Ethics Newsline®

Do you know what’s in the First Amendment?
To read its text, highlight the passage below.
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“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”
– The First Amendment to the U.S. Constitution
End here.

Walking by the lakeshore here in Maine the other day, I found a hornets’ nest larger than Saddam’s head. It was near a cabin where, some years before, the joists had been nearly chewed through by porcupines, bristling with quills like gunboats in the Gulf.

Like all animals, hornets and porcupines have sophisticated defense mechanisms. But where most animals respond to attacks by fleeing, burrowing, or biting, these two follow different doctrines. For the porcupine, the answer is deterrence. The woods are full of domestic predators who, like our dog, once tried to attack. Nothing like a nose full of quills to recalibrate one’s belligerence. Among wild animals, the word is out that this enemy is too well armed to make an attack even thinkable. That’s deterrence.

Hornets chose a different option: preemption. They don’t wait to be victimized; they swarm out to attack first. If I’m strolling past a hornets’ nest minding my own business, I figure I’m safe at 25 feet, endangered at 15, and under full Red Alert at 7. Nor do hornets care about my intentions. I could be charging with a firebrand to burn out the nest, or sleepwalking with no clue to my whereabouts. No matter. The doctrine of preemption glows crystalline in every hornet’s heart: Anything within 7 feet must be removed.

Washington is no stranger to these twin doctrines. For years, the porcupines have been in ascendancy. They’ve argued that any would-be belligerent will be cowed when they see America all abristle with defense. And since our enemies are rational animals who seek to minimize their own pain and prolong their own lives, they’ll weigh the risks and leave us alone.

Since 9/11, however, the hornets have carried the day. That became clear last week when the Bush administration’s plan for “counterproliferation” ended decades of Cold War deterrence by asserting that the nation has a “right to self-defense by acting preemptively” against external threats. Anchored in a 33-page document titled “The National Security Strategy of the United States,” which presidents must submit to Congress, the doctrine of preemption makes it clear that, particularly in dealing with terrorism, the United States intends to get there first by attacking anything that comes too close for comfort.

Why the shift? Because a core premise of the porcupines — that our enemies want to save their own lives — collapsed into rubble along with the World Trade Center. What’s to deter a suicide bomber? Certainly not the threat of pain, punishment, or destruction. We’re fighting a new kind of war these days, say the hornets, and the only way to be safe is to destroy them before they destroy you.

This shift from deterrence to preemption is no mere theory. Last week it was clearly visible in three related areas:

• Saddam in Iraq. Is he really heading toward the West’s nest? Waiting to find out could be fatal, so send in the attack jets for the sting. Hence the administration’s request to Congress last week for authority for the president to use “all means he deems appropriate, including force,” to remove Saddam — whether or not he is actively developing weapons of mass destruction.
• Muslims in Lackawanna. Earlier this month, federal agents rounded up eight American men of Yemeni descent in upstate New York who allegedly trained under al Qaeda in Afghanistan. Admitting they knew of no specific terrorist act the men were planning, federal agents acted preemptively, based on intercepted calls and other evidence.
• Zacarius Moussaoui in court. Judge Leonie M. Brinkema, overseeing the trial of the only person charged in this country with the 9/11 attacks, has refused to make public several court filings containing Mr. Moussaoui’s inflammatory comments, fearing he could be using code to communicate with his al Qaeda colleagues.

These are three expressions of the same ethical dilemma. On one hand, it is right to protect the rights of individuals to speak freely, associate with whomever they will, think whatever they like, and remain innocent until proven guilty. On the other hand, it is also right to defend the community against horrendous acts of mayhem perpetrated by those who aren’t interested in saving their own lives and are therefore difficult to deter. Under the former logic, you watch and wait. Under the latter, you preempt. Which is the higher right?

In the animal world, porcupines and hornets coexist successfully. Add a new element — a hunter with no weapon more complex than a club — and the slow-moving, over-confident porcupines haven’t got a chance. Hornets, more adaptable, adjust to new elements by striking first.

