Ethics Newsline®

Beard gone and head shaved, John Walker Lindh — the “American Taliban” — stood politely before a judge in Alexandria, Virginia, last week to hear charges against him: conspiring to kill Americans, supporting Al Qaeda, and engaging in illegal transactions with the Taliban. In a word: treason.

That’s a heavy charge for a 20-year-old to bear. Yet most Americans think it’s deserved. Shortly after Mr. Lindh (the name he now prefers, though government documents used Walker) was captured in Afghanistan in December, Gallup found that 70 percent of Americans thought he should be imprisoned or executed. Last week a CNN-Time Magazine poll found that only three percent of Americans felt he “did not do anything seriously wrong.” The image of Mr. Lindh’s grimy, unshaven face — second only to pictures of Osama bin Laden — may well be the most despised icon in America today.

How he will fare in court remains to be seen. Washington, facing strident international complaints over its handling of prisoners from Afghanistan at the naval base in Cuba, will want to avoid any legal missteps. In this atmosphere of concern for judicial technicalities, Mr. Lindh might walk rather than doing time. So be it. More interesting, from a moral perspective, will be the responses of a group of Americans who may have the most at stake here — the parents of teenagers, who will be asking what they must do to keep their own children from following in his track.

There’s little consensus about what led this quiet, intelligent student from California’s Marin County into Islam. He apparently switched his interest from hip-hop music to Islamic culture after reading The Autobiography of Malcolm X. Attending an alternative school that gave him wide latitude for self-expression, he also switched from Catholicism to Islam and began wearing the robes and headgear of his new faith. His parents, facing the age-old choice between giving teenagers free rein to explore new ideas or clamping down on excesses of behavior, let him be. They also funded a path that led him to Yemen (to study Arabic), Pakistan (to study the Koran and jihad), and — unwittingly — Afghanistan (to dress like and fight with the Taliban against Americans).

What will other parents make of Mr. Lindh’s history? Will they see it as the laissez-faire parenting of a hippie generation? As pop educational psychology, preaching self-actualization at all costs? As the spoiled rich kid, indulging his interests without the brake often imposed by family finances? As someone struggling with his parents’ divorce at a crucial age in his life?

If they see it as any of these things, they’re safe: We’ve all seen these kinds of John Walker Lindhs by the thousand, and most of them turn out okay. What’s more, these are circumstances that parents can more or less control.

But what if they see this as a tale of an innocent mind unable to defend itself against a seductive and pernicious system of thought? What if they think the fault lies not with the parents or the school but with the mosque? Will they see Islam as a peaceable religion that happened to have a particularly bellicose mosque in Lindh’s neighborhood, where he found a theology well beyond the mainstream that led him into violence and hatred? Or will they see in Islam a strain of anti-Western thought twisted so tightly into its cultural DNA as to be virtually inseparable from the religion itself?

These are troubling questions — not popular to ask, not fun to answer. They are, however, the stuff of a new book by Bernard Lewis, the noted Islamic scholar at Princeton — a book about the centuries-old divergence in world views between the West and Islam with the provocative title What Went Wrong?

As the Lindh trial unfolds, that’s exactly the question parents will be asking. They’ll also be asking a more immediate question: “What should we do if there’s a mosque nearby?” The American tradition of tolerance for cultural diversity, respect for individuality, and freedom of speech and religion raise powerful arguments for letting its worshippers continue to teach, preach, pray, and even proselytize. But there’s an equally powerful desire of parents to defend their children against destructive ideas — and to raise them in safety zones where youthful engagements with new ideas don’t lead into experiments with dangerous behaviors. At the extreme, there’s even a concern about brainwashing — a term Mr. Lindh’s father, Frank Lindh, has used to describe what he thinks happened to his son.

What does the mosque really stand for? Only Islam can answer that. If the view that remains after the trial is the one favored by Osama bin Laden — intolerant, vindictive, narcissistic, and virulently anti-American — parents will have reason to be alarmed. But if Muslims are successful at conveying a version of their religion that allays parents’ fears for their children, the alarm may fade. How moderate Muslims respond in the next few months will have a lot to do with the future of Islam in America.

