Ethics Newsline®

The number of employers keeping tabs on their workers’ use of technology — from email to phone calls, from Web surfing to saved files — has jumped dramatically over the past few years, according to a recent report from the American Management Association (AMA).

Companies often offer two principal reasons for conducting surveillance: boosting productivity, and protection from lawsuits. But the AMA warns that firms hoping to avoid lawsuits via surveillance may ironically be setting themselves up for related suits: violation of privacy lawsuits filed by employees who were not told they were being monitored. Indeed, experts say roughly one-third of firms watching over their workers’ keystrokes and phone calls do so without telling their employees.

The AMA’s advice: Go ahead and monitor, but be sure you disclose your policies. Lawmakers last week introduced legislation that would back up that advice with stiff fines for firms that opt to stay mum about monitoring. The new bill would slap employers conducting covert surveillance with fines of $20,000 per employee and $500,000 per incident. For a snapshot of the AMA’s figures, see below.

Source: American Management Association’s Annual Electronic Monitoring and Surveillance Survey.

A letter regarding Rushworth Kidder’s Newsline commentary, “Ethics and the Human Genome” (July 3, 2000).

Dr. Kidder:

One thing is to look into the morality of the project itself, which should be seriously done. And another is to dig into the intentions and the value systems of the people behind the project.

I would be afraid if these “experts” didn’t believe in the existence of universal moral laws and man’s absolute dependence on God.

Dr. Zen Udani
University of Asia and the Pacific
Pearl Drive, Ortigas Center, Pasig City, Philippines

Among the world’s most puzzling chicken-and-egg riddles is the one about unethical behavior. Which came first: the bad things people do, or the unethical culture in which they do them? Is the organization simply the sum of the ethics of the people in it? Or does it determine the actions — good or bad — of its people?

With the indictment of two former officials of the Salt Lake Olympic Committee, this question of moral determinism is now squarely before the courts.

Charged are former bid committee president Tom Welch and his senior vice president, David Johnson. Their bid was successful: The International Olympic Committee (IOC) awarded the 2002 Winter Olympic Games to Salt Lake City. The indictment, which follows a 19-month federal investigation, posts a laundry list of corrupt activities beginning in 1991. Detailing more than $1 million in payments to “influence” the votes of 15 IOC members, it describes:

• funds wired to foreign banks, cash-stuffed envelopes changing hands at airports and hotels, and a scheme to alter the committee’s account books
• payments for luxury travel and vacations, for “scholarships” and fancy apartments for committee members’ children at U.S. universities, for medical care at Utah hospitals, and for a mayoral campaign in Chile
• free plastic surgery, firearms, a purebred retriever, and the payment of an American Express bill
• the diverting by Welch and Johnson of about $130,000 of bid committee revenue for their own purposes

In one sense, it’s a ho-hum indictment, merely adding chapter and verse to a corruption scandal that has already saddened the world. Since the problem surfaced in early 1999, ten IOC members have resigned or been expelled and, last December, the IOC passed a 50-point reform plan.

But there’s a curious twist in this case. Statements by Welch and Johnson suggest that when it comes to trial — on a schedule uncomfortably close to the opening ceremonies of the Winter Games on February 8, 2002 — they’ll use a form of “the-devil-made-me-do-it” defense.

Responding to the indictment, Welch observed that “we did what we, and many other people, thought was absolutely necessary and in keeping with the ideals of the community.” Johnson noted that “our efforts to win the Winter Olympics were consistent with the goals and mission of the bid committee. We operated in a culture that others created.”

Given current levels of international corruption, Welch and Johnson probably believed that they, too, needed to bribe. That, however, is hardly a defense. It’s little more than muddled thinking. It comes from a public confusion about the nature of ethics. Asked to define that term, many people, I’ve noticed, use phrases like “what’s proper” or “what’s appropriate” or “what’s acceptable.” To be sure, ethics is embedded in cultural norms. But it rests on core principles that, for most people, are essentially aspirational. Ethics is not simply what’s around us — it’s where we’re going. It’s the willingness to listen to our better angels nudging us upward, rather than sinking to the “everybody-does-it” standard.