In the policy world, add the new element of suicide and what once worked well may no longer be up to the task. Look for this long, slow shift from deterrence to preemption to throw up any number of tough ethical dilemmas as it ravels out to its conclusion.

(c)2002 by the Institute for Global Ethics

Re: “When Poor Kids Fail, so Does Ethics,” Sep. 16.

Nice commentary. Just a side bar: While I believe subject matter knowledge is critical, I think more emphasis needs to be given to the importance of teacher/pupil relationships, especially in the lower grades. (”If you want to teach math to Mary, it’s more important to know Mary than to know math.”) Caring for and respecting Mary is also a determining factor in Mary’s willingness to learn.

– Luke Austenfeld
Augusta, Michigan

“Intellectual property systems may, if not used carefully, introduce distortions that are detrimental to the interests of developing countries. Developed countries should pay more attention to reconciling their commercial self-interest with the need to reduce poverty in developing countries, which is in everyone’s interest.”

–From the text of a new report by the Commission on Intellectual Property Rights. Established by the U.K. government in 2001, the commission’s recently released report warns that strict patent safeguards in developed countries are protecting Western profits at a dangerous cost to the developing world.

NEW YORK
Jack Welch, the legendary head of General Electric (GE), last week asked the company to renegotiate his lucrative compensation package after its long list of perks caught the attention of federal investigators and a suspicious public.

Welch, who transformed GE from a $13 billion appliance company to a $480 billion industrial conglomerate over the course of 20 years, is widely respected as a business visionary.

But last week, Welch came under scrutiny after the U.S. Securities and Exchange Commission said it was launching an “informal investigation” into whether GE had lawfully disclosed the terms of his compensation package.

The lavish perks — including free flowers, food, toiletries, laundry service, computer support, sports tickets, opera tickets, a Manhattan apartment, and round-the-clock jet access — were made public recently in a divorce filing by Welch’s estranged wife, reported the Washington Post.

Welch immediately denied any wrongdoing, saying he would surrender most of his post-GE perks solely to appease a nervous public, burned lately by hidden sweetheart loans, private deals, and financial foul play at firms like Enron, ImClome, Tyco, and Adelphia.

“In these times when public confidence and trust have been shaken, I’ve learned the hard way that perception matters more than ever,” Welch wrote last week in the Wall Street Journal. “In this environment, I don’t want a great company with the highest integrity dragged into a public fight because of my divorce proceedings. I care too much for GE and its people.”

Welch said that while the terms of his compensation package were extensive, they were warranted — and rarely used. In the current environment, though, he said the terms could be “misportrayed” as excessive.

GE, which insists it has done nothing wrong, has reportedly agreed to the renegotiated package. The new deal will still provide Welch with a $9 million annual pension, as well as access to a company-owned jet, the Manhattan apartment, and other facilities in exchange for an annual payment of $2 to $2.5 million.

Welch will also retain lifetime access to an office and administrative support, perks “given for decades to all retired GE chairmen and vice chairmen,” he wrote in the Journal.

NEW YORK
Tyco International Ltd. last week reported that its former CEO and several other executives manipulated the company’s loan procedures and balance sheets to bilk the firm of roughly $600 million.

In papers filed by Tyco with the U.S. Securities and Exchange Commission (SEC), former chief executive L. Dennis Kozlowski was fingered for most of the blame, accused of siphoning off more than $60 million under a loan program that essentially became a private piggy bank, reported the Wall Street Journal.

Former chief financial officer Mark Swartz is accused of improperly borrowing more than $33 million via the same program. Former chief corporate counsel Mark Belnick allegedly duped the fund of $14.6 million.

The men, led by Kozlowski, also helped 51 upper-level Tyco executives secure more than $56 million in special, unapproved bonuses meant to fund an office relocation to Florida.

The bonuses, given to some executives who never even moved, were essentially loans that Kozlowski later ordered Tyco to forgive, requiring recipients to sign a confidentiality agreement forcing them to forfeit the funds if they ever spoke publicly about the deal.

