The skeptic always thinks it’s too soon to declare victory. Looking at the financial markets, skeptics could be right. True, the encouraging numbers from the past week could mark the end of the meltdown. Or they could signify another false bottom.

But we don’t need to wait for the grande dame to sing before asking, What was this opera all about? What will future historians say about this summer’s corporate scandals? What will be their legacy?

Here’s my answer. This collapse is part of a much larger picture. In markets, money follows trust. And a public withdrawal of trust is under way that goes far beyond financial institutions. What’s being distrusted, it seems, is professional expertise itself. Why? Because professional expertise is increasingly seen to be amoral — dangerously beyond the reach of ethical constraints, and operating in a vacuum with no sense of integrity.

That’s such a blanket assertion that it’s bound to be untenable. If it were true, it would have appalling consequences. What’s alarming, however, is the growing public tendency to believe that it’s true. Of the several trends shaping our ethical future, I worry that the growth of fashionable distrust is one of the big ones.

Doubt it? Then look at the news from the last several weeks with a single question in mind: Who can I trust?

The big losers, of course, are top corporate executives. CEOs have become the bane of lost-out shareholders and the butt of late-night comics. Too many, these days, wear handcuffs instead of cufflinks.

Then how about accountants and auditors? You mean like the ones at Arthur Andersen, where greed and moral courage appeared to be inversely proportional, with the former so dominant that the whole firm imploded?

Investment analysts, then? They’ve been shown to be a gnarly lot, pitching stocks to others that they themselves wouldn’t buy, and using a rating system so rosy that it makes recent reports of ivy-league grade inflation look almost pedestrian.

Speaking of the ivies, what about our major universities? Like Princeton, you mean? Its top admissions officer computer-hacked his colleagues’ databases at Yale in ways that, if done by a politician, would have been as handcuffable as a Watergate cat burglar.

And as for politicians? Well, there went James Traficant (D-Ohio), drummed out of the House of Representatives and right into jail — followed by Sen. Robert Torricelli (D-NJ), roundly rebuked by the Senate Ethics Committee for shady conflict-of-interest deals.

Good thing we can trust the food chain, then. Or can we, given ConAgra’s recall last month of 19 million pounds of meat possibly tainted with a deadly bacteria?

Medics? We thought Dr. Harold Shipman, the British physician, had deliberately killed only 15 of his patients. Turns out it was at least 215. Nor is the United States insulated from breaks, even if inadvertent, in chain of medical expertise: Two patients in Florida, we’re told, just received transfusions of HIV-tainted blood.

But surely we can trust the airlines — until we recall that two America West pilots were fired for allegedly drinking on duty, and that a Swiss air traffic controller apparently made the wrong calls that put two planes on a fatal collision course over Germany.

So in times like these, you need to be able to trust church officials….

Reads almost like a cartoon, doesn’t it? But cartoons can be deadly serious. So is this. Three conclusions:

1. Big distrusts, like those concerning financial markets, create a powerful vortex of skepticism that sucks other things into it. They sensitize the public to issues of failing integrity. Raising the visibility of the issue, they make it easier to imagine that a few scattered observations are hardening into a trend. Look for growing suspicion of professional expertise — and massive efforts by professionals to rebuild trust with their publics.

2. Corporations are not alone to blame. They are knit inextricably into the fabric of our culture, and they reflect in many ways our norms and values. It makes little sense to single out corporate leaders and financial professionals as though they were peculiarly unethical. Those now at the top were educated in the same context as the rest of us, reflecting an easygoing and pervasive moral relativism. Look for much more serious efforts at character education in the coming years.

3. Distrust is not contagious. But the belief in it is. Once convince a critical mass of the public that trust is evaporating right, left, and center, and that belief will be harder to counter. Yet there are great reservoirs of trust still operating at the community level in our culture, from simple things like keeping promises to complex ones like refusing to take or offer bribes. Look for efforts to identify, celebrate, and build on those examples.

Trust is neither optional nor obsolete. It’s central to the operation of every human relationship. It’s too important to surrender to a summer’s downward swirl of broken faith.

(c)2002 by the Institute for Global Ethics

Part I:

“Each of these cases is to be heard separately from all other cases on the docket. The courtroom must be closed for these cases — no visitors, no family, and no press. This restriction includes confirming or denying whether such a case is on the docket.”

