Ethics Newsline®

In reference to Rushworth Kidder’s column on corporate ethics in Britain and America (”‘Softly, Softly’ versus ‘Ready, Fire, Aim,’” June 29, 1998), let me offer a few observations.

There is a language barrier between the U.S. and the U.K. Despite increasing globalisation, we are culturally some way apart. While our working methods, financial systems, and computer networks converge, there is still suspicion of how each other acts and the underlying motivations. We are developing an ethical language, but the intonation is different; perhaps we put the stresses in a different place.

As a nation, we Brits are more interested in pragmatic real-life issues than theoretical debate. The establishment of ethics officers, we feel, is tantamount to an admission that we have failed, or at the very least, need to try harder. It runs counter to our belief in fair play; it just isn’t cricket.

Boardroom debates do tend to focus on operational issues. There is little sympathy for taking a “holier than thou” attitude only to be shot down from the top of the pedestal.

We know that the soft issues are the hardest to crack simply because there is no corporate rule book that checks off ethical conformity. Yet compliance is utilised as a monitoring tool for those [who] have ethical codes. There is a feeling that U.S. regulations that mitigate penalties for companies found to be acting unethically–if they can prove they have an ethical framework–are just a cop-out. Shooting someone is still wrong, even if the gun was kept in an excellent condition.

There is a tendency to try to fit ethics into existing structures of compliance, communications, training, and so forth. I have some sympathy with that. But unless ethics is integrated within the business, it will not be effective. Bolt-on ethics [is] always an afterthought.

Regards,
Jonathan Bye
NatWest Bank, London

The world of business is often driven by legislative action, as those in the insurance, banking, telecommunications, airline, and (more and more) Internet industries can attest.

by Rushworth M. Kidder

No question about it: The national media is going through a rough patch just now. In recent weeks, apologies have been rolling in from:

• The New Republic, which dumped writer Stephen Glass for making up the details in some 27 articles

• The Boston Globe, which sacked columnist Patricia Smith for fabricating quotes

• CNN and Time magazine, which retracted a much-publicized report but did not dismiss Peter Arnett for alleging that the U.S. military used the nerve gas sarin during Operation Tailwind in Laos in 1970

• The Cincinnati Enquirer, which fired reporter Mike Gallagher and agreed to pay Chiquita Brands, a banana distributor, more than $10 million for “deceitful, unethical, and unlawful conduct” in preparing its report on that firm

And (except that they haven’t apologized) you could add NBC to the list. Last week it was ordered by a federal jury in Bangor, Maine, to pay $525,000 to two long-haul drivers defamed in a 1995 Dateline NBC program about tired truckers.

The temptation, in many quarters, is to crow triumphantly: “Those *&%#! in the media are finally getting what they deserve!” Businesses savaged by slanted reporting are particularly prone to dance with glee. Are they justified in doing so?

Yes and no. The “yes” vote comes in recognizing that the media can indeed take a high-handed and cavalier approach to the interpretation of facts. Reason: It’s so easy to do. There are few external checks on what reporters say. Good editors, of course, will discuss details with reporters, trying to ensure veracity. And good reporters have an internal moral compass that steers them away from falsehood, distortion, and malice. Otherwise, there are only a few offended parties to bring suit–and the public to suspect that something’s occasionally fishy.

But given the First Amendment protections enjoyed by the media, there’s little legal recourse. Questions of veracity and trustworthiness swim outside the law’s net, in the broad oceans of ethics. That’s as it should be. And that’s why, when an ethical collapse occurs, the public is rightly offended, and editors have to issue apologies and dismiss reporters.

The “no” vote comes from a realization that we’re all in the same boat. For many businesses, publicity is the lifeblood of marketing. And the parameters of corporate public relations are essentially those of the media. Each has access to facts. Each forms hypotheses. And each is then tempted to conform the story to suit the hypothesis.

At its most gentle, this “spinning” entails the timing of a release, the choice of headline, the relative placement among other stories, and the effort to pitch a story for a particular audience. At its worst, the spin includes blatant fabrications, knowing distortions, and unsubstantiated analyses. The former is typically forgiven. The latter brings lawsuits.

But it’s the middle ground that causes the real concern:

• “It’s not in my notes, but I’m sure he used the word ‘crooks’ in talking about his competition.”

