Sorry, not sorry: Why some corporations can't apologize

HONG KONG (CNNMoney)

Confronted with their sins, businesses too often apologize only for having upset the public or their customers, not for the mishap itself. Or they lard up their apologies with obfuscation.

When that happens, executives are doing more harm than good. Experts say apologies that lack real regret or responsibility only serve to sew more distrust between businesses and the public.

Examples are everywhere: Facebook (FB, Tech30) COO Sheryl Sandberg issued a classic non-apology after the social media giant performed psychological experiments on users without their express consent.

"It was poorly communicated," Sandberg said. "And for that communication we apologize. We never meant to upset you."

A close reading suggests Sandberg was not sorry for conducting the experiment -- only poor communication. (In reality, the experiment was not communicated at all, and upsetting some users was the entire point of the research.)

A more recent flawed apology came courtesy of Uber CEO Travis Kalanick after a deputy suggested the company dig up dirt on journalists. Kalanick took 14 tweets to get to a sort-of apology -- and even then, he earned low marks for sincerity.

Chip Wilson, the founder of Lululemon (LULU), apologized to employees for suggesting some women were too fat for the company's pants -- but he forgot his customers.

Former BP CEO Tony Hayward had barely finished expressing remorse for the Gulf oil spill when he dropped his guard: "I'd like my life back," he said.

Plenty of corporations do a fine job of apologizing (Tim Cook on Apple Maps and Mary Barra on the GM (GM) recall come to mind). But why do many others struggle to get it right?

Experts say different interpretations of what an apology implies about culpability is partly to blame.

In Japan, for example, corporate apologies often include the CEO performing a deep, sustained bow before ranks of photographers. The accompanying apology is typically remorseful and direct.

Yet the Japanese public is unlikely to see this as the CEO taking personal responsibility for wrongdoing. Experts say the message is closer to: "It is unfortunate that this happened."

"Americans see an apology as an admission of wrongdoing, whereas Japanese see it as an expression of eagerness to repair a damaged relationship, with no culpability necessarily implied," wrote a team of senior researchers in the Harvard Business Review.

Related: Japan needs more women at work

Western audiences are more likely to focus on whether an apology is being made on behalf of an individual, or an institution, according to Barbara Kellerman of the Harvard Kennedy School.

Individuals who pass the buck may be slated in public, while companies escape similar censure, Kellerman has written.

And that may explain why many American executives find it hard to apologize properly -- they don't feel personally responsible, and the public is more likely to give a corporation a pass.

Even if responsibility lies elsewhere, they would benefit from mastering the art.

Take medicine. Physicians in the U.S. have long been advised never to apologize for mistakes, for fear of costly malpractice lawsuits.

Yet since some states enacted "Apology Laws" that provide legal cover for expressions of remorse, physicians have been more open to saying "I'm sorry." Research suggests that both the number of lawsuits and monetary payouts have declined as a result.

Why? Victims just wanted to be acknowledged. Corporations, take note.

First Published: December 9, 2014: 9:45 PM ET

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KFC just can't give up on China

HONG KONG (CNNMoney)

Parent company Yum! Brands has been hit in recent years by major food safety scandals that damaged its brands' reputations, including one this July that involved a tainted meat supplier.

Yum even said on Wednesday its China same-store sales this year will be in the red, as its brands were "significantly impacted by adverse publicity." Shares of the stock plummeted in after-market trading in New York.

Related: KFC's China sales plunge on tainted food scare

But despite scandals and poor sales, the company has shown no signs of slowing down its China investments, and continues to open new stores. Yum already has 6,400 restaurants in almost 1,000 Chinese cities, and plans to open another 700 new stores next year.

China is "the best restaurant opportunity of the 21st century with a consuming class that is expected to double from 300 million to more than 600 million people by 2020," according to the company website. "We continue to invest behind the development of our emerging brands in China."

Related: The crazy flavor experiments in Chinese fast food

It's no surprise Yum sees China as an important market -- the company generates more than 40% of its overall operating profits and more than half of its total sales from its KFC and Pizza Hut restaurants in China.