– Michael Creppy, the United States’ chief immigration judge, in sweeping instructions quietly issued to hundreds of U.S. judges on September 21, 2001, ten days after last year’s terrorist attacks. Judge Creppy’s directive was the blueprint for more than 600 “special interest” immigration cases tried by the government.

Part II:

“This is the most profound shift in our legal institutions in my lifetime and — most remarkable of all — it has taken place without engaging any broad public interest whatsoever.”

– William G. Young, the U.S. federal judge presiding over the criminal case against Richard Reid, British citizen and alleged “shoe bomber,” discussing the Bush administration’s shift to secretive military tribunals for alleged terrorists. Judge Young was appointed by President Ronald Reagan.

Part III:

“I’ll never forget going to Argentina and seeing the mothers marching in the streets asking for the names of those being held by the government. We must be very careful in this country about taking people into custody without revealing their names.”

– Warren Christopher, U.S. secretary of state under President Bill Clinton, at a conference held by a federal appeals court last month. Christopher’s allusion to Argentina’s “disappeareds” was directed at Viet Dinh, an assistant attorney general under President Bush, who has refused to identify the people detained by the government in terrorism probes.

NEW YORK
A new poll of the nation’s leading chief financial officers (CFOs) finds that nearly one in six say they have been pressured to falsify figures over the past five years, according to CFO Magazine.

Five percent acquiesced, according to respondents.

The poll, part of an upcoming series from CFO Magazine, covered 3,000 CFOs of public companies. Of those polled, 141 responded, two-thirds of whom work at corporations with more than $1 billion in annual revenues.

Nearly a third (27 percent) of the CFOs said their firms concealed debt from their balance sheets, most often by using special constructs similar to those employed by Enron Corp., reported the Reuters news agency.

“If anything, I think our survey probably undercounts the problem, even though it was taken anonymously,” said Julia Homer, the magazine’s editor in chief. “Chief financial officers face enormous pressure to fudge results.”

Despite such pressure — 11 percent said corporate heads had leaned on them for leaner figures at least three times within the past five years — 93 percent denied engaging in aggressive accounting practices, noted the Associated Press.

“One clear message is that not everybody responds to the pressure,” Homer said.

After last year’s Enron implosion, corporate accounting has come under increasing scrutiny as regulators peel back the balance sheets, shedding harsh light on figures that show a growing number of firms used shadowy tricks to finish in the black.

WASHINGTON
The U.S. State Department last week moved to block a lawsuit charging oil giant ExxonMobil Corp. with human rights abuses in Indonesia, saying the suit could endanger U.S. business interests and the fight against terrorism.

ExxonMobil, which operates a natural gas field in the separatist Aceh province, hired members of the Indonesian military to protect its operations from sabotage. According to a lawsuit from the International Labor Rights Fund, those military forces used ExxonMobil resources and facilities to torture, murder, and rape local villagers.

ExxonMobil has denied any wrongdoing, and asked the U.S. government to intercede on its behalf, saying foreign policy issues should be considered before the case goes to trial.

Last week the State Department complied, arguing that the suit could cause severe problems for the Indonesian government at a time when the country is an important ally in the fight against terrorism.

The lawsuit against ExxonMobil would “risk a seriously adverse impact on significant interests of the United States,” including terrorism and business, the State Department said last week.

Indonesia’s ambassador to the United States agreed, saying the suit would “definitely compromise the serious efforts of the Indonesian government to guarantee the safety of foreign investments, including in particular those from the United States,” reported the Dow Jones Newswire.

While the judge in the case is not bound to obey the State Department, observers say the government’s move will likely kill the suit.

A similar suit against U.K.-based mining giant Rio Tinto was dismissed earlier this year after the U.S. government warned it could hurt its interests in Papua New Guinea, noted the Financial Times. Petroleum company Unocal Corp. faces similar litigation for its involvement in Burma.

Last week’s move by the State Department was blasted by human rights groups, including the Lawyers Committee for Human Rights, which warned that it signaled “that the war on terrorism is now going to be used as a cover for all kinds of corporate malfeasance.”

The U.S. government, which cut military ties with Indonesia in 1999 over violence against East Timor, said last month that it would renew relations with the nation, promising $50 million over the next three years to train police and fight terrorism.

