Monday AM December 3rd, 2007
by: Ed Mayberry, December 3, 2007 5:12:00 am
The Greater Houston Convention & Visitors Bureau's new president and CEO takes office today. Greg Ortale returns to Houston after having served as general manager and executive vice president of the CVB from 1979 to 1987. He was most recently president and CEO of Meet Minneapolis, formerly the Greater Minneapolis Convention & Visitors Bureau. He replaces Jordy Tollett, who resigned in late 2006.
The National Business Ethics Survey by the Arlington-based non-profit Ethics Resource Center shows that reports of bad business behavior are back to pre-Enron levels. Dr. Patricia Harned, president of the group, says more than half of American employees witnessed some kind of misconduct in the workplace.
"The leading types of misconduct that they tended to observe were conflicts of interest—putting your own interests ahead of your organization, abusive and intimidating behavior and lying to employees. Twenty-two percent of employees said that at work they had seen someone putting their own interests ahead of the interest of their organization. Fifty-five percent of employees said that they had observed someone at work engaging in some kind of behavior that was misconduct. And that dropped some after Enron took place. Employees were much more positive about ethics at work. But in 2007, again, more than half of employees--56 percent--said that they observed some kind of misconduct at work. We're not seeing a rise in ethical courage among employees. Almost two in five employees who observed something going wrong at work—some kind of violation—are not making management aware of it. The second thing is that we've also seen some good news in this research that were companies have ethics and compliance programs and they're focusing on building strong cultures, they're able to significantly reduce their ethics risk."
Harned says companies reacted to Enron and WorldCom by reassessing their ethics and culture. She says the Sarbanes-Oxley Act initially helped, to some extent.
"Right after Enron, we certainly saw a rise in company interest in putting in controls within their companies, in establishing help lines and focusing on complying with regulation, and there was a positive effect from that. But what we also know is that it's in the company culture that the biggest difference happens when there's a strong ethical culture in place. That's the real accelerator of ethics in the workplace. So we've seen a little bit of change over time, but misconduct is on the rise because company leaders need to focus more on building ethical cultures. I think the most important thing to take away from this research is first of all there is an ethics crisis in America, and particularly in business because we're seeing that the risk to business is the same as it was before Enron even took place. But that said, there are tools available to companies if they're willing to make use of them. The first is to build a strong ethics and compliance program, and the second is to focus on building an ethical culture where employees feel they can be courageous and report misconduct."
Harned says every time a business hires, builds, sells or buys, it's acting for the public as well as for itself, and must be prepared to accept full responsibility.
The Bush administration is working with officials in the financial industry on a plan to provide a financial lifeline to homeowners facing the prospect of rising loan payments. Treasury Secretary Henry Paulson is among government leaders who met with loan servicing companies, firms that collect and distribute loan payments. An agreement to temporarily freeze certain subprime interest loan rates could be announced in the next week or so. The mortgage industry and other federal regulators have been under intense pressure to stem the tide of foreclosures. The risk is that foreclosures could rise further as adjustable rates reset at higher payment levels.
A fresh sign of weakness in construction. The Commerce Department says construction spending fell by eight-tenths of a percent in October. It is the biggest decline since July. Activity in the besieged housing industry fell for a 20th straight month while nonresidential construction weakened as well. The eight-tenths-percent drop in construction was far bigger than the two-tenths-percent dip that had been expected. Private residential construction fell by a sharp two percent, the 20th straight decline in this troubled sector. Private nonresidential construction, which had been helping to cushion the housing downturn, dropped by a half percent. The only strength came in government activity, which was up as spending on state and local projects hit an all-time high.
Whether the project billed as the cutting-edge power plant of tomorrow winds up at any of four sites in Texas or Illinois, economists believe one thing is clear--the winner wins big. The $1.5 billion project known as FutureGen promises 1,300 jobs during its construction, and 150 permanent ones once it's running. FutureGen is a $1.5 billion prototype coal-fired power plant that developers--a consortium of coal and power companies working with the U.S. government--say will produce nearly no air pollution. Carbon dioxide will be stored beneath a layer of bedrock, not released to the air. The 275-megawatt plant could be up and running by 2012, supplying enough power for about 150,000 homes. Developers will announce between December 17th and the end of the year the winning site among four finalists: Jewett and Penwell in Texas, Tuscola and Mattoon in Illinois. Texas has promised $260 million in cash and tax credits, while Illinois has offered $80 million in grants, low-interest loans and tax breaks. Both states have offered developers protection from liability if carbon dioxide leaks from the ground. Economists say the project is an attractive economic target for small towns, and a big improvement on the kinds of low-wage jobs they tend to chase. The Texas sites of Jewett, about 135 miles northwest of Houston, and Penwell, about 370 miles west of Dallas near Odessa, know the boom-and-bust nature of the petroleum business. The central Illinois towns of Mattoon and Tuscola have lived through lean times, losing local coal mines to pollution concerns and local industry to the rust belt exodus of the 1970s and '80s.
The Federal Trade Commission says a new analysis concludes 8.3 million Americans over 18 were victims of identity theft in 2005. That's down from 9.9 million in 2003. But consumer advocates are not convinced the numbers are accurate. One problem in getting accurate information about identity theft is that most consumers don't know it when their personal information is compromised. And the FTC acknowledges that its identity theft survey involved such a small sample that the results are not "statistically significant.'' Still, there's agreement that ID theft is a monumental problem. One research firm says it cost American businesses $55 billion in 2006. And the FTC estimates the cost to consumers last year came to $1.2 billion.
Hollywood studios have a new contract offer on the table for striking film and TV writers. Producers say the offer would pay writers millions more for work that's shown on the Internet. The split over Web-based revenue has been a central issue in negotiations. Writers wanted a break in talks until Tuesday so they could study the plan. Meanwhile, the union is calling on its members to continue their nearly month-long walkout. The studio plan offers writers $130 million more in extra Internet-based cash over a three-year period. The writers have countered with a plan that would up that number to just over $150 million.
AT&T's CEO says the San Antonio-based company plans to offer a version of an iPhone next year. Randall Stephenson says the model would run on a faster wireless network so users can get speedier results when surfing the Web. Stephenson spilled the news during an appearance at the Churchill Club in Santa Clara, California. A spokeswoman for Apple declined to comment. Stephenson said he didn't know how much more the new version will cost than the existing model, which sells for $399. The move would address one of the main drawbacks about the cellphone made by Apple and distributed exclusively by wireless carrier AT&T in the United States. Many industry observers had expected Apple to make the iPhone work on faster 3G networks at some point but couldn't pinpoint when. The current model runs on 2.5G networks, or in AT&T's case, its relatively slow Edge network. The difference in performance is similar to a dial-up Internet connection versus a high-speed broadband connection.
Federal regulators have approved the $1.3 billion sale of 35 TV stations owned by San Antonio-based Clear Channel Communications. But the Federal Communications Commission set conditions on the sale to the private equity group Newport Television. Newport's an investment group controlled by Providence Equity Partners. The sale will result in a violation of FCC ownership rules in nine markets and require the sale of several stations. The sale of the 35 stations will mean the new owner will be out of compliance with FCC rules that limit the number of stations one company may own in a single market. The market areas include San Antonio. The sale was conducted within the context of a much larger plan to privatize Clear Channel, which is the nation's largest radio station operator. Last month, shareholders approved the $19.5 billion sale of the company to a private equity group led by Thomas H. Lee Partners and Bain Capital Partners.
Icelandic investment company FL Group has cut its stake in Fort Worth-based AMR Corporation. FL Group says it's reduced its stake in the parent company of American Airlines from 9.1 percent to 1.1 percent because it doesn't believe the investment provides sufficient returns. The divestment will cut FL's fourth-quarter earnings by about $326 million. At the end of the third quarter, FL valued its total AMR holding at $509 million. FL Group began investing in AMR in 2006. It had suggested that AMR improve disclosure and monetize its assets, such as its Aadvantage frequent flier program. FL says AMR's failure follow through on the suggestions, combined with high fuel costs and a tightening U.S. economy, has hurt their investment.