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Michael Hiltzik: Meg Whitman, politics and corporate ethics

April 24, 2010 |  8:17 pm

It seems that any time wealthy individuals decide to play at becoming politicians, a point arrives at which the difference between their milieu and that of the commoner comes into high relief.

We discover that John Kerry absolutely lacks the common touch; that Carly Fiorina has no conception of what it might be like not to have the money to cover her cancer surgery; that when Arnold Schwarzenegger pledges to ignore the "special interests," he means special interests such as nurses, not his friends among the real estate developers.

As my Sunday column observes, that point has arrived for Meg Whitman with the renewed airing of her "spinning" problem.

When it was first disclosed in 2002 that as CEO of EBay she had accepted shares in 100 hot IPOs from Goldman Sachs, which did a lot of business with her company and wished to do a lot more, her defense was that her actions were not "illegal." That excuse was judged to be tolerably adequate by her chums in the corporate-executive world and by some of her employees, but in the political context it sounds like an awfully low standard as a definition of "the right thing."

Are matters helped by Whitman's assertion that the foofaraw was about a mere couple of million dollars -- "a very small fraction" of her investment portfolio? Other than certifying that she won't be campaigning for governor as a salt of the earth, it's hard to see where that argument gets her.

One hesitates to condemn Whitman merely for making a mistake. Lord knows some of the rest of us have tripped over the ethical line in one or another portion of our lives, and faced the consequences. That's life. But now that she's running for governor, shouldn't she understand that "it wasn't illegal" isn't an ethical principle?

The spinning episode and Whitman's continuing insistence that there's nothing wrong about it just proves F. Scott Fitzgerald's maxim that the rich "are different from you and me." Yes -- they can afford to live by their own rules.

The column starts below.

Meg Whitman says she lives by the principle of doing the right thing. It's there in the very first line of her autobiography. 

"What is the right thing to do here?" she recalls challenging her underlings at EBay, where she was chief executive, after some troubling issue of customer service had arisen.  I've been trying to reconcile that principle with her actions in what's become known as her "spinning" scandal. 

Eight years ago, it came out that Whitman was among an elite group of favored executives who had accepted preferential stock deals from Goldman Sachs while it was seeking business from their companies. 

In spinning, executives would typically get shares in coveted initial public stock offerings, which they would "spin," or resell, into a soaring market, usually within days and sometimes within hours. Their quick and almost entirely risk-free profits were effectively gifts, and the investment banks the givers. 

Whitman attempted to dodge responsibility for her actions by claiming that there was "nothing illegal" about them at the time. (This is rather at odds with a credo appearing on page 130 of her book: "Be accountable.")

Read the whole column.

-- Michael Hiltzik

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