NEW YORK
Two prominent U.S. lawyers last week said they would soon announce a federal lawsuit against Saudi Arabian financial interests accused of bankrolling the terrorists behind last September’s attacks.

“This is a case that deals with the most important event since Pearl Harbor,” said Allan Gerson, who helped broker a tentative $2.7 billion settlement with the Libyan government over the 1998 bombing of Pan Am Flight 103 over Lockerbie, Scotland.

Gerson will be joined by Ron Motley, a former U.S. government prosecutor of Nazis, who helped draft federal legislation enabling victims’ families to sue foreign sponsors of terrorism, reported the Atlanta Journal-Constitution.

The men are launching their lawsuit on the legal theory that wealthy Saudis sponsored the terrorists who attacked the United States, and therefore should be held responsible for the damage they did.

The suit, which will seek billions of dollars from wealthy Saudi citizens, banks, corporations, and charities, is expected to filed later this month, according to the Journal-Constitution.

NEW YORK
As many as 4,000 members of a New York credit union used a computer glitch caused by the collapse of the World Trade Center last September to steal $15 million through bogus ATM withdrawals, New York authorities said last week.

Sixty-six people have been arrested on charges of stealing as much as $18,000 each by deliberately overdrawing their accounts at the Municipal Credit Union. Thirty-five others are being sought, according to the New York Times.

Authorities say the credit union’s computer system was crippled when the World Trade Center, located across the street, collapsed during the terrorist attacks of September 11.

Although bank officials knew their account tracking system was damaged, they decided to let the credit union’s members — municipal employees, including firefighters, police, and teachers — continue making withdrawals.

“We did this at a time of crisis in the city because many of our members are firemen, policemen, and we felt at the time it was a necessary step for us to take to help settle down the city,” Thomas Siciliano, general counsel of the Municipal Credit Union told the Times. “We did not realize on the first day that there would be this kind of loss.”

Over the next two months, that loss would climb to $15 million as thousands of credit union employees and members plundered the bank’s accounts, withdrawing up to $500 a day whether or not their accounts contained the funds.

“This is a prime example of no good deed goes unpunished,” New York District Attorney Robert Morgenthau lamented last week. “People took advantage.”

Morgenthau and his team last week began arresting those accused of stealing more than $1,000 and making no effort to repay the funds when confronted. More than 1,700 people stand accused of overdrawing their accounts by at least $3,000.

Announcing last week’s arrests, New York Police Commissioner Raymond Kelly pledged to crack down on this and other scams stemming from last year’s attacks. “Anyone who thinks they can profit from the World Trade Center aftermath is sorely mistaken,” Kelly warned.

CHAPEL HILL, North Carolina
A conservative Christian group last week sued the University of North Carolina (UNC) for requiring all incoming freshmen to read and discuss a book about Islam, saying the assignment is an attempt to use taxpayer dollars to indoctrinate students into Islam.

Each summer, UNC chooses a book for incoming freshmen, who are asked to read and discuss the text. This year, the school chose Approaching the Qur’an: The Early Revelations by Michael Sells, a professor of comparative religion at Haverford College.

“We chose the book because since September 11 many of us have wondered what the core teachings of Islam really are,” UNC Chancellor James Moeser said in a statement. “We’re not spoon-feeding [students] a set of beliefs. We’re asking them to read and tell each other what they think.”

The Family Policy Network (FPN), a socially conservative Christian group, argues otherwise, saying the assignment “will have the effect of endorsing, advancing, and indoctrinating students in the religion of Islam.”

The FPN sought out three UNC freshmen — an evangelical Christian, a Catholic, and a Jew — as well as two local FPN members, and filed suit on their behalf, saying taxpayer dollars are being misused.

It’s a view that has been voiced in sound bites from TV preachers and talk-show hosts, including the Fox News Network’s prominent Bill O’Reilly, who compared the UNC assignment to teaching “Mein Kampf” in 1941, saying it was an exercise in teaching “our enemy’s religion.”

Rev. Franklin Graham, who gave the invocation at President Bush’s inauguration has espoused similar views, denouncing Islam as an “evil” religion that advocates terrorism on behalf of “mainstream” Muslims around the world, reported the Washington Post.

