Individualism is one of various ethical theories, which can be used to analyze a given ethics controversy. The values of individualism include profits and the owner's wishes. This theory’s ethical rule is “business actions should maximize profits for the owners of a business, but do so within the law” (Salazar, The Case Manual, p. 17). In the case of Citigroup, an Individualistic analysis would result in saying Citigroup was unethical. Although the traders were manipulating rates to make more profit, they were doing outside of the law. If the traders involved were abiding by the law then the action would be considered in the best interest of the owner, according to Individualism. Traders were not considered with the effect their decisions had on stakeholders (which is considered ethical under Individualism) but because they broke the law the action is considered unethical.

Utilitarianism
Utilitarianism is yet another ethical theory used to analyze whether or not a company acted ethically. Utilitarianism focuses on the values of happiness, and has the ethical rule that “businesses should aim to maximize the happiness in the long run for all conscious beings that are affected by the business action” (Salazar, The Case Manual, p. 19). In contrast to Individualism, utilitarians focus on more than just the owners’ wants and needs. “Classical Utilitarianism” stresses the value of happiness. This would mean that anything resulting in an unhappy outcome is considered unethical. A utilitarian would consider Citigroup unethical as they have not considered their stakeholders in their actions. They stress the long-term outcome of things. In the short run, Citigroup made money but in the long run many customers were cheated (a bad outcome). A utilitarian would weigh these outcomes and come to a conclusion. Even after the fact, Citigroup is moving forward while those who were cheated have lost money due to the issue. All of the individual lawsuits against Citigroup exemplify the lost of trust from its customers. Utilitarians would take this into account and ultimately consider this an unethical decision. Losing the trust of one’s customers is not worth making extra money from lying to them. 

Kantianism

The third ethical theory used to evaluate the Citigroup, Inc. case is Kantianism. According to Kantianism lying, cheating, manipulating, or harming others is considered unethical (Salazar, The Case Manual, p. 20). This is where Citigroup went very wrong. The traders involved in the fix purposely manipulated their customers for their own benefit. Customers were lied to by a company they thought they could trust. This in itself is unethical. There is a serious lack of “Good Will” within the employees of Citigroup. Most employees, if not all employees that had anything to do with the scandal were fired. This was the best thing Citigroup could have done to ensure that the same problem does not occur. When looking at "Good Will" specifically, a Kantian would as if Citigroup, Inc. fired their employees because it was right or because they were told they had to. The same could be argued for when the company pleaded guilty. It is likely that the company pleaded guilty not because it was right but because they were told to by a lawyer so they could cut a deal with the authorities. Kantianism would argue that Citigroup acted unethical throughout the whole scandal, even when they admitted their wrongdoing.

Virtue Theory

The final theory used to evaluate this ethics case is Virtue Theory. Virtue Theory declares that if a company, or individual is acting in such a way that they are expressing good character traits and working to avoid bad character traits then they are acting ethically. The values of Virtue Theory include “character traits that promote wellness or flourishing of individuals within a society” (Salazar, The Case Manual, p. 22). In Virtue Theory good traits are virtues while bad traits are vices. Some examples of virtues are: honesty, compassion, and temperance. Examples of vices include jealousy and greed. In the case of Citigroup, the traders involved in the scandal let the vices get the best of them. By fixing the rates for their own benefit they were selfish, greedy, and dishonest. If those involved in the scandal had taken the time and effort to embraces their virtues and avoid the vices, the scandal may have not even occurred. However, they let their vices take over, leaving an unethical result for the company.

Vikram Pandit, former CEO of Citigroup Inc.

Justified Ethics Evaluation

I believe Citigroup, Inc. was wrong in fixing the foreign exchange rates. This affected so many people across the globe. They manipulated their customers for personal benefit, which is unethical to me. The company also broke the law, which speaks for itself. Although it is hard to control individual employees' decisions, when talk came up about joining the chat room, Citigroup should have opted out. In my opinion, to give banks a monetary fine is not sufficient. Citigroup has not seen any trouble in business activity after the scandal. The fact that they were able to still operate and make a profit seems unjust. They broke the law, plead guilty, but the price being paid does not seem high enough for what they did. I do not mean this monetary wise as they have extremely large fines, just freedom wise. When an individual or small business breaks the law they are often revoked of their rights. Overall, Citigroup acted unethically in fixing the foreign exchange rates and everyone involved should serve the consequences of their actions.

References

Chon, G., Binham, C., & Noonan, L. (2015, May 20). Six banks fined $5.6bn over rigging of foreign exchange markets. Retrieved September 17, 2015. 

Citigroup, Inc. Progress informed by the past, and inspired by the future. (2015). Retrieved October 20, 2015.

Corkery, M., & Protess, B. (2015, May 20). Rigging of Foreign Exchange Market Makes Felons of Top Banks. Retrieved September 17, 2015.

Karen, F., David, H., & Steve, S. (2015, May 20). Global banks admit guilt in forex probe, fined nearly $6 billion. Retrieved October 20, 2015.

Kamich, B. (2015, September 22). Citigroup stock: Here's a chart to lose sleep over. Retrieved October 20, 2015. 

Mcgeever, J. (2014, March 31). TIMELINE-The FX fixing scandal. Retrieved October 20, 2015.

Royden, D. (2014, December 4). The Forex Fix: Understanding the Foreign Currency Scam In London. Retrieved October 20, 2015.

Salazar, Heather (2015). The case manual.