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Trump's Flynn scandal has many corporate analogues
February 14, 2017 / 4:27 PM / 10 months ago

Trump's Flynn scandal has many corporate analogues

WASHINGTON (Reuters Breakingviews) - The first career businessman to occupy the Oval Office has many corporate analogues to help him navigate his first major political scandal. Like messes that roiled large public companies from Wells Fargo to Valeant Pharmaceuticals, the rising furor over the U.S. national security adviser’s misleading statements about his dealings with Russia point to a common problem: the management style of the chief executive.

National security adviser General Michael Flynn arrives to deliver a statement during the daily briefing at the White House in Washington U.S., February 1, 2017. REUTERS/Carlos Barria

Donald Trump brags about his decisive leadership, pointing to the firings in “The Apprentice” reality show as evidence, but was woefully slow to act on Mike Flynn. Hours before Flynn resigned, White House counselor Kellyanne Conway said the former general had the president’s “full confidence.” Vice President Mike Pence also defended Flynn in national media interviews. Yet a few weeks ago former acting Attorney General Sally Yates notified the White House that Flynn was vulnerable to blackmail because he lied about discussing sanctions with Russian Ambassador Sergey Kislyak in December.

It’s not all that different from what happened at Wells Fargo, the nation’s second-largest bank, last year. Wells knew for years that thousands of employees had manufactured fake client accounts to meet sales targets. Yet when Chief Executive John Stumpf faced congressional hearings he was ill prepared and resigned shortly thereafter. Valeant blamed the “tone at the top” for inflated drug prices, which led to the resignation of Michael Pearson as CEO.

The Flynn affair has further amplified the disorder already surrounding the Trump administration. The president hired inexperienced staffers to help run the government, which led to a rushed-out travel ban on seven Muslim-majority countries that’s now on hold because of successful legal challenges. This past weekend, pictures of Trump and Japanese Prime Minister Shinzo Abe openly discussing North Korea’s missile test at the president’s Mar-a-Lago club appeared on Facebook, prompting security concerns.

Though some of these corporate chiefs had built reservoirs of credibility before they confronted misdeeds within their ranks, they were ultimately held accountable by their boards and shareholders. Trump will need to resolve questions about who knew what about Flynn’s Russian relations, and when, if he is to avoid another distraction from making good on the economic promises that got him elected.

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