Kozlowski allegedly engineered that deal by faking board approval to dupe Tyco’s human resources department into inking the deals and cutting the checks, reported the Washington Post.

In addition, Kozlowski is accused of directing payments to three members of Tyco’s board of directors, intending to buy their silence about sweetheart loans and fiduciary fraud, noted the Post.

Such easy-term executive loans were made illegal by new legislation passed last July.

Tyco has sued Belnick, Kozlowski, and Swartz, to recoup the funds, but will have to get in line with the Manhattan district attorney, the SEC, and scores of angry shareholders, all of whom have also filed suit.

While much of the blame has been directed at Tyco executives, the company’s board of directors has come under harsh criticism as well. Most members are expected to resign by early next year, according to a report from the Reuters news agency.

NEW YORK
Merrill Lynch & Co. last week fired two high-placed executives who refused to help federal regulators investigating any role that Merrill Lynch may have played in the collapse of Enron.

The executives — vice chairman Thomas Davis, and investment banker Schuyler Tilney — were dismissed without any immediate evidence of wrongdoing, reported the New York Times.

The men were among 96 Merrill Lynch employees who invested in a Merrill-devised vehicle dubbed LJM2, which helped Enron keep debt off its books, one of the schemes that led to the firm’s collapse last year, according to the Times.

While both men have denied any wrongdoing, Tilney invoked the Fifth Amendment when summoned by a congressional panel to testify about the Enron connection in July, and Davis refused to cooperate on the advice of his lawyer, Tom Fitzpatrick, who said Enron and other corporate scandals had whipped the public into a frenzy of finger pointing and recrimination, according to the Times.

“In this environment, caution is mandated,” Fitzpatrick told the Times. “As the Supreme Court has said, one of the Fifth Amendment’s purposes is to protect the innocent. Tom Davis is innocent of any wrongdoing, but it’s a different environment.”

Merrill decided not to wait until Davis, a recent contender for the company’s CEO title, could prove his innocence. Davis had planned to retire in November.

Citing a company policy requiring its employees to cooperate with regulators and prosecutors, Merrill Lynch let go Davis and Schuyler last week.

Henry McVey, an analyst with Morgan Stanley, said Merrill Lynch’s actions are not too surprising.

“We’re seeing a more sustained pattern on Wall Street where top brass is moving to distance themselves from employees who are unwilling to usher in change quickly,” McVey told the Times.

NEW YORK
As once-prominent U.S. firms implode, many schools, charities, museums, and other institutions are being forced to do some soul-searching about how to handle badly needed donations made by implicated executives.

A report last week from the Washington Post notes that across the country, there are a half-dozen Kenneth L. Lay endowed chairs, more than three dozen Arthur Andersen professors of accounting, and a handful of Enron centers of education.

Now that their titular donors are being drummed out of business for alleged and proved improprieties, host institutions must face the difficult dilemma of how to respond.

Some, according to the Post, are doing nothing, while others are engaging in a top-to-bottom scrub of all things Enron, Adelphia, WorldCom, and ImClome.

“Are we the recipient of stolen goods?” asked Paul Maxwell, a board member of the National Cable Television Center and Museum — a pet project of Adelphia’s indicted founders, the Rigas family.

“For charities to say it’s okay to take this money just because they are doing good, I don’t think that’s an adequate answer,” Maxwell told the Post.

Neither do some groups, such as the Ex-WorldCom Employee Assistance Fund, which are lobbying politicians and others for the return of donations made by crooked corporate executives.

“It’s ridiculous for a politician to say this is money he can keep in good conscience when WorldCom employees who were let go by no fault of their own can’t pay their mortgage or feed their kids,” said former WorldCom employee Kate Lee, who now chairs the assistance fund.

Such questions are particularly penetrating at Junior Achievement, a nonprofit that schools youth about business and economics — and received more than $200,000 from now-suspect firms like Arthur Andersen and Tyco.

Citing an $86,000 donation to Junior Achievement’s Houston chapter, Peter Frumkin, an associate professor with Harvard University’s Hauser Center for Nonprofit Organizations, said the group faces the problem of trying to teach kids about business ethics by using funds from unethical executives.

