Ethics Newsline®

As the Memorial Day holiday sweeps through the United States, most Americans are clear about the difference between “talking about morality” and “moralizing.” The former is a good thing; we hear a lot, in this year following 9/11, about American values and ethics. The latter isn’t good at all; we run for cover when speakers start lecturing us about morality in an overbearing and sanctimonious way.

That distinction, however, is quite recent. The Oxford English Dictionary finds no bad overtones in the word moralize, defining it as “to interpret morally.” My 1926 Webster’s is similarly kind, noting that moralize can mean “to impart morals or morality to.” Only in my Webster’s New World Dictionary (1984) does the word finally mean “to think, write, or speak about matters of right and wrong, often in a self-righteous or tedious way.”

What happened between 1926 and 1984? What turned a good word so sour? You don’t need specifics to deduce the general cause. A lot of people, in the name of moral guidance and teaching, must have been so haughty, hectoring, and hypocritical that they gave this term its peculiar warp. And that’s the charitable interpretation. More harshly, one might say that a lot of high-visibility people never walked the talk. Instead, they talked morality while acting in egregious ways.

Nothing new in that, of course. Yet we’re entering a period where the contrasts between walk and talk are increasingly public — and increasingly stark. Whether it’s former President Clinton, some Catholic clergy, or the auditors at Arthur Andersen, the public has been treated to some pretty appalling moral implosions. These examples, sadly enough, are mostly Americans. That’s not to exonerate other nations. It’s to remind Americans that, however great the nation is and can become, it still has a ways to go to free its own moral voice from the moralizing tone.

Case in point: The recently released “Bribe Payers Index” from Transparency International (TI). To gather their data, the TI researchers questioned not the payers of bribes in the big exporting nations, but those who were being bribed in less developed, emerging market countries. Listing 21 exporting countries (United States, China, Russia, Canada, United Kingdom, and so forth), they asked respondents to “indicate how likely” it would be that companies from those countries would “pay or offer bribes to win or retain business” in the respondent’s own country. Out of a possible bribe-free “10,” Australia placed first with 8.5. Russia was last with 3.2. The United States was below the median, in 13th place with a 5.4 — down from 6.2 in 1999.

TI then asked about means other than bribes that “governments use to gain unfair advantage.” The list included diplomatic or political pressure, financial pressure, threat of reduced foreign aid, favors or gifts to officials, promises of arms deals, promises of scholarships or health care, and so forth. The worst-case loser — the country whose government was seen to have the most unfair practices — was the United States, followed by France, the United Kingdom, Japan, and China. The United States, in other words, appears to be the most sophisticated manipulator on the face of the globe.

Before I duck behind a parapet to avoid brickbats from loyal Americans, let me admit that I, too, have some skepticism about the data. Why did 23 percent of the sample think South Korea was unfairly manipulative in 1999, while only 4 percent thought so in 2002? Why were there similarly huge changes in three years for Italy, Singapore, and Malaysia? Countries don’t clean themselves up that fast. But that misses the point. TI is not saying that the United States is the most unfair global player. It’s only saying that it appears that way to those in developing nations.

In the realm of moral authority, appearances matter. The perception that the United States is a law to itself, seeking its own advantage to the detriment of others, is a growing topic of discussion around the world. America’s refusal to sign the Kyoto treaty on global warming or join the International Criminal Court, its recent imposition of tariffs on steel, and new levels of protectionism in the farm bill may all, individually, have had valid reasons behind them. But they all fuel those conversations. Frankly, so does envy, as the U.S. economy continues to prosper.

If America really seeks to take a global lead in the major moral issues of our time — fighting terrorism and drugs, fostering democracy, and promoting the values of a free market, a free society, and a free press — it needs to be alert to these perceptions. If those views are driven by reality — if Americans really are bribers and manipulators — that has to change. On the other hand, if these perceptions are driven only by impressions, there needs to be more thoughtful attention paid to appearances.

Why does this matter? Because the issues facing this century are profoundly values-based. Addressing them requires the leadership of moral reason. If that leadership can too easily be dismissed as “moralizing,” the whole enterprise is compromised. Whether this century’s problems get sorted out depends in large part on whether those who take the lead are genuinely moral or merely moralizing.

