Monday 30 June 2014

My Unexpected Adventure With Dov Charney

While an American Apparel employee, I spoke out publicly against the company’s ethics and employment practices. Then I got a call from Charney.



Bloomberg / Via Bloomberg


American Apparel CEO Dov Charney was slapping himself in the face. After every third or fourth slap, he fixed his eyes on mine, pointed his finger at me, and yelled, "This is what you did to me!" This was the first time Charney and I had met.


In 2009, during my sophomore year in college, I got a job at an American Apparel store in Chicago. That year Charney was a finalist for Time's "Most Influential People in the World." American Apparel had received accolades for being one of few clothing manufacturers that held decent labor standards in an infamously abusive industry. Through the business, Charney had also supported progressive causes like immigration reform, environmentalism, and gay rights.


At the same time, the company had more than its share of critics. Many took issue with Charney's hypersexualized advertising, earning him a reputation as a chauvinist. Countless stories of his exhibitionism and inappropriate sexual conduct with employees abounded, and there was a long history of lawsuits against Charney himself and the company for sexual harassment and abuse.


When I was hired, Charney was under fire for his new store policies. It was well-known that before hiring any employee, managers had to send photos of job applicants to the L.A. headquarters for approval, but the company was taking this further. An employee tipster told Gawker about the "class photo," when headquarters demanded a photo of all staff on duty within five minutes. The employee claimed that executives pressured managers to fire their employees based on the class photo, calling it an effort to weed out "uglies." Charney said they were judging fashion sense, but critics, including many employees, said it amounted to "beauty profiling."


I was one of those employees. Hearing stories of abrupt firings and complaints from female employees who felt unfairly targeted, I spoke out online. I harshly denounced the company's policies on an internal forum meant for work discussion. I also went public with my critique in the comments section of a Gothamist post. Identifying myself as an employee, I wrote that the post "doesn't even grasp the magnitude of the company's dehumanizing policies and actions" and that "I have serious issues with the company's ethics — especially when you compare them to the way the company tries to present itself as 'progressive' and 'ethical.'"


The comment Timm left on the Gothamist post:


The comment Timm left on the Gothamist post:


Gothamist / Via gothamist.com


While folding clothes in the stockroom back at work the next day, I received a phone call.


"Hi, Jonathan, it's Dov."


He was calling, he said, because he saw what I had written online. He accused me of damaging the company. Yelling into the phone, he said that he was tightening the dress code only because he saw employees who weren't representing his brand well. It was about style, he said, not looks, and he hadn't fired anyone based on photos. I'm as good as gone, I thought, so I might as well speak my piece. I said I didn't believe him, and I saw it as part of a pattern of unfair policies that created an uncomfortable working environment, especially for women.


Our conversation lasted more than an hour, with Charney ending it by saying that although he respected my boldness, I had him wrong. "You think I'm some corporate fat cat, but I'm over here eating out of a can, OK?" he quipped. "I'm just trying to run a good company." If I saw for myself how he worked, he said more than once, I would understand.


"I'll tell you what, I'm going to fly you to the factory. I'll pay for your flight. I'll pay for your hotel," said Charney, giving me his phone number in the process. "Just do one thing for me, and take down that comment."


My idealism was no match for the intrigue. I hadn't changed my mind about his policies, but I had been dazzled. While it was easy to paint Charney as a soulless profiteer from behind a computer screen, it was much harder to do so with him on the other end of the phone. His excitement is contagious. Even when he says ridiculous things, you can see that he believes them, and you almost want to believe them too. He talks a mile a minute, pausing only after making a bold statement and punctuating it with an expansive hand gesture and a big smile.


Charney persuaded me that his request to take down my Gothamist comment was fair, but since that was out of my control, I did the next best thing: I went online and backpedaled hard. "I'd like to take back what I said and I am going to do more research to obtain accurate information about this issue," I wrote, "suspending my judgment for now."


Late one night a few weeks after our initial conversation, Charney called me again and, without even saying hello, asked, "Can you get on a plane tomorrow morning?"




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Sony, Community's producer, shopped the cult comedy actively, but found no buyers on cable or at Netflix or Hulu. With the hold on the show's cast expiring today, June 30, Yahoo swooped in. According to Vulture's Josef Adalian, talks with Hulu fell apart over the show's budget, but cash-rich Yahoo made it work.


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Charles Platiau / Reuters / Reuters


BNP Paribas, the largest bank in France, has pled guilty in New York state court to falsifying businesses records and conspiracy, bringing an end to an investigation of the bank's transferring money for Sudan and other countries sanctioned by the U.S. This is the second criminal charge that a large bank, albeit foreign, has pled guilty to this year, part of prosecutors' efforts to show that financial institutions are not "too big to jail."


The total penalty is $9 billion paid to U.S. authorities.


Attorney General Eric Holder said today in a press conference that BNP Paribas was "conspiring with other entities to deliberately and repeatedly violate longstanding U.S. sanctions against Sudan, Cuba, and Iran."


Holder said that BNP had helped transfer more than $500 million for an Iranian energy company, over $1.7 billion in transactions in Cuba, and "many billions" for Sudan while it was under U.S. sanctions for human rights violations. U.S Attorney Preet Bharara, whose Southern District U.S. Attorney Office helped investigate BNP, described the bank's actions as a "tour de fraud." The Justice Department said that BNP was helping sanctioned countries and companies transact in U.S. dollars from from 2004 to 2012.


BNP Paribas "acted as a de facto central bank for the government of Sudan," Deputy Attorney General James Cole said in a press conference. The New York State Department of Financial Services said that BNP Paribas ultimately helped conceal $190 billion worth of transactions, and the Justice Department said the $8.83 billion reflected what was "probably" criminal.


DFS said that BNP would have to suspend its dollar clearing — processing international transactions in dollars through New York — for a year starting in the beginning of 2015. An independent monitor will be appointed to oversee the implementation of the penalties, DFS said.


The months of negotiations over the guilty plea have dragged on BNP's stock price, which has fallen 12% this year to just over €49. Large banks across Europe have been nursing losses from the financial crisis and are still mired in investigations for interest rate and currency market manipulation — Credit Suisse in June estimated that the European banking sector was facing just over $100 billion in litigation costs, nearly doubling a February estimate of $58 billion.


Analysts at Nomura said in a note today before the announcement that a temporary ban on dollar clearing, while hard to game-out precisely, would at worst lead to a "low-mid single digit" percentage point impact on the bank's earnings. While the fine BNP is paying is well above what other European banks have faced, it is also significantly better capitalized than its European peers like UBS, Barclays, or HSBC who have also reached large settlements with U.S. regulators. BNP is €10 billion above its regulatory capital minimum before paying the penalty.


The Justice Department's investigation and push for a large fine raised the ire of several high franking French officials, including the French president Francois Hollande who wrote a letter to President Obama pleading that any penalty for BNP not be "unfair and disproportionate."


$2.24 billion of the nearly $9 billion penalty will be paid to the New York State Department of Financial Services. DFS also said that 13 BNP employees will leave the bank, including its chief operating officer George Chodron de Courcel. BNP said earlier this month that Chodron de Courcel would leave by the end of the month.


The DFS head, Ben Lawsky, has made extracting huge fines, departure of executives, and monitor-enforced changes of behavior for foreign banks with New York charters a hallmark of his just more than three year tenure at the head of the newly-created financial regulatory agency. While a deal was reached specifically to allow BNP Paribas to plead guilty without endangering its existence in the United States, Lawsky was still able to win additional penalties.


"As a civil regulator, we are taking action today not only to penalize the bank, but also expose and sanction individual BNP employees for wrongdoing," Lawsky said in a statement. "In order to deter future offenses, it is important to remember that banks do not commit misconduct – bankers do."



Mike Segar / Reuters




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