(c)2002 by the Institute for Global Ethics

“Over all, women are equal to men up to about 33 years of age and then they steadily lose.”

WASHINGTON
The Bush administration last week ordered federal agencies to review any contracts with Enron and Arthur Andersen LLP to determine if those embattled companies are legally and ethically performing their duties for the government.

About 100 contacts worth $70 million will be put under the microscope, according to CNN.

The Associated Press reported that federal budget director Mitchell Daniels said recent scandals involving alleged misleading accounting practices and shredding of evidence “could reflect poorly” on the companies and their ability to meet government ethics standards.

In a letter to the General Accounting Office, which will oversee the contract review, Daniels noted that federal contracting rules “require that firms seeking to do business with the government have a satisfactory record of business ethics and integrity.”

Daniels’ statement comes only one month after President Bush repealed a Clinton-era law giving the government the right to refuse federal contracts to companies that break environmental, health, and labor laws. The former law effectively ordered federal contract officers to consider a company’s record of integrity and business ethics when awarding contracts valued at over $100,000.

Capping a week that saw several new developments in the unfolding scandal, the body of a former Enron executive was found Friday in his car, an apparent suicide. The New York Times reported that J. Clifford Baxter had left the company last spring after expressing concern about the firm’s accounting practices, and had recently been subpoenaed to testify before Congress about the implosion of the Houston energy firm.

CHARLOTTE, North Carolina
Lorillard Tobacco Co. last week sued a North Carolina foundation, saying the group’s hard-hitting antismoking commercials had descended into unacceptable vilification of the firm and its employees.

Under the 1998 settlement between the tobacco industry and 46 U.S. states, a portion of the deal’s $206 billion was earmarked for advertising campaigns aimed at keeping kids away from cigarettes.

The American Legacy Foundation, based in North Carolina, was created using those funds. A portion of its annual budget is tagged for a series of “Truth” campaign spots, using the radio, TV, print media, and Internet to warn teenagers about the dangers of smoking.

Last week, Lorillard filed suit against the foundation, accusing it of going too far with the Truth campaign, which included a controversial body-bag commercial outside Philip Morris headquarters, reported the Reuters news agency.

“They have continuously shown a pattern of vilification, and most recently have specifically attacked Lorillard with a radio ad which suggested that we put dog urine in our cigarettes,” Lorillard spokesman Steve Watson said last week.

Watson’s comments — and Lorillard’s suit — center on one particular Truth ad, which involves a dog walker who offers dog urine to Lorillard, noting that urine contains urea, a chemical found in the company’s cigarettes.

Lorillard says the American Legacy Foundation ad campaign “goes beyond the bounds of ethical and educational advertising and they need to be stopped.”

American Legacy Foundation spokesman Bill Furmanski disagrees. “Anyone who has seen Truth ads knows they educate young people about the addictiveness, health effects, and social costs of tobacco, which is exactly what” they are supposed to do, Furmanski told Reuters.

“I will not deny that [the] ads are edgy and hard-hitting,” American Legacy Foundation president Cheryl Healton said on the group’s Web site. “We do not apologize for this. Indeed, these are the very qualities that make the campaign effective.”

Analysts say Lorillard may be fighting an uphill battle with the suit, according to the New York Times. Although the 1998 tobacco settlement does forbid “any personal attack on, or vilification of” any person, company or government agency, such an assessment is largely subjective and tricky to prove in court.

DETROIT
A disturbingly high number of U.S. public schools have been built near toxic waste sites, putting hundreds of thousands of schoolchildren at risk of chronic disease and learning disabilities, according to a new report released last week.

In a survey of five states conducted by an environmental coalition called Child Proofing Our Communities Campaign, nearly 1,200 public schools were found to be sited within a half-mile of a federal Superfund or state-identified contaminated site, reported the Washington Post.

The survey examined schools in California, Massachusetts, Michigan, New Jersey, and New York. Currently, only California requires the testing of proposed school sites for hazardous chemicals.

“We knew there were a lot of schools being built on or near toxic sites, but we had no idea the numbers would be this staggering,” said Lois Gibbs, a leader of the Child Proofing Our Communities Campaign.

