If the CEO Does It, Does That Make It OK?

Ethics is easy when the stakes are low, or when doing the right thing makes you look good: You find your neighbor's wallet on the sidewalk, and return it to him promptly.

It gets more difficult as the stakes go up.

The most recent case is that of Mark Hurd, who was until last Friday chief executive officer of Hewlett-Packard.

As reported by numerous news outlets (click here for Colin Barr's article for Fortune / CNN), Hurd resigned following an accusation of sexual harassment of a marketing contractor with whom he developed a personal relationship. In the course of its internal investigation, H-P determined that Hurd had not violated its sexual harassment policy, but violated its "standards of business conduct" policy, having repeatedly filed inaccurate expense reports in amounts ranging from $1,000 to $20,000, apparently in an effort to keep the relationship secret (Hurd is married).

Hurd reportedly first offered to repay the improperly expensed items, but the board insisted that he step down.

In the words of CNET's Erica Ogg, "Hurd's resignation marks a stunning end to what had been by most accounts a wildly successful five years at the helm of what is now the largest computer company in the world, measured by total revenues." H-P share prices dropped nearly 10% in late trading on news of Hurd's departure.

In an email to the New York Times, which was first reported by UK-based theregister.co, Oracle's chief executive officer Larry Ellison blasted the H-P decision as "the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago."

"In losing Mark Hurd, the H.P. board failed to act in the best interest of H.P.’s employees, shareholders, customers and partners," Mr. Ellison wrote. "The H.P. board admits that it fully investigated the sexual harassment claims against Mark and found them to be utterly false."

Well, maybe, Mr. Ellison. But what about those pesky "inaccuracies" in expense reporting? Such behavior is generally considered to be a for-cause firing offense. Or is it only a firing offense if you're a junior-level employee? Doesn't this remind you of President Nixon's remark to David Frost that if the president does it, it's not illegal?

Not to mention that a junior-level employee with falsified expense reports wouldn't receive a nice little severance payment of more than $12 million....