Ethics Newsline®

“Something is clearly wrong with the equation,” said my companion as we stood in a gleaming shopping center housing dozens of upscale stores.

We were in the heart of Guangzhou, China, an ancient, sprawling city where the juxtaposition of old and new is startling. In the shadow of glass-box skyscrapers, a visitor finds thousands of locals living in warrens of winding alleys so narrow that a tall man can almost touch buildings on both sides. Next door to a shop selling high-tech audio equipment is a store where an ancient iron contraption grinds sugarcane into a traditional summer drink. And as we walk by a toothless shoe repair craftsman squatting on the sidewalk in the murderous midday heat, wearing only a pair of ragged shorts as he sits idly among some rusted tools, frigid air conditioning blasts from the front door of a fashion boutique.

The “equation” in question deals with the fact that in an economy where many professionals in modern China still hold jobs that pay, perhaps, the equivalent of $400 per month, hundreds of everyday Chinese swarm the new shopping centers, buying $40 shirts and $200 watches.

“Most of the people around us probably have two incomes,” said my companion, who did not want his name used in print. “The official income and the money that comes off the books.”

Off-the-books income, he explained, can come from legitimate side businesses or, commonly, from kickbacks and bribes.

For example, he explained, officials who are in charge of awarding contracts may receive gifts of goods or services that are individually small but, in aggregate, contribute substantially to their standards of living. Or workers for state enterprises may arrange their purchases through suppliers who kick back money or extra goods that are resold on a black market.

Such an underground economy, he ventured, is virtually inevitable in a society undergoing a transition from the “iron rice bowl,” a system of guaranteed but low-paying jobs, to the relative free-for-all of capitalism.

Like most people I met and interviewed while traveling through China, my companion was reticent to talk with an American reporter, especially one he had just met, about corruption. While corruption at some level seems to permeate the economy, it is something the Chinese government takes seriously. Recent high-profile cases have involved the execution of public officials who took bribes and kickbacks that frankly, by U.S. standards, seem minor-league.

Anticorruption drives in China have worked their way down to the rank and file. Despite the disintegration of the iron rice bowl, the Communist party still is woven into the fabric of many organizations, and during at-work party meetings, employees are instructed to inform on coworkers engaged in corruption.

But not surprisingly, such efforts meet with resistance. “We have a saying in China,” a businessman who has attended such meetings told me, “and it translates to something like, ‘hurt me an inch and I’ll hurt you a foot.’ While there are penalties for corruption, there are also very real penalties for informing on your coworkers.”

So is there a real, perceptible change in readings of the nation’s moral barometer when examining corruption issues? In some cases, yes, in others, apparently not. While the government has received recent praise from independent monitoring organizations for its efforts to crack down on corruption, the visible rewards of the capitalist system stand at odds with the remnants of a system that until only a few years ago vigorously and sometimes brutally discouraged acquisition of wealth. At the same time that the government mounts public demonstrations of crackdowns on piracy, a print shop in Guangzhou openly exhibits phony famous-name manufacturers’ labels for sale, and Hong Kong street stalls along a famous shopping district openly display catalogs with photos of real Rolex watches and Gucci bags so that shoppers may conveniently choose their counterfeit item.

Such are the contradictions of the evolving Chinese economy.

(c)2000 by Carl Hausman

Are gas prices skyrocketing because of price fixing or simply because of an unfortunate sequence of events? Probes into charges of market rigging often lead our report in Business Ethics Newsline, and this week is no exception, as we examine press reports that the U.S. government is investigating allegations against the petroleum industry. And we follow with a related story about alleged price fixing among European Union banks.

From the international business desk come five stories: a court ruling that Massachusetts may not penalize companies dealing with a nation suspected of human-rights abuses, a UN agency’s claim that globalization hurts job stability, a probe into Canadian brokerages, the release of the names of 15 nations suspected of high rates of money laundering, and a political scandal in Thailand revolving around that nation’s anticorruption bureau.