“Should an opera company lose sleep from taking contributions from these companies? I would say no,” Frumkin told the Post. “Now when you talk about Junior Achievement, then you have this question … Is the mission being undermined?”

That is a question the group is still struggling to answer, observerd the Post.

LOS ANGELES
Myanmar villagers who say they were abused by military security guards while being forced to build an oil pipeline benefiting international companies will have their day in U.S. court, a federal appeals court ruled last week, overturning a lower decision that dismissed their suit.

The villagers contend that their alleged abuse at the hands of Myanmar military forces was done on behalf of firms including France’s Total Elf-Fina and U.S.-based Unocal.

Plaintiffs, alleging abuses including murder, torture, and rape, filed suit against Unocal under a 200-year-old federal law, the Alien Tort Claims Act.

That law gives foreign citizens the right to use U.S. courts when suing corporations for violating their human rights, regardless of where those violations occurred, reported the Los Angeles Times.

In the Unocal case, a judge had dismissed the suit, saying the villagers’ evidence failed to prove that Unocal, one of the companies funding the pipeline’s construction, actively participated in their abuse.

While evidence suggested that Unocal “knew that forced labor was being utilized and that the joint venturers benefited from the practice,” the judge ruled that such knowledge was not the same as participation.

“Unocal was saying you can’t hold us liable because we didn’t hold the gun,” plaintiffs’ lawyer Terry Collingsworth told the Times. “That’s the classic Nuremberg defense: We weren’t the Nazis. We merely profited from them.”

Last week, a three-judge panel for the 9th U.S. Circuit Court of Appeals ruled that recent war-crimes prosecutions abroad had altered the standard for complicity.

“The evidence,” the appeals court wrote, “supports the conclusion that Unocal gave practical assistance to the Myanmar military in subjecting plaintiffs to forced labor.” The panel sent the case back to federal court for retrial, according to the Dow Jones news service.

“It’s very ordinary, routine American tort law that companies are responsible for the actions of those they hire to do things for them,” Robert Benson, a Loyola Law School professor and longtime critic of Unocal, told the Times. “So it doesn’t stretch legal principles at all. But it does make new law in this particular area of international law, in holding transnational companies responsible.”

Christine Rosen, an associate professor at UC Berkeley’s business school, said the ruling could push U.S. firms to uphold domestic standards when operating abroad.

“It should be a wake-up call to companies that they may be held to American standards of liability, that it now makes even more sense for them to apply American standards in labor relations and environmental affairs and so forth in the developing world,” Rosen told the Times.

A trial date in February has been set for a state-level version of the villagers’ suit. At least 10 similar suits by foreign plaintiffs are pending, while a host of others are under consideration.

Special to Newsline from Canadian correspondent Errol P. Mendes

MASERU, Lesotho
A leading Canadian engineering firm, Acres International Inc. of Toronto, last week was convicted by the High Court of the small African kingdom of Lesotho of bribing a director of a water project in return for $13.3 million worth of contracts.

Acres flatly denied all charges.

Earlier this year, the Court had sentenced the director of the project, Masuphe Sole, to 18 years in jail for accepting bribes from foreign firms, including Acres, that were involved in a $2.4 billion water venture partly financed by the World Bank.

According to the Globe & Mail, some development observers are claiming that the verdict will “send shivers through transnational corporations who have escaped punishment for bribery in the past because authorities have focused on officials who took bribes instead of the companies paying the money.”

Acres has stated it will appeal the decision to a higher court and points to the fact that an exhaustive World Bank investigation exonerated the firm of any complicity in the bribery.

However, the High Court’s decision revolves around payments made by Acres to its Lesotho agent of about $674,000 over seven years and paid into a Swiss bank account.

The Globe & Mail is reporting that about 60 percent of that money found its way to the director of the water project.

Acres claims that it had no knowledge or suspicion of these kickbacks.

