Ethics Newsline®

Several years ago, before digital cameras were the rage, a Web camera appeared in the front window of a shop in our coastal village. It was programmed to take pictures every few minutes of the comings and goings on Main Street, posting them on a Web site popular with tourists, vacation-home owners, and others nostalgic for New England. When residents protested, annoyed that they couldn’t even walk downtown without having their image published worldwide, the store abandoned its practice.

We didn’t know it at the time, but our town was pioneering a massive debate, soon to consume every nation, about the ethics of camera phones.

Camera phones are nothing but conventional cell phones with tiny lenses and built-in digital cameras. Once the user takes a photo, it can be sent to a friend’s cell phone with a few keystrokes — or to a Web site where it can be posted in real time. The estimated number of camera phones sold in the United States: 1.9 million this year, up to 4.9 million next year. Estimated number already on the streets of Japan: more than 25 million.

So what’s the issue? Hands up, everyone who’s never seen tourists snapping pictures indiscriminately on city streets with real cameras. Hands up, all those who are utterly sure that pictures of themselves aren’t right now in family photo albums in Kalamazoo or Kharkov or Kyoto. Hands up, those who regularly agonize that amateur shutterbugs are invading our privacy.

The real issue isn’t photography itself, which has been around for more than a century. True, some big-city health clubs are beginning to ban camera phones, lest nude pictures get snapped in locker rooms. And yes, it’s been said that celebrity parties have asked guests to check cell phones at the door, fearing that every visitor could become the paparazzi. We’re told that Samsung Electronics in Korea has banned camera phones from its research facilities, fearing industrial espionage. It’s been reported that magazine distributors in Japan post placards urging customers not to photograph pages from magazines they would otherwise buy. But all that could have happened before camera phones. What’s new is the sudden ease with which pictures can be surreptitiously taken and instantly published.

Those two characteristics — stealth and sharing — will be the focus of this new debate. We’re used to talking about the right to remain private behind some kind of barrier — the physical walls of our home, the electronic firewalls keeping computer hackers away from our personal information, the walls of confidentiality we expect from lawyers, accountants, doctors, or ministers. This new debate centers on public privacy — the presumption that, even in public, we have the right to live an unrecorded life.

That presumption depends on the fact that most people have only a fleeting and selective memory. It depends, in other words, on the presumption of evanescence. We’ve always assumed that the passing dailiness of our lives will disappear without a trace. But what if something could lock in those moments forever — and without our approval?

That strange new possibility has people greatly concerned. Should they be? Not if their principal fear is terrorism, fraud, corruption, and sundry other vices. Camera phones may prove effective crime fighters. But if their fear concerns the misuse of these images, there’s a brave new world of concern out there.

Is it inconceivable that computers can be taught (like humans) to recognize images as they now recognize voices? Is it impossible to imagine vast data banks of images, refreshed every second from the Web sites of cell-phone snappers on every street? Is it far-fetched that someone could locate every picture of you in the last five years, building a profile of your activities that makes credit-card or phone-bill sleuthing look like child’s play? Is it beyond credibility that the person asking for that information may have malicious designs?

To the extent that such a world can be imagined, it will breed fear. And fear will raise calls for government regulation of camera phones. Other Web-based activities have so far managed to escape such regulation, though porn is pushing that limit. The camera-phone craze, by its sheer popularity in an age fascinated with visual imagery, could shatter that limit altogether.

Will camera-phone users voluntarily adopt an etiquette of restraint and an ethic of self-regulation? Or will they be regulated against their will by alarmed citizens and concerned legislators? This time, I suspect, the technology is too powerful to escape regulation. The question is not when, but how.

(c)2003 Institute for Global Ethics

“Our view is give them lawyers and let the process take its course, and if they are found guilty of crimes they will pay their price and would have had fair representation. If not, they should be released.”

– Adel al-Jubeir, foreign policy adviser to Saudi Arabia’s Crown Prince Abdullah, discussing his government’s efforts to pay for lawyers and bond for hundreds of Saudi citizens detained or prosecuted in U.S. anti-terrorism efforts. The Saudi government says its actions are aimed at making sure trials are fair; an FBI official says they are “tantamount to buying off a witness.” (“FBI Says Saudis Buy Off Witnesses,” Associated Press, Oct. 17)

WASHINGTON
In an unusual but not unprecedented move, a federal judge has ordered five journalists to reveal their sources for stories they reported involving Wen Ho Lee, a former nuclear weapons scientist at the Los Alamos National Laboratory who was charged in 1999 with espionage.

