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Corporate Culture
First step in Evolution of Ethics is a sense of solidarity with other human beings."
Albert Schweitzer, early 20thcentury German Nobel Peace Prize-winning mission doctor and theologian
The greatest discovery of our generation is that a human being can alter his life by altering his attitudes.
- William James
Action
The difference between a successful person and others is not a Lack of Strength, not a Lack of Knowledge, but rather in a Lack of Will.
In order to be big, you have to think big. If you think small, you're going to be small.
- Emeril Lagasse
Believe
If you do not believe in yourself ... chances are nobody else will.
If you have your sight, you are blessed. If you have insight, you are a thousand times blessed.
12
Dont be afraid to lose money to satisfy Internal & External customer or sponsor a in Your Org. Short-term Losses can equal Long-term Gains.
You cannot change the truth, but truth can change you
- Anonymous
The quality of a person's life is in direct proportion to his commitment to excellence, regardless of their chosen field of endeavor.
16
17
Although the world is full of suffering, it is full also of the overcoming of it.
Helen Keller (1880 - 1968)
18
To do right is wonderful. To teach others to do right is even more wonderful and much easier.
- Mark Twain
19
Self-pity is our worst enemy & if we yield to it, we can never do anything wise in this world
- Helen Keller
20
Treat people as if they were what they ought to be, & you help them to become what they are capable of being
- Johann Wolfgang von Goethe
22
The race is not always to the swift... but to those who keep on running.
23
Actions
happiness,
but there is
no happiness
without Action
- Benjamin Disraeli
24
Setting an example is not the main means of influencing others, it is the only means.
- Albert Einstein
25
"We cannot solve our problems with the same level of thinking that created them.
(Albert Einstein)
"The true voyage of discovery lies not in seeking new landscapes, but in having new eyes."
The mind of the superior man is conversant with righteousness; the mind of the mean man is conversant with gain. -Confucius
Start viewing the probable as possible. You'll be surprised at what you can accomplish.
The best & most beautiful things in the world cannot be seen or even touched. They must be felt with the heart.
The greatest discovery of our generation is that a human being can alter his life by altering his attitudes.
- William James
Nature present us with an infinite variety of Attitudes from gloomy mist to glorious sunshine. Our own moods, whether gloomy or bright, radiate to those around us.
We may affirm absolutely that nothing great in the world has ever been accomplished without passion.
- George Hegel
Two Parts of Empathy: Skill (tip of iceberg) & Attitude (mass of the iceberg).
Attitude
Action
The difference between a successful person and others is not a Lack of Strength, not a Lack of Knowledge, but rather in a Lack of Will.
Passion
We may affirm absolutely that nothing great in the world has been accomplished without passion.
- Georg Wilhelm Friedrich Hegel
s (Thomas Alva Edison quotes 1847-1931) Banthay haan marey kargayia fakar maain anjum
"Better go home & make a net, rather than dive for fish at random."
(Chinese proverb)
6-48
We can invest all the money on wall street in new technologies, but we cant realize the benefits of improved productivity until companies rediscover the value of human loyalty.
Frederick Reichheld
1449
1450
Ethics
''To argue, in the manner of Machiavelli, that there is one rule for business and another for private life, Is to open the door to an orgy of unscrupulousness before which the mind recoils.
R. H. Tawney, the British historian '
Ethics
There is no such thing as business ethics - only ethics.
Truett Cathy, founder of Chick-filA
Ethics
Duty-Based v. Outcome-Based Ethics
Duty (Deontology)
Duty is an act done simply for the sake of what is right. Duty is determined by revealed truths and involves universal principles Often religion-based e.g. Kants Categorical Imperative "Everyone is obligated to act only in ways that respect the intrinsic value, human dignity and moral rights of all persons." Places High Value on Individual Rights
Outcome
Ethical if best outcome for the majority Involves cost-benefit analysis "Of any two actions, the most ethical one is that which will produce the greatest balance of benefits over harms." De-emphasizes individual rights
Ethics
Strategic v. Real Ethics
What is the motivation/purpose for acting ethically? Pertol Prices in Pakistan Vs Kamran Lashri & OGDCL MD Pay to Flood Victims before Eid Tony Blair Son Vs Monis Pervaiz Elahi Sait Abid, Malik Riaz of Bahria Town Vs Abdul Ali Khan of Aitchsion College Ramzan Price Hike Vs Roza
Unethical Behavior
Unethical behavior in business is not just a recent phenomenon
In the sixth century, B.C., the philosopher Anacharsis once said,
The market is a place set apart where men may deceive one another.
Business Ethics
Business Ethics is about:
Decision-Making By People in Business According to Moral Principles or Standards
Decision-Making
Conflicting duties, loyalties or interests create moral dilemmas requiring decisions to be made
Decision-Making
Ethical decision-making involves the ability to discern right from wrong along with the commitment to do what is right.