WASHINGTON
Scientific, legal, and academic experts are raising concern over the Bush administration’s alleged push to dismantle and stack scientific advisory committees with people predisposed to favor Bush’s policies on topics ranging from gene research to abortion, according to a report last week from the Washington Post.

At the center of the controversy is a network of more than 250 advisory committees that advise the Department of Health and Human Services (HHS) on the long-term effects of science and health policy.

Such policies, which can determine the future path of research and legislation, include genetic testing safeguards, protections for human research subjects, and public health issues ranging from bioterrorism to the links between pollutants and cancer.

While each administration tailors the process, critics say the Bush administration’s rate of change and political maneuvering is the most extreme since Ronald Reagan took office in 1981.

Ousted experts contend that the Bush administration is biasing the process by disbanding committees that give advice the administration does not like, and by replacing members with religious conservatives, industry advocates, and Bush allies.

The Post report highlights a number of these changes, as well as HHS insistence that conservative bias is not a part of the makeover process, according to HHS spokesman William Pierce.

“It’s always a matter of qualifications first and foremost,” Pierce told the Post. “There’s no quotas on any of this stuff. There’s no litmus test of any kind.”

That view contrasts with the experience of at least one candidate for an HHS advisory committee, who told the Post that he was blocked from serving after an official said his views on embryo cell research, cloning, and physician-assisted suicide did not align with those held by the Bush administration.

“Those are not litmus tests,” Pierce responded to the Post.

IASI, Romania
Romanian doctors last week urged their government to legalize the giving of so-called “gratitude money” from patients, saying the added funds are necessary to make a living and learn new skills.

Romania, like many eastern European nations, is suffering a health care crisis, with doctors paid substandard wages of $120 to $300 a month, and hospitals literally collapsing from lack of funds.

In such nations, many patients opt to pay doctors an extra sum in exchange for improved treatment — a practice that is officially illegal, but largely overlooked, reported the Reuters news agency.

Most observers note that the funds help underpaid doctors stay solvent, buy new textbooks, and learn about the latest techniques in medical science, reported Reuters.

Last week, Romanian doctors staged a support rally for one of their most respected colleagues, Dr. Costel Plesa, a 40-year medical veteran accused of demanding a $60 bribe from a female patient.

While the woman has admitted paying the additional sum to Plesa, she has denied that it was demanded, saying she, like others, wanted to pay an extra sum out of gratitude.

“We should be able to avoid situations where good professionals are treated like ordinary thieves because somebody wanted to say thank you for saving his or her life,” Dr. Constantin Pandeli from the Iasi St. Maria’s Children’s Hospital, told Reuters. “Only those doctors who attach conditions to their medical treatments should be punished.”

Similar struggles to differentiate between corruption and gratitude are under way in Hungary, Poland, Slovakia, and the Czech Republic, according to Reuters.

If convicted, Plesa could face between 6 months and 5 years in prison.

LONDON
The U.K. government may soon start billing businesses for the cost of hospitalizing workers injured on the job if those injuries are caused by the employer’s negligence — a proposal sparking an outcry from the private sector.

Currently, Britain’s National Health Service covers the cost of medical treatment for the nation’s citizens, dipping into a fund created by taxes.

The government has started recouping the cost of treatment for people hurt in car accidents by billing the drivers’ insurance companies, recovering more than $155 million each year.

Now, the Department of Health wants to recoup an additional $186 million by extending that policy to employers who skirt safety laws, reported the Reuters news agency.

Supporters say the policy will push businesses to better protect their workers, resulting in saved revenues and lives. But critics charge that the policy will provoke a premium hike that could cripple corporations.

“The difficulty we have with this policy is that the cost is not going to be borne by just the people who inadvertently contribute to an accident in the workplace,” Jane Todd of the Federation of Small Businesses told the BBC. “It is going to be borne by the entire business community through their employer’s liability insurance.”

The proposed change, out for public comment until early November, will require legislative action not expected until 2003 at the earliest, reported the BBC.

HOLLYWOOD
Hollywood studios last week rattled their sabers in an escalating turf war over copyright and movie content, squaring off with a growing number of firms producing unauthorized video versions of major films that are “sanitized” of controversial content.