(c)2002 by the Institute for Global Ethics

“If it’s on the list, you’re caught, and it’s in your body, you will at least lose your position, your medal, that is very clear. But if it’s not performance-enhancing, it will not be on the list. That’s the new point.”

NEW YORK
Merrill Lynch last week agreed to pay $100 million to settle allegations that the firm hyped stocks viewed poorly by in-house analysts in order to win big contracts for the company’s investment banking branch.

Merrill Lynch, which also agreed to widespread reforms but did not admit wrongdoing, was accused of operating with serious conflicts of interest that put corporate profits before investors’ well-being.

A ten-month probe into the company found evidence that Merrill Lynch analysts urged investors to purchase stocks that the firm’s analysts privately derided as “junk,” “dog,” and “disaster.”

The problem, according to New York Attorney General Eliot Spitzer, was Merrill Lynch’s pay scheme, which rewarded analysts for the amount of business they brought to the company’s investment bankers.

Issuing “buy” recommendations for souring stocks was one key way of currying favor with powerful firms, the Washington Post reported.

Last week, Merrill Lynch agreed to pay $48 million to New York and $52 million to be divided among all other states if they agree to not sue. Merrill Lynch also agreed to hire a compliance monitor, and to sever the relationship between analysts’ pay and the business they lured to the firm.

Merrill Lynch, the nation’s No. 1 brokerage, also apologized for any “inappropriate communications” or views that “may have appeared inconsistent” with published recommendations, but refused to admit any wrongdoing.

Last week, Spitzer hailed the settlement as a victory that should serve as a warning to other firms, reported the Los Angeles Times.

“I would suggest that you review your emails, review your documents, and once you have conducted that review … come in and have a forthright conversation with us as we continue to march forward and reform this industry,” Spitzer advised at a news conference last week.

While Merrill Lynch’s settlement could lead to positive reform, some critics say that large Wall Street firms providing both analysis and sales services will always be wrestling with conflicts of interest that put private investors at risk.

“I’m not convinced that bolstering investor confidence in Wall Street research really ought to be our goal,” Barbara Roper, director of investor protection at the Consumer Federation of America, told the Times. “Perhaps bolstering a healthy skepticism about Wall Street research is a better goal.”

That advice may be sound, according to a report from the Boston Globe, which noted that despite the recent stock downturn, only 500 of the 22,000 individual stock ratings in place last week were “sells.”

More than a dozen private lawsuits have been filed by investors who lost millions because of bad recommendations from conflicted Merrill Lynch analysts, according to the New York Times.

WASHINGTON
The Senate Governmental Affairs Committee last week issued subpoenas to the Bush White House demanding the release of information on the administration’s dealings with Enron and other energy firms, sparking partisan grumblings.

The committee voted 9-8 along party lines to compel the release of documents detailing meetings and records of contacts between the energy industry and the White House.

The committee has been demanding the records since late March, but with little success, the Boston Globe reported.

White House spokeswoman Anne Womack last week said she was perplexed that Congress would “pursue this confrontational approach rather than cooperation with the White House.”

Sen. Joseph Lieberman (D-Conn.), who heads the GAC, said such cooperation had not been forthcoming. “This committee has not singled out the White House. The White House has singled itself out,” Lieberman said.

“It’s clear to me that there is a very determined decision not to respond to substantial parts of the committee’s request for information,” Lieberman said. “At the least, it’s slow walking; at the worst, it’s stonewalling.”

GAC member Sen. Thad Cochran (R-Miss.) accused Lieberman, a potential Democratic candidate for president in 2004, of using the subpoenas as a political device to provoke the Bush administration. “If you got everything you asked for, you wouldn’t know what to do with it,” Cochran challenged.

Lieberman countered that the subpoenas would have been unnecessary if the Bush administration had cooperated with Congress. “No White House can be immune from congressional oversight. We are, after all, the people’s representatives here,” he said.

Shortly after the subpoenas were issued, the White House produced a letter detailing at least a dozen meetings between Enron officials and the Bush administration that had previously been undisclosed, according to a report from the New York Times.

Although that release was a step in the right direction, it is not enough, Governmental Affairs Committee spokeswoman Leslie Phillips said last week.