Decision-Making
Some factors affecting decision-making (from Integrity Management, by D. T. LeClair et al, Univ. of Tampa Press, 1998): Issue Intensity (i.e. how important does the decision-maker perceive the issue to be? Can be influenced by company/management emphasis) Decision-Makers Personal Moral Philosophy Decision-Makers Stage of Moral Development Organizational Culture
Decision-Making
8 Steps to Sound, Ethical Decision-Making
1. Gather as many relevant & material facts as circumstances permit. 2. Identify the relevant ethical issues (consider alt. viewpoints) 3. Identify, weigh & prioritize all the affected parties (i.e. stakeholders) 4. Identify your existing commitments/obligations. 5. Identify various courses of action (dare to think creatively) 6. Identify the possible/probable consequences of same (both short & long-term) 7. Consider the practicality of same. 8. Consider the dictates and impacts upon your character & integrity.
Decision-Making
Disclosure Test: How comfortable would I feel if others, whose opinion of me I value, knew I was making this decision?
Decision-Making
The higher the level of a decision-maker
the greater the impact of the decision and the wider the range of constituencies that will be affected by the decision.
By People In Business
The moral foundation of the decision-maker matters
He doeS have a moral compass. Whistleblower Sherron
Watkins describing Andrew Fastow, former CFO of Enron. (Watkins gets frank about days at Enron, Edward Iwata, USA Today, March 25, 2003, p. 3B.)
By People in Business
Ultimately, one's own motivation for ethical behavior must be internal to be effective. External motivation has a limited value -- punishment and fear is only effective in the short-run. If people believe that they are above the law, they will continue to act unethically. Organizations that have a clear vision, and support individual integrity are attractive places of employment.
Teri D. Egan, Ph.d, Associate Professor, The Graziadio School of Business at Pepperdine University, Corporate Ethics, Washington Post Live Online, Friday, Aug. 2, 2002;
Ethics
Values: guiding constructs or ideas, representing deeply held generalized behaviors, which are considered by the holder, to be of great significance.
Morals: a system or set of beliefs or principles, based on values, which constitute an individual or groups perception of human duty, and therefore which act as an influence or control over their behavior. Morals are typically concerned with behaviors that have potentially serious consequences or profound impacts. The word morals is derived from the Latin mores (character, custom or habit) Ethics: the study and assessment of morals. The word "ethics" is derived from the Greek word, ethos (character or custom).
Morality
The most important human endeavor is the striving for morality in our actions. Our inner balance and even our very existence depend on it. Only morality in our actions can give beauty and dignity to life.
- Albert Einstein (in a letter 11/20/50)
Morality
The historian Arnold Toynbee observed
"Out of 21 notable civilizations, 19 perished not by conquest from without but by moral decay from within."
History is a voice forever sounding across the centuries the laws of the right and wrong. Opinions alter, manners change, creeds rise and fall, but the moral law is written on the tablets of eternity. James A. Forude
8)
Values
To ensure that employees can and will act with integrity organizations need a strong and consistent set of values that dictate appropriate individual actions.
Conclusion of study conducted by Professor Pratima Bansal, cited in Rebuilding trust, The integral role of leadership in fostering values, honesty and vision,by Carol Stephenson in the Ivey Business Journal, Jan/Feb. 2004, Vol. 68, Issue 3.
Values
Without commonly shared and widely entrenched moral values and obligations, neither the law, nor democratic government, nor even the market economy will function properly.(Vaclav Havel Politics, morality, and Civility, Summer Meditations)
Values Navigating the complexities of a situation ... requires a reliable compass. We can plot that "north" by determining clearly our own core values We have to identify -& articulate What we believe is important to us and to our companies.
Values
What are the core values that are fundamental to the success of any individual or organization? make them different in Ethical Practices
Values
Honesty Respect Responsibility Fairness Compassion Perseverance Courage
Our core values drive our behaviors, & our behaviors tell world, who we are and what we stand for. .. Identifying and adhering to a Core-Values Compass point provides a standard that will make decisions easier, consistent and justified.
- Parkinson, J. Robert, Thinking clearly, remembering values key to making the call, Milwaukee Journal Sentinel, March 22, 2004.
Values - Honesty
Honesty Being straightforward, sincere, truthful, free of fraud, deception or misrepresentation. Transparency To be open, honest and available, to provide clear, accurate, and understandable information (in the context of financial disclosures). Ethical business practices Best measured by a company's Character and Commitment to Transparency than by their Social Vision.
Values - Honesty
Honesty
Builds/Maintains Trust Fosters Community Makes Communication more Efficient & Effective Demonstrates Respect for the Dignity of Others
Values - Honesty
Moral Leaders welcome Transparency & Truth as opposed to Secrecy & Deception. In a Ethical leadership survey, Majority by a wide margin, cited Honesty as the quality most admired in a leader.