We follow with three stories dealing with litigation and equity issues: a settlement in a case where an insurance company was accused of overcharging minority clients, a proposed class-action race-discrimination suit against Nextel, and a U.S. court’s ruling that female flight attendants who were held to more exacting weight standards than men were victims of discrimination.

And we wrap up this edition with a story from the technology file dealing with the difficult definition of the word “public” — in this case, the financial records of the nation’s federal judges, which are now being made available on the Internet.

Have a productive, ethical week.

– Carl Hausman

WASHINGTON
The Federal Trade Commission (FTC) last week announced it will expand its investigation into the causes of soaring gas prices, following suggestions that collusion and price fixing by oil firms were partly to blame.

The government’s announcement was accompanied by promised subpoenas and a letter of inquiry sent to the heads of six major petroleum companies, who were asked to explain their pricing policies, CNN reported.

BP Amoco, Citgo, Exxon Mobil, and Phillips Tosco Corp. were among the firms targeted by the letter, sent at the behest of the U.S. Justice Department and the Environmental Protection Agency.

Oil executives dismissed the accusations, insisting that low supplies, high taxes, and a host of complicated environmental regulations are to blame, an assessment backed last week by a report from the Congressional Research Service.

That report assigns the fault for skyrocketing prices to two factors: supply and distribution problems, and new regulations requiring the use of a less-polluting, more-costly fuel known as “reformulated gasoline,” according to the Los Angeles Times.

FTC head Robert Pitofsky promised a preliminary report by mid-July, but said a “thorough investigation” may extend well past that time, according to the Reuters news agency.

Last week, the Organization of Petroleum Exporting Countries (OPEC) agreed to boost oil exports to 25.4 million barrels a day, a slight rise of 780,000 barrels.

That may prove to be cold comfort for the nation’s drivers, especially in Midwestern cities such as Detroit and Chicago, where pump prices spiked to $2.13 per gallon last week. The national average last week was $1.68, according to the Times report.

BRUSSELS
The European Commission last week said it has found evidence of price fixing among EU banks, which the Commission claims colluded to inflate the fees charged to consumers for changing currency.

EU antitrust head Mario Monti announced the findings last week, saying that 120 banks and banking federations had been implicated in the price-fixing scandal, according to the Associated Press.

Monti said letters ordering the banks to change their practices could go out before the end of the summer.

The announcement follows a series of raids conducted last year against some of Europe’s leading banks, including Deutsche Bank and Dresdner Bank of Germany, Societe Generale of France, and the Bank of Ireland.

Consumers long have complained that EU banks are inflating fees when changing money from one currency to another, the AP reported.

Monti last week said such claims seem credible under the weight of mounting evidence against Euro-zone banks.

The EC investigation is expected to continue throughout the summer.

WASHINGTON
The U.S. Supreme Court last week struck down a Massachusetts law that penalizes companies doing business in Burma, also known as Myanmar, saying the law intrudes on the federal government’s exclusive right to construct foreign policy.

The ruling, while narrowly written, is expected to have a spill-over effect across the country, where a number of other cities and states have adopted similar laws meant to bolster human rights.

The Supreme Court’s ruling came in the case of a 1996 Massachusetts law that required companies doing business in Burma to add 10 percent to their bids for city contracts.

About 580 multinational firms sued to block the law, and business organization complained that such strictures made doing business difficult.

“Nobody is saying Burma is a fine upstanding citizen. But it becomes impossible for a company to do business if every state and locality has their own foreign policy,” U.S. Chamber of Commerce general counsel Stephen Bokat told the Washington Post.

The federal government also sided against Massachusetts, saying the city had trespassed on the federal right to establish foreign policy, reported the Los Angeles Times.

The Supreme Court held that the state act compromises the “capacity of the president to speak for the nation with one voice in dealing with other governments,” justice David Souter wrote for the Court.

Proponents of the measure defended its aim, pointing out that similar measures in the 1980s were largely credited with ending South African apartheid.

“It’s important that American corporations get a sense that they are really going against a growing trend in the U.S. — that people care about human rights around the world,” the law’s author, state representative Byron Rushing, told the Associated Press.