“The White House is still providing only what it thinks is relevant, rather than what the committee asked for,” Phillips said. “We just don’t know if the information is everything they collected, or just what they’re willing to tell us.”

Congress’s General Accounting Office (GAO), is also seeking records related to the White House’s energy policies. In February, the GAO sued Vice President Cheney for refusing to turn over the information.

Cheney and Bush insist that the White House is protected from such transparency, contending that turning over the requested information would cripple their ability to get good advice. Last week, the Justice Department filed a motion trying to throw out the GAO’s lawsuit.

The continuing battle over the Bush administration’s energy policy and relationship with Enron, a leading donor to President Bush, has put the spotlight on the tension between executive privilege and the public’s “right to know.”

“The Bush-Cheney administration is unusually interested in preserving its executive privileges and maintaining secrecy about its own decisions,” Larry Sabato, director of the University of Virginia Center for Politics, told the Los Angeles Times.

“They’re violating the basic rules of modern-day politics: get information out quickly and completely, and support government in the sunshine instead of the shade,” Sabato said. “All the Bush administration accomplishes in doing that is to convince people that it has something to hide.”

The GAC subpoena requires the release of all demanded documents by June 5.

WASHINGTON
The U.S. Justice Department last week said it would sue three Florida counties as well as cities in two other states over alleged illegal voter treatment that may have biased the bitterly contested 2000 presidential election.

U.S. Assistant Attorney General Ralph Boyd said the five lawsuits would focus on the mistreatment of minority and disabled voters, improper purging of voter rolls, and failed “motor voter” registrations.

Boyd’s comments came in testimony to the Senate Judiciary Committee last week, where he announced the five suits against three Florida counties and one city in both Missouri and Tennessee, reported the Associated Press.

Boyd refused to identify the municipalities in which the forthcoming suits would be filed. He said the suits would be launched within two months.

The suits are the result of an 18-month investigation by the Justice Department over voting irregularities that turned the 2000 presidential election into a divisive battle over vote tampering and state interference.

Last June, the U.S. Commission on Civil Rights found that the votes of Florida’s black voters were nearly 10 times more likely to be thrown out than were the votes of whites, the Baltimore Sun reported.

Although a sharply divided Supreme Court eventually ended ballot recounts and gave Florida’s electoral votes — and therefore the presidency — to George W. Bush, numerous lawsuits have been filed by private groups.

Last week, Boyd said the Justice Department had whittled down more than 11,000 complaints from voters, launching 14 active investigations that ultimately led to the five planned lawsuits, according to the AP.

Boyd said he hopes and expects the suits will be settled before this November’s elections, although state officials in Florida said they were unprepared and caught off guard by Boyd’s announcement.

President Bush’s brother, Florida Governor Jeb Bush, who has authorized $24 million for voter reforms since the debacle, last week said he did not know anything about the new lawsuits and was unaware that voters had been denied access to ballots in his state, the Los Angeles Times reported. “I know there were some accusations made and a lot of investigation,” he said.

The National Association for the Advancement of Colored People (NAACP), which has filed seven suits on behalf of disenfranchised black voters, welcomed last week’s announcement as a “pleasant surprise.”

The Justice Department “can’t do anything to undo the mistakes that were made, but the least they can do is prevent them from ever happening again,” NAACP spokesman Hilary Shelton contended to the Times.

NEW YORK
In exchange for money, some U.S. physicians have allowed drug marketers to sit in on patient exams, view patients’ medical charts, and recommend the companies’ products for treatment, according to newly unsealed court documents.

The records are part of a federal lawsuit against drug giant Warner-Lambert (now part of Pfizer), which is accused of violating medical ethics in pursuit of profits from its epilepsy drug Neurontin.

Neurontin, which has government approval for only one narrow treatment of epilepsy, has become wildly popular for treating a host of other diseases and mental conditions for which it is not approved.

In 2000, more than 78 percent of Neurontin prescriptions were for such “off-label” uses, pulling in billions of dollars in profits, reported the New York Times.

Although doctors can prescribe drugs for off-label uses, drug companies are barred from promoting the practice — a proscription Warner-Lambert violated, according to the government.

Prosecutors allege that Warner-Lambert launched a “shadowing program” that partnered its sales representatives with doctors willing to swap cash for access to their patients, who were unaware of the arrangement.