Values - Honesty
Honesty & Transparency make you Vulnerable. Be honest & Transparent anyway.
Mother Teresa
Contra: "Speech was given to man to disguise his thoughts." - Charles-Maurice de Talleyrand
Values - Respect
To give particular attention to, show consideration for, or hold in high or special regard
Online Dictionary, 10th Edition)
(Merriam-Webster's
Values - Respect
Every man is to be respected as an absolute end in himself; and it is a crime against the dignity that belongs to him as a human being, to use him as a mere means for some external purpose.
Immanuel Kant, Prussian geographer and philosopher (1724-1804)
Values - Compassion
Sympathetic consciousness of another's distress together with a desire to alleviate it"
(Webster's 7th New Collegiate Dictionary],
Values - Compassion
Word 'care' finds its roots in Gothic 'Kara' which means lament. Basic meaning of care is: To grieve, to experience sorrow, to cry out with.. . . A friend who cares makes it clear that whatever happens in external world, being present to each other [now] is what really matters."
[Henri Nouwen, Here and Now, p. 105]
Values - Compassion
Southwest Airlines CEO Herb Kelleher has openly demonstrated a willingness to go the extra mile for Southwest employees. He has made it a priority to learn their names and to chip in and work alongside them when the situation has demanded his help. He has been observed lugging baggage and greeting customers in an Easter Bunny costume. He has repeatedly demonstrated a truly exceptional level of caring and compassion for his employees, and his employees have responded in kind. Perhaps the most dramatic example of their commitment to their beloved leader occurred when they pooled their own money and ran a $60,000 ad in USA Today recognizing him on Bosses Day. In the ad they thanked Kelleher for being a friend, not just a boss. - from The
Leadership Wisdom of Jesus, Charles C. Manz, 1998.
Values - Fairness
Fair: just, equitable, impartial, unbiased, objective. Involves Elimination (or at least a minimization) of one's own feelings, prejudices and desires, so as to achieve a proper balance of conflicting interests. Equitable Distribution of Burdens & Benefits. Rules are fair if they are rules that People operating under them would have agreed to, had they been given an opportunity to accept or reject them before hand.
(John Rawls argues in A Theory of Justice )
Values - Fairness
Justice: demonstrating fairness, equity, impartiality, righteous action To some, justice is about conformity to truth. To others, its about conformity to law But law and justice are 2 different concepts.
The law is something we must live with. Justice is somewhat harder to come by.
Sherlock Holmes, in The Case of the Red Circle.
Justice occurs on earth when power and authority between people are exercised in conformity with Gods standards of moral excellence.
- Gary Haugen, in The Good News About Injustice, InterVarsity Press, 1999.
Values - Perseverance
Perseverance/Fortitude Steadfast determination to continue on despite adversity usually over a long period of time.
Hawa hay tund o taiz mugar Chraig apany jala raha Woo murd a durwais gisko haq nay dayian
Iqbal
First place to start is for every individual to become aware of their Core Values &To have: Courage & Discipline to live out of them in all aspects of their lives.
(The rising tide won't lift this economy: Unless we're willing to confront the trust problem we've helped to create, Bill Grace, Founder & Executive Director, Seattle's Center for Ethical Leadership, Guest Columnist, Seattle Post-Intelligencer, June 16, 2003.)
Values - Courage
Banda a momin ka dil baeem o raya say pak hayIqbal Wahi haa sahib imroz gis nay apni humat say. Iqbal
Values - Courage
Courage is a perfect sensibility of the measure of danger and a mental willingness to endure it.
General William T. Sherman (for whom the Sherman tank was named).
Corporate Culture
Both individuals and organizations hold values A corporation is said to manifest its values in its corporate culture Most employees take their cues from the company culture and behave accordingly.
A Business derives its Character from the character of the People who conduct the Business.
Corporate culture is How we perceive, think, feel and do things around here.
Elizabeth Kiss of the Kenan Institute for Ethics
Corporate culture is loosely defined as the a ttitudes, behaviors and personalities that make up a company and that shape its behavior and reputation
Corporate Culture
"Moral behavior is concerned primarily with interpersonal dimension of our behavior: how we treat one another individually and in groups, increasingly, other species and the environment." Key -Morality brings us into contact with others & asks us to consider the Quality of that contact.
Quote from The Leadership Compass, John Wilcox and Susan Ebbs, as quoted in Everyday Ethics, by Thomas Shanks, S.J., Markkula Center for Applied Ethics.