That’s especially important in the Olympics. What makes corruption so unethical is its unfairness. It deceives others into believing there’s a level playing field, while tilting the arena invisibly to favor those who pay most. Yet competitive athletics is all about fairness. Remove that moral standard, and sports degenerates into competitive dishonesty.

In the fast-breaking, high-stakes games of the Olympics, the roar of adrenaline can be deafening. In the gotta-do-what-you-gotta-do culture, winning can seem to be everything. Who sets the standards, if not those at the top? If the only standard is “a culture that others created,” what’s really being said is that individuals are wholly in the grip of the organizations around them. It settles the chicken-and-egg question very simply: The influence of the culture always trumps the power of the individual.

Fortunately, our law enforcement structures don’t see it that way. Hence this indictment. Yes, the culture may need redeeming, in Salt Lake City and around the world. But that doesn’t excuse individuals from taking responsibility for their actions. Perhaps, when Welch and Johnson tell their stories in court, many more individuals will find they should have taken responsibility for the culture.

(c)2000 by Rushworth M. Kidder

There are many names and nicknames for the emerging digital infrastructure, including the “Internet,” the “Web,” and the “Information Superhighway.” But one appellation may sum up the technology best of all: “The World’s Greatest Copy Machine.”

The ability to copy complex information with little effort — indeed, the mere click of a mouse — prompts intriguing ethical dilemmas, including our lead story this week. We summarize and link you to reports about what may be one of the more significant cases involving the fate of intellectual property on the World’s Greatest Copy Machine: the injunction against the music-swapping service known as Napster.

And we follow with two more high-tech ethics items: a series of fines against online retailers that failed to meet delivery dates, and bills introduced in both houses of Congress to limit employers’ rights to snoop on workers’ electronic communication. (For more details on this latter story, see this week’s Statline and Research Report.)

From the international business desk come four reports: praise for a UN-backed statement of principles for multinational firms, a death sentence in a Vietnamese fraud case, a Japanese firm pleading guilty to price fixing, and reaction to efforts to stanch the trade in so-called “blood diamonds.”

Next, a story dealing with ethics and finance: a settlement in a case where a broker is alleged to have routed transactions through third parties without informing customers.

We have two provocative Trendlines reports this week: a look at a Wall Street Journal report claiming that companies use tricky math to lower the value of pension funds without employees’ knowledge, and a link to an AP investigation claiming many companies that have been convicted of defrauding the federal government remain eligible for federal contracts.

And we conclude this edition with a “Whatever Happened to…” follow-up on the continuing trade flap between Canada and Brazil over subsidies to aircraft manufacturers.

Have a productive, ethical week.

– Carl Hausman

SAN FRANCISCO
In a case that could have far-reaching effects on the legal status of intellectual property in the age of consumer-level digital technology, song-swapping software site Napster was ordered last week to shut down its service by U.S. District Court judge Marilyn Hall Patel, who slammed the company for fostering “wholesale” infringement of U.S. copyright laws.

Napster later won a stay of the shutdown from a federal appeals panel, and will be allowed to stay online until the case comes to court. No date has yet been set.

Napster, created by a 19-year-old college dropout, allows users to scan each others’ computers for digital music files, which then can be traded freely via Internet connections.

Released in August 1999, Napster has become an Internet phenomenon with an estimated 20 million users swapping an average of 14,000 songs every minute, according to the New York Times.

The Recording Industry Association of America (RIAA), several popular musicians, and other groups filed suit against the company, claiming Napster has fostered wholesale piracy and cost more than $300 million in lost sales, the San Francisco Chronicle reported.

Napster counters that it merely serves as a conduit for users and frowns on piracy. But even if Napster fans are swapping files stripped from their CDs, the company says such activities should hardly raise eyebrows because people routinely copy cassette tapes and TV show broadcasts.

Judge Patel rejected that line of argument, ruling that the company’s primary objective appears to be enabling wholesale copyright violations, not the legally protected duplication of works for personal use, according to the Times report.

The case against Napster is the latest round in an escalating battle over the reach of U.S. copyright protections on the digital frontier, where ephemeral connections and rapidly changing technology have spawned widespread distribution of protected works.