Polluted sites suppress property values, making nearby land temptingly affordable to cash-strapped schools, according to the report. But the price tag is ultimately much higher — and paid by communities and families whose children may become sick from such close proximity to contaminants, the group warned.

Statistics cited by the group purport to show a sharp two-decade escalation in cases of child asthma, cancer, hyperactivity, learning disabilities, and diminished IQs — all of which have been linked to exposure to toxins, the Post reported.

“During a critical period of their growth and development, children spend a large part of the day at school,” the report says. “To needlessly place them in settings that heighten risk of disease … is therefore irresponsible.”

The group is calling for action on several fronts: advising schools to reconsider their choice of construction sites, asking the government to clean up the toxic sites, and urging parents to keep their children off contaminated lots, which may not be fenced off from play areas, reported the Detroit Free Press.

PARIS
French physicians last week launched a one-day strike to protest lagging pay and staff shortages in the French medical system.

The 24-hour action, which received widespread public support, included between 50 and 80 percent of the nation’s doctors. In Paris, an estimated 8,000 of the city’s 10,000 doctors joined in, reported the Associated Press.

“There is a real feeling of despair across the sector,” Michel Chassang of the leading doctors’ union, UNOF, told Britain’s Guardian newspaper last week. “We do not necessarily want more pay, but we do need more money to allow us to provide the standard of healthcare the French people have a right to expect.”

Last Wednesday’s “Day Without Doctors” strike followed two related labor actions: a smaller physician strike on Monday, and a walk out by thousands of the nation’s nurses on Tuesday, according to the AP.

French people, accustomed to top-notch health care, have been shocked by recent images of exhausted hospital workers, long lines, and overflowing waiting rooms, according to press reports.

Public indignation at the problem could spell political problems for Socialist party head Lionel Jospin, whose campaign to take the French presidency in upcoming elections included a push for a 35-hour workweek.

Doctors say the shortened workweek, which was enacted even as budgetary constraints were adopted as part of France’s conversion to the Euro currency, have left health facilities understaffed.

NEW YORK
Pharmaceutical firms may soon be scaling back their efforts to woo doctors with lavish perks and trips, a practice increasingly targeted as ethically questionable, according to a report last week from the New York Times.

There is no doubt that questionable spending practices persist, George Hradecky, editor of online magazine Pharmaceutical Representative, told the Times. But a recent campaign by the American Medical Association (AMA) to educate firms about the ethics of marketing to doctors may be having an effect.

“There is a general trend” of scaling back marketing efforts, Hradecky told the Times. “A lot of doctors are turned off by it.”

A sales representative for pharmaceutical giant Merck & Co. last week agreed, telling the Times that her manager had told her to no longer offer free Broadway tickets, weekend trips, and other perks to doctors, saying such gifts could be viewed as inappropriate.

While a Merck spokesman refused to confirm or deny the directive, the sales rep told the Times that her manager said other companies would likely follow Merck’s lead, which is “the right thing to do.”

In 2001, drug firms spent roughly $2 billion on gifts, trips, and marketing incentives for doctors — double the amount spent in 1997. Critics contend the funds are being used to sway doctors’ prescription choices.

Last year, the AMA launched a campaign to remind doctors about the ethics regarding such company perks — an effort bankrolled in large part by drug giants Merck, Pfizer, and Eli Lilly, noted the Times.

CINCINNATI, Ohio
Consumer-goods giant Procter & Gamble last week donated patented research on skin disorders to a Cincinnati children’s hospital, which could develop the technology on the public’s behalf.

Since 1999, Procter & Gamble has been ceding selected patents and technologies to universities, hospitals, and research institutions when the company decides to no longer develop the research for consumer products.

Recipients of the company’s research can then develop the patents and technologies for their own profit and the public good, reported the Associated Press.

In last week’s gift, Procter & Gamble transferred 32 patents to the Cincinnati Children’s Hospital Medical Center, which could develop the research to treat skin discoloration from burns, wounds, skin grafts, and cancers.

WASHINGTON
Finance firm Credit Suisse First Boston (CSFB) last week agreed to pay $100 million to settle charges that it illegally gave preferential stock offerings to customers in exchange for steep kickbacks.