Corporate Culture
The Pressure to Conform
Some years ago, a social scientist named Solomon Asch wanted to see how people dealt with social pressure so he designed an experiment to measure the results. He came up with a simple test that showed a series of lines on a board in front of the room, with one of the lines matching another in being the same length. The others were either much shorter or much longer. A person was brought into the room, along with others in a group, which unbeknown to the subject, were helpers to the professor. The whole group was asked to match the two lines that were the same length together. The helpers intentionally gave the wrong answer and it was found that in almost 75% of the time, the subjects would go along with the wrong answer, knowing full well it was wrong, but not wanting to stand out. - Opinion and Social
Pressure, Scientific American, Nov. 1955, 31-35.
Corporate Culture
A strong corporate culture founded on ethical principles and sound values is a vital driving force behind strategic success. - Thompson & Strickland One company stressed its commitment to RICE : respect, integrity, communication, and excellence. The words have been on T-shirts, paperweights, and on signs. The firm printed a 61-page booklet with its code of ethics and every employee had to sign a certificate of compliance. That company was Enron!
Whose Values?
Integrity: from the Latin integritas, meaning wholeness, completeness, or purity. To courageously hold to what one believes is right and true, without compromise. To stand undivided, immovable, consistent in both heart and action, word and deed. Involves the maintenance of virtue & pursuit of moral excellence.
Integrity is demonstrated by not only espousing your values, but by living according to them. Integrity describes both who you are and what you do. People of integrity are conscientious, trustworthy, accountable, committed and consistent. A key to maintaining integrity is counting the cost before committing yourself.
Integrity
Psychologists have found integrity to be essential to an individual's sense of identity and self-worth, enabling the successful navigation of change and challenge. Links between integrity & ability to gain and maintain the trust of others have often been noted.
Many purveyors of practical advice, counseled that integrity is the cornerstone No Qualities [are] so likely to make a poor Man's Fortune as those of Probity & Integrity
Integrity
In Living a Life That Matters Harold Kushner describes kind of people who are able to overcome the negativity in their lives. People who are whole, united within themselves, their internal conflicts ended. Because of this, they are Persons of integrity. Integrity, is a quality just as essential to human wellbeing as is the pursuit of peace and justice.
Character
The notable/ conspicuous/ distinguishing moral/ethical traits or characteristics of a person that give evidence of their essential nature and which ultimately shape their reputation.
Character
"Fame is a vapor, popularity an accident, riches take wings, those who cheer today may curse tomorrow, only one thing endures -- character. President Harry Truman
would have resulted in a return nearly three times as much as an investment of $10,000 in the Standard & Poors 500 stock index. (Fortune)
The mind of the superior man is conversant with righteousness; the mind of the mean man is conversant with gain. -Confucius
Moral Gamesmanship, the excusing of unethical practices by viewing business as "a game" and oneself as "a player Scientism, the elevation of science-including management science-to a position of unquestioned authority.
(see Corporate moral blindness not solved by typical ethics, by John Knapp, Emory Report, April 26, 1999, Volume 51, No. 29, http://www.emory.edu/EMORY_REPORT/erarchive/1999/April/erapril.26/4_26_99morals.html)
Stakeholder Theory
Definition: The primary consideration in business decision-making is preserving/promoting the rights of stakeholders Takes into consideration the moral principle of mutual respect.
Stakeholder Theory
Goal: to maintain the benefits of the free market while minimizing the potential ethical problems created by capitalism (Phillips, Wharton School) Primary difference from Classical Theory: elevation of nonshareholding interests to the level of shareholder interests in formulating business strategy and policy.
Stakeholder Theory
Stakeholder: an individual or group, inside or outside the organization, who has a meaningful stake in its performance. Who are the stakeholders of a business? Narrow view vs. Wide View
Stakeholder Theory
Some Possible Stakeholders of a Business:
Customers Department/Employees Owners/Shareholders Creditors Suppliers Distributors Competitors
Stakeholder Theory
Some Additional Possible Stakeholders:
Local Community National Citizens Global Inhabitants Non-Human Life the Environment
Stakeholder Theory
Corporate citizenship: the extent to which a business meets its responsibilities, to its various stakeholders, or to society at large.
Stakeholder Theory
Problems with wider view?
Discourages Investment - Undermines/Dilutes shareholder property rights Interest Group Politics - Leads to waste and inefficiency
Punitive Nature: Laws & regulations are usually punitive rather than motivational Difficult to Enforce: Regulations sometimes difficult to enforce as the costs of conducting litigation are high Incompetence: Political appointees are sometimes not competent Failure to act in the Public Interest: Regulatory agency made earlier decisions allowing Enron to engage in certain accounting practices and exempting the energy-trading company from some federal requirements Non-compliance: Passing laws alone will not guarantee compliance. Ambiguity: Difficulty in reaching consensus, leading to ambiguity in legislation: leaving it subject to various interpretations (e.g. good faith) Unethical does not always = illegal: (Enrons worst sins seem to have been lawful.) Creates a False Sense of Security: Regulation creates a moral hazard. We don't understand finance, but it's regulated , so we're safe. Often Based on Inaccurate Assumptions: For example, the threat of longer sentence assumes rational risk/reward analysis but ignores emotional factors.