The RIAA welcomed last week’s injunction as a crucial step in demarcating online copyright protections. A spokesperson for the association later expressed disappointment with the stay, but said members remain confident the court will ultimately shut the service down.

WASHINGTON
Seven online retailers were fined $1.5 million last week following a government investigation into the firms’ tardy shipment of customers’ orders last Christmas season — a holiday buying period some observers regarded as the first big test of the viability of Internet shopping.

The companies, including CDNow and the online sites of Toys R Us, KB Toys, Original Honey Baked Ham Company, and Macy’s department store, were charged with failing to warn customers that orders would not arrive on time for Christmas day as promised.

Under federal law, companies that take orders via mail, phone, or Internet must deliver goods according to their promised schedule or within 30 days if no date is specified. If the shipment will be delayed, companies must provide customers with notification and the option to accept the delay or cancel the order.

The firms fined last week failed to follow those rules, according to the Federal Trade Commission (FTC), which launched an investigation following an avalanche of customer complaints after the holiday season.

Online shoppers accused the companies of stalling and stonewalling when it came to shipping delays, saying the companies denied problems they knew would prevent them from filling orders on time, reported the Washington Post.

Macys.com, Kbkids.com, and Toysrus.com were each fined $350,000, the largest of the civil penalties levied. Macy’s will also be required to fund an online advertising campaign consisting of banner ads informing shoppers of their rights under U.S. law.

Last week’s consent decrees, which still must be approved by the court, do not require the companies to admit any wrongdoing.

WASHINGTON
Lawmakers in the both the U.S. House and the Senate last week proposed new legislation requiring employers to tell their workers if their email, phone, and Web usage is being monitored, or face stiff fines for “eavesdropping.”

The bills, introduced by House Republicans and a Senate Democrat, call on employers to be forthcoming when dealing with workers’ use of technology.

“We would never stand for it if an employer steamed open an employee’s mail, read it, and put it back,” Senate sponsor Charles Schumer (D.-New York) said. “It is the same thing with an employee’s email.”

“We’re not saying, ‘abolish this practice,’ we’re just saying employees have a right to know when they’re being watched,” Schumer said.

“This legislation says to employers that if you are monitoring employees’ electronic communications, make sure you notify them first,” he said.

More than half of all U.S. companies currently monitor employees’ Web and/or email usage, often to protect themselves from future liability lawsuits and the loss of trade secrets, according to a report from ABC News.

But one-third of those firms keep such surveillance secret — a policy that could expose them to privacy lawsuits from employees who find out they have been covertly monitored, Internet policy expert Michael Overly told ABC.

The proposed legislation would make secret surveillance illegal and punishable by fines of $20,000 per employee and $500,000 per incident, according to the Associated Press.

UNITED NATIONS
United Nations secretary-general Kofi Annan last week welcomed the adoption of a “Global Compact” by the leaders of nearly 50 transnational companies, who agreed to go on record with their commitment to helping the world’s poor workers and damaged environments.

The firms agreed to post information on their “best practices” on a Web site for comment and criticism from the public, a move designed to make the firms more accountable as they extend their reach overseas.

Secretary-General Annan originally proposed the creation of the Global Compact in January 1999, warning that globalization could suffer a severe backlash if firms failed to respect the rights and environments of poor nations and people.

Last week, Annan said he welcomed the Compact as a sign that businesses had heard his message and begun to recognize their role in setting the pace for improving conditions worldwide.

“Companies should not wait for governments to pass laws before they pay a decent wage or agree not to pollute the environment,” Annan said. “If companies lead by example, the governments may wake up and make laws to formalize these practices.”

Applause for the Global Compact was not universal, however. Some groups have criticized the nonbinding Compact, which does not provide for any legal enforcement of its principles, as a convenient whitewash for firms with less than savory histories, the Reuters news agency reported.

But Phil Watts, an executive with Royal Dutch/Shell, insisted that the Compact nevertheless was a significant step to making progress in the global marketplace. In today’s environment of street protests, “there is no alternative to engagement,” Watts told Reuters.

Corporate signatories of the Global Compact included Bayer Corp., BP Amoco, DaimlerChrysler, Deutsche Bank, DuPont, LM Ericsson, Nike, Novartis, Royal Dutch/Shell Group, and Unilever.

