Michael Riley: Integrity? Whatever…

Tuesday, September 30, 2014

Michael G. Riley, GoLocalProv MINDSETTER™

Seth Magaziner

In a 1999 speech before top performing high school seniors, Warren Buffett discussed the three characteristics that Berkshire Hathaway looks for when hiring. They are personal integrity, energy and intelligence. He further explains that integrity is considered the most important criteria. There are many smart and energetic young people but that only goes so far and in fact those characteristics become a questionable value without integrity.

Buffett tells the students that their next few years are important to their development and they can choose their course and habits by emulating those with integrity. They can’t really choose their intelligence or effectively manufacture a new level of energy quite so easily, but integrity is acquired and is about choice. It speaks to what a person values and admires. Students should choose someone they admire and strive to emulate what they like about that person. For many students’ lives, it’s about getting by with the least amount of effort. Too often shortcuts are taken and ethical boundaries stretched. Anyone can cut corners, evade responsibility, stick their head in the sand or make excuses and still get by and maybe even succeed for a while. Those choices become habits and develop early in life and are very hard to change. Buffett recommends a young person choose to work hard, put in extra time and effort to do the best job he can do, be open and honest, and unafraid to attack and address what is most important, look for the best outcomes and be unselfish regardless of your career. Those habits can last a lifetime.

When I look at the candidates for Attorney General and Rhode Island Treasurer, I see very clear choices based on Buffett’s model. In the Treasurers race, young charismatic Seth Magaziner is so eager to enter a life of politics and so entrenched in a political mindset that he says things like “I will be a Democrat for life” or “I have the best track record managing money of anyone in this race, bar none.” Never mind the fact he has never managed money and only became an “analyst” two years ago, after teaching kindergarten. This 30-year-old is actually wise beyond his years, having grown up in a political world not particularly well known for its honesty and integrity. Seth formed some bad habits. Seth has tons of energy and is smart but his bravado and naivety has already showed him willing to fabricate his resume. Rather than own up to it, Seth has been silent and compromised his own firm’s integrity with the CFA Institute. I guess he thinks it’s all worth it and it’s easier to whitewash and double talk than own up to his transgressions. Needless to say, this is not a great sign for State Treasurer; but that’s not how we decide things in Rhode Island. Seth has a big political future in mind, well beyond being elected Treasurer of Rhode Island. Who knows what he’ll do after he defeats Almonte? Lets just hope we survive.

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Ernest Almonte, on the other hand, is an enigma. Who could have a better claim on the job of Treasurer in the midst of pension turmoil at both the state and municipal level? He seems the picture of integrity having received numerous awards and accolades in the accounting profession: twelve years as Auditor General in Rhode Island, including several published reports warning of exactly what Rhode Island Municipalities face right now. He is former United States President of AICPA and Chairman of the US Department of Defense Audit Committee. Ernie is a great family man and universally known as a wonderful guy. It is nearly impossible to have a better resume for State Treasurer of any state, not just Rhode Island. So why was he a distant third in the Democratic primary?

It’s politics. He’s his own man, doing what he thinks is right, unwilling to be bought and paid for by special interests. Rhode Island might like him in 50 years or so, but not now. The special interests and Democrats need much more insider loyalty and money and Clinton-like connections. They need to “know a guy” and be able to influence and control him; otherwise he’s useless. They can’t do that with Almonte. That’s why Chafee never ran as a Democrat; he’s loyal only to his wife and the humanist cause, not to anyone else. Not that he’s above being bought, it’s just that Chafee is a forgetful man with no moral compass at all and might forget who he owes.

It’s frustrating for someone like me who has read the former Auditor General Almonte's reports, and had deep accounting discussions with him. I have voiced my concerns with him; the biggest being that for such a smart, experienced, honest giant of a man who sees “great economic danger, dead ahead” his message of urgency just doesn’t come across. Where is the fight in this 6-foot-4 martial arts expert? If my opponent had outright lied to my face and the people of Rhode Island like Seth Magaziner has done, I would have been livid and telling everyone just how dangerous Seth's naivety and dishonesty is, given Rhode Island’s perilous financial circumstance. So Ernie has integrity and Seth has energy, but there is zero spark in this race and unless Almonte attacks, Seth will probably win big time.

The Attorney Generals race is also one where the challenger, Dawson Hodgson, clearly has integrity and smarts but doesn’t seem to have the energy it takes to bring down a key insider in Rhode Island’s corrupt political circle. Attorney General Kilmartin is neck deep in everything surrounding 38 Studios. The entire state knows this. He’s so conflicted he can’t even comment on anything related. He has literally done nothing to better the corrupt climate surrounding the State House and no one cares. People in the state can’t even bring cases to him for fear of reprisal or he will bury the case. We do not have an Attorney General who we can trust. Dawson Hodgson has been talking about this condition well before he ran for AG. This state is an embarrassment and every moment that goes by in silence is another black mark on our legal system where cases and crimes disappear like smoke from a firecracker. The motto above the AG office should be “just wait a while, they will all forget about it.” Unfortunately the motto is accurate because it is “knowing a guy” that creates delays and unpunished criminal behavior. To end this cycle, Rhode Island needs an AG who isn’t tied in and hasn’t sold out. We need one unafraid to dig in and root out “public corruption” that is running rampant in this state.

We need an AG who learned to do the right thing at a young age. As Warren Buffett said: “someone who has integrity, energy and intelligence.”

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Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC news, Yahoo TV, and CNBC.

Related Slideshow: RI Treasurer Candidates: Tale of the Tape

Below are GoLocalProv MINDSETTER™ Michael Riley's notes comparing and contrasting Ernie Almonte, Frank Caprio, and Seh Magaziner, candidates for State Treasurer.