Ethics Newsline®

“You can’t escape the responsibility of tomorrow by evading it today.”

– Abraham Lincoln (16th U.S. president (1861-1865), 1809-1865)

From the Pew Research Center for People and the Press:

“The public is deeply divided about the future of U.S.-China relations. Although a solid 60 percent majority say relations between the United States and China are stable — neither improving nor getting worse — there is little agreement over the question of whether our current handling of China is tough enough and no single policy stance gets majority support.

“Today, 44 percent of the American people say the Clinton administration has not been tough enough in its dealings with China and 43 percent say the administration struck the right balance. Just 2 percent say the United States has been too tough.

“Similarly, no consensus exists on the question of whether the United States should cooperate with China to help maintain peace and prevent the spread of nuclear weapons in Asia or take a firm stand against human rights abuses there, even if it increases tensions between the two countries. Today, 45 percent of the public chooses cooperation; 44 percent opt for a firm stand.

“Again, agreement fails to emerge when the public is asked to balance trade and military security. Given the choice, 47 percent of Americans say containing China’s military power is more important; 42 percent say maintaining China as a trading partner is more important. . . .

“American public opinion toward China has grown slightly more negative since President Clinton visited the Asian nation last summer. As Chinese Premier Zhu Rongji tours the United States this week, increasing numbers of Americans express skepticism about China’s resolve on free markets, democracy and diplomacy.

“Less than one-quarter (23 percent) of Americans now say China is becoming more democratic and allowing its people more freedom; 65 percent feel just the opposite is true. This is a return to the 26 percent-64 percent split in 1997 and marks a significant change from August 1998, when 35 percent of Americans thought the Asian nation was becoming more open and 51 percent disagreed.

“Similar movement can be seen on the issue of free markets, although the public is not quite so adamant in their view of China’s resistance of economic reforms. Today, 34 percent say the Chinese economy is becoming more like the U.S. economy; 47 percent disagree. In August 1998, Americans were more evenly divided: 41 percent felt the Chinese economy was becoming more open, 44 percent disagreed.

“Although a 48 percent plurality of the public continues to see China as a serious problem — a number basically unchanged since September 1997, when 46 percent of the public felt this way — many Americans are becoming increasingly critical in their view of China. More Americans now describe China as an “adversary” (up to 20 percent from 14 percent in 1997) and fewer dismiss China as “not much of a problem” (down to 25 percent from 32 percent). Moreover, two-thirds of the public considers allegations that China stole nuclear technology from the United States to be very serious.”

WASHINGTON
The U.S. Supreme Court ruled last week that gifts to public officials are illegal only when the gifts are linked to a specific official act.

The Court unanimously ruled that gratuities to public officials are not illegal if they are given merely in order to win favor with a public official in a position to help them, the Associated Press reported.

The decision stems from the 1996 prosecution of then-Department of Agriculture secretary Mike Espy, who was charged with accepting gifts from a Californian produce company in exchange for preferential treatment.

Espy was acquitted of all charges last December.

LUXEMBOURG
EU officials agreed last week to a one-year postponement of their controversial ban on aircraft fitted with noise reduction equipment known as “hushkits,” a measure that the United States had warned could prompt retaliatory action.

The EU claimed that the mufflers are a makeshift response and are not effective in curbing pollution.

That delay allows U.S. companies to integrate more hushkit-fitted aircraft into their European fleets, effectively sidestepping the ban, which applies only to aircraft not already in operation over European skies.

The U.S. government, which has threatened to ban Europe’s Concorde plane from U.S. airspace, says the EU ban could cost U.S. companies as much as $2 billion, according to Reuters.

TOKYO
Japanese women hold fewer managerial positions than their foreign counterparts, work longer hours than Japanese men, and face pay and promotion inequity, according to a new government report released last week.

The study is part of the Japanese government’s effort to increase awareness of discrimination against the country’s 26.65 million working women, the Reuters news agency reported.

According to the report, a “remarkably low” 9.3 percent of working women hold managerial positions in Japan, compared with 44.3 percent in the United States and 26.6 percent in Germany.

The government’s push to highlight workplace discrimination against women includes a revised law banning sexual discrimination at the workplace, and a planned $1.68 billion campaign to bolster projects, such as daycare centers, that help working women, according to Reuters.

Is corporate ethics a passing fad, ripe for replacement by the next managerial flavor of the month?