“While the patient was dressing, the doctor and I one-on-one would discuss the patient and therapeutic options,” one sales representative said in a voice-mail message submitted to the court. “I felt I had influenced her.”

Dr. Marcia Angell, the former editor of the New England Journal of Medicine, denounced such intimate access as “inexcusable,” saying it clearly crossed the line of medical ethics.

For its part, Pfizer spokeswoman Mariann Caprino says the alleged wrongdoing is confined to the past and violates current policy.

That may or may not be true, noted the Times, but a recent survey of Maryland physicians, 37 percent of whom said they had accepted compensation from drug companies, shows that the practice may be widespread.

OTTAWA
Canadian Prime Minister Jean Chrétien last week announced an eight-point ethics plan meant to quell growing anger over perceived cronyism and corruption in the national government.

Chrétien and his Liberal Party have been accused of wasteful spending and giving government contracts to party donors — allegations that are receiving close scrutiny from rival parties, reported the Globe & Mail.

In the most recent scandal, Public Works Minister Dan Boudria has been condemned for taking a family vacation at a mansion owned by one of the government’s main advertising contractors. Although Boudria wrote a $500 check to recompense the firm, the check was not cashed until two months after an investigation was launched.

Under increasing attack, Chrétien last week denied any deliberate ethics violations by his officers and denounced rival parties for using harsh rhetoric to stir up the public’s emotions.

“I am humble enough to admit that mistakes have been made and determined enough to correct them,” Chrétien told the House of Commons last week. “But I ask of everyone — opposition, government, and the media — let us tone down our rhetoric. Let us acknowledge our differences but respect our motives.”

Chrétien then unveiled an ethics plan he hopes will bolster public trust in the government by increasing transparency and making officials more accountable for their spending decisions and contract awards.

The plan also includes a new code of conduct and ethics guidelines for cabinet members, revised rules for governmental dealings with corporations, and public guidelines for fundamentally changing the laws governing the financing of political parties and candidates.

Many critics remained unappeased by Chrétien’s plan, denouncing it as nothing more than a public-relations ploy that would bring little change, according to the National Post.

Part of the problem, they say, is that the government’s ethics counselor remains a political position accountable to Chrétien, instead of being given the mandate and freedom to operate independently.

Special to Newsline from Canadian correspondent Errol P. Mendes

WASHINGTON
It is being reported in several Canadian media outlets that the U.S. Federal Energy Regulatory Commission (FERC) is investigating many power generators and traders including four Canadian electricity marketing firms for possible involvement in manipulation of wholesale electricity prices in California two years ago.

The Financial Post reports that B.C. Hydro Power Authority, Enmax Corporation of Calgary, TransAlta Corporation, and TransCanada Pipelines Co. Ltd. are being asked by the FERC whether they engaged in electricity trades called round trips, washes, or sell-buybacks to artificially increase revenues and trading volumes.

The Financial Post report indicates that the investigation from FERC comes on the heels of the U.S. Congress learning that Enron and Reliant Resources had manipulated electricity prices in California.

Congressional pressure for a widening FERC investigation also stems from California regulators claiming the state was overcharged $9 billion during a time of dramatically increasing electricity prices in 2001.

WASHINGTON
Drug maker Schering-Plough will pay a record $500 million fine, pull 73 products off the market, and submit to intense government scrutiny until 2005 under the terms of a consent decree announced last week.

The agreement between Schering-Plough and the U.S. Food and Drug Administration (FDA) follows a probe into manufacturing violations at four company plants in New Jersey and Puerto Rico.

Since 1998, the FDA has inspected the plants and found “significant violations … related to facilities, manufacturing, quality assurance, equipment, laboratories, and packaging and labeling,” according to a statement from the agency.

Schering-Plough has “a history of failing to comply with [manufacturing standards] at these plants, which produce about 90 percent of the firm’s drug products,” the FDA said.

The agreement, which still must be approved by a federal judge, calls for a record $500 million fine, and the withdrawal or suspension of 73 prescription and over-the-counter drugs, reported the Associated Press.

Schering-Plough will also be required to submit to increased federal oversight until the end of 2005. If the company fails to correct its procedures, another $175 million could be forfeited, according to the Washington Post.