Sells, author of the book assigned by UNC, dismisses such statements as vitriolic hyperbole. “Islam, like all the other major religions, is a religion of peace or of violence depending on who is interpreting it, and if you look across the Muslim world, you’ll see very different answers,” he told the Post.

“The whole question of how to handle issues of religion in public institutions is one we need to grapple with better,” Sells added in an interview with the North Carolina Charlotte Observer. “My hope is that out of this controversy there will be some serious discussion of these issues — how to teach about religions in a society founded on a separation between church and state, and how to discuss the relationship of religion and violence.”

The fate of such discussions — at least at UNC — may be up to the courts, which have been asked to penalize the university for requiring its 3,500 incoming freshmen to read and think about Islam.

In the wake of the controversy, the university amended its assignment, allowing students to skip the book as long as they write a one-page paper explaining their reasons.

“At the very least, it starts a dialogue,” student body president Jennifer Daum told the Post. “My feeling is that if you’re not prepared to read ideas that are not your own and that you might disagree with, you do not belong at an institution of higher learning.”

OSLO, Norway
The Norwegian government mandated last week that all state-owned and public companies fill 40 percent of their corporate board posts with women within the next three years.

Currently, women account for only seven percent of the country’s corporate board members, a low figure that is still far higher than the European average of two percent, reported the Guardian.

“Here in Norway we have what we call an old boys’ network,” Martin Bernsen, a spokesman for Norway’s minister for children and family affairs, told the Guardian last week.

“The typical board member is male, over 55 years of age, and has a background in law and economics. They collect people from their own network and that has to change,” he added. “The minister has given firms an ultimatum.”

Last week’s decree sent shock waves through Norway, one of Europe’s most egalitarian nations, with many companies complaining that there simply are not enough qualified women to meet the government’s requirement.

“We have proven that there are lots of educated, highly qualified women out there with the right experience. But firms have to go and look for them,” Bernsen countered, saying the mandate would remain.

State-owned firms have 12 months to make the shift. Public companies have three years.

If they fail to meet the mandate, the government has threatened to back it up with legislation.

JOHANNESBURG, South Africa
South African mining giant Anglo American last week announced that it would start providing anti-AIDS drugs to all of its employees — a costly step the company says makes good sense in both ethics and economics.

Roughly one-quarter of Anglo American’s 90,000 employees, mostly poor miners, are believed to be infected with HIV, the virus that causes AIDS.

Last year, the company said it would begin offering anti-retroviral treatments to its infected workers, but then balked at the cost. This year, the company said it could no longer turn its back on the problem.

“The reality is severe but it’s not impossible to manage,” Brian Brink, senior vice-president (medical) of Anglo American, told the Financial Times. “You can’t dabble around any more. [HIV/AIDS] is big — you have to get on with it.”

Jackie Kelly, a labor consultant based in Johannesburg, agreed. “Most large companies previously saw the AIDS challenge as primarily a human resources issue,” Kelly told the Times. “Now they acknowledge it as the single most important strategic issue facing South African business.”

According to recent figures, AIDS is expected to orphan 20 million African children by the end of the decade, with infection rates especially high in South Africa and Botswana, where life expectancy is expected to plummet to age 27 by the year 2010.

While businesses have begun recognizing the threat AIDS poses to the workforce, they have considered the high cost of providing treatment for their workers too steep. Most governments have refused to step in to help, putting most treatment efforts at an impasse.

Last week, Anglo American decided to forge ahead without government support, saying that paying for HIV treatment is cheaper than the alternative: decreasing productivity, increasing sick days, high turnover rates, and expensive retraining, noted the New York Times.

“This is a very significant step, and we hope that by taking this step, at this stage, it sets the lead for other South African companies,” Anglo American chief executive Tony Trahar told reporters last week.

Two other prominent employers Debswana, a diamond company jointly owned by De Beers and the Botswana government, and automaker DaimlerChrylser South Africa — already offer HIV treatment for their workers.

LONDON
One of Britain’s leading children’s charities last week worked to defuse a growing controversy after agreeing to accept a donation from BAE Systems, Britain’s biggest arms trader.

The donation to NCH Action for Children comes after the charity’s management overruled its ethics advisory committee, which recommended against the financial alliance, reported the Guardian.

After a similar controversy two years ago, NCH Action for Children adopted a policy barring donations from firms that produce or promote weapons, gambling, tobacco, and pornography.