HO CHI MINH CITY, Vietnam
A Vietnamese court last week ordered the execution of a local businesswoman for obtaining $27.8 million in fraudulent loans in the latest in a series of high-profile corruption cases culminating with a death penalty.

Business owner Tran Thi Hieu was convicted of fraudulently using the names of family, friends, and staff at her agricultural and garment firm to secure a series of loans in a far-reaching scandal implicating the management at several Vietnamese banks, reported the BBC.

Last week’s convictions also resulted in a sentence of life imprisonment for three former top-level bank executives, and sentences ranging from probation to 18 months in prison for 28 others.

The BBC notes that the stiff penalties are part of a get-tough-on-corruption campaign that spawned nearly 200 death sentences last year, a trend that worries some human-rights groups.

SAN FRANCISCO
Japan’s Daicel Chemical Industries Ltd. last week agreed to pay $53 million and plead guilty to criminal charges for participating in what the Justice Department charged was a multinational cartel that rigged the market for food preservatives known as “sorbates.”

Three of Daicel’s top executives were also indicted last week on related charges. The men, all Japanese citizens, each face up to three years in prison and fines of $350,000 if convicted, reported the Reuters news agency.

Daicel is the fourth firm to admit its role in the international conspiracy, which ran from 1979 to 1996 and affected nearly $1 billion in U.S. sales alone, the San Francisco Chronicle reported. U.S.-based Eastman Chemical Co. pleaded guilty to related charges last September and paid an $11 million fine. This summer, Japan’s Nippon Goshei and Germany’s Hoechst AG followed suit with guilty pleas and fines of $21 million and $36 million respectively.

The Justice Department says the firms rigged and divvied up the global market for sorbates, food preservatives used in high-moisture and high-sugar foods such as cheeses and baked goods.

As part of their agreements with the Justice Department, all the firms have agreed to cooperate with the government’s ongoing investigation into the conspiracy, according to Reuters.

Special to Newsline from Canadian correspondent Errol P. Mendes

CALGARY
Investor’s Business Daily is reporting that a Canadian expert, among others, is questioning the effectiveness of the program established by the World Diamond Congress to halt the trade in “blood diamonds” — gems that fund long-lasting and genocidal wars in Africa.

The program would set up a certificate system and audit trail to track the origin of diamonds so that without the right certificates, blood diamonds, also known as “conflict diamonds,” theoretically would not find buyers, and warlords who control diamond-mining areas would not be able to use proceeds to fund insurrection.

But Alfred Levinson, a University of Calgary geologist, tells Investor’s Business Daily that diamonds do not have DNA; once a gem is cut and polished, it cannot be traced.

He argues that an expert might be able to determine the source of diamonds if he or she had a large sample of raw stones, but once polished they are indistinguishable from any others.

Professor Levinson also argues that just like money, diamonds can easily be laundered through another country and then disguised with bogus labels. He adds that for $2 million, warlords could also build their own labs, bring in diamond cutters, and mix their diamonds with others from countries such as Brazil.

The diamond-identification program, called the “Antwerp Pact,” was pushed by De Beers, the South African firm that controls 65 percent of the world supply of diamonds.

SALT LAKE CITY, Utah
The U.S. Justice Department last week filed criminal charges against the two businessmen who led Salt Lake City’s successful bid to host the 2002 Winter Olympics, charging the men with 15 counts of fraud and racketeering.

Tom Welch, the former president of Salt Lake’s Olympic organizing committee, and David Johnson, the group’s former vice president, were indicted last week following failed efforts to reach a plea bargain.

The men denied any wrongdoing and claimed they are being scapegoated for simply doing what most cities traditionally have done during the Olympic site-selection process: plying International Olympic Committee (IOC) members with free gifts, services, and travel to curry favor.

According to the 15-count indictment, the Salt Lake committee bribed IOC members with such enticements as first-class airfare, medical care at Utah hospitals, free plastic surgery, firearms, and U.S. college tuition for their children, reported the Associated Press.

In addition, Welch and Johnson are accused of siphoning off $130,000 in funds for their personal use.