Schering-Plough, manufacturer of the popular allergy drug Claritin, last week said that despite the violation and consent decree, all of its products on the market are safe for consumers.

BOSTON
Taking aim at widespread grade inflation, Harvard University last week announced that it would toughen its grading system to make sure that fewer students receive A’s and honors titles.

Public scrutiny fell hard on Harvard last year after a report from the Boston Globe charted a surprisingly high rate of honors graduates at the school, with more than 90 percent of Harvard’s class of 2001 receiving honors.

Critics of the system — including some faculty and students — warned that the escalating ease of earning honors at Harvard was embarrassing the school and stripping the honors designation of its meaning.

“A Harvard degree is a good degree, but it’s better if a plain degree — without honors — is seen as a significant category in itself,” Susan Pedersen, undergraduate education dean, told the Globe.

After studying the issue, Harvard’s faculty voted unanimously last week to set quotas for the different honors designation, capping the number of honors graduates at 60 percent, reported the New York Times.

Harvard also voted to abandon its byzantine 15-point grading system, opting to adopt the 4.0 grading system common at most U.S. universities and colleges.

Pedersen, who proposed the changes, says that while they may help Harvard retain its status as a top-notch university, they could also backfire by hurting students’ schooling.

In the past, Pedersen told the Times, students often ventured into tougher classes with the tacit understanding that they would earn an honors degree for their efforts. Now, those classes will carry the same intellectual rigor, but no implied reward — at least not in terms of GPA.

NEW YORK
More than 200 chefs and 90 restaurants from Los Angeles to New York last week said they would remove Chilean sea bass from their menus until more is done to protect the species from overfishing.

Last week’s announcement by a long list of respected restaurants was meant to lend a hand to the push to save Chilean sea bass from overfishing by a growing fleet of trawlers headed toward its breeding grounds in the Antarctic.

The fish, dubbed the “Dish of the Year” by Bon Appetit magazine in 2001, became a popular delicacy in the mid-1990s after marketers changed its name from Patagonian toothfish, noted the Associated Press.

As the number of fishing vessels soared, the population crashed, largely because the fish, which can grow as large as a linebacker, were being killed before they could reach sexual maturity and replenish the population.

Last week, chefs from premier restaurants on both coasts said they would no longer serve Chilean sea bass until stronger safeguards are in place to protect the population, which some estimate could be wiped out in five years.

“I sell seafood for a living. I’m not an environmentalist first,” Rick Moonen, the executive chef at Oceana in Manhattan, told the New York Times. “But as a responsible professional, I can’t justify selling this until the regulatory process is tightened up and a program is in place to assure the population can be sustained.”

Linda Candler, a spokeswoman for the National Fisheries Institute, a seafood trade group based in Washington, said such measures already are in place and are starting to work. The boycott could backfire, she told the Times, by putting pressure on fishing vessels to sell their catch to less scrupulous buyers in the United States and other nations.

The boycott movement, led by the National Environmental Trust, hopes that the purchasing power of U.S. restaurants, which buy 70 percent of Chilean sea bass sold domestically, will put a quick end to abuses.

In addition to Oceana, New York’s Grand Central Oyster Bar and the Union Square Cafe, as well as California’s Spago Beverly Hills have joined the boycott, which is already supported by 500 other chefs around the country and in Canada, according to the Times.

The report notes that if consumers want to verify that a restaurant’s Chilean sea bass was caught according to protective regulations, they can ask to see documents legally required to be kept by the restaurant.

DENVER
A Colorado advertising agency last week fended off criticism after the firm offered pithy signs to Denver panhandlers recruited to promote the company while asking for contributions from passersby.

The signs, created by downtown ad agency Sumaato, carried messages that included, “Last Year I was a Dot.Com CEO,” “At Least I’m Not Spamming Your Email,” and, “Hell, It Beats a Cubicle.”

Dennis Wakabayachi, CEO of Sumaato Advertising, said the placards were meant as a humorous plug for his company, which thought it could mix self-promotion with helping panhandlers.

“We found that humorous signs have been more successful for panhandlers,” Wakabayashi said in a press release. “So, we decided to have a little fun with it.”