While Lee later pleaded guilty to one felony count of unauthorized copy of classified documents onto computer tapes, 59 other counts were dropped in what subsequently was described as a bungled case by the federal government, resulting in an apology to Lee from the judge on behalf of the government.

U.S. District Court Judge Thomas Penfield Jackson’s ruling comes in a civil case brought by Lee against the U.S. Department of Energy and the Federal Bureau of Investigation.

Lee’s suit alleges violations of the Privacy Act, which, according to the Los Angeles Times, “bars unauthorized disclosure of certain personal information by government agencies.” Lee alleges that government agents disclosed personal information about him to reporters during the media frenzy that ensued after his arrest.

According to the Associated Press, Judge Jackson wrote in his opinion, “‘It does not detract from the importance of the First Amendment principle at stake to conclude, in the instant case at least,’ that making possible evidence of government leaks available for trial outweighs the interest of keeping sources confidential.”

Former Energy Department secretary and current New Mexico Governor Bill Richardson stated in a deposition that he does not recall speaking with reporters about Lee. Several other government officials involved also claim that they either did not speak with reporters or do not recall speaking with them, the AP reported.

The journalists and their employees contest the ruling and are likely to appeal.

Dave Tomlin, the AP’s general counsel, told his news agency, “Before the First Amendment lets you compel reporters to reveal sources, we think you have to do more than get a small handful of government officials to shrug their shoulders and claim they don’t know or can’t remember.”

Similarly, New York Times spokeswoman Catherine Mathis told the Washington Post, “We continue to believe that the confidentiality of our sources is critical to providing the public with important information and plan to seek an appeal.”

According to the AP, “Under federal law, journalists have no unqualified privilege to keep their sources confidential, the Supreme Court ruled in a 1972 case.”

The reporters directly involved in the case are Bob Drogin of the Los Angeles Times, James Risen and Jeff Gerth of the New York Times, H. Josef Hebert of the Associated Press, and Pierre Thomas of CNN.

NEW YORK
The New York Stock Exchange’s hectic bidding floor lost a bit of its fervor for a moment last week after the floor’s five leading players were hit with fines of roughly $150 million for trading violations.

The firms named in last week’s action are those that lead the high-volume, high-stress fray of buying and selling stock shares on the floor. The NYSE is the only major exchange that still uses the “open-outcry” trading system, in which specialist firms match sellers and buyers directly on the floor, reported the Reuters news agency. Specialist firms are companies that actually engineer the trades, and are appointed by the exchange to work with a particular type of stock.

The specialist traders are suspected of failing to act as mere intermediaries for many trades: Instead of invisibly hooking up buyers and sellers, they allegedly bought the shares themselves, raised the prices a notch or two, and then sold them, pocketing the profits.

The firms — Bear Stearn’s Bear Hunter; FleetBoston’s Fleet Specialist; Goldman Sachs’ Spear, Leeds & Kellogg; LaBranche & Company; and Van der Moolen — also allegedly made their own trades before executing customers’ orders, causing price difference that cost clients, reported Reuters.

The firms are to be fined various amounts, with the grand total “in the ballpark” of $150 million, NYSE interim chairman John Reed told lawmakers in Washington last week.

Nearly all of the firms say they may appeal the fines, noting that the NYSE has yet to provide them with data backing up the claims of improper trading and how they calculated potential losses to clients.

“The exchange has provided us no detailed information. We have neither the data nor the specifics as to how the amounts were reached,” said Van der Moolen Specialists vice chairman Robert Fagenson. “Without access to that data, we cannot perform our own analysis.”

The New York Times notes that last week’s action, normally a rather straightforward regulatory move by the NYSE, was shaped by the U.S. Securities and Exchange Commission (SEC), which pressed for higher fines and for changes in the investigation of the five firms.

The unusually active involvement by the SEC follows allegations of regulatory weakness and conflicts of interest at the NYSE, and “underscores the uncertain future of the exchange’s regulatory role,” according to the Times.

GENEVA
Swiss banks last week agreed to provide investigators with limited access to 4.1 million accounts that may contain funds owed to Holocaust survivors and their heirs — accounts that until now have been kept hidden by the banks’ secrecy rules.

The accounts, opened between 1933 and 1945, have been eyed as the possible property of people who survived or died at the hands of Hitler and his supporters, reported the New York Times.