“Our efforts to win the Winter Olympics were consistent with the goals and mission of the bid committee,” Johnson said last week in a statement. “”We operated in a culture that others created. There was never, ever any intention to deceive anyone.”

Denouncing the charges as “preposterous,” Welch said he and Johnson “did what we, and many other people, thought was absolutely necessary and in keeping with the ideals of the community.”

The court now will have to decide whether Welch’s argument puts the actions outside the strictures of U.S. racketeering law, Loyola University law professor Laurie Levenson told the Los Angeles Times.

“If [Welch and Johnson] succeed in that argument, it’s like saying, ‘There were no rules. We did what we had to do.’ That’s the real issue that will face a jury: Were there any limits, any rules, governing Salt Lake’s conduct in trying to obtain the Olympics,” Levenson said.

Last week’s criminal charges are the latest fallout from the heavily publicized bribes-for-votes scandal that tarnished Salt Lake’s efforts to woo sponsors for the 2002 Winter games.

Three other people, including the U.S. Olympic Committee’s former director of international relations, have been convicted on related charges. And last December, the IOC adopted a 50-point reform plan meant to cleanse the site-selection process of illicit, backdoor deals, according to the Times.

Welch and Johnson have been charged with mail fraud, wire fraud, and traveling between states to aid racketeering activities. If convicted, each faces up to 75 years in prison and fines totaling $3.75 million.

DENVER
The U.S. Olympic Committee’s former director of drug control administration charged in a suit filed last week that the USOC has refused to crack down on athletes using performance-enhancing drugs, creating a “sham” system of testing that routinely gives the green light to athletes engaged in so-called “doping.”

The charges are part of a suit filed in federal district court by Dr. Wade Exum, who resigned from his USOC post in June, accusing the agency of fraud, breach of contract, wrongful termination, and racial discrimination.

Exum claims the USOC denied him warranted promotions because he is black, and continually hindered his efforts to reform the agency’s drug-testing program, according to the New York Times.

“In recent years, absolutely no sanction has been imposed on roughly half of all the American athletes who have tested positive for prohibited substances,” Exum charged in court papers.

Exum so far has refused to back up his allegations with names or statistics, but says he will do so if ordered by the court.

Exum claims the USOC operates its drug-testing program with an inherent conflict of interest because the athletes it tests are the same people it hopes to send to the Olympics.

Scott Blackman, a USOC executive and Exum’s former boss, denounced the charges, calling them “either untrue, unsubstantiated, or irrelevant,” the Associated Press reported.

Blackman characterized Exum as a disgruntled employee striking back at the USOC because his job was being phased out by the creation of the U.S. Anti-Doping Agency, an independent group assuming control of drug testing.

NEW ORLEANS
Discount brokerage Charles Schwab Corp. agreed last week to pay $20 million to settle charges that the company put clients at a disadvantage by routing their orders to third-party brokers who secretly paid Schwab for the business.

A suit filed by Schwab clients accused the company of setting up a potential conflict of interest by using vendors who paid Schwab and who stood to profit by completing orders at prices that benefited them, not Schwab customers.

Schwab allegedly failed to disclose its relationships with the third-party brokers, prompting a class-action suit filed by Schwab customers who held accounts between 1985 and mid-1999, the Associated Press reported.

U.S. District judge Charles Schwartz Jr. ruled that while Schwab acted improperly, customers did not lose any money because of the company’s dealings.

Under terms of the settlement, Schwab will spend $20 million on educating investors and improving its processes for handling their trades. The company was not required to admit any wrongdoing.

NEW YORK
A growing number of the nation’s employers are finding ways to pare down workers’ pensions, often times without rousing suspicion, by disguising reductions with euphemisms and complex math, according to an in-depth report from the Wall Street Journal.

The paper’s extensive examination of policies at some of the country’s biggest employers — including IBM, Kmart, and Lucent — highlights some of the strategies the Journal claims companies are using to quietly cut retirement benefits.

The Journal claims companies began putting the squeeze on pension funds — despite record profits and the bullish stock market — because U.S. law now permits companies to take excess pension income and pump it into the bottom line.

In the midst of a mind-numbing maze of accounting rules that baffle even many government experts, corporate accountants have constructed plans that thin retirement benefits to fatten the bottom line, the Journal says.

