July 2007 Archive

New York State politics is in uproar once again. This time it is Governor Spitzer who is on the hot seat. Two of his close staff members are accused of using State resources (taxpayer’s money) to investigate and then defame Council member and former rival to the Governor, Joseph Bruno. It was reported by a leak to the press that Bruno might have used the State airplane inappropriately. The Attorney’s General Office investigated the matter and concluded that Bruno’s use of the State aircraft was legal.

Eliot Spitzer reacted properly to this scandal when he said: "As Governor, I am accountable for what goes on in the Executive branch and I accepted responsibility for the actions of my office."

He also took action and suspended indefinitely his communication director, Darren Dopp and assigned William Howard, the liaison to the State Police to a job not connected with the Governor’s office. (If Richard Nixon had reacted in the same way, he would not have had to resign!)

The Governor claims that he was not aware of the actions of his associates. Some question whether this is true, such as Henry J. Stern, former City Councilman and Park Commissioner, in his weekly StarQuest blog. The "Watergate" question: "What did you know and when did you know it" will have to be answered.

Eliot Spitzer may do so if and when he appears before the State Ethics Committee.

The Governor was a strong defender of ethics and corporate governance when he was Attorney General and promised, when he became Governor, that ethics would be high on his agenda and that his objective would be to make the government "ethical and wise"
This incident proved to be neither. However, we are all fallible and should be very careful, particularly if in position of authority and responsibility not to stray from the right course.

The saddening aspect of this story is that it may provoke a public reaction of cynicism. "What do you expect, this is politics, and politics is dirty" one might be tempted to say.

That is a dangerous reaction. Cynicism destroys idealism and society needs ideals and hope. We can change for the better, we can make progress and as a nation we have.

Dinesh D’Souza once said "America is the greatest, freest and most decent society in existence. It is an oasis of goodness in a desert of cynicism and barbarism. This country, once an experiment unique in the world, is now the last best hope for the world."

We have to continue to believe this is true and when it is not, do what we can to make it so.

A fad is a phenomenon that becomes popular for a very short time while a trend is a long- term movement in a particular direction. I believe the concern about corporate ethics is a definite trend and not a fad. Below are some indications that confirms the growing trend of concern about corporate ethics:

- 57 of the Fortune 100 companies have an ethics officer and are members of the Ethics and Compliance Officer’s Association. The organization started a little more than 10 years ago with only 12 members. It now has over 1200 members.

- A search on Monster.com reveals that there are more than 5,000 job openings in the ethics field.

- The salary range for an ethics and compliance officer in Wall Street is between $750,000 and $1,000,000.

A recent Consumer Ethics Trend study, commissioned by the German retailer OTTO found that a new trend has developed towards individual responsibility rather that global improvement. The study showed a high level of interest in consumer ethics across all age range.

Another study conducted by The Conference Board on corporate citizenship found that 92 % of the 700 global companies that participated in the study believed that their company has a citizenship goal as part of a statement of core values or business principles.

There is definitely a new trend of increasing expectations from consumers (and the public in general) that corporations maintain high ethical standards.

In every trend, there is a business opportunity. In our role of public relations counselors we interpret or rather translate current trend into business opportunities for our clients. We are in fact trendslators. (The word is new and first appeared in this blog….today!)

The business opportunities for corporations in understanding this new trend are many.

In Ruder Finn co-CEO Kathy Bloomgarden’s book, Trust: The Secret Weapon of Effective Business Leaders, she quotes professor Donaldson from the Wharton School: "Empirical studies have demonstrated that companies with good ethical reputations attract and retain better employees, that customers and suppliers are drawn to companies with better reputations for integrity, and that employees are more loyal to their company when they have a good impression of its ethics."

President Bush commuted Scooter Libby’s sentence so that he will not have to serve time for lying to federal authorities about the Valerie Plame-CIA leak. (See the March 12, 2007 entry) The reaction to his decision was once again very controversial.

Alan Dershowitz says that pardons are part of the political process and not the judicial process. However he believes that the U.S Court of Appeals denial of Libby bail pending appeal was a political decision that judges are not allowed to make. That, according to Dershowitz justified the President’s decision.