• “The tests aren’t all in yet, but since it looks like this will prove to be the most fuel-efficient vehicle ever, can’t we just say that?”

• “Look, 83 percent of the American people tell us they love shopping at this mall. So what if we surveyed only people who were already at the mall? Let’s go with that number.”

Here’s where ethics figures. Here’s where the individual decisions, whether made by reporters or corporate publicists and marketers, come up against core values. And here’s where business professionals are subject to the same temptations as their counterparts in the media.

In fact, there may be no more important a place for a corporate ethics office to build an influential presence than in the corporate communications arena. In the end, what any business has to sell is reputation. Of course that reputation needs protection on the outside, legally, against outrageous and unethical media attacks. More important, however, it needs to be protected on the inside, ethically, against the middle ranges of warping, stretching, and insinuating.

In an age of increasing transparency, it’s well to assume that whatever can get out, may get out. The media has relearned that fact, and paid the price in dollars and shame. Corporations need to go to school on the media’s mistakes–and revisit their own standards of communication. This is a time not for glee but for a sober realization: There, but for ethics, go I.

Accountability is a time-honored facet of the law, dating back centuries.

But legal and ethical complications lie in the limits of liability: How muchresponsibility does one party have for actions committed decades ago? Isresponsibility limitless, and if so, how can we function if every actionexposes us to uncapped risk?

Several questions in that vein dominate our weekly recap of the news inethics. Our top story recounts Volkswagen’s efforts to remedy a wrongcommitted during World War II–the use of slave labor in its factories.

In the United States, a bill that would have limited small business’s product liabilitywas near death last week as partisan disputes in the Senate stalled themeasure. We report on the varying views of the measure–which somecharacterize as a mechanism to strengthen small business, while otherspaint it as a device for business to duck responsibility in the marketplace.

A massive and complex liability case was nearing resolution last week as DowCorning reached a tentative $3.2 billion settlement in a series of suitsinvolving silicone breast implants.

We also report on two other stories involving health care: In Brazil, thegovernment has established a police task force to combat drug counterfeiting,and in the United States, President Clinton has warned health insurers to play by therules and honor provisions of recent legislation ordering insurers to providecoverage for job-changers and those with preexisting conditions.

In other news from the world of ethics, we report on a British measure to curbtruancy by forbidding shopkeepers to do business with minors on school days.We have details of a school board’s message to Disney–tone down the sex andviolence–and a story from Washington about attempts to cope withincreasingly complex legal and ethical ramifications of Internet commerce.

When is commemoration really commercialization? The New Zealand postalservice confronted that question last week when it canceled a proposed Dianastamp, and we have a report and links to that story.

We conclude this week’s Newsline with a report filed by our Londoncorrespondent detailing the latest controversy to rock the Blairadministration–charges that former members of the administration areselling access as private consultants.

DETROIT
Dow Corning announced a proposed $3.2 billion settlement with170,000 women suing the company over silicon gel breast implants, offering tosettle thousands of claims filed by women who allege the implants caused awide variety of health problems.

The settlement, offering an average payment of $31,000 to individual claimantsover the next 16 years, must be approved by a bankruptcy court, creditors, andlitigants before taking effect.

Dow Corning filed for bankruptcy protection in 1995 after a barrage of damageclaims.

AUCKLAND, New Zealand
The New Zealand postal service has canceled a plannedstamp commemorating Princess Diana, citing concerns that “her death wasgetting a bit overcommercialized,” as the first anniversary of her August 31death approaches.

But memorabilia hunters still have ample shopping opportunities. Popularstamps have already been issued by several nations, including North Koreaand Niger, reports the BBC. The commemorative stamps are often seen as aquick and easy way to raise money.

WASHINGTON, D.C.
A proposed compromise bill intended to place a $250,000 cap onpunitive damages against small businesses in product liability lawsuits wasstalled in the Senate last week after Democrats and Republicans reached animpasse over amendments to the bill.

While the measure had garnered support from small businesses that claimedexcessive awards stifle growth, many consumer advocates said the proposalwould have allowed corporations to escape responsibility for their negligence.

A similar measure was passed by Congress in 1996 but was vetoed by PresidentClinton. It is unlikely that a revised bill will be considered in the closingdays of the current congressional session, the Associated Press reported.