The company even acquired a local chain -- hot pot cuisine -- called Little Sheep in 2012. And its restaurants also make efforts to appeal to local tastes by putting traditional Chinese dishes on the menu.

Related: KFC parent cuts profit expectations in half

First Published: December 9, 2014: 10:41 PM ET

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Toddler vs. Apple iPad Air 2: Stress Test

NEW YORK (CNNMoney)

Well, not exactly.

CNNMoney gave two nursery school classmates a brand new iPad Air 2 and let them loose in our studios for a (very) non-scientific stress test.

Good news for iPad owners: You can literally throw the device from the top of a 12-foot staircase and see it survive. (A note: CNN's newsrooms have a thin layer of carpeting, but the iPad endured nearly a dozen such plunges.)

We mistakenly thought that when the toddlers grew tired, we'd see how well the tablet withstood a full-blown tantrum. Many parents use Apple (AAPL, Tech30) iPads for educational games and general preschooler entertainment, so this seemed like a potential real-world scenario.

Related: Samsung's Galaxy Note Edge is the latest WTF phone

Turns out, getting them to drop the tablet a mere two or three feet required undoing years of parenting: They knew it was wrong.

Even when being encouraged to mimic the actions of elders dropping the iPad, they stopped short of actually letting it fall.

Eventually, after a fair bit of encouragement from our production crew, they started to explore the limits of the device. How might Siri react if held down for minutes at a time? How does the LCD display do under the sole of a Spiderman Stride Rite? And most perilously, how does the anodized aluminum case do when dropped many, many times?

The answer: very well.

Related: The best gifts to get for the holidays

Standing on the anchor desk on CNN's newsroom set, testers Sofia and Tzuri tossed the iPad roughly six feet on to a wood floor. They repeated this exercise fourteen times, at least six of them resulting in a glass-first fall. The screen remained pristine -- not even a scratch.

Upping the ante, we brought them on the staircase in our main newsroom.

They nudged the iPad Air over the railing or threw it off the edge nine different times.

Apart from a small dent on one its beveled edges, the device remained unscathed.

First Published: December 9, 2014: 10:54 PM ET

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UVA article is a miss in a long history of hits for Rolling Stone

Mistakes involving the University of Virginia rape story is a stain on Rolling Stone's long rich journalism history.

NEW YORK (CNNMoney)

Media critics and news organizations have identified discrepancies with the 9,000-word article about an alleged gang rape at the University of Virginia. The victim, Jackie, described the rape in detail, and Rolling Stone agreed not to contact the alleged rapists.

On Friday the magazine acknowledged "doubts about her narrative," said "we were mistaken in honoring Jackie's request to not contact the alleged assaulters to get their account," and apologized.

Amid an internal review, there is speculation that some staffers may lose their jobs.

The missteps in this case were all the more glaring because the pioneering magazine has had so many hits.

Some non-readers think it's just about music and pop culture. But since its first issue in 1967, Rolling Stone has published in-depth and in many cases award-winning journalism on subjects ranging from the CIA and the media to American fast food consumption to the post-9/11 U.S. military.

Its pages have featured famed bylines like P.J. O'Rourke and Hunter S. Thompson and given a home to muckraking reporting.

The magazine earned the American Society of Magazine Editors' award for general excellence in both 1998 and 2007.

In 1986, the magazine picked up one of the society's reporting awards for David Black's "The Plague Years," a two-part story on the emerging AIDS epidemic.

The magazine also won reporting awards in 1998, 2004, and 2006.

In recent years, writer Matt Taibbi has received widespread attention for his penetrating critiques of Wall Street, the global banking system and government. To some, these caustic pieces have been misses, but to many others, they have been hits.

Taibbi's "The Great American Bubble," for instance, sent shock waves through Wall Street for Taibbi's vivid description of the investment bank Goldman Sachs as a "great vampire squid wrapped around the face of humanity."

Related: Rolling Stone apologizes for rape article: What now?