Regulators accused CSFB of rigging its allocation of lucrative initial public offerings (IPOs) of new stocks. During the dot-com craze of 1999 and 2000, IPOs typically skyrocketed on the day they hit the market, realizing gains of 100 to 700 percent.

CSFB allegedly gave its IPO offerings to several firms in exchange for agreements that the companies would later pay exaggerated commission fees on other trades, funneling a portion of their IPO profits back to CSFB, the government charged.

Between April 1999 and June 2000, under-the-table deals by CSFB allegedly recouped the firm between 33 and 65 percent of its customers’ high-flying IPO profits.

CSFB was not required to admit any wrongdoing in agreeing to last week’s settlement, which also requires the firm to bolster its oversight of IPO transactions. The firm’s $100 million penalty will be split evenly between the U.S. Securities and Exchange Commission (SEC) and the National Association of Securities Dealers.

“The amount of money … is kind of on the low side,” University of Florida finance professor Jay Ritter told the Reuters news agency. “I would categorize [the settlement] largely as a slap on the wrist.”

Stephen Cutler, director of the SEC’s enforcement division, disputed that assessment. “These are very serious sanctions that ultimately, among other things, require the firm to write a very large check.”

The SEC is currently investigating several other firms for similar alleged misconduct, reported the Associated Press.

WASHINGTON
The Internet browser war heated up last week with a new lawsuit filed by AOL Time Warner Inc., which accuses Microsoft Corp. of abusing antitrust laws to crush competition from AOL’s Netscape Navigator.

AOL’s action follows a possible resolution of a colossal lawsuit filed against Microsoft by the U.S. government and several states, which attempted to fracture the company to reduce its dominance in the computer market.

AOL Time Warner, which purchased Netscape in 1999, says evidence uncovered by the government shows that Microsoft broke the law to bully and suppress rival Netscape, reported the Reuters news agency.

“Netscape’s lawsuit is a logical extension of the findings … that Microsoft thwarted competition, violated the antitrust laws, and illegally preserved its monopoly at Netscape’s expense,” AOL general counsel Randall Boe said in a statement.

Microsoft says AOL is simply blaming the industry leader for its failure to compete adequately. “AOL purchased Netscape for $10 billion. Now AOL wants to blame Microsoft for Netscape and AOL’s own mismanagement,” spokesman Jim Desler claimed.

The AOL suit, which targets Microsoft’s decision to bundle its Internet browser with its dominant Windows operating system, is asking for treble damages for lost revenues and market share. “Microsoft’s illegal actions and the harms to Netscape are ongoing,” AOL contends.

The new suit is the latest salvo in the battle for market share between Netscape’s Navigator and Microsoft’s Internet Explorer. Currently, Microsoft holds an 80 percent lock in the browser market, according to the Washington Post.

Special to Newsline from Canadian correspondent Errol P. Mendes

BERLIN
The Globe & Mail is reporting that Bombardier Inc. of Montreal is facing a political storm in Germany after announcing its plan to close two factories in an area of eastern Germany that has a high unemployment rate.

The two factories were temporarily occupied by the 1,000 workers who will lose their jobs later this year when the factories close.

At one of the factories near Berlin, the soon to be laid-off workers welded the factory doors shut, built bonfires, and erected signs that read “Building the East, Canadian Wild West Style.”

The political heat became so intense that Chancellor Gerhard Schroeder has intervened to obtain a promise from Bombardier to postpone the formal decision on the closing of the two factories.

One German commentator, Professor Wolfgang Renzsch of the University of Magdeburg, is asserting that foreign companies like Bombardier come to take all of the government subsidies and then leave after a short time.

The company has replied that while it has never obtained any subsidies for the plants that are to close, one of them was modernized in the 1990s with government subsidies while belonging to a previous owner.

WASHINGTON
The U.S. military last week altered its dress code for U.S. servicewomen in Saudi Arabia, saying the wearing of the head-to-toe “abayah” robe was highly recommended, but no longer mandatory.

Other policies barring U.S. servicewomen from driving, from riding in the front seat of vehicles, and from going off the base without a man remain in force, reported the Washington Post.

Proponents of the change say the forced use of the abayah flies in the face of both the U.S. Constitution and U.S. efforts to liberate Afghanistan, where women were compelled by harsh religious codes to wear the similar burqa robe.