Corruption/Bribery
Corruption/Bribery
Corruption exists in every country and is endemic to some, especially developing countries.
Africa: Corruption is perceived to be rampant in Cameroon, Kenya, Angola, Uganda, Madagascar and Nigeria. In Kenya, bribery costs the average citizen 20% of their income. In 2004, Kenyan President Kibaki launched a zero corruption initiative. (Unfortunately, his government was recently forced to resign due to, you guessed it, corruption). No African country was listed among the 25 least corrupt countries in the most recent Transparency International Survey (Botswana, which was rated as Africas least corrupt nation, tied for 29th overall).
Corruption/Bribery
Asia: Corruption is perceived to be rampant in Bangladesh and Indonesia. In Indonesia, it is estimated that 20% of business costs are bribes to bureaucrats. The Financial Times recently reported that deep corruption [in China] is corroding the exercise of state power. Falsified accounts used to cover up this corruption have the effect of rendering Chinas official statistics virtually meaningless.
Corruption/Bribery
Latin America: Corruption is perceived to be rampant in Paraguay. In Ecuador, it is estimated the government could pay off its foreign debt in five years if corruption was brought under control. In Argentina, corruption in the customs department defrauded the government out of $3 billion in revenues. Officials estimated that 30% of all imports were being under-billed and approximately $ 2.5 billion of goods were brought into the country labeled in transit to another country, thus illegally avoiding import taxes altogether.
Corruption/Bribery
In Albania, approximately one-third of potential profits are lost to bribe payments that amount to 8% of inventory turnover. German companies are estimated to pay an aggregate of over $ 3 billion a year in bribes to obtain business contracts abroad. In industrial countries 15 % of businesses were found to pay bribes, but in the former Soviet Union this figure jumped to over 60 %. In Kazakhstan typical bribe to win approval of a large construction contract is 15 to 20% of contract price.
Political Corruption/Bribery
In Mexico, suspicions surround the ability of Raul Salinas, the brother of former President Carlos Salinas, to amass a fortune of over $ 120 million while a public official. Two former presidents of South Korea were convicted of developing a fund of over $900 million while they were in office in the 1980s and 1990s. According to Transparency International, in 6 out of 10 countries, political parties were determined to be their nations most corrupt institutions.
Corruption/Bribery
1997 estimate by the World Bank placed the total about of bribery involved in international trade at $ 80 billion per year. A recent World Bank survey of 3,600 firms in 69 countries found that 40 % of businesses pay bribes.
Corruption/Bribery
What sets Norway apart?
Oil
Recent Statoil bribery allegations, planned to funnel a $15 million bribe to an Iranian official in exchange for help with contracts Oil is considered a significant factor in Nigerian & Angolan corruption as well.
Corruption/Bribery
Where do we stand?
In the same study , the U.S. tied for 17th with Belgium and Ireland. It was perceived as more corrupt than Norway, Australia, the Netherlands, the U.K., Canada, Austria, Luxembourg, Germany and Honk Kong, but less corrupt than nations such as France, Spain, Japan, Israel, Italy, & Mexico .
Corruption/Bribery
Bribe - a payment of money, or something of value, to a party, with the intent to influence, or in exchange for special consideration, that is incompatible with the partys duties of office, position or role (Coarse Bribery that which affects a significant community interest)
Corruption/Bribery
Some examples of bribery
Corporate purchasing agents are often given "kickbacks" in order to make their purchases from a specific supplier. Tour operators may receive special unpublicized commissions or payment in kind or services, in order to include certain airlines, hotels, restaurants, and stores in their itinerary.
Corruption/Bribery
Civil servants in regulatory agencies, usually badly paid relative to the economic power they possess, may find it hard to refuse payment in exchange for waiving the regulations or to tailor specifications and contracts, to suit special groups or firms. (Note: In India most government officials & their families could probably not survive on their salaries alone.)
Corruption/Bribery
Corruption/Bribery
Motivations: Firms, pressure groups and citizens try to maximize their gains by paying bribes, while public officials try to maximize their illegal earnings and politicians their power and wealth.