The firms perform functions suggested by their names — CleanFlicks, ClearPlay, and MovieMask — by editing, splicing, bleeping, and blacking out nudity, sex, strong language, and violence.

These silver-screen offspring, rented, sold, and downloaded across the country, are marketed most heavily to conservative groups in Colorado and Utah, according to a report last week from the New York Times.

Hollywood, which so far has largely ignored the phenomenon, is finally getting serious about stopping such firms from taking copyrighted content, reworking it to suit their taste, and then releasing it under the original title.

“This is not about an artist getting upset because someone dares to tamper with their masterpiece,” Jay Roth, national executive director of the Directors Guild of America, explained to the Times. “This is fundamentally about artistic and creative rights and whether someone has the right to take an artist’s work, change it, and then sell it.”

Breck Rice, whose company distributes MovieMask software, says his product allows computer and DVD users to edit a film to their own personal taste, with more than three dozen possible versions of the same movie available for viewing.

In March, the firm swept through Hollywood to show the industry what it could do — replacing swords in “The Princess Bride” with light sabers, and covering a nude Kate Winslett with a corset in “Titanic.”

The company has also inked a deal with a product-placement company to digitally insert graphics — cereal boxes, soda cans, Bibles — into films, possibly even tailoring the images for regional audiences.

“We came to show them what our technology was capable of doing, purely to grab their attention,” Rice told the Times. “It certainly did that.”

Now, MovieMask and its ilk are on the defensive, saying they are simply providing a legitimate product to video owners, who should have the right to alter their purchases as they see fit.

So far, Hollywood disagrees.

“We’re just beginning to understand that this is part of a wider issue,” Hollywood veteran Marshall Herskovitz, producer of “I Am Sam” and “Traffic,” told the Times. “As long as something exists as digital information, it can be changed. So as a society we have to come to grips with what the meaning of intellectual property will be in the future.”

From the First Amendment Center:

“For the first time in the annual State of the First Amendment survey, almost half (49 percent) of those surveyed said the First Amendment goes too far in the rights it guarantees — a 10-percentage-point jump from 2001, which suggests new public concerns in the wake of the Sept. 11 terror attacks….

“‘The stakes have risen for the First Amendment in the wake of September 11,’ said Ken Paulson, executive director of the First Amendment Center. ‘The results of our 2002 survey suggest that many Americans view these fundamental freedoms as possible obstacles in the war on terrorism.’ In 2001, 39 percent of those surveyed said the First Amendment went too far in the rights it guarantees.

“‘That’s not to suggest a monolithic response to these core First Amendment values. In truth, Americans are of multiple minds about the 45 words drafted by James Madison,’ Paulson said. ‘While a majority says they respect the First Amendment, a significant percentage seems inclined to rewrite it.’…

“Additional findings:

• “More than four in 10 said they would limit the academic freedom of professors and bar criticism of government military policy.
• “About half of those surveyed said government should be able to monitor religious groups in the interest of national security, even if that means infringing upon religious freedom.
• “More than four in 10 said the government should have greater power to monitor the activities of Muslims living in the United States than it does other religious groups.

“About 40 percent of those surveyed said they have too little access to information about the government’s war on terrorism, compared to 16 percent who said there’s too much. Forty-eight percent of those surveyed said there’s too little access to government records, compared to just 8 percent who believe there’s too much.

“The least popular First Amendment right once again was freedom of the press. Forty-two percent of respondents said the press in America has too much freedom to do what it wants, roughly the same level as last year.

“The survey also found, as in previous years, that many Americans are unable to name the five freedoms guaranteed in the First Amendment. The percentages of those responding who were able to identify individual freedoms:

• “58 percent — freedom of speech
• “18 percent — freedom of religion
• “14 percent — freedom of the press
• “10 percent — freedom of assembly/association
• “2 percent — freedom of petition…”

“The world cannot continue to wage war like physical giants and to seek peace like intellectual pygmies.”

–Basil O’Connor (U.S. healthcare leader and philanthropist, ??-1972)