“We’re an ad agency, and in this tough market we have to do something to get attention,” Wakabayachi told the Rocky Mountain News.

John Parvensky, president of the Colorado Coalition for the Homeless, was less enthusiastic about the marketing stunt, which was refused by one out of every five panhandlers the firm approached.

“It seems to trivialize the problems that homeless folks are facing,” Parvensky told the Rocky Mountain News. “I think it’s focusing attention in the wrong direction.”

The signs, which also include a list of shelters and kitchens for the homeless, include the tag line, “Sumaato Advertising Works” — something the agency hopes will prove true once the controversy dies down.

Special to Newsline from editor Carl Hausman

Controversy over conflicts of interest in the financial world continued to dominate the news in ethics during May, with this week’s edition of Ethics Newsline reporting on a $100 million settlement in the case against Merrill Lynch, alleged to have misled investors in hopes of appeasing big investment banking clients. On May 20, we carried a summary of what appears to be a record number of restatements of earnings following revelation of various accounting scandals, and on May 13 we covered a probe into allegations that Enron manipulated California’s energy supply during 2000 and early 2001. And on May 6 we featured a summary of Congress’s probe into fluctuating oil prices.

May saw several news stories dealing with the intersection of governance and ethics: a subpoena for White House records related to energy policy (May 27), a call for ethics reform in Canada (May 27), a government suit against municipalities for alleged voter mistreatment during the 2000 elections ((May 27), a dramatic shift in the Justice Department’s view toward interpretation of gun control (May 13), a stay on executions in Maryland (May 13), and a call by a Canadian newspaper for an end to what it views as U.S. trade protectionism (May 13).

Media ethics issues figured prominently in ethics news: a controversy over an ad agency’s use of the homeless in its marketing (May 27), protests over the use of a 9/11 photo of President Bush for fund-raising (May 20), concern over the airing of a videotape depicting portions of the killing of a Wall Street Journal reporter (May 20), and protests against the calling of reporters to testify in war-crimes trials (May 20).

Workplace stories also were featured in Ethics Newsline during May: a call for action to stem workplace violence (May 13), a settlement in a case involving testing workers for predisposition to certain workplace injuries (May 13), and a U.S. Supreme Court ruling upholding seniority rights in the workplace (May 6).

As always, education ethics remained a continuing theme throughout our coverage: Harvard’s effort to reform grade inflation (May 27), criminal charges in the U.K. brought against a mother for allegedly allowing her daughter to be truant (May 20), and a call for more comprehensive sex education in the United Kingdom (May 6).

From the New York Times Co.:

In an employment trends report released today, The New York Times Job Market reported that job seekers believe loyalty does not necessarily pay, even in the current difficult economic climate.

About half of job seekers (51 percent) believe that loyalty to a company is helpful to the individual. In contrast, however, 40 percent say it makes no difference and 9 percent believe that loyalty works against an individual. These findings lead the third in a series of reports on employee loyalty by The New York Times Job Market research team.

At the same time, almost all hiring managers (97 percent) and job seekers (87 percent) agree that loyalty makes an employee more productive.

Are there any other benefits in fostering a loyal employee base? Are there any financial consequences for business? Two-thirds of hiring managers (67 percent) answered yes to both questions and explained that it is more expensive to recruit a new employee than it is to retain a current one. Hiring managers estimate that on average it costs $10,350 to replace an employee who has left for another job….

RE: Europe’s Rightward Shift: A Challenge to Moral Boundaries, May 20.

Dear Rushworth,

I read with great interest and appreciation “Europe’s Rightward Shift.” It very clearly framed an issue that is getting a lot of attention and concern here.

I recently presented to the school governors of a local Catholic school on the theme Cultural Awareness and Education — and was struck by one governor’s comments especially. He called attention to the fact that the European Union has recently questioned the need to value other cultures, especially when they are [perceived as] intolerant. As he said, “To what extent does a democratic society tolerate non-tolerant groups within their borders?”

Whether we frame concerns of a rightward drift through the lens of moral boundaries or cultural awareness (and acceptance) clearly we have a lot of ground to cover. I was very pleased to see the territory being so clearly articulated by your article.

All the best,
Paul Pickering
Slough, Berkshire, England