In the world of real estate financing, it is important to choose lenders with integrity and high standards. As we read a recent newsletter from our friends at Revitalization Partners, we decided to share their message about accountability in business, as compared to government. Accountability is not always consistent, sometimes it is not even present, but that doesn’t have to dictate the level of standards with which we do business. Juniper Capital is committed to maintaining enduring business relationships through trustworthy private money loans and financial interactions.
This is an excerpt from the Revitalization Partners newsletter…
That master of management teaching, Peter Drucker, stated in his book, The Effective Executive, that: “It is the duty of the executive to remove ruthlessly anyone- and especially any manager- who consistently fails to perform with high distinction. To let such a man (person) stay on, corrupts the others. It is grossly unfair to the whole organization.”
Even after the resignation of Secretary of Veterans Affairs Eric Shinseki, government employees allegedly committing fraud are clearly handled differently than a business person or non-governmental individual.
In one case with which we are familiar, a respected partner in one of the largest, most successful law firms in the country was charged with withholding the interest on a client’s escrow account. At the time of the allegations, he was dismissed from his law firm, the bar association suspended his license, and the case was investigated by the IRS, FBI, and SEC. He was convicted and is currently serving prison time. The money amounted to hundreds of thousands of dollars and no one died.
In yet another example, mining employees accused of accepting $2 million in kickbacks from vendors were terminated as soon as the allegations came to light. They have since been indicted by the US Attorney and trained prosecutors.
In the case of documented neglect at VA hospitals, there is little doubt criminal acts have been committed, and we are treated to the Assistant Chief of Staff for the President spending eight hours at the Phoenix VA hospital doing interviews. We are told that the agency, through its Inspector General, is investigating itself. But where are the trained prosecutors and forensic accountants? Why do those accused remain in their jobs with their bonuses?
In our business, we repeatedly see both the lack of accountability and a focus on personal gain. We have seen and worked in businesses where the following occurred:
1. The CEO of a company cut all salaries, including his, during the recession. However, he also rerouted payments that were supposed to go to the bank in loan repayment to his personal account.
2. A family owned company employed a family member who repeatedly stole from the company to support an addiction. Even though it was well known what was happening, the company kept him employed until he began taking personal items that belonged to other employees.
3. The CEO of a multi-generation family company turned the day to day operation of the company over to a non-family COO and an unqualified CFO. The lack of supervision of these executives and unwillingness to address the financial failings of the company resulted in unmanageable debt and liquidation of the company as well as the CEO’s personal assets.
Corporate America loses billions of dollars per year in terms of employee theft, defective products, workplace conflicts, leadership and supervisory behaviors and loss of valuable employees due to disillusionment, discouragement, and cynicism.
But the greatest loss is incurred by our continuing acceptance of a lack of accountability in our practices, businesses and government. A statement by Army Chief of Staff George Marshall sums up the issue best:
“When standards are not rigorously upheld and inadequate performance is allowed to endure in leadership ranks, the effect is not only to rob the enterprise of some of its potential, it is to lose the standards themselves and let the most important capabilities of leadership succumb to atrophy.”
It’s true for our practices, our businesses, and our government.
Many business owners or CEOs “Fail While Really, Really Trying.” When a company is worth saving… it’s worth consulting Revitalization Partners.
At Juniper Capital, we work hard to help our clients achieve their real estate investment goals with quality private money loans in Washington, Oregon, and Idaho.