Lt. Col. Martha McSally, the Air Force’s highest-ranking female fighter pilot, has filed suit over the dress code. McSally says the military’s code violates her constitutional right to religious freedom by forcing her to comply to another’s religious edicts.

Many Saudi observers criticized the military’s decision, saying it could lead to harassment of U.S. women who shed the abayah.

If U.S. servicewomen leave the base without the abayah, “they will be breaking our laws and … looking for trouble” from outraged men and the stick-wielding military police, who patrol the streets to enforce Islamic law, a Saudi businessman told the Reuters news agency.

The Associated Press reports that the dress-code decision by U.S. Central Command may have little practical impact, since it leaves enforcement to the discretion of local U.S. commanders, many of whom are refusing to ease the rules for servicewomen in deference to local customs.

LONDON
British people want a helping hand when it comes to planning vacations, not only with advice on where to go, but also on how to behave when they get there — a growing interest in so-called “ethical tourism,” the BBC reported last week.

According to a new poll, 65 percent of Britons want travel agents and tour operators to help them get better informed about local customs and politics, environmental concerns, and means of supporting local people.

More than half — 52 percent — of British travelers say they would be more likely to book a holiday with a firm that has a responsible tourism policy, according to Christian relief and development agency Tearfund.

The group’s report, “Worlds Apart,” claims that many tourists unwittingly pump their lucrative cash into mega-resorts and hotels, which often do little to enrich or support impoverished local communities.

By venturing away from such one-stop resorts to interact with local people, travelers can get a better feel for distant places while benefiting their economies and citizens, Tearfund insists.

“Tourism is one of the largest industries on the planet. It can bring huge benefits to poor countries. But often those benefits simply bypass local poor people,” Tearfund executive Graham Gordon told the BBC.

“More of us are venturing further afield on our holidays to countries where people battle to feed their families and make a living,” Gordon added. “Our research indicates that we do not want our holidays to be at someone else’s expense.”

The Tearfund report urges travel agents and tour operators to adopt meaningful policies on responsible tourism, and to cultivate local business partnerships in travel destinations.

Special to Newsline from editor Carl Hausman

Ethical and legal responsibilities of the government, corporate executives, and independent auditing firms were the subject of several of our top stories this month, culminating in our lead item this week: a government call to probe current contracts with Enron and Arthur Andersen. As we report, the U.S. budget director pointedly noted that existing laws “require that firms seeking to do business with the government have a satisfactory record of business ethics and integrity.” (See Newsline’s Jan. 7 issue for coverage of President Bush’s decision to repeal a law bolstering such government oversight.)

Previous issues of Newsline (Jan. 14 and Jan. 21) also reported on the controversy surrounding allegations that federal officials have not been forthcoming with details concerning what they knew about Enron and when they knew it, and claims that the private accounting firm hired by Enron overlooked dangerous financial practices because it did not want to risk losing the energy giant’s business.

Another emerging trend this month concerns medicine and ethics. As we report in this week’s issue, France is facing a crisis precipitated by a tightening national budget and an increasingly expensive health care system. In addition, France has been rocked by controversy surrounding doctors’ liability for prenatal tests that fail to diagnose birth defects (Jan. 7 and Jan. 14). On Jan. 21, we reported on an intriguing story centering on a television network’s decision to pay for DNA tests to help produce a news program about wrongly convicted criminals. The ethical implications of prenatal medicine were also front and center in a Jan. 7 report on the widespread use of the so-called morning-after birth control pill in Canada.

Equity issues continue to dominate headlines from the world of ethics. This week we reported on a dispute over regulations requiring female members of the military stationed in Saudi Arabia to wear the head-to-toe robe required under that nation’s law. On Jan. 21, we summarized several stories about an important change in the role of arbitration in settling disputes, and on Jan. 14 we featured a major roundup dealing with a tightening of the definition of the term “disability” when enforcing U.S. workplace law. And allegations of age discrimination figured prominent in the news capsulized in the Jan. 7 issue, where we reported that a major insurer was hit with a lawsuit by former agents claiming they were forced out because of their age.