No, say participants in an Institute for Global Ethics survey of more than 1,000 employees from a major midwestern corporation in the financial services sector. Earlier, I reported on their core values (Newsline, April 4) and their sense of the corporate ethical environment (Newsline, April 19). Now, from six questions about the future, it’s clear that, for employees at what we’re calling "XYZ, Inc.," ethics is here to stay.

1. Most foresee stability. Nearly 80 percent agree that "ten years from now, if I were asked to choose my values, my choices would probably be the same as today’s choices." Only 1.7 percent thought they would be "very different from today’s choices," with 18.5 percent saying "somewhat different."

2. Yet corporate values are diversifying. Nearly 50 percent said that "ten years from now, I believe that the values of employees [at XYZ Inc.] will be more diverse," with 45 percent saying "about the same" and hardly any saying "less diverse." Employees expecting most diversity ahead were those with most years of experience, as well as those under 25 — an encouraging comment on the impact of diversity training in our schools.

3. Customers will demand higher ethics. Asked whether in ten years "our customers will look at our ethical standards and practices" with "more interest and attention," 45.9 percent agreed, while 49.2 percent chose "the same interest and attention." Leading the pack were employees in XYZ’s international division, where more than half foresee "more interest and attention."

4. Ethical issues aren’t getting easier. Only 2.2 percent thought that in ten years the "ethical challenges facing people working in [our segment of the financial services industry] are likely to be less complicated." Most thought they would be "as complicated" (42.3 percent) or "more complicated” (55.5 percent). The higher ranking the participant, the more complicated the ethical future is thought to be.

5. Ethics will figure in promotions. More than a third (36.4 percent) agree that "the role of ethical standards in determining promotion to top positions in [this] industry will be more important" in ten years. Although the majority (59.5 percent) sees little change from today, women are more likely than men to predict that ethics will be more important to promotions.

6. New hires will not be ethically diminished. A final question asked whether the ethics of future employees would be higher, lower, or about the same as the respondents’ ethics when they themselves were hired. A majority of respondents (56 percent) believed it would be about the same, with roughly equal numbers saying it would be higher (23 percent) and lower (21 percent).

Two overall themes stand out. The first concerns stability. Significantly, there is no correlation between values and responses: No pattern emerges to let you predict that those who chose “Value A” will answer “Question X” in a particular way. However diverse the values within an organization, then, the ethical standards can remain constant. Nor, contrary to popular opinion, do these participants think the next generation has gone to hell in a handbasket. Those who are currently employed foresee no great shift in ethics among new hires.

The second trend concerns challenge. It’s getting harder to untie the Gordian knots of ethics — no surprise to those aware of the range of moral perplexities prompted by new technologies, increased media attention, and greater focus on the rights of individuals. Yet customers won’t take that for an excuse. They’ll demand increasing evidence of ethical behavior. And corporations will respond by paying more attention — albeit slowly — to ethical attributes in the promotion process.

Bottom line? If the folks at XYZ are like most corporate employees — and there’s reason to think they are — ethics is no fad. Companies recognizing that fact will develop frameworks to help managers make tough ethical decisions. They’ll set rigorous values-based standards for dealing with customers. And they’ll devise strategies to ensure that, ten years out, they’ve promoted ethical people to top positions.

(c)1999 by Rushworth M. Kidder

To whom does a firm owe responsibility? Investors? Society at large? The government?

That’s obviously an enormously complex question, but an interesting one, and the fulcrum of our lead stories in this week’s edition of Business Ethics Newsline, your guide to news at the busy intersection of commerce, governance, and morality.

We lead with a story about a protest at a British Aerospace shareholders’ meeting, a topic of broad interest because it reflects a growing trend of such activism. We follow with a report on efforts in the U.S. Senate to delineate businesses’ responsibility to customers should the Y2K problem become the subject of extensive litigation. And we have an interesting story and series of links about claims that credit card companies share some of the responsibilities for bankruptcies in the United States.

Turning to international trade news, we bring you stories about the lifting of unilateral trade sanctions against Iran, Libya, and Sudan; an antitrust agreement signed by the United States and Australia; and an intriguing demonstration in India regarding pirated software and an elephant brought in to put his foot down, literally, on the problem.

A story of vital interest to personnel executives follows: a multi-million dollar verdict in a discrimination case brought by a corporate headhunter.

From the media ethics file, we have a report from Canada about discussion of the media’s role in a possible copycat shooting; a story about the ethics of a groundbreaking interview with Yugoslav president Slobodan Milosevic set up by a U.S. businessman with Serbian ties; and the decision by the New York Times that tobacco ads are not fit to print in its pages.