FRANKFURT, Germany
Citing “historic and moral duties,” German automakerVolkswagen–founded under the Nazi regime–announced last week that itwould establish a private fund for slave laborers who toiled at the company’sWolfsburg headquarters in 1944 and 1945.

While Volkswagen had claimed that the firm had no legal responsibility for theslave labor, the company’s board last week decided to establish a private fundto dispense yet-unspecified “humanitarian help” to surviving victims, theReuters news agency reported.

Volkswagen was one of about 12,000 German firms to use slave labor during thewar, a company spokesperson said.

WASHINGTON, D.C.
The U.S. Commerce Department announced it will ease restrictionson the export of powerful encryption software to approved financialinstitutions in 45 nations.

Commerce Secretary William Daley said banks, securities firms, and credit cardcompanies abroad could soon be licensed for the encryption software withoutapplying for case-by-case permission, giving U.S. “financial institutionsthe flexibility they need to remain globally competitive.”

The new policy is a shift for the U.S. government, which has argued that so-called keyless encryption software–programmed without a “backdoor”permitting law enforcement agencies to examine scrambled data during criminalinvestigations–would weaken international efforts to curb money laundering.

Mexico, China, and Russia, considered weak on fighting money laundering, arestill excluded from keyless encryption software sales, as are sevennations considered to support terrorism.

SPECIAL TO NEWSLINE
from London correspondent E. B. Mills

Political punditssearching for comparisons between the Clinton and Blair administrations havebeen handed a new cognate: access to the administration’s decision makers inreturn for money.

In the case of Tony Blair’s Labour government, the scandal involvesallegations of lobbyists with intimate connections to high-level Whitehallofficials, using those connections to obtain favors for clients, includingadvance notice of policy announcements.

Since Blair’s election, several lobbying firms have been started by, or hiredpeople who had been closely connected to, Blair’s “New Labour” party, and whohad worked for Blair’s election. Now these lobbyists are allegedly steeringhigh-paying business clients into private meetings with government officials,or using their contacts to influence policy decisions in favor of theirclients.

One lobbyist, Derek Draper, reportedly boasted to an Observer reporter posingas a business agent that he could “go straight to Number 10″ (Downing Street,the prime minister’s residence) to obtain exemptions from pollutionrestrictions on oil shipping.

The reporter, Gregory Palast, also quotes Blair policy advisor Roger Liddle assaying, “Just tell me what you want, who you want to meet, and Derek (Draper)and I will make the call for you.” Liddle denies the quote, and the Blairadministration has attacked the reporter’s credibility.

Since the Observer’s investigative reports first ran, Derek Draper has beenfired from the lobbying firm GPC, where he had been a director.

Footnote: When is it ethical for a journalist to misrepresent him- or herself inorder to gain access to sources, as Gregory Palast did in this case? Manyjournalists feel that if it is done to serve an urgent public concern, such ascorruption in government, and if there is no other way to get the information,the deceit is justified.

BRASILIA, Brazil
German pharmaceutical maker Schering was fined $250 millionand Brazil set up a new police department to investigate counterfeit medicinelast week after at least 13 million placebo contraceptive pills made bySchering’s Brazilian subsidiary were released on the market, apparentlyresulting in the unplanned pregnancies of at least seven women.

It is unclear how the placebos wound up on the market, but the company claimedthe sugar pills were produced to test a packaging system and the company hadbeen the victim of “criminal manipulations,” the Reuters news agency reported.

Drug falsification is an ongoing problem in Brazil, and the incidents relatedto the useless birth control pills added urgency to the establishment of thefederal task force, according to Reuters.

WASHINGTON, D.C.
President Clinton last week threatened to allow cancellation oflucrative government contracts with insurers who deny coverage to workers wholose their jobs or have preexisting medical conditions.

The move is designed to stiffen enforcement of the 1996 Health InsurancePortability Act. Some insurers have gotten around the requirements of theact, critics contend, by charging exorbitant premiums or tying up unwantedapplications in red tape.

With nine million people covered by government contracts with 350 health plans,Clinton waved a heavy stick, warning insurance companies that “if you say noto people with preexisting conditions, the federal government will say no toyou,” Reuters reported.

AUSTIN, Texas
The Texas Board of Education voted last week to sell its $45million holdings of Walt Disney Co. stock to protest sex and violenceportrayed in the films and music produced by Disney and its subsidiaries.