Rushing and other Massachusetts legislators have signaled that the fight against Burma is far from over. Lawmakers last week announced a proposal to divest the state’s $32 billion pension fund of any companies doing business in Burma, noted the AP report.

GENEVA
Economic globalization, which has boosted sagging economies and fattened corporate bottom lines, also has a downside: job insecurity for workers, according to a report from the International Labor Organization (ILO).

In its World Labor Report 2000, released last week, the ILO outlines an especially grim scenario for workers in the developing world, especially in Asia, Africa, and Latin America, where most have no unemployment, retirement, or health insurance safety nets, according to the BBC.

Central and Eastern Europe also received poor marks in the report, which noted that governments there have quickly shed their socialist pasts, leaving more than half of their unemployed workers with no financial security.

Britain, with the highest jobless rate of all EU member nations, was also faulted for providing its unemployed workers with lower benefits for a shorter period of time than in other EU countries.

In Britain and elsewhere, it’s getting easier for companies to hire and fire workers rapidly, and harder for the unemployed to scrape by while trying to find work again, according to the ILO report.

The ILO urged governments to step in on their workers’ behalf — not by hindering globalization, but by bolstering benefits and job training programs for the unemployed.

While some analysts argue that improving benefits only encourages the unemployed to stay on the dole and dampen GDP, the ILO report disagrees. Workers who feel secure at work accomplish more and adapt more quickly to changing technologies, boosting a company’s productivity and profits, according to the ILO.

Special to Newsline from Canadian correspondent Errol P. Mendes

TORONTO
The National Post is reporting that brokerages owned by the Royal Bank of Canada, the Canadian Imperial Bank of Commerce, and the Bank of Montreal, along with a dozen Canadian and foreign firms are being investigated by the Ontario Securities Commission and the Toronto Stock Exchange for suspected stock manipulation.

The investigation centers on the practice known as “high closing,” which seeks to improve the performance of investment funds by artificially boosting the price of the stock at the end of the trading day. This practice penalizes the retail investor who may consequently have overpaid for stocks bought at the end of the trading day, the paper reports.

One of the key pieces of evidence, according to the Globe & Mail, is a set of taped conversations between employees at Royal Trust Capital Management, the pension management arm of the Royal Bank and staff at other brokerages.

This latest controversy in a series that have hit the Canadian financial sector has focused attention on whether the boom in equities trading and profit making has undermined the critical ethical parameters of this sector of the economy.

PARIS
Fifteen nations — including Israel, Russia, the Bahamas, and the Cayman Islands — were named last week by the Financial Action Task Force (FATF) as havens for money laundering.

Last week’s list marks the first time the FATF, an agency created by the G7 economic powers, has publicly identified governments in a bid to clamp down on banking fraud, reported the Reuters news agency.

The group estimates that $600 billion, roughly the value of the entire Canadian economy, flows through the world’s banks in illegal money-laundering operations each year, Reuters reported.

Following last week’s naming of 15 “noncooperative” banking havens, FATF president Gil Galvao said some governments have already “promised to act” to get off the list “as fast as possible.”

U.S. banks will be asked to pay special attention to transactions with the listed countries, according to deputy Treasury secretary Stuart Eizenstat, who was quoted in the Washington Post as saying the list is intended not to punish countries but to bring them “into international compliance with high standards.”

Special to Newsline from Carl Hausman in Thailand

BANGKOK
A dispute has erupted over an order to suspend the head of Thailand’s anticorruption agency pending a determination of charges he violated civil service regulations by holding shares in a private accounting firm.

The Bangkok Post reports that seven of ten directors of the Audit Commission have signed a letter protesting the suspension of Nontaphon Nimsomboon, claiming that no wrongdoing was established and that the charges are relatively minor and technical in nature.

The subtext of the controversy revolves around a long-standing dispute over the composition of the board that battles corruption, with appointments of the directors earlier this year marred by widespread allegations of political interference and influence peddling.

According to the Post, an earlier campaign to discredit Nontaphon Nimsomboon included three apparently staged accidents involving Nontaphon’s cars, arranged by an opponent to expose Nontaphon’s failure to pay car registration fees.