Other news with an ethical angle this week includes reports about U.S.-Chinese trade and intelligence disputes, the definition of disability, new pollution control measures in the United Kingdom, continuing salvos over the Olympic scandal, and two stories about tobacco troubles along the U.S.-Canadian border.

Our Trendlines feature looks at the difficulties encountered by women who want to move into management in Japanese firms, and we conclude our report with an update on the continuing dispute over U.S. aircraft fitted with mufflers that the Europeans claim don’t work very well, and a follow-up on a case involving gifts to public officials.

Have a productive, ethical week.

– Carl Hausman

LONDON
British Aerospace’s annual stockholder meeting was disrupted last week by activists protesting the company’s deals to manufacture arms for countries with shaky human rights records.

Protestors heckled chairman Sir Richard Evans, denouncing British Aerospace’s deals to sell Hawk aircraft to Indonesia, and to allow Turkey to locally manufacture 5,000 British Aerospace rifles, the Reuters news agency reported.

British Aerospace chief executive John Weston defended the deals, saying that the company was convinced that the Hawks would not be used to attack civilians, and that Turkey’s license had been approved by necessary government agencies.

Weston also insisted that the firm’s controversial plan to manufacture explosives that could be used in landmines was in compliance with a new British law banning such products, according to Reuters.

WASHINGTON
The U.S. Senate last week found itself stalled on proposed legislation that would limit consumers’ lawsuits over problems caused by the Y2K computer problem.

Sponsored by Sen. John McCain (R.-Ariz.), the proposed legislation would provide a 30- to 90-day cooling-off period for filing Y2K lawsuits, giving companies a grace period to fix the problems.

A coalition of consumer groups had criticized the legislation as pro-business, insisting that its limits on lawsuit damages and class-action lawsuits would “undermine incentives of companies to correct Y2K defects,” the Associated Press reported.

Republicans and Democrats last week were hashing out compromises over the legislation, bolstering consumer protection, eliminating most caps on punitive damages, and allowing lawsuits against individual corporate officers.

But Democrats’ efforts to attach riders to the legislation brought compromise to a standstill.

Further debate is scheduled for this week.

WASHINGTON
Consumer groups last week blamed credit card companies for pushing people to bankruptcy, and asked Washington to pass legislation making credit card companies’ operations more transparent and user-friendly.

The call came as a reaction to pending legislation that would toughen personal bankruptcy law to reduce the number of U.S. consumers — 1.4 million in 1998 alone — who fold each year under excessive debt.

Credit card companies strongly back the toughened bankruptcy laws, which would shelter them from absorbing the debt of bankrupted cardholders, the Reuters news agency reported.

But the Consumers Federation of America (CFA) says that the credit card companies share much of the blame for personal bankruptcy, because they deluge consumers with easily obtainable credit.

The CFA wants Congress to require credit card firms to disclose how long it would take consumers to pay off their credit card debts if they only make the minimum monthly payments, and to toughen the requirements for issuing credit cards to people under 25, according to Reuters.

WASHINGTON
The United States announced last week that it would end unilateral sanctions against Iran, Libya, and Sudan, permitting a case-by-case approval of food and medicine sales to the blacklisted countries.

The policy change follows intense pressure from lawmakers in farm states, who claim U.S. agriculture is losing hundreds of million of dollars in lucrative contracts to other countries, the Reuters news agency reported.

U.S. under secretary of state Stuart Eizenstat was quoted by Reuters as saying the relaxing of sanctions would benefit the people of Iran, Libya, and Sudan, without benefiting their military regimes suspected of sponsoring terrorism.

“We apply sanctions to influence the behavior of a regime not to deny people their basic human needs,” Eizenstat said.

Iranian and Sudanese officials downplayed the significance of the policy change, insisting that the new plan resulted more from market forces than a desire to help their countries’ people, according to the BBC.

WASHINGTON
The United States and Australia last week signed an international antitrust pact designed to help the two countries share confidential evidence when investigating cross-border antitrust violations.

U.S. attorney general Janet Reno welcomed the agreement, noting that antitrust enforcement cannot be “truly effective unless we have international cooperation and the ability to exchange evidence.”

The new deal bolsters a less extensive 1982 antitrust agreement between the United States and Australia.

DELHI
India’s software industry held a demonstration last week to protest the country’s rampant software piracy, which it says accounts for 60 percent — $164 million — of India’s software market.