From the Gallup News Service:

“It isn’t likely that the Enron scandal will have a dramatic effect on the views of the American public about business, the relationship between business and politics, or campaign finance reform. Even before the Enron crisis moved to the nation’s front pages, Americans had relatively low opinions of the honesty and ethics of business executives, did not have a great deal of confidence in business as an institution, and felt that business already has too much influence in society.

“Additionally, the public has long thought that George W. Bush was too cozy with big business, suggesting that Americans may not be surprised by the recent focus on the relationship between members of the Bush administration and Enron.

“The Enron scandal is also unlikely to cause a groundswell of public pressure for campaign finance reform. Americans support campaign finance reform in principle, but are usually cynical that it will reduce the undue influence of special interests in Washington….

“The one area in which the Enron scandal may hit its most responsive chord could be in relationship to retirement, and the need for workers’ legal protection when their 401(k)s are heavily tilted towards one company’s stock. Americans have long been concerned about their ability to retire with financial security, and the scandal could heighten these fears.

“Americans’ attitudes about big business are lukewarm at best. As part of Gallup’s annual survey of confidence in institutions, last year Americans rated ‘big business’ near the bottom of the list: 28 percent said they had a great deal or quite a lot of confidence, while 26 percent said they had very little or no confidence in big business….

“Similarly, the public’s perception of the honesty and ethics of business executives is also relatively low. In Gallup’s annual survey of the honesty and ethics of professions, completed last November, just 25 percent of Americans said they thought the honesty standards of business executives were very high or high, compared to the 60 percent and higher who rated the honesty of pharmacists, doctors, engineers, and clergy as very high or high….

“Along the same lines, the major business sector involved in the controversy — the oil and gas industry — scored near the bottom in public esteem in a Gallup poll survey assessing the public’s ratings of business and industry last year….

“Given these perceptions, it is possible that Americans will be receptive to the inevitable calls for new legislation and controls on business, although the existing attitudes may also suggest that the public is relatively cynical that these types of controls would ultimately make a difference.

“Our initial read on the public’s perception of the culpability of the Bush administration in the Enron matter shows a muted response. Even among those following the situation closely, only 15 percent say that they believe members of the Bush administration did something illegal…. Still, our data show that even before the recent publicity surrounding Enron, Americans have felt that there was too cozy a relationship between business and the Bush administration…. The fact that so many Americans already feel that the administration is too influenced by big business may suggest that the impact of the new revelations is less dramatic than might be the case for an administration that had no corporate-influence image issue. At the same time, the public’s predisposition to believe that the White House is too closely linked to big business could make any charges about improper conduct more plausible….

“Much of our data investigating Americans’ personal financial concerns suggest that the public is worried about being able to retire with adequate financial resources…. Last spring — even before the full effects of the recession were evident to most Americans — the public was as worried about not having enough money for retirement as they were about any of the other of a list of financial problems included in the question….

“The publicity surrounding the plight of Enron employees who had most of their retirement savings in Enron stock could underscore these concerns for Americans — particularly those who have money in company stock….”

Thank you for an excellent commentary on the Enron debacle. You’ve given a concise global perspective of the issues. It seems that the ethical issues far outweigh the legal ones. It will be interesting to see the positioning by all involved in how they respond to the questions of “obedience to the unenforceable.”

Omaha, my hometown, was originally home to Enron — initially Northern Natural Gas, then InterNorth, then Enron. In 1987, after Ken Lay took over, the headquarters was moved to Houston. It was a bitter pill for Omaha back then, to lose one of the city’s cherished corporate citizens. Despite the move, many remained fiercely loyal to Enron, and there are many retirees in our community whose retirement savings were in Enron stock.

What a breach of trust.

Northern Natural Gas in Omaha was run by one of the most trusted men you could find — Willis Strauss. He was accessible, he was a leader in the true sense of the word, he was an outstanding corporate citizen. And the trust worked both ways: He trusted and connected with his employees and for that he gained their trust.

You asked in your commentary how many more Enron’s are out there. How many of us are now asking, “Who can you trust?”

Larry Jacobsen
Omaha, Nebraska, U.S.A.

“Children have never been very good at listening to their elders, but they have never failed to imitate them.”