The new Thai constitution gives Nontaphon’s office, reporting directly to Parliament, responsibility for auditing local administrations, state enterprises, and government agencies.

NEW YORK
American General Life and Accident Insurance, the nation’s third largest life insurer, last week agreed to pay more than $215 million to settle charges that the company discriminated against its poor and black policyholders by forcing them to pay inflated rates.

Plaintiffs claimed that nearly five million black customers were charged more than whites for identical policies, and several million others were conned into paying more in premiums than their policies were worth, reported the Reuters news agency.

American General’s alleged race-based rate inflation goes back several decades, continuing past the time when most other companies dropped their differential price policies based on race, noted the Reuters report.

Florida insurance commissioner Bill Nelson, whose office uncovered the alleged discrimination during a three-year investigation, announced the settlement last week.

“It’s tragic that this discrimination and exploitation occurred in the first place, but it’s incomprehensible that this practice occurred up until just a few days ago,” Nelson said.

American General’s settlement will be divvied up among several parties, with the bulk — $206 million — allocated for cash refunds and increased death benefits for affected policyholders.

The insurer will also pay a $7.5 million fine and give $2 million to the National Association for the Advancement of Colored People.

American General head Robert Devlin said his company “moved swiftly and responsibly to correct the regrettable historical practice of differential pricing,” which affected people holding roughly 9.1 million policies designed to cover the costs of funerals and burial.

Last week’s settlement still must be approved by the court and U.S. insurance regulators. Four other insurance firms also are under investigation for similar discrimination, according to the Associated Press.

WASHINGTON
Minority employees at Nextel Communications Inc. last week asked the federal government to certify a class-action lawsuit accusing the wireless-communications firm of widespread employment discrimination.

More than 300 current and former Nextel workers charge their employer with fostering a hostile work environment, and denying minority workers warranted promotions and equal pay.

Lawyers for the plaintiffs said they will seek more than $1.76 billion in damages.

In addition to compensatory damages, plaintiffs plan to demand that Nextel “commit more than $2 billion toward diversity programs,” Jeffrey Brown, a partner at Leeds Morelli & Brown, the firm representing the plaintiffs, told the Reuters news agency.

The law firm last week began filing workers’ complaints with the Equal Employment Opportunity Commission (EEOC), which must review the case before certifying it for class-action status, according to the Associated Press.

Brown, who said his clients suffered physical and emotional injury as a result of the workplace abuse, complained that the “problem is so severe and so pervasive that this is the only thing that can be done.”

Nextel last week issued a statement blasting Brown and his firm for demanding outrageous legal fees and sabotaging the company’s efforts to address the allegations out of court.

Nextel is “committed to creating and sustaining a work environment that … prohibits discrimination or harassment on the basis of race, gender, sexual orientation, religion, or other inappropriate grounds,” the company said in a statement.

The EEOC, which often tries to forge settlements in such cases, is expected to take up to six months to determine the legitimacy of the plaintiffs’ charges before approving their class-action status, according to the AP report.

SAN FRANCISCO
United Airlines violated the rights of its female flight attendants when the company devised less forgiving weight guidelines for female flight attendants than for men, a U.S. federal appeals court ruled last week.

The court’s decision fundamentally overturns a lower court’s 1995 ruling, which said the issue had been settled in 1979, when the weight standards were found to be merely misapplied, not discriminatory.

In a 2-1 ruling, the 9th Circuit Court of Appeals said the lower courts had been wrong to dismiss the allegations, finding that United clearly discriminated against its female flight attendants.

Plaintiffs charge that the airline forced women to stay thinner than men of the same age and height in a bid to keep female flight attendants slim and attractive, according to plaintiffs’ lead attorney Edith Benay.

Last week’s ruling, which likely will be appealed by United, clears the way for plaintiffs to begin calculating damages based on the discriminatory weight guidelines, noted the AP report.

United eliminated the controversial weight standards in 1994.

NEW YORK
Crime-reporting Web site APBnews.com last week posted online the financial disclosure statements of the U.S. Supreme Court justices, the first of 1,600 such statements from federal judges to be posted after a judicial group controlling the information relented after months of litigation.

