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When business and personal ethics collide: A cautionary tale

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On the surface, you can be a strong supporter of ethics and compliance policies in your business; however, if your personal life takes a different path, you may be in for a long, embarrassing and expensive trip.

Such is the case of Alex Molinaroli, CEO of the multibillion dollar Johnson Controls. Molinaroli is a longtime Johnson Controls employee who rose through the ranks to become its CEO in 2013. The company has been lauded for how it conducts business, including a nine-year run as one of the world’s most ethical businesses and recognition as one of the best corporate citizens.

Industry wide, Molinaroli was seen as an “ethics champion” and in an early 2014 letter to employees, he reminded them that “…the choices we face on the job aren’t always so clear-cut. Ethical dilemmas are a reality of our world. Our Ethics Policy…promotes a common understanding of right and wrong across all Johnson Controls businesses, wherever we operate.”

Fast forward to October of the same year and Molinaroli admits to having an extramarital affair with a consultant. The consultant is fired but Molinaroli retained his job with “the full support of the board,” but did get penalized $1 million in bonus money.

Now in 2015, Molinaroli is under scrutiny again for allegedly providing millions to accused Ponzi schemer Joseph Zada, including money for his legal defense, a rent-free mansion and other perks. Yet when it comes to an explanation for this as well as the investment capital he provided, the head of a Fortune 80 company said he is not sure of how much money he gave Zada, nor where the money was invested.   

It remains to be seen whether this latest incident will affect Molinaroli’s tenure. However, Morningstar analyst David Whiston opined that the Zada episode “raises the inherent risk of there being poor judgment on the business side because of poor judgment on the personal side.”

Can you have solid business judgment and ethics but still lapse in personal integrity? Where do the two meet and which one is likely to prevail?

As an advisor, you are often required to maintain a high level of fiduciary responsibility with your clients. This is ingrained in your office culture and co-workers. But when you have an outside, personal circumstance invade your business world, you run the risk of losing trust and respect from those who work with you.  Though you may still maintain your professional stature, an outside issue can certainly tarnish one’s reputation, as well as fuel speculation as to your moral standing.

There is, of course, the concept of people throwing stones from their respective glass houses; however, until they are under the microscope for a personal fail, their right to cast judgment prevails.

‘Do as I say not as I do’ may seem like Molinaroli’s perspective but for the rest of us, the collision of business and personal ethics is a very slippery slope.


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