Business Ethics. Is it an oxymoron? Is it a myth?
Some might still argue that there is no such thing as Business Ethics. But today, ethical considerations cannot be taken for granted, by any sensible or responsible organization.
This 'Ethics' issue comes to forefront once again with last week's news of Christophe de Margerie, the CEO of the French Oil and Gas giant, 'Total', being put under judicial investigation for alleged financial misconduct. He is being questioned on claims that kickbacks were paid to win a contract with the Iranian government to operate the South Pars gas project.
Total insists that they acted in full compliance of the local laws and that there was no violation of its code of ethics. But, only time will tell if the claims against Total are 'total'ly baseless.
Corruption in high places has always been good feed to the media, quite obviously for the readership, viewership and listenership it generates. But whatever the hype, the real question is whether companies can ever be fully ethical? If not, how far can they be ethical in their dealings?
If we quickly revisit some recent financial scandals in business, they are all true stories of leaders condoning negligence, consenting to falsification, and still complacent in optimism.
Heads of companies were thinking they can misrepresent facts, and remain silent for just a little while more. But the noise of crashes these companies made, as they came down, must be ringing loud in the ears of their former bosses and employees.
In 2002, it was the Enron issue - one of the biggest bankruptcies in US history - where thousands became jobless overnight. Lavish unchecked expenditure, misrepresentation of accounts, refusal to allow employees to sell their company stock, have all snowballed into a horrible mess from which Enron was unable to untangle itself. Employees were made to believe that everything was hunky-dory until suddenly, the brutal truth of enormous bills, hit them all. And the panic-stricken investors, withdrew the support and the whole thing quickly collapsed. And it was sad to see the way the company crumbled.
Arthur Anderson, Enron's auditing firm – which until then was renowned as among the world's 'Big Five' auditing firms - had to also swiftly bite the dust. Because, withholding crucial information from employees or investors, and shredding incriminating evidence is not easily taken by courts. And in its wake came the WorldCom collapse, which had beaten Enron to become an even bigger US bankruptcy case. Reason? Once again, misrepresentation of finances!
Despite the great reputation she built for herself, Martha Stewart was jailed for five months, for selling stock, on the basis of insider information. The information she apparently got from the former head of ImClone, Dr.Waksal, had proved very costly for her, and she now struggles rebuilding her own organization. And meanwhile, Dr Waksal himself is serving a 7-year jail sentence for securities fraud, bank fraud, conspiracy to obstruct justice, and perjury.
But why do people fall from grace? Is it because they are unaware of legal controls? Or is it because they are confident their actions justify ethical values? Whatever it is, one can easily infer that if we make mechanisms that challenge the 'get-rich-quick' guy, he will surely find a way to beat it. There would always be these Nick Leesons and Harshad Mehtas who will find ways and means to hoodwink the world with brilliant plans.
Its not just financial control mechanisms, and impregnable banking systems, but the individual attitudes of honesty, openness and transparency that actually yield ethical behaviour. Its not the decades of reputation that a company has garnered, but the moral values of its current members, that will dictate its decision making policies.
Morally upright actions would result only from a societal upbringing that respects honesty and rewards integrity. If the values of integrity and goodness are taught in a way that individuals are not swayed by greed or temptation or even lack of courage, then the organizations will have better workforce. Better staff would mean better organizations, and thereby a better world.
Yes. 'Corporate Governance' will be a wonderful reality only when individuals, who make up the corporate, are governing their conscience.
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