The postings follow a contentious nine-month battle with the Judicial Conference of the United States, which had fought APBnews’ efforts to distribute the information over the Internet.

Federal officeholders’ disclosure statements already are a matter of public record, legally available to the public by written request. But APBnews.com wanted to extend such access to the Web.

The Judicial Conference rejected the news group’s request last September, insisting that posting judges’ statements online would broadcast the information too indiscriminately, possibly posing a danger to the judges.

APBnews.com argued that the statements do not list private details, such as addresses, Social Security numbers, or family members’ names. Instead, the documents list officeholders’ assets, investments, loans, gifts, and free travel — interests that potentially could bias judges’ decisions.

Last December, APBnews.com sued to gain access to the documents. After a settlement attempt and congressional inquiries into the matter, the judges finally relented last week.

“This is a clear victory for advocates of government openness,” APBnews.com attorney Mark Zaid said, noting that the documents contain “information regarding the federal judiciary that could affect fairness.”

More than 800 federal judges’ disclosure statements, slightly redacted for online publication, were handed over to APBnews.com last week. The remaining 800 will be turned over in “the near future,” according to the Administrative Office of U.S. Courts.

From the Kaiser Family Foundation:

“Although Americans report mostly positive experiences with their health insurance plans, one in two say they’ve had a problem with their plan in the last year, according to a new survey released by the Kaiser Family Foundation. Most problems appear minor and easy to resolve, but a significant minority involve serious reported consequences and are difficult to settle.

“The survey of 2,500 insured adults ages 18-64 found that most consumers are confused about where to turn for help in resolving problems with their health plans, especially with regard to the right to appeal health plan decisions to an independent expert….

“‘When one out of every two people reports having a problem with their health plan, it suggests that the pressure behind the patients’ rights debate is grounded in real patient experiences, not just anecdotes,’ said Drew Altman, Ph.D., president of the Kaiser Family Foundation. ‘But we also need to keep in mind that most of these problems are more hassle than horror story,’ he added.

“Most people (83 percent) who have had contact with their plan in the last year say that their recent experiences in dealing with their plan have been positive. Even among those who say they have had a problem with their plan, most (71 percent) report their recent experiences as positive….

“Overall, 51 percent of insured Americans under age 65 report having some problem with their health plan in the last year. Women, those in ’strict’ managed care plans, and those who are in fair or poor health or who have a health condition are most likely to report problems….

“Almost two in five (38 percent) of people experiencing problems (or 19 percent of all insured adults) say there was a financial consequence to the problem (i.e., they ended up paying more for treatment or services than they normally would have)….

“About one in five (21 percent) of people experiencing problems say they lost time from work, school, or other major life activities as a result. While most cases involved relatively little time lost, it amounted to at least a week in 28 percent of these cases….

“About one in five (21 percent) of people with problems say they experienced a decline in health as a result. Most said it was ‘not too serious,’ though a small minority (6 percent of those with a problem of any kind) said the decline resulted in a permanent or long-lasting disability….

“Most people are satisfied with the resolution to their problems — nearly half said their problem was resolved to their satisfaction. Twenty-three percent said it was resolved, but not the way they would have liked, and 28 percent said their problem had not yet been resolved.

“More serious problems appear to be more difficult to resolve. Among those whose problems had a high impact (involving financial consequences, lost time, or reported health declines), only 20 percent said the problem was resolved to their satisfaction, 31 percent said it was resolved but not the way they would have liked, and 49 percent said the problem had not yet been resolved….

“When asked what resources would be helpful in resolving health plan problems, people gave the highest marks to appeals to an independent medical expert (87 percent said it would be ‘very’ or ’somewhat’ helpful), an independent place to turn for help (84 percent), and someone at work whose job it is to deal with health insurance issues (81 percent). Somewhat fewer people identified a state agency (74 percent), or the right to sue (69 percent) as helpful….”

“Economy does not consist in saving the coal, but in using the time while it burns.”