Corruption/Bribery
Facilitating Payment - customary, local, incentive/grease payments or sweeteners intended to expedite performance. Usually made to low-level public officials to speed things along. Typically involves issuing licenses or permits, clearing goods through customs, etc. (In Italy, called bustarella. In Mexico, la mordida, the bite. In South Africa, dash. In the Middle/Near East, baaksheesh. In Germany, schimengeld. In France, douceur. (Ukraine adoption example)
Corruption/Bribery
The CEO of Unilever, the food and hygiene giant, insists Unilever does not pay bribes but it does pay "facilitating payments". "There are customary local things," he said. But they are only used where local custom and practice dictate in the 90+ countries in which Unilever operates. The idea is akin to tipping a waiter to get a better table, he said. He insisted that an overall code of conduct governs these matters, and bans the use of payments for unfair advantage although trusted local managers have leeway to interpret the rules according to local habits.
Corruption/Bribery
How do you distinguish between a bribe and a mere gift?
Its not always clear Secrecy is a defining characteristic of bribery/corruption. Gifts are generally made openly and often declared Bribes are often made using a middleman Gifts are usually given directly Bribes are usually of significant value Gifts are typically of minimal value
Corruption/Bribery
How do you distinguish between a bribe and a mere gift? Consider the social situation and context Consider perceptions of donor and recipient important Consider whether or not a quid pro quo is understood to be expected
Corruption/Bribery
Bribery commonly occurs in:
Large investment projects Government Purchasing Extra-Budgetary Activities (Special Projects)
Corruption/Bribery
Reasons/Excuses for Participation in Bribery
Competitive necessity Respect for local cultural norms Extortion Inability or unwillingness to control rogue employees/delegation of power
Corruption/Bribery .
Governments are starting recognize and respond to the damage caused by bribery/corruption Why?
Lost revenues (taxes, duties, etc.)
Corruption/Bribery .
Globalization: The borderless global marketplace is bringing national economies and corporations throughout the world into increasingly greater interdependence. High profile cases (e.g. Lockheed/Japan, involved major companies as well as political figures and staggering sums of money. Paid $12.5 million in bribes for $430 million sales contract.)
Corruption/Bribery .
U.S. Foreign Corrupt Practices Act of 1997
Prohibits payments to a foreign official for the purpose of influencing
any act or decision or the omission of an act in violation of the law of that country to obtain or retain business
Implies intent Only liable for actions of 3rd party agents when have reason to know of Does not prohibit facilitating payments (Note that the Justice Dept. only brings on average 1.5 cases per year- Special Report: Bribery and Business, Economist, March 2, 2002, p.64 )
Corruption/Bribery .
At first, the rest of the world looked at it as a sad case of an American moralism or moralistic imperialism
If other nations not follow suit does this = a competitive disadvantage for U.S.?
Corruption/Bribery .
1996 Interamerican Treaty Against Corruption 1997 OECD treaty committing 34 countries to similar restrictions, in effect beginning in 1999.
Corruption/Bribery .
Other important anti-bribery initiatives have recently been launched by the World Bank, the International Monetary Fund, the European Union, the Council of Europe, the Organization of American States, the Pacific Basin Economic Council, the Global Coalition for Africa and the United Nations.
Corruption/Bribery .
Ghana, Mozambique, Zambia & South Africa have also launched anti-corruption drives..
Corruption/Bribery .
In addition, recent steps by President Vladimir Putin to introduce tax reforms and new laws fighting money-laundering in Russia But still high levels of bribery by firms from Russia, China, Taiwan and South Korea, Italy, Hong Kong, Malaysia, Japan, USA and France.
Corruption/Bribery .
Not much being done to address the demand side of bribery (i.e. extortion) RICO (Anti-Racketeering) Statutes in U.S.
Corruption/Bribery .
Reputation Management (Coca-Cola)
Coca-Cola is operational in many developing countries, is doing well, is beating competitors, and is not paying bribes. The company is thoughtful and painstaking about how it enters new markets, how it selects local business partners, and how it conducts itself in foreign countries.
Corruption/Bribery .
Integrity is key to its approaches.
Coca-Cola makes maximum effort to be transparent in its dealings, to win public support, and to develop the kind of strength -from its consumers and the public at large -that make top officials uneasy about seeking bribes from the beverage giant.
Corruption/Bribery .
The reality is that to maximize opportunities in the growing markets of developing countries, corporations must strive to be seen as honest, long-term, committed guests. Corporations must impress upon host governments, customers, suppliers, and the general public that they seek fair, open, long-term relationships.
Corruption/Bribery .
Coca-Cola trains its staff to learn about the traditions, politics, and values of the people in all of the countries in which it operates. It gives key responsibilities to nationals of these countries and ensures that its image is never that of a ruthless multinational colonialist corporation.
Corruption/Bribery .
Coca-Cola plays an active role in most of the countries in which it works, supporting education and the arts and social services in a long-term and genuine way. GE & Texaco also have developed a reputation of refusing to pay bribes.