Last week, the charity’s executives sidestepped that policy, agreeing to accept up to $2.3 million from BAE Systems, formerly British Aerospace.

In a protest letter sent to the Guardian, angry NCH employees denounced their charity’s decision as an unethical capitulation to the bottom line.

“We are looking after children who are victims of the arms race very directly,” one worker wrote. “We have Kurdish children from Turkey where BAE have sold arms. You do not need to make too many leaps to see how these children are suffering the consequences of companies like BAE.”

A spokeswoman from NCH said the decision was a hard but “proper” one, insisting that “charities sometimes have to make difficult decisions.”

Special to Newsline from Canadian correspondent Errol P. Mendes

OTTAWA
The Globe & Mail is reporting that the Indonesian government is seeking the resignation of three judges who almost forced a subsidiary of the giant Canadian insurance company, Manulife Financial Corporation, into bankruptcy after being allegedly bribed by a former local business partner of a rival firm.

President Megawati Sukarnoputri, the country’s leader, has suspended the three judges from duty after the Supreme Court of Indonesia overruled the three judges who had declared Manulife Indonesia bankrupt for not paying a dividend despite the company being solvent.

The Justice minister of Indonesia, Yusril Ihaza Mahendra, confirmed that an investigation had indicated that a crime had been committed by the three judges and the matter was now with the police.

Lawyers for the three judges have denied the allegations of bribery.

The United Nations has previously expressed concern over alleged corruption and lack of transparency in the Indonesian legal system.

WASHINGTON
The U.S. government last week slapped fax service Fax.com with a record $5.4 million fine for barraging the nation’s consumers and companies with “junk faxes.”

The Federal Communications Commission (FCC) says Fax.com continued jamming junk messages through the public’s fax machines despite repeated warnings to stop.

Fax.com “engaged in a pattern of deception to conceal its involvement in sending the prohibited faxes,” FCC commissioner Kathleen Abernathy alleged last week. “Despite repeated warnings … and numerous consumer complaints, the company appears to have made no effort to mend its ways.”

The FCC retaliated against Fax.com by hitting the company with a $5.38 million fine — a record for violations of a federal law barring unsolicited faxes, phone calls, and prerecorded messages, according to the Associated Press.

Fax.com attorney Mary Ann Wymore said the company needed time to review the suit, but said an appeal is likely.

From the Gallup News Service:

“The nation’s employees have become less optimistic about their companies’ prospects over the last three months. The Gallup/UBS Employee Outlook Index for July is down by about 11 points since April, with about half that drop (five points) occurring in the last month. This drop parallels the downturn in the American public’s views of the overall economy.

“At the same time, despite this slippage, the Index as a whole reflects quite positive attitudes on the part of the American worker. Workers are, in general, much more confident in their own companies than they are in other companies, or in the U.S. economy as a whole….

“Employees continue to be least positive about their own job security, and most robustly positive about the future for their companies.

“Here are several examples of the specific attitudes of employees that are changing.

• “Seventy-six percent of employees said their company’s financial situation was getting better in April. That number has now dropped to 68 percent.
• “While 64 percent of employees in April thought their companies would continue to be profitable over the next six months, that number has fallen to 57 percent now.
• “The percentage of employees who are ‘extremely confident’ that they will still have their jobs in a year dropped by nine points from April to July.

“It is important to point out that workers are still more positive about their own companies than they are about the general economy…. Whereas 74 percent of the nation’s employees rate their own company’s financial situation as excellent or good, only 29 percent of the public … is currently rating the overall economic climate in the country as excellent or good….

“The sharp differences reflect the general tendency for people to rate their local situations more positively than they rate national situations — a phenomenon evident across a wide variety of issues, such as healthcare, Congress, education, and crime. Still, it is a hopeful sign that employees look around at their own companies and are not nearly as negative as they are about the country as a whole.

“How do employees rate their own managers? Despite the publicity about corrupt managers who have led their companies down the road to ruin and bankruptcy while enriching themselves, over eight out of 10 employees say that the people who run their companies are honest and ethical, and three quarters say they are good leaders. There is slightly less agreement that their managers are worth the money they earn….”

“Nostalgia combines regularly with manifest respectability to give credence to old error as opposed to new truth.”

– John Kenneth Galbraith (U.S. (Canadian-born) economist, 1908- )