– Ralph Waldo Emerson (U.S. essayist and poet, 1803-1882)

Mr. Kidder -

Regarding your piece on the possible connections between films and social violence (Newsline commentary, May 29), based on the recent school shooting in Florida, I’d like to make a few observations….

I agree with and support the view that there is indeed a connection between media violence and the social/mental climates that so greatly influence adolescents (and a lot of adults for that matter). I also agree that filmmakers should take some social responsibility for the impacts of the films they produce. And while that may do some good, I question if it is enough. Is it really safe to assume that a “seethe of moral indignation” will indeed reach the box office? After all, there will always be those whose ethical and moral standards fall well below what might be considered acceptable by a majority of the world. So there would always be someone willing to risk social censure and keep on making those kinds of films…. [A]s long as there is a market for violence, someone will be willing to feed that market….

How do we control these issues? How do we encourage or create the tide of moral indignation that will drown the menacing hordes that have nothing but money and fame on the brain? We need a grassroots movement that is supported at the highest levels. We need parents who understand the issues and teach family values that generate that indignation in their children. We need community and political leaders who are willing to take a moral stand. And we need a justice system that will support such a moral stand.

Unfortunately, there is such apathy these days on so many issues of importance. It shows in declining voter turnout numbers, it shows in the pleas from our schools for greater support in parent/teacher groups, and it shows in the increasing number of incidents like the school shooting in Florida. Even if a great number of filmmakers choose to make ethical and moral decisions with regards to the films they make, will we as a society embrace those decisions with enough enthusiasm to sustain the movement? Aye — there’s the rub.

– M. Nall
Fort Lauderdale, FL

Over dinner last Tuesday in Silicon Valley, I found myself sitting between a high-tech CEO and the Web master of a leading consulting firm. We talked about Microsoft, about privacy, about the financial markets, about government regulation of the Internet — all the big topics for the new economy.

Then we got to the CEO’s really big question: Where can I find employees, and how can I keep them once they’re here?

Looking around, you can understand his concern. Silicon Valley is pretty much Ground Zero for national unemployment. For the skilled and talented, there are jobs hanging from the proverbial trees. No sooner does a start-up get its people up and running than some giant lures them away — or gobbles up the whole firm in a talent drive.

Under such pressure, small companies can panic. They can cut corners, lower standards, break promises — whatever it takes to lure talent. This CEO was holding the moral line, firmly. But he could see the dangers all around him.

As it happens, a survey released that same day in Washington, D.C., plays directly into his hands as he questions how to retain employees. Its answer? Build an ethical company. Set high ethical standards. Create a clear code of ethics. Provide programs (like training and help lines) that reinforce the code. Model the values of honesty, respect, and trust at the top leadership level. Do this, and your employees will reward you with surprising degrees of loyalty.

The results come from the 2000 National Business Ethics Survey, conducted by O’Neil Associates for the Ethics Resource Center (ERC), a Washington-based nonprofit focusing on business and organizational ethics. In it, the 1,491 nationwide participants were asked, among other things, to respond to the statement, “My organization’s concern for ethics and doing the right thing is an important reason that I continue to work here.” Seventy-nine percent either strongly agree (22 percent) or agree (57 percent).

As the ERC report notes, this finding “gives employers another reason to focus on ethics in their efforts to recruit and retain employees. If even a quarter of employees act on these perceptions, the consequences for organizations can be substantial.”

That will be especially true in Silicon Valley, home to so many small start-ups. The effect of this ethical glue is even more important in firms with fewer than 500 employees, where 82 percent cite “ethics” as a significant reason they continue to work for their present employer.

Continuity, however, is not the only indicator that rises in response to sound corporate ethics. As the survey makes plain, employees who see ethical values applied frequently in the workplace say they “feel less pressure to compromise ethics standards, observe less misconduct, are more satisfied with the response to reported misconduct, are more satisfied with their organizations overall, and feel more valued.”

Creating an ethical corporate culture, however, is apparently not easy. To be sure, the new report finds steady improvement in the corporate moral barometer since the previous ERC survey in 1994. Yet one in eight employees still feels some pressure to compromise ethical standards at work — predominantly because of the influence of their supervisors, top executives, or coworkers. And one in three employees says they have observed unethical conduct in the past 12 months.