Corruption/Bribery
Caux Roundtable Anti-Corruption Principles
1. Disclose publicly and make widely known its endorsement of the Anti-Corruption Measures. 2. Establish a clearly articulated written policy prohibiting any of the firms employees from paying or receiving bribes and kickbacks. 3. Implement the policy with due care and take appropriate disciplinary action against any employee discovered to have made payments in violation of the policy. 4. Provide training for employees to carry out the policy, and provide continuing support, such as help lines, to assist employees to act in compliance with the firms policy.
Corruption/Bribery
Caux Roundtable Anti-Corruption Principles
5. Record all transactions fully and fairly, in accordance with clearly stated record-keeping procedures and accounting controls, and conduct internal audits to assure that all payments made are proper. 6. Report annually on the firms bribery and corruption policy, along with a description of the firms experiences implementing and enforcing the policy. 7. Have the annual report in step six above audited either by an independent financial auditor or an independent social auditor, or both. 8. Require all agents of the firm to affirm that they have neither made nor will make any improper payments in any business venture or contract to which the firm is a party.
Corruption/Bribery
Caux Roundtable Anti-Corruption Principles
9. Require all suppliers of the firm to affirm that they have neither made nor will make any improper payments in any business venture or contract to which the firm is a party. 10. Establish a monitoring and auditing system to detect any improper payments made by the firms employees and agents. 11. Report publicly any solicitations for payments whenever such reporting will not lead to harsh reprisals of material consequences to the company or its employees (or report privately to a monitoring organization, such as Transparency International or a social auditor). 12. Establish a system to allow any employee or agent of the firm to report any improper payment without fear of retribution for their disclosures.
Accounting Principles
Accountants Duty of Care An accountant must possess the skills that an ordinarily prudent accountant would have and exercise the degree of care that an ordinarily prudent accountant would exercise.
Accounting Principles
The skills and care of an ordinarily prudent accountant are reflected in the: Generally accepted accounting principles (GAAP) promulgated by the Financial Accounting Standards Board (FASB), and the Generally accepted auditing standards (GAAS), promulgated by the American Institute of Certified Public Accountants (AICPA).
Accounting Principles
An accountant conforming to GAAP or GAAS, and acting in good faith, will normally not be held liable for incorrect judgments or for relying on incorrect information. On the other hand, a violation of GAAP or GAAS will be prima facie evidence of the accountants negligence, subject to the accountant clearly qualifying her opinion or disclaiming liability for particular errors.
Relativism
As R.H. Popkin describes relativism in his article on the subject in The Encyclopedia of Religion, views are to be evaluated relative to the societies or cultures in which they appear and are not to be judged true or false, or good or bad, based on some overall criterion but are to be assessed within the context in which they occur. Thus, what is right or good or true to one person or group, may not be considered so by others there are no absolute standards Man is the measure of all things (quoting the Greek philosopher Protagoras (481420, B.C.), and each man could be his own measure [Relativism] urges suspension of judgment about right and wrong. (Ellis Washington, Reply to Judge Richard A. Posner on the Inseparability of Law and Morality, Rutgers Journal of Law and Religion, Vol. 3)
Relativism
As Cardinal Joseph Ratzinger said, Relativism is presented as a position defined positively by the concepts of tolerance and knowledge through dialogue and freedom, concepts which would be limited if the existence of one valid truth for all were affirmed affirming that there is a binding and valid truth in history in the figure of Jesus Christ and the faith of the church is described as fundamentalism. Such fundamentalism, is presented in different ways as the fundamental threat emerging against the supreme good of modernity: i.e., tolerance and freedom. - Address to Congregation for the Doctrine of Faith, Guadalajara, Mexico, May 1996
Absolutism v. Relativism
The demise of Americas legal foundations occur when society rejects laws that are based on solid, irrevocable, moral, universal, absolute values, to a society that bases its laws on an arbitrary system of relativism, situational ethics, materialism, individualism, hedonism, paganism, or in any secularist ideology. This secularization of law has influenced all branches of knowledge law, philosophy, business, religion, medicine, education, science, the arts, and mass media. Harold Berman, The Interaction of Law and Religion 21 (1974).
Corporations
Today more than 25% of the worlds economic activity comes from the 200 largest corporations. - Top 200 The Rise of
Corporate Global Power, by Anderson & Cavanaugh, Institute for Policy Studies, 2000)
The largest 500 U.S. companies constitute at least 75% of the U.S. economy.
Corporations
Many now believe that it is not the church or state, but the corporation that is:
the most important organization in the world The Company: A Short History of a Revolutionary Idea, by Micklethwait & Woolridge, 2003 or the central institution of contemporary society - Corporate Society: Class, Property, and Contemporary Capitalism, by McDermott, 1991.
Corporations
These beliefs echo the prediction made by -French Sociologist Emile Durkheim (1858-1917), in his work Suicide, that following the collapse of the family and the church, the corporation would be the association in the future that would supply the social support that every individual needs to maintain a moral life . - Cited in An Essay on the Background
of Business Ethics: Ethics, Economics, Law and the Corporation, by Lisa N. Newton & Maureen M. Ford, in Taking Sides.