After World War II, many banks refused to turn over funds to claimants unable to provide necessary documents, such as death certificates, which were never issued by Nazi concentration camps.

Under a $1.25 billion settlement with Holocaust victims in 1988, Swiss banks agreed to provide court investigators with information about their accounts in case they could be traced to victims or heirs.

But over the past five years, the banks have released information on only 36,000 accounts, according to the Times.

Last week’s move wedges open the banks’ holdings, and follows a recent court report criticizing the banks for using secrecy laws to deny access to requested information.

Roger Witten, a lawyer for the banks, last week disputed charges that the banks had been stonewalling investigators and warned that the number of questionable accounts had been overstated.

Under the terms of last week’s deal, the banks will allow investigators to perform a test run, trying to match 550 claims against the listings of 4.1 million accounts. If matches are made, investigators may find leverage to expose the accounts to wider scrutiny, noted the Times.

To date, claims officials have distributed only $131.5 million in connection with 1,751 bank accounts; $800 million has been set aside for such payments. The remainder of the $1.25 billion settlement is allocated for other Holocaust victims.

WASHINGTON
Federal and state regulators teamed up last week to issue a rare joint advisory to consumers, saying that the growing number of nonprofit credit counseling firms may be taking advantage of already troubled consumers.

The Federal Trade Commission (FTC) and Internal Revenue Service (IRS) are among those looking into the counseling firms, some of which are suspected of charging exorbitant fees, paying excessive salaries, and funneling funds to side businesses.

Regulators’ doubts, if confirmed, could cost some of the credit counseling firms their nonprofit status — and millions of dollars in penalties and lost business, reported the New York Times.

“Consumers need to know not to read too much into not-for-profit status — that’s no guarantee that someone is legit,” the FTC’s Midwest director, Steven Baker, warned last week. “A lot of these credit counseling companies are using tax-exempt status as a get-out-of-regulation-free card. That’s why we’re teaming up with the IRS on this issue.”

Two Midwestern states — Illinois and Missouri — have filed sued against AmeriDebt, one of the industry’s leading players, accusing the company of pushing fees onto consumers while pumping $75 million in subcontracts to the husband of the firm’s founder.

The Better Business Bureau says complaints about such firms have skyrocketed from 237 in 1998 to 1,480 last year — the largest number of which have been filed against AmeriDebt, reported the Washington Post.

The industry used to be heavily supported by payments from the credit card industry, which benefited from counseling work that pushed clients to repay heavy debts instead of declaring bankruptcy.

As fees from the credit-card firms have decreased, some counseling firms have begun seeking profits by pressuring clients into paying steep “voluntary” fees for the free services on offer, regulators suspect.

“Because of the work that we do, we have to be an arbiter for both sides, and I do think some tension comes from that,” Suzanne Boas, president of the Consumer Credit Counseling Service of Greater Atlanta, told the Times. “But if you’re very clearly focused on providing value for consumers, I think that’s a tension that can be resolved.”

Congress, which is contemplating legislation that would require bankrupt consumers to get credit counseling as part of the process, has promised to investigate.

Sen. Norm Coleman (R-Minn.), chairman of the Senate Permanent Subcommittee on Investigations, said he plans to hold hearings on the issue soon. “While there are some good firms out there, we are concerned that some folks are taking advantage of vulnerable people,” Coleman told the Post.

The Post reports that 9 million U.S. consumers contact credit counseling firms each year, with 2 million enrolled in programs at any one time.

WASHINGTON
Halliburton last week defended itself against allegations that the firm is gouging U.S. taxpayers by inflating the cost of gasoline and other fuels sold to U.S. government operations in Iraq.

Reps. Henry Waxman (D-Calif.) and John Dingell (D-Mich.) led last week’s charge against Halliburton and its operations in Iraq, citing numbers they say indicate suspicious price hikes by the firm’s KBR subsidiary.

Halliburton was given a noncompetitive contract to restore Iraq’s oil infrastructure and supply needed fuel to the U.S. government, which then distributes the fuel to armed forces, government agencies, and the Iraqi people.

According to their figures, Halliburton is charging the U.S. government $1.62 to $1.70 per gallon of gasoline, even though experts say regional prices suggest the cost should be only 96 cents per gallon.

The discrepancy between Halliburton’s prices and regional prices mean that at least 66 cents are unaccounted for, the lawmakers argued in a letter to the White House Office of Management and Budget.