Nor are the top five observed offenses merely trivial:

• Lying to employees, customers, vendors, or the public (26 percent)
• Withholding needed information from employees, customers, vendors, or the public (25 percent)
• Abusive or intimidating behavior toward employees (24 percent)
• Misreporting actual time or hours worked (21 percent)
• Discrimination on the basis of race, color, gender, age, or similar categories (17 percent)

If you’re the CEO, it’s not rocket science to conclude that these behaviors militate against teamwork, quality, customer satisfaction, and the rest of today’s management buzzwords. But it may not have crossed your mind that fighting these behaviors with a solid, widespread ethics program also improves retention.

In a business where most of your investment walks out the door every evening, it’s worth doing whatever you can to bring it back in the next morning. The research now makes it clear that sound, explicit, well-modeled ethics helps you do exactly that.

(c)2000 by Rushworth M. Kidder

Pressure on business is unrelenting, and it takes a toll on the people who must respond to it. In an atmosphere where investors demand rapid success and instant profits, the role of manager becomes a hot seat.

In such an atmosphere, concern for the bottom line has a tendency to override the ability of businesses to successfully maintain practices that meet meticulous ethical and regulatory standards, and to devote the time needed to ensure that rights of customers and employees are safeguarded. It is, of course, when they fail to meet their ethical responsibilities, that the spotlight of public attention focuses most harshly on business, and it is that to which we as a society are inclined to devote our attention and concern.

In keeping with this reality, our stories this week again concern the nexus of business profitability and social responsibility.

In a key decision last week, the U.S. Supreme Court considered a case concerning HMOs and their policies to contain costs by encouraging physicians to limit the availability of treatments offered to patients. In a case involving an attempt to sue an HMO in federal court for actions resulting from such cost containment practices, the Court ruled that federal law does not permit plaintiffs to sue their HMOs on that basis.

From Russia comes a story about the use of alleged business irregularities as the reason for jailing a media mogul who has been critical of the government. Many say accusations of business-related infractions constitute a smokescreen that permits the Russian government to retaliate against a journalistic critic.

The securities industry is the focus of two stories this week. We report on arrests in a case that involves organized crime and brokerage firms accused of a widespread scheme to inflate the value of stocks using threats and extortion to ensure cooperation by some brokers. The Japanese government, meanwhile, imposes tight controls on foreign securities industries accused of failing to follow laws that the affected businesses call antiquated.

Two industries made news last week as they confronted issues relating to corporate social responsibility. Raytheon reimbursed the government after improperly billing it for tests it never performed, while a report from Canada notes a turnabout by executives of that nation’s leading tobacco companies, who have admitted for the first time that the cigarettes they manufacture and sell are harmful to the health of the customers who use these products.

We report on several recent actions that require businesses to concern themselves with their treatment of various categories of people. The U.S. Supreme Court ruled that plaintiffs in age discrimination cases may not be required to produce new evidence in order for their claims to hold up at the appeals level, and a treaty approved by an international labor group requires businesses to institute additional measures to aid working mothers. The treaty is not expected to be ratified widely, however. Meanwhile in India, the government is considering controversial legislation proposing that corporations there be required to set aside a specified percentage of board positions for women.

A story from Newsline’s Carl Hausman, reporting from China, notes the struggles of technology and pharmaceutical businesses there as they struggle with the government’s lax enforcement of intellectual property laws. And in Canada, news reports describe studies that show that ecommerce is developing more slowly than in the United States due to consumer mistrust of online security when purchases are made, according to a story filed by our Canadian correspondent, Errol P. Mendes.

Workplace stress can be costly to lower-level workers, as well as to mid-level and top-level management. From England comes a report that “bullying” of workers by stressed out mid-level managers results in measurable losses in productivity because of increased absenteeism and poor morale. At the top management level, a story reported by the Reuters news agency this week notes that shareholders anxious for instant high returns on their investments bring pressure to bear on CEOs to produce large corporate profits quickly or face the prospect of losing their jobs.

– Philip Benoit