While companies are required to notify workers of alterations to their pension plans, the Journal notes that many reductions and cuts are disguised as “modifications” and “changes” that slip by without sounding alarms.

Workers should take warning when changes to retirement benefits are explained as means to “attract, retain, and motivate” employees or “align more with industry practices and trends” — bellwether phrases that often hide cuts to benefits, according to the newspaper’s report.

Other popular tactics include freezing or cutting the rate at which future benefits are earned, or dropping future benefits altogether. Some firms use complex mathematical formulas to figure benefits, tweaking several variables to trim down earnings. Some force employees to choose quickly between new cash-balance or lump-sum plans and their older plans. Still others slash pensions, but boost 401(k) savings plans and emphasize “total” retirement benefits, according to the Journal.

Often times, the financial sleight of hand remains undetected until too late, as in the case of David Finlay, a senior engineer at IBM who found the value of his annual pension had dropped nearly 20 percent — from $71,200 to $57,700 — after a series of quiet changes in the 1990s.

It took Finlay months of data crunching to figure out where his money had gone, according to the Journal. In the end, Finlay found that a few so-called “modifications” to the plan in 1995 had slashed his pension’s value.

“I’m a Goldwater conservative, a Vietnam vet, and a Republican, but I’d support a union coming in here if it would force the company to open up its books on what it’s doing,” Finlay told the Journal. “If I were 10 years younger, I would have left. It tells you something about a company when it does something like this to people.”

WASHINGTON
The Associated Press last week reported that many companies convicted of defrauding the U.S. government remain eligible for federal contracts — some despite multiple convictions for bilking taxpayers.

According to an Associated Press investigation of 1,020 companies sued or prosecuted for fraud over the past five years, nearly three-quarters remain eligible for new contracts.

The AP report highlights several cases of egregious conduct, including the 1997 case of Perkins Aircraft Services. According to the AP, the Texas-based firm was hired to replace 14 defective windshields for Coast Guard rescue jets. The company never did the repairs, according to the report, but said it had, returning the jets to service with faulty windshields.

The company blamed the problem on a rogue employee and remains eligible for new contracts.

In another case, a Kentucky-based environmental testing firm was barred from receiving new contracts after being convicted of bribing public officials in 1995. Afterwards, the company merely closed its doors, moved its assets, and reopened as Environmental Chemical Corp. — a firm awarded $55 million in government contracts by the close of 1999, the AP reports.

Pointing out that only four of 103 defense contractors convicted of fraud were barred from winning future government contracts, Iowa senator Tom Harkin says it is time to take action.

“There is a continuing pattern of fraud and abuse in some of our largest contractors. The American people have every right to be outraged at this,” Harkin told the Associated Press.

Special to Newsline from Canadian correspondent Errol P. Mendes

GENEVA
Canada has won another round in a battle over aircraft subsidies with Brazil after a WTO panel in Geneva ruled that Brazil continues to violate international trade rules over aircraft subsidies, and has damaged a Canadian firm that is Brazil’s archrival in the manufacture of small jets.

The panel also found that Canada made its government aid to the aerospace industry comply with the WTO rules.

Canada has demanded compensation from Brazil of $700 million a year for five years for damage caused to Canadian firms by Brazilian subsidies to its major aerospace manufacturer Embraer.

There have been reports from negotiations between Brazilian and Canadian trade officials negotiating to avoid a full-scale trade war that Brazil is willing to change the subsidy mechanism and offer compensation.

However, according to some reports, negotiations have bogged down over Brazil’s insistence that it will not alter subsidies on 900 jets already guaranteed as confirmed sales.

Earlier this year, the WTO panel had ruled that both Canada and Brazil were violating trade rules in subsidizing the manufacturing of regional jets and ordered both countries to change their subsidy programs. Canada redesigned its program, called the “Technology Partnerships” program, and the changes were approved as complying with WTO rules. However, Brazil failed to implement the recommendation of the WTO panel to withdraw the export subsidy for the manufacturing of regional jets by Embraer, according to press reports.