There is no doubt that politics influence the judicial process. The best example of such influence is the Supreme Court decision that gave President Bush the presidency. Whether it was justified or not, it seems to me that members of the Court voted according their political philosophy, not on the principle of the law.

Those that were opposed to the clemency believe that the presidential decision was interference in the normal judicial process.

Presidential clemency is not new. There have been more than 27,000 acts of presidential clemency since George Washington. Franklin D. Roosevelt has the all-time record of 3, 687 pardons, while President James Garfield pardoned none!

Presidential pardons or sentence commuting is problematic because it violates fairness. If you pardon one, why not pardon all?

However, fairness also implies that the same punishment be applied to all. In this case, it is hard to believe that Scooter Libby was the only party responsible, so why should he alone suffer the consequences and further punishment. (He did loose his job and most likely his career and had to pay a heavy fine.)

Rushworth Kidder, the founder and president of the Institute of Global Ethics says that our toughest ethical dilemmas arise when we face two strong moral arguments. In this case, I think we are facing three fundamental values: justice, fairness and mercy.

When in doubt I would advocate that we err on the side of mercy. After all, we are all fallible. Who can tell if in the future, we may wish, others would exercise mercy on our behalf?

As Abraham Lincoln once said:
"I have always found that mercy bears richer fruits than strict justice."

As we celebrated the 4th of July last week, I was thinking of a story about my Grandmother, Anghel Tchividjian. She attended an all-girl American school in Turkey just before the Armenian Genocide. One day, Turkish army officers, on horseback, came to the gate of the school and demanded that it be opened. They were looking for Armenians girls to arrest and deport them. The woman director had no power to resist them but was very quick and smart. In the lobby of the school, stood a mast with the American flag. She ordered one of the staff members to bring it to her and she quickly laid it down in front of the gate. She then told the officers: "To come in, you will first have to step on the American flag, and I dare you to do so." The officers, probably trying to avoid a diplomatic incident, walked away. (This was before the U.S entered WWI.) Thus, the flag played a significant role in savings my grandmother’s life and the lives of many young Armenian girls.

I am afraid this would not happen today.

Society as a whole has lost the sense of respect, not only for our country and institutions but also for each other.

In the Jewish tradition we are told to: Let the honor of your fellow man be as precious to you as your own. (Ethics of the Fathers: Avot: Chapter 2, Mishna 10)

In our Ethics Guideline we state:

" We want to respect the individual concerns of those who work for the firm and those for whom we work, and encourage a sense of loyalty and responsibility to each other."

Respect is a fundamental value in society. We should always consider the value of respect when we try to resolve an ethical issue.

As Kant said: "Act in such a way that you always treat humanity, whether in your own person or in the person of any other, never simply as a means, but always at the same time as an end."

In 2006, there were a total of 47 new open US corruption investigations of major international companies such as Seimens, BNP Paribas, Total and Baker Hughes. That represents a 213% increase over 2005. The SEC and the Department of Justice are now more aggressively enforcing the 1977 Foreign Corrupt Practices Act (FCPA.)

The FCPA is very specific, from a legal standpoint, as to what constitutes corruption. We may be tempted to think that corruption is an issue for the elite, the corporations and big government. What about corruption at a lower level, in our everyday life?

Are there other more subtle forms of corruption that may not necessarily be illegal but that are definitely unethical?

I think there are.

The Merriam-Webster definition of corruption as "an impairment of integrity, virtue, or moral principles" clearly applies to all of us.

A recent survey found that about 20 % of respondents admitted stealing office supplies from their company and one fifth of them had no remorse. The survey also indicated that the employees that were highly paid stole more than those that earned less.

While there is a major legal difference between a felony and a misdemeanor the distinction is not as definite in ethical or moral terms. While stealing a million dollars is a felony and stealing 50 cents is petty theft, the ethical principles are the same; only the dollar amount is different.

None of us are innocent of doing something others would find wrong. I break the law almost every day, driving to work, speeding 10 miles above the speed limit.

The expression "slippery slope" is a warning that a minor ethics violation might lead to a major one. Once a principle has been violated, it will mostly likely be violated again, in different circumstances that could have major consequences.

As George Bernanos once said, "the first sign of corruption in a society that is still alive is that the end justifies the means."

We must constantly be reminded that the end does NOT justify the means.