– James Baldwin (U.S. writer, 1924-1987)

In principle, ethics is fairly straightforward. But in practice, the tangle of threads within an ethical issue can be maddeningly complex. Case in point: Enron, where ethical issues are so numerous that one hardly knows which thread to pull.

Should the focus be on Enron’s chairman and chief executive, Kenneth L. Lay? In a September 26 online session with employees — before the company restated almost $600 million in earnings in November, then filed for bankruptcy in December — he told employees that Enron was “fundamentally sound,” that “the third quarter is looking great,” and that “we’re well positioned for a very strong fourth quarter.” Was that honest?

Or should the focus be on the Enron board? In 1999, it took the extraordinary step of waiving the firm’s code of ethics in order to permit the kind of off-balance-sheet deals that hid massive debt from public view. Was that responsible?

Perhaps the real story is in the company’s policy on retirement accounts. When employees received Enron stock in those accounts, they were prevented from selling it — except for top executives, who could dump their shares as the crisis mounted. Though many employees saw their retirement savings vanish in the bankruptcy, the policy was perfectly legal. But was it ethical? Was it respectful of employees and their families?

Or maybe this is all about Arthur Andersen. The Chicago-based accounting firm audited Enron’s accounts and certified to the public that everything was fine. Like its peers among the Big Five auditing firms, however, it also ran a lucrative consulting business, working closely with Enron to establish the questionable partnerships it then audited. Did that compromise Andersen’s independence, making it less willing to criticize Enron policies or confront its management over potential problems? If so, was it fair?

Then, too, the big story may be the shredding of Enron documents by Andersen auditors once they glimpsed the enormity of the pending collapse. Isn’t the destruction of evidence not only unethical but illegal?

And what about the nation’s extensive web of oversight entities — the American Institute of Certified Public Accountants overseeing Andersen, the Securities and Exchange Commission (SEC) watching over public corporations, and the role of Congress, the bankers, the lawyers, the media? Were some of them (like the media) not watching, and guilty of a lack of vigilance? Were some (like the SEC) watching but overworked, and guilty of creating the appearance of assurance without the substance of real control? Were some (like Vinson and Elkins, the Houston-based law firm whose largest client was Enron) watching only selectively and blindly? And were some (like Congress) watching out for themselves, colluding in a scheme that poured millions into campaign financing?

And speaking of politics, is the story really one of intensive lobbying by Enron and of significant financial links to key legislators and administration officials? Did Enron largess purchase a laissez-faire attitude that allowed the firm to do what it wanted? Does integrity in public office require a higher standard than that?

Finally, what about the memo drafted by Enron vice president Sherron S. Watkins and sent to Mr. Lay in August? She described herself as “incredibly nervous that we will implode in a wave of accounting scandals.” As with many whistleblowers, she put her own career on the line through her willingness to speak truth to power. Isn’t this a powerful expression of moral courage?

Stand back from all of these, and three overarching ethical themes weave through the still-unfolding Enron case:

• Dishonesty. This appears to be a story of deception. Absent a desire to keep investors in the dark, why go to such massive lengths to hide funds off the books? The underlying Enron motive, it seems, was to be something other than forthright with those who most needed to know.
• Disrespect. What seems to be emerging is a cavalier attitude toward government (it can be bought), investors (they can be romanced), employees (they can be duped), and the public (it can be wowed). Some of the means were legal. That doesn’t mean they were ethical.
• Hypocrisy. This may be the big one. Enron was a real presence in philanthropy, bestowing its charitable dollars in and beyond Houston. But it seemed to be something it wasn’t, and in the end it couldn’t walk its talk.

That last point suggests the most sobering issue of all: the failure of America’s early warning system. Since the Great Depression, generations of schoolchildren have been taught that the federal government now has safeguards in place to make a repeat of such economic disaster much less likely. And so it does, at the macro level. But down at the level where you and I and many of Enron’s employees live, is that true? Or has this case exposed a kind of institutional hypocrisy, wherein we blithely go forward under the assumption that “the regulators” are doing their job. Are they? And if we think they are while they’re not, isn’t our complacency perhaps the greatest danger of all?

Enron is chock full of ethical lessons. Is America chock full of Enrons? We need to learn from the former, in case the latter proves true.

(c)2002 by the Institute for Global Ethics