Board chairman Jack Christie spearheaded the Disney divestment, saying thatTexas schools and the U.S. public have “had enough of the violence” inmovies like Pulp Fiction, which was produced by Disney subsidiary Miramax.

Spokespeople for Disney declined to comment on the Texas decision, but astatement from the firm insisted that Disney “continues to produce more familyentertainment than any other company in the world.”

National Public Radio commentator Elaine Segaldiscusses a friend’s questions about morality in the workplace and thedifference between what isexpected and what should be expected. NPR’s Web site says Segal’s friend “feels overwhelmed by her successful corporate life and thelackof good values she sees at the office.”For NPR’s audio report, click here.

LONDON
An association of British shopkeepers has proposed a ban on doingbusiness with minors during school hours as a means of curtailing truancy andcrime.

British Retail Consortium assistant director Michael Schuck told the BBC that”the devil will find work for idle hands.”

Worried that “if youngsters are not at school they are reducing theiropportunities,” Schuck suggested that vigilant shopkeepers could cooperatewith police and social service workers to keep kids in the classrooms and outof trouble.

From Policy.Com:

Tight deadlines, commercial pressure, and ambition are common excuses for sloppy and sometimes purposefully inaccurate reporting [see Rushworth M. Kidder's commentary above]. Some or all of these certainly played a role in Stephen Glass’s decision to risk his professional reputation to make his New Republic stories more vivid and sensational. The same might be said of theBoston Globe’s award-winning metro reporter Patricia Smith, who last month was asked to resign from her long-time position at the paper for fabricating people and quotes in at least six columns. Or of the Cincinnati Enquirer’s Mike Gallagher, who stole 2,000 telephone messages (which he is charged with selectively editing) from Chiquita Brands International, Inc., in the course of writing an investigative piece on the company’s overseas land dealings.

Are these isolated incidents, or do they indicate a larger, more disturbing trend in journalistic ethics? While one may be tempted to chalk these incidents up to the unethical professional practices of a few aberrant individuals, incidents like these are leading journalists, columnists, and media commentators to question the industry more seriously and urgently as a whole.

The recent spate of high-profile ethics violations makes it easy to forget that the vast majority of journalists are scrupulous to a fault–checking and double-checking sources and facts. This week’s “Issue of the Week” in the on-line policy journal Policy.Com poses the question, “Is the media experiencing a crisis of ethics?” and provides arguments that state the affirmative and negative viewpoints raised by this question. The “Issue” also examines the effect new electronic media, such as the Internet, has on media ethics, and the role the paparazzi play in contributing to the media-ethics debate.

Click here for Policy.Com’s full issue briefing.

Below are links (from the full briefing) to other ethics and journalism information:

Society of Professional Journalists’ Code of Ethics
The Society of Professional Journalists’ code of ethics is available on their Web site. The code includes a list of parameters that journalists should follow, including seeking out the most reliable and accurate information, fair and humane treatment of subjects, and accountability for ethical conduct to the public and fellow journalists.

Radio-Television News Directors Association (RTNDA) Code of Ethics
Vernon Stone of the Missouri School of Journalism outlines the evolution of the RTNDA code of ethics and provides links to each set of changes, dating back to 1946.

First Amendment Handbook
This handbook from the Reporters’ Committee for Freedom of the Press is designed to provide a basic primer on the laws affecting reporters’ rights to gather and disseminate news. It includes information on gag orders, freedom of information acts, libel, privacy, and copyright, among other salient journalistic topics.

All of us who professionally use the mass media are the shapers of society. We can vulgarize that society. We can brutalize it. Or we can help lift it onto a higher level.

–William Bernbach, quoted in Bill Bernbach Said . . . (DDB Needham Worldwide, 1989)

“Sexual harassment is simply not something that employers can wholly prevent without taking extraordinary measures–constant video and audio surveillance, for example–that would revolutionize the workplace in a manner incompatible with a free society.”

–Justice Thomas, U.S. Supreme Court, in his dissenting opinion on the recent harassment cases, as quoted in “The Editors: Anti-Expressionism,” The New Republic, July 20, 1998

For more information on the recent Supreme Court harassment decisions, see former Newsline story. To read the entire New Republic editorial on-line (until August 3, 1998), click here.