India’s National Association of Software and Service Companies (NASSC) used an elephant to trample hundreds of illegally copied discs seized from Delhi stores.

NASSC president Dewang Mehta said the event dramatized the need for the nation to “put its foot down” on piracy, “using the biggest foot we can find,” according to a report from the BBC.

“India cannot become a software superpower if it does not ensure that makers of legal software get paid for their products,” Mehta said.

India is second only to the United States in its funding of software development, spawning an estimated $2.6 billion in software sales and service exports for 1998/99, according to the BBC.

SANTA ANA, California
A Californian jury last week ordered Hyundai Semiconductor America Inc. to pay $9.5 million to a headhunter who claimed he was fired after he refused to follow Hyundai’s request to discriminate against black and female candidates.

Hyundai Semiconductor hired headhunter Jeff Abraham to fill positions at a computer chip manufacturing plant in Oregon in 1996.

Abraham said that a Hyundai human resources manager told him to stop forwarding applications for black and female candidates because company executives had decided to “hire as few as possible,” the Associated Press reported.

When Abraham refused, he said Hyundai retaliated by withholding commissions, severing business relations, and spreading lies about his company.

Hyundai Semiconductor, a division of Korean giant Hyundai Group, issued a statement insisting that the company does not discriminate and will appeal the verdict.

Special to Newsline from Canadian Correspondent Errol P. Mendes

TABER, Alberta
A 14-year-old male student last week shot two fellow students, one fatally, at a high school in the small town of Taber, Alberta, in circumstances that made it look like a copycat killing of the massacre in Littleton, Colorado, a week previous.

Student eyewitnesses claimed that the killer was wearing a blue trenchcoat.

Some commentary in Canada is turning to the ethics of the media in allegedly glorifying mass killings, creating a climate that tolerates violence, and invading the privacy of victims’ families.

The last fatal shooting in a Canadian high school was 20 years ago.

HOUSTON
A local television station in Texas last week sparked a debate over journalism ethics by accepting the help of a pro-Serbian man in securing the first post-bombing interview with Yugoslav president Slobodan Milosevic.

KHOU-TV acknowledged that its coveted interview was made possible by Bob Koprivica, a U.S. businessman of Serbian and Croatian descent, the Associated Press reported.

Koprivica, who calls reports of Milosevic’s ethnic cleansing “a lie,” brokered the interview and paid the travel costs for KHOU-TV’s military analyst Ron Hatchett to fly to Yugoslavia.

KHOU news director Mike Devlin maintains that Koprivica’s assistance did not influence Hatchett’s objectivity. Hatchett “asked all the appropriate questions,” Devlin told the Associated Press.

Media ethicist Bob Steele of the Poynter Institute said that KHOU’s acceptance of financial assistance from a biased source sets a bad example.

Journalists “should not be beholden to any organization or special interest group who, even though they may be good people, have intentions that may be counter to the intentions of journalism,” Steele said.

NEW YORK
The New York Times announced last week that it would no longer accept advertisements for tobacco products because it was concerned about the harmful effects of smoking.

The New York Times Co. said its ban would cover only the Times, and not the company’s other papers, which include the Boston Globe, reported the Reuters news agency.

Tobacco ads account for less than one percent of the Times’ $1 billion annual ad revenue, according to a statement from the company.

The paper will still accept tobacco companies’ advertisements for non-cigarette items, such as concerts and festivals.

YOUNGSTOWN, Ohio
Two Taiwanese executives were convicted last week of conducting economic espionage by stealing adhesive secrets from California-based Avery Dennison Inc.

The conviction of Pin Yen Yang and his daughter, Hwei Chen “Sally” Yang, marks the first case to be filed under the 1996 Economic Espionage Act, which criminalizes the theft of trade secrets.

The Yangs were arrested in 1997 for paying an Avery Dennison employee $160,000 over eight years in exchange for confidential company papers, the Associated Press reported.

Defense lawyers immediately filed for a mistrial, claiming federal prosecutors did not prove their case and that the Act had been misapplied.

WASHINGTON
In a related story, the U.S. government admitted that Taiwan-born scientist Wen Ho Lee, the target of an FBI investigation since 1996, had transferred massive amounts of classified nuclear information to his unclassified computer for more than a decade.

Energy secretary Bill Richardson called Lee’s actions an “egregious breach of security,” prompting further criticism over the government’s investigation of the alleged theft of nuclear secrets from Los Alamos National Laboratory by the Chinese, according to the Associated Press.