Corporations
Legally speaking, Corporations are:
fictional persons
lacking body and soul, corporations cannot be punished - Pope Innocent IV (13th Century) lacking a soul, corporations cannot commit treason, be outlawed, or excommunicated - Sir Edward Coke, Chief Justice, Kings Bench (17th Century)
Corporations
King George III's Lord Chancellor Baron Thurlow remarked at the end of the 18th Century: "How can you expect a corporation to have a conscience, when it has no soul to be damned and no body to be kicked?"
Corporations
As artificial persons corporations cannot have real responsibilities. - Nobel Prize Winning Economist Milton Friedman Philosophy Professor Manuel Velasquez argues that only corporate members and not corporations themselves, can be held morally responsible.
Corporations
However, Although a corporation is not something that can be seen or touched, it does have prescribed rights and legal obligations within the community. - William
H. Shaw, Business Ethics.
Corporations
The exclusively economic definition of the corporation is a deadly oversimplification , allowing overemphasis on self-interest at the expense of the consideration of others. - Kenneth Andrews, Professor, Harvard Business School
Corporations
Limited liability is the key feature of the corporate form, encouraging investment.
Doesnt that run directly counter to the value of Responsibility/Accountability?
Types of Codes
Forbes 500 Companies (237 respondents):
Date Introduced Revised in 90s < 5 yrs. >20 yrs.
Code of Ethics Values Statement Corporate Credo All Three Documents 91% 53% 34% 49 cos. 18.5% 51.0% 41.0% 15.5% 8.0% 22.0% 82% 83% 81%
Source: Patrick E. Murphy, Corporate Ethics Statements: Current Status and Future Prospects, Journal of Business Ethics 14: 727-740 (1995).
Capitalism
Capitalism: An economic system in which the major part of production and distribution lies in private hands, operating under a primarily free market system, for the primary purpose of earning a profit on capital invested.
Capitalism
Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of the things for the greatest good of everyone. John Maynard Keyes
Capitalism
Values that are central to a capitalism
Freedom of voluntary exchange
Sanctity of contracts
Capitalism
As it presently functions, capitalism encourages human pathologies -embodying irresponsibility as a central requirement in its operating routines. William Greider is national affairs correspondent for The Nation
Of the 208 sentenced organizations, only four asked for mitigation based on the presence of an effective ethics compliance program.
Gift or Bribe?
Ashbourn Corp., is soliciting bids for a 5 year contract for the cleaning of their U.S. facilities, worth $22 million per yr. Pete Stevens, the Sales Manager of Perfect Cleaning Co. is, by coincidence, a former employee of Ashbourn Corp.& an old college buddy of John Joyce, Ashbourn Corp.s Purchasing Director. Pete was confident he could win this contract, after all his company already had a good relationship with Ashbourn Corp. James Parkin, the CEO of Perfect Cleaning Co. & Edgar White, the CEO of Ashbourn Corp. were both Masons and Parkin had sponsored White for membership to an exclusive country club a couple of years earlier.
Gift or Bribe?
Pete phoned John Joyce to find out more about the bidding process. They also talked about old times and how they used to enjoy skiing holidays together "Isn't it about time we went back to Reno" asked Pete, "How about booking a long weekend? I've got plenty of spare Air Miles that you can use? John Joyce was cautious about this suggestion. After all, they are in the middle of a bidding process. But he mentions it to his wife who is really keen about the idea of getting back onto the slopes. "We will have a rule, no mention of work" She says. They book to go on holiday with Peter and his wife in February.
Gift or Bribe?
Eid is fast approaching. Joyce , sends ens a Christmas card. His company has a policy of not sending gifts. Johns wife receives a package by courier on the 23rd of December from Pete and his wife addressed to the Joyce family. It is an elegant mantel clock. In February, the two couples enjoy a relaxing skiing holiday together. Not a word is spoken about business. Pete even wins $10,000 at the casino after taking some tips from John on winning at Black Jack. Pete buys John a champagne dinner to celebrate.
Gift of Bribe?
In March the bids are considered, with John Joyce as Chairman of the Selection Committee. The bids are almost identical. None of the companies really stand out on price, quality of service, etc. John tells his CEO that he hesitates to recommend Perfect Cleaning Co. because of his rejuvenated friendship with Pete. However, his CEO tells him, Dont worry about that. I trust you to look after our shareholders' interests - you tell me who you think is best for the job". Perfect Cleaning Co. is awarded the contract. A week later a letter arrives marked "Private & Confidential". John Joyce opens it and a check for $5,000 falls out. A simple note is attached "Thanks for your tip at the Casino you deserve a share of my winnings! Pete.