Not long after, Michael Hastings' bombshell profile of U.S. Army General Stanley McChrystal -- "The Runaway General" -- ultimately led to the resignation of McChrystal, who was then the commander of allied forces in Afghanistan.

In the story, the general made critical comments about Vice President Biden and the Obama administration. Hastings' use of potentially "off the record" quotes was debated by some, but there was no debating the story's impact.

Now with the University of Virginia article, Rolling Stone finds itself dealing with another controversy -- seemingly of its own making.

Taibbi, who recently returned to Rolling Stone, wrote on Twitter on Saturday that "like everyone else at the magazine, I'm both mortified and sorry -- for the public, for anyone affected, and for the source herself."

He said that the missteps associated with the article "did not involve the fact-checking department."

"It usually takes longer to fact-check a Rolling Stone feature than it does to write it," Taibbi tweeted.

On Monday, a Rolling Stone spokeswoman said that the magazine's investigation into the "Rape on Campus" story was continuing and had no further comment.

Margaret Sullivan, the public editor for The New York Times, wrote in a Monday blog post that "Rolling Stone has published important work for many years."

She recommended "self-examination and transparency," following the lead of other news outlets, like The Times, that have recovered from journalistic lapses.

Sullivan wrote, "I hope that the magazine will thoroughly investigate what happened, publish that investigation and tell its readers how, precisely, editors will make sure it never happens again."

Related: Advocates say Rolling Stone controversy a distraction from rape problem

First Published: December 8, 2014: 6:21 PM ET

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The 3% down payment mortgage makes a comeback

NEW YORK (CNNMoney)

But borrowers will still need to meet strict criteria first, the two government-backed mortgage giants said.

The new loans will only be doled out to those who buy private mortgage insurance, have a credit score of at least 620 and offer complete documentation of their income, assets and job status. And, to further mitigate risk, the agencies will require borrowers to receive home ownership counseling.

Both programs are for fixed-rate loans given to first time homebuyers and those seeking to refinance. Fannie will start backing the loans as soon as December 13, while Freddie will start offering them March 23.

Related: 10 hottest housing markets for 2015

The move should expand access to credit for first-time homebuyers, typically younger buyers who have not have had enough time to save a big lump sum.

Fannie and Freddie already back mortgages with as low as 5% down. And the Federal Housing Administration insures 3.5% loans.

Still, according to Mark Palim, who directs economic and strategic research at Fannie Mae, it's a welcome expansion of credit.

"It's not a radical departure from what we're doing now, but anything at the margins helps," he said.

The 3% loans from Fannie and Freddie should also offer some advantages over the 3.5% down loans offered by FHA, according to Palim.

For example, the FHA loans require borrowers to pay for private mortgage insurance premiums for the entire term of the mortgage -- typically 30 years. That means adding an extra 1.35 percentage points to monthly mortgage rates. A loan carrying a 4% rate, for example, becomes a 5.35% mortgage.

Related Best cities for Millennial home buyers

In dollars, that's about an extra $80 a month for every $100,000 borrowed or $960 a year. That adds up to nearly $30,000 over the life of the loan.

Under Fannie and Freddie's programs, borrowers are permitted to cancel their private mortgage insurance premiums once the mortgage balance drops below 80% of the home's value -- either because they've made enough payments or the home's value has risen.

If home prices increase 5% a year for three or four years, for example, these borrowers may be able to cancel their insurance and save them tens of thousands of dollars over the next 26 or 27 years.

First Published: December 8, 2014: 6:15 PM ET

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Message to Sony: Don't show 'movie of terrorism'

NEW YORK (CNNMoney)

The message appeared Monday on the code-sharing community website Github. It claims to be from Guardians of Peace, a.k.a. GOP, the same hackers that attacked Sony Pictures two weeks ago. It's a group that, until recently, the world has never seen before.

"We have already given our clear demand to the management team of SONY, however, they have refused to accept," the message reads. "Do carry out our demand if you want to escape us. And, Stop immediately showing the movie of terrorism which can break the regional peace and cause the War!"