From the American Management Association:

“The American Management Association (AMA) [recently] released results of its Annual Electronic Monitoring and Surveillance Survey. Nearly three-quarters (73.5 percent) of major U.S. firms report that they record and review their employees’ communications and activities on the job, including their phone calls, email, Internet connections, and computer files. This figure has doubled since 1997, driven by a dramatic increase in employers’ interest in what employees are doing on their computers. One out of four companies say they have dismissed employees for misuse of telecommunications equipment.

“‘Employers have legitimate concerns regarding performance and liability. Likewise, employees have legitimate concerns regarding privacy,’ said Ellen Bayer, AMA’s global practice leader on human resources issues. ‘To ensure effective and fair monitoring policies, AMA strongly recommends that companies create clearly stated and broadly understood policies on this subject,’ added Bayer.

“The growth of electronic monitoring has been explosive over the past two years. Fifty-four percent of employers report monitoring their employees’ Internet connections. Thirty-eight percent review email messages, up from 15 percent in 1997, and 31 percent review computer files, up from 14 percent in 1997….

“The larger the company, the more likely it is to engage in monitoring and surveillance activities. Broken down by business category, respondents from the financial services sector (banks, brokerages, insurance, and real estate) lead the pack when it comes to monitoring their employees’ email, with 55 percent engaged in this practice, and when it comes to monitoring their employees’ Internet connections, with 73 percent doing so.

“‘Internet monitoring is such a new area filled with so many misconceptions of what is proper, appropriate, and legal, that employees and employers need to have a clear, mutual understanding of what each may and may not do, ’said Bayer. To assure that shared understanding, AMA recommends that electronic monitoring policies be:

• “Clearly defined and disseminated to all employees through all communication channels, from paper to electronic media.

• “Addressed in recruitment, orientation and training programs.

• “Discussed in face-to-face meetings between managers and employees, which allow for questions to be answered and concerns aired.

• “Illustrated through specific examples of misuse, accompanied by a consistent explanation regarding application of standards….”

The Ethical Imperative: Why Moral Leadership is Good Business by John Dalla Costa Perseus Books Reading, Massachusetts, 1998 ISBN: 0-7382-0130-8 Book review by Earl H. Hess

Drawing from what this reviewer sees as a unique combination of skills and perspectives in the areas of economics, business leadership, theology, and the social sciences, John Dalla Costa laments a global economic system that seems focused on short-term, bottom-line profitability with disregard for the long-term damage being imposed on the quality of human life.

This book is no easy read. Rather than dealing in only gut feeling and anecdotal evidence, Dalla Costa documents his positions very thoroughly. He does not hesitate to deal with specific situations in which the failure of companies to build a culture that supported moral as well as financial integrity led to gross ethical misconduct. Conversely, he also cites those whose “ethical maturity” parallels their economic savvy.

In an early chapter, Dalla Costa documents the cost to our global economy of fraudulent and unethical practices, putting dollar amounts onto such areas as healthcare fraud, fines and damages to companies because of mistreatment of employees, and violations of environmental regulations. The sum total is indeed staggering.

He proceeds to document the urgency of a global ethic integrated into our global economy, an ethic built around simple core values such as honesty, dignity, fairness, justice, and honoring the environment, and then describes the benefits not just to the business but to all of society.

In the later chapters of The Ethical Imperative, his emphasis is on the “how to” of implementing ethics. He uses the term “Strat-Ethic” to emphasize the importance of integrating ethical elements (the company’s core values and culture) into its strategic plan, and identifies key roles of governing boards and CEOs in setting the tone for a company’s commitment to high ethical standards and practice.

The reviewer, having a keen interest in the role that religion can play in creating an ethical society, finds Dalla Costa’s perspective extremely enlightening. He brings together the basic ethical teachings of the world’s great religions and finds them strikingly consistent, as exemplified by a statement from the Parliament of World Religions in 1995. Further, he insists that religion plays a key role in providing the moral undergirding of a global ethic, but decries the divisiveness inflicted on us by narrow sectarianism.

As mentioned earlier, this book is not an easy read, but it will prove immensely worthwhile to those of usespecially in the business worldwho long for a way of integrating our lives to include both its personal and business dimensions.

“The noblest motive is the public good.”

– Virgil (Greek poet, 70 - 19 BCE)