“The basic thing that Halliburton has to answer is why this high price,” Walid Khadduri, editor of Cyprus-based oil newsletter Middle East Economic Survey, told the New York Times. “That’s way above market price and they have to justify that.”

Halliburton chairman and chief executive David Lesar last week defended his firm’s pricing, saying the hiked prices are caused by “strict contract requirements defined by” the U.S. government.

“The requirements included the ability to acquire the necessary quantities of fuel and the ability to deliver it in a hostile environment,” Lesar fired back, according to the Reuters news agency.

Lesar says the latest questions are politically motivated. Halliburton, a frequent target of criticism, was run until 2000 by Vice President Dick Cheney, who still receives compensation from the firm, noted the Associated Press.

NAIROBI
Following up on a pledge to clean up the country’s judicial system, Kenyan officials last week suspended more than half of the country’s top judges over concerns about corruption.

Six of Kenya’s nine Appeals Court judges and 17 of its 36 High Court judges were suspended pending investigation on a range of alleged corruption counts, reported the BBC.

The judges were put on notice last month after a damning report warned of widespread corruption, including cash bribes, sexual favors, document doctoring, stolen evidence, and unfounded wealth.

The nation’s president, Mwai Kibaki, has promised to stamp out corruption. Last week, he appointed two tribunals to investigate the suspended judges on allegations of “corruption, unethical practices, and absence of integrity.”

Kibaki and others hope that last week’s action will begin restoring public confidence in the country’s judicial system, even though its short-term consequences may put a heavy burden on remaining judges, slowing down legal proceedings.

“It is better for cases not to be heard instead of appearing before a judge whose integrity has been publicly questioned,” senior counsel Kamau Kuria told the BBC.

WASHINGTON
The Supreme Court last upheld the right of physicians to advise their patients about the use of medical marijuana.

The court let stand a lower court ruling that defied the Bush administration’s attempt to punish doctors who discuss the use of marijuana for medical reasons.

Without comment, the court refused to take up the case, which pitted doctors’ right to discuss all possible treatments with their patients against the federal government’s right to regulate illegal drugs.

After U.S. states began adopting laws giving doctors the right to discuss or recommend medical marijuana with their patients, the Clinton administration countered by saying it would prosecute such actions because they involve an illegal drug.

While states give doctors their license to practice, the federal government grants their license to prescribe medication, without which most doctors would be unable to make a living, noted the New York Times.

A coalition of doctors, civil-rights groups, and advocates of medical marijuana sued in 1997, arguing that blocking doctors from discussing all possible remedies violated the First Amendment rights to free speech.

After the 9th U.S. Circuit Court of Appeals ruled in favor of the plaintiffs, federal regulators appealed, reported the Associated Press.

“The provision of medical advice — whether it be that the patient take aspirin or vitamin C, lose or gain weight, exercise or rest, smoke or refrain from smoking marijuana — is not pure speech. It is the conduct of the practice of medicine. As such, it is subject to reasonable regulation,” Bush administration solicitor general Theodore Olson said in court papers.

Last week, the Supreme Court refused to get involved, turning a deaf ear to such arguments and leaving the 9th Circuit’s ruling in force.

The high court’s refusal to enter the fray over medical marijuana was unexpected, given the deference the court usually pays to cases in which the administration takes an active role, noted press reports.

Despite a federal ban on the use of marijuana, ten states — Alaska, Arizona, California, Colorado, Hawaii, Maine, Maryland, Nevada, Oregon, and Washington — have passed laws approving medical marijuana. Thirty-five states have adopted legislation recognizing its medicinal value, according to the AP.

ROSEMONT, Illinois
Many of the nation’s college basketball coaches, worried about their image in the wake of numerous scandals, met last week to talk about ethics and devise a game plan for restoring public confidence in the sport.

Coaches recently have been on the defensive after basketball became the frequent subject of headlines involving rules violations, cheating, carousing, lying, and even murder.

Last week, the National Collegiate Athletics Association (NCAA) and the National Association of Basketball Coaches (NABC) decided to play offense rather than defense, pulling together a meeting on ethics.

NCAA president Myles Brand joined nearly 300 Division I coaches for the mandatory three-hour meeting, which ended with a call for each coach to customize a code of ethics for their school within three weeks. It also charged an ethics committee with creating sanctions for coaches who break the rules, reported USA Today.

The meeting received both praise and criticism from coaches, according to press reports.

“By and large, the coaches said, ‘First of all, we’re already doing this,’” Gonzaga coach Mark Few complained to the Seattle Times