NewsNotables – Issue 45

PC Stolen From Boeing Packed With Employees’ Personal Data

The Seattle Times, November 19, 2005
Highly sensitive personal data on 161,000 current and former Boeing workers is missing after the theft of a company personal computer.

The data included “names and Social Security numbers, and in some cases birth dates and banking information,” according to Boeing. The banking information included names of banks, routing numbers, and account numbers for some workers who had elected to have their paychecks directly deposited into their accounts. No credit card numbers were on the computer. The news incensed workers who were notified by the company.

As of November 23, a Boeing spokesman stated, “We still don’t see any evidence of any data being used to commit fraud,” and none of the effected employees have reported any problems with their bank accounts or other financial information. I guess time will tell.

Comment: This got personal with the Ethix executive director’s name on the list!

Cray Co-Founder Leaves for Position at Microsoft

The Seattle Times, November 26, 2005, article by David Bowermaster
Cray announced that co-founder and chief scientist Burton Smith will leave December 7 to join Microsoft. Smith will be a technical fellow, said Lou Gellos, a Microsoft spokesman.

“The Web is increasingly going to be driven by supercomputers,” said Paul Saffo, a technology forecaster in Silicon Valley, California. “This is just the latest chapter in the arms race between Microsoft and Google.”

The Ethical Climate

Boeing Frontiers, December 2005/January 2006
“Even if Boeing never had a single ethical violation, today’s general business environment would still drive an ongoing major focus on ethics and compliance. The reality is that there are many more regulations, there is much greater scrutiny, and in this world of instant communication, there’s far more opportunity for mistakes to occur and far less time to correct them if they happen. Boeing is not alone in this. All companies are under the microscope and need to refocus on ethics and compliance,” said Jim McNerney, chairman and CEO, The Boeing Company.

Fraud Cases Tied to Hurricane Aid Now Exceed 1,000

The Wall Street Journal, December 7, 2005
The number of federal criminal investigations tied to the government response to Hurricane Katrina has passed the 1,000 mark, and is likely to rise as more relief money becomes available to those claiming to be storm victims.

Less than three months after the storm ravaged Louisiana and Mississippi, the $63 billion in federal money allocated for relief efforts has triggered a large wave of apparent criminal activity. The 1,000 cases now under active investigation represent the largest number of fraud probes stemming from a natural disaster in U.S. history. Most of the investigations involve fraudulent claims submitted by individuals who didn’t live in storm-affected areas or who owned property there that wasn’t touched by Katrina.

The surge in Katrina-related fraud cases have come as Congress continues to squabble over the proper way to police the money. There are at least seven proposals circulating on Capital Hill for Katrina oversight. It seems that as Congress continues to deliberate, fraudulent claims continue to just take.

Comment: In the last issue of Ethix, I noted an article, “Relaxed ID Rules Could Invite Financial Fraud.” It didn’t take a rocket scientist to predict this would happen.

Google Concerns Privacy Crowd

USA Today, December 8, 2005
In just seven years, Google has emerged as one of the most influential companies of the 21st century, a multinational whose recent forays into classified ads, book publishing, video, Wi-Fi, and telecom make its data empire ever more powerful. That’s pushing it into a growing buzz saw of competitors, such as Microsoft, and lawmakers worried about data privacy and protection.

“Google could easily become the poster child for a national public movement to regulate data collection,” says Jeff Chester, head of the Center for Digital Democracy, a privacy advocate. Google is building defenses to block government actions that slowed growth and innovation at other once fast-growing companies. It is bolstering its new Washington lobbying office.”

How Corporate Scandals Gave Tech Firms a New Business Line

The Wall Street Journal, December 9, 2005
A new gusher of technology sales is emerging — laws meant to fight corporate fraud. In 2002, software maker Consul Risk Management Inc.’s business was in trouble. Its software for reviewing the mainframe-computer records known as “log files” had limited appeal, and its revenue was stuck at a few million dollars a year. After burning through its venture capital, it had fired half its employees.

Today, business is sizzling. Consul expects revenue of $20 million this year, up from $13 million in 2004. The company now has 350 customers including Kroger Inc. “Sarbanes-Oxley changed the world,” said its chief technology officer.

The Sarbanes-Oxley act of 2002 and similar measures, passed in the wake of corporate scandals such as Enron and WorldCom, have left a burden on publicly traded companies. Now companies must hire more people to do the tedious job of bulletproofing their financial operations, or investing in software that can do much of the job automatically. Therein come companies like Consul Risk Management Inc.

Comment: I guess everything has two sides. The corporate scandals have hurt the public in a devastating way, but many new jobs have been created to safeguard the public. The real question is have measures such as Sarbanes-Oxley been very effective or are they just window dressing — at a steep cost? I know how companies like Consul would vote.

By Roger Eigsti
Board President,
Institute for Business, Technology, and Ethics