The Decline and Fall of Business Ethics

WHAT IS THIS — the business news or the crime report?

FORTUNE Magazine, December 8, 1986, by Myron Magnet

Turn over one stone and out crawls Ivan Boesky’s tipster, investment banker Dennis Levine, dirt clinging to his $12.6-million insider-trading profits. Turn over another and there’s a wriggling tangle of the same slimy creatures, from minute grubs like the Yuppie Gang to plump granddads like jailed former Deputy Defense Secretary Paul Thayer. A shovel plunged into the ground above General Electric recently disclosed a bustling colony industriously faking time sheets to overcharge the government on defense contracts. Almost everywhere you look in the business world today, from the E.F. Hutton check-kiting scheme to the Bank of Boston money-laundering scandal, you glimpse something loathsome scuttling away out of the corner of your eye.

It’s not just illegality. As if trapped by a thermal inversion, the ethical atmosphere of business, some executives mutter, is growing acrid. Says private investor and Fordham business school dean Arthur Taylor: “I can’t do transactions on the telephone any more because people do not keep their word.” Adds leveraged-buyout panjandrum Jerome Kohlberg of Kohlberg Kravis Roberts: “Agreements have got to be in writing, and writing is itself subject to interpretation.” Laments Merle J. Bushkin, president of an investment banking boutique bearing his name: “I used to think that I could tell good guys from bad guys, and wouldn’t deal with people I thought dishonest or unethical. But I’ve learned that I can’t tell the difference. They look alike.”

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