Presumably, it relates to the Hollywood studio's upcoming release of "The Interview," a comedy about a plot to kill North Korean leader Kim Jong-Un.

CNNMoney cannot verify the authenticity of the message.

The note boasts the FBI won't be able to find them, because, "We are perfect as much."

Notably, it says hackers claim no responsibility for an email threat sent to Sony employees last week, warning that "your family will be in danger."

So far, they've taken credit for breaking into Sony Pictures and destroying information on employee computers.

There's increasing evidence that North Korea is behind a massive hack that stole Sony Pictures movie scripts, entire films, internal memos and personal information on movie stars and studio employees.

A week ago, Sony executives called this "a terrorist attack." The company declined to comment Monday evening.

Related: Are you safe? CNNMoney's cybersecurity magazine

First Published: December 8, 2014: 6:52 PM ET

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Nobody escapes U.S. taxes - even astronauts

Astronauts still have to file their taxes on April 15 every year -- even if they're floating in outer space.

HONG KONG (CNNMoney)

Yes, that's right. Astronauts are on the hook to file taxes by April 15, even if they're orbiting hundreds of miles above Earth on a long-term mission.

The IRS -- the much-feared enforcer of the U.S. tax code -- makes no exceptions. Experts say astronauts don't get special treatment, no matter how far away they are from the planet.

NASA astronaut Leroy Chiao -- commander of the tenth expedition to the International Space Station -- was in orbit when tax day rolled around in 2005. Chiao had no choice but to manage his taxes from space.

But how exactly did that happen?

"Get someone to help you out on the ground," Chiao said. The mission commander's sister is an accountant, and she was able to file papers on his behalf to extend his tax return deadline.

"He certainly had a good, valid reason [for the extension]," said his sister, Judy Chiao Smith.

Related: This job has the world's worst tax return

After eight months living on the International Space Station, Chiao returned to earth on April 24, 2005 -- just nine days after tax day -- and got busy working on his tax return.

Since astronauts are routinely gone for months, "you do have to anticipate everything," Chiao said. The astronaut ticked off a laundry list of events to prepare for: voting, birthdays, anniversaries and even Christmas.

Taxes are no exception. Astronauts need to "make sure their mail is getting redirected, so the [tax forms] and other information from the government actually goes somewhere, and isn't held at the post office," Chiao Smith said. "If you're up there in space, you can't get ahold of the data."

Another strategy is for astronauts to file taxes early, said NASA spokeswoman Nicole Cloutier. Some astronauts "file an extension pre-flight, or their spouse handles filing the taxes," she said.

Taxes have long stressed out astronauts -- Jack Swigert, a last-minute addition to the Apollo 13 crew, even radioed Houston's mission control center for tax help while the mission was underway.

"Hey, listen, it ain't too funny; things kind of happened real fast down there, and I do need an extension," Swigert said, according to NASA transcripts. "I didn't get mine filed, and this is serious."

With laughter in the background, mission control promised to help Swigert.

For accountants that work on astronaut taxes, the physical location of their clients raises some interesting -- or perhaps bizarre -- questions.

Americans living abroad can claim an exemption on income earned in a foreign country, for example. Could an astronaut also claim the exemption?

Related: For $90, you can bury stuff on the moon

Experts say astronauts working in outer space probably wouldn't qualify. That's because government workers aren't typically eligible, and the IRS doesn't consider international airspace or waters to be a foreign country, said Vincenzo Villamena, an accountant who specializes in expat taxes.

"Even if the astronaut was stationed on board the International Space Station, it would be considered an offshore shop or offshore installation [subject to U.S. taxation]," he said.

But does the IRS definition of "international airspace" extend to altitudes beyond the Earth's atmosphere? The tax code is silent on the issue, and the IRS did not respond to request for comment.

"It'd be an interesting argument to make, because technically, you are out of the country," Chiao Smith said.

Read next: Why NASA is turning to Elon Musk

First Published: December 7, 2014: 9:09 PM ET

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