Behavior Economy Politics

Americanas: a string of disloyalties

Americanas: a string of disloyalties



News brought by the CPI of the Americanas stores imbroglio states that the current president of the company has publicly admitted the existence of accounting fraud and that the estimated R$ 25 billion loss was deliberately hidden in the financial statements over several years. They also claim that the former directors are solely responsible for the accounting fraud and that they hid the information from the company's board of directors. In the market, the version of misalignment of information between management and the board of directors sounds strange, as it is commented that the controlling shareholders have always been very active and that not rarely they were directly involved in the hiring of the most senior executives from whom absolute loyalty was required. With the feeling of betrayal, a counter-attack by the former directors is now expected to generate a bloody battle as to the culpability of the fraud.

The scandal started with a public accusation made by a former president of the company, after only 10 days in office, which caught everyone by surprise. To this day it is questioned whether this surprise denunciation was made in self-interest, therefore in disloyalty to the company, and that it led the company to the brink of bankruptcy and thousands of people to unemployment.

The focal point of the legal discussion points to the analysis of the accountability of the conducts, but from a philosophical point of view, loyalty will be under debate. In this case, it is worth analyzing the whole chain of breach of loyalty involved in the episode. The Board of Directors seems to have acted disloyally to the Executive Board which, in turn, seems to have acted disloyally to the market. The whistleblowing ex-president, on the other hand, seems to have acted disloyally to the company, and the auditing companies, well, they were incompetent. Therefore, some questions arise. Is loyalty a virtue? Are there limits to loyalty? To whom should one be loyal?

In general, it is considered a virtue. For Josiah Royce, an American philosopher, author of "the Philosophy of Loyalty," published in 1908, loyalty is the primary virtue, "the center of all virtues and the central duty of all duties. He presents loyalty as the basic moral principle, from which all others are derived. But we often find ourselves facing crossroads that conflict to whom one should be loyal. It is both an ethical and a moral concept. In much more complex societies like today's, our webs of relationships are more extensive. We are taught to be loyal to family, but also to friends, to a company, to society, to a cause, and most importantly to Flamengo. It is common, therefore, for these interests to clash.

The loyal one expects to receive only his own loyalty in return

Loyalty is a two-way street. Nothing is expected in return except one's own reverse loyalty. It is the formula on which trust is established in any relationship: personal, professional, and social. It is the ability to consider others unselfishly and to stand by them in good times and bad. It is not to be confused with faithfulness, which goes back to an obligation, while loyalty is associated with a connection to the values of each individual. Thus, not all believers are loyal, as they may be following what they consider an obligation and not following their individual values. Therefore, more than being loyal to others, one is loyal to oneself, to one's values and principles. This is why the breaking of loyalty causes so much suffering. When one devotes a life to a person, a family, or a company, with demonstrations of loyalty and sacrifice, and this loyalty is not reciprocated in the most acute moments, the disappointment is deep, with irremediable scars.

This brings us to the terrain of motivations and personhood. In the field of people, that is, to whom one should be loyal, the matter falls into two categories: being loyal to an abstract entity, such as companies, or a cause; and being loyal to people, or a group of people, such as friends or family. In the case of abstract entities, being loyal will not make the company, or the cause, loyal to you. On the contrary, legal entities are motivated to do what interests them at that specific moment and demand concrete actions of loyalty from their executives, even if this leads to personal sacrifices of great family, social and reputational impact. If you are an excellent professional, with exclusive dedication for long periods, it doesn't mean that your job is guaranteed if there is a desire for your position. The executive of a company who denounces its accounting crimes, even with good intentions, will never be seen as loyal to the company. To abstract entities, the concept that predominates is more linked to loyalty, since the relationship is established in reciprocal contractual obligations. It doesn't matter what the internal policies, principles and regulations of the companies say, or even the cliché that people make companies. In mass capitalism companies are loyal to profit and to the desires of their controllers. So when being loyal to a company, make sure you are prepared for the betrayal it will eventually impose on you.

In personal relationships, on the other hand, there is no rule for resolving conflicts. These are managed by the intrinsic values of each person. If the family relationship is solid, one tends to have a natural loyalty to all its members. If the friendships are true, with common values, loyalty will naturally flourish, but if the relationships are based on interests, loyalty will be limping. Therefore, in the eventual choice between whom to be loyal to, the personal relationship to the abstract entity predominates. Choosing to be loyal to a company at the expense of one's family is unnatural.

It then remains to address the motivation for loyalty. Here we enter a more objective and complex area. The criminal disloyal to the gang is always considered disloyal because he acts in his own interest and not for a moral purpose. But the executive who betrays the company, aiming at a noble cause such as the denunciation of environmental crimes, tends to be accepted by society - not by the company denounced - given the altruistic purpose of his conduct.

The popular saying goes that loyalty is priceless. In fact, it is similar to respect, since it is not possible to buy it, only to earn it. But there is a price for loyalty. It will cost you relationships, friendships, or professional promotion, because you can't be loyal to everything and everyone at the same time. The limit of loyalty is tied to the nobility of your motivation.

About Author

Maurício Ferro

What do soccer, wine, law, politics, and economics have in common? Much more than you can imagine. And contrary to what the popular saying says, they can and should be debated and analyzed, yes. Welcome to Maurício Ferro's site, a channel to create and exchange thoughts and opinions. Maurício Ferro is a lawyer, graduated from PUC university in Rio de Janeiro, with a Master's degree and specializations from universities such as the London School and the University of London. He studied OPM at Harvard Business School. Author of published works in the commercial and capital markets areas, and acting in the Board of Directors of large companies, he based his legal and executive career with a focus on Business Law. But his passion goes beyond the corporate world. A passionate Flamenguista, Mauricio knows the ins and outs of the professional world of soccer and other sports. He is a partner in innovative companies such as 2Blive, a global startup focused on technological solutions to fill the education gap, especially in areas of great need such as Africa. He also invests in the Flow Kana company, based in California, and focused on the scientific production of cannabis for various purposes, such as medicinal, clothing production, or recreational use. To all these ingredients, add a deep knowledge of wine and the delicious ways of winemaking. That is the recipe for what you will find here.


  • Mauricio,
    Your article about this nebulous situation in which Americanas finds itself is very good.
    A new director of a company the size of Americanas, who in 10 days discovers the existence of fraud, was put in charge as a scapegoat? It is simply bizarre. Are there no monthly meetings to control balance sheets? How did the trio of owners let the situation get to this point?
    Overconfidence in the Loyalty of their board, a board that has betrayed the dome for years. And there they mix and complete each other, Loyalty and Faithfulness. In my opinion, it is a plot where many are involved with the God Money.
    I just don't agree with you when you say that "you can't be loyal to everything and everyone at the same time". I think it is a question of posture and principles.

  • Quite interesting this article! Makes you think... Many angles...

  • Congratulations on the article!

  • Very enlightening!

Leave a Reply

Your e-mail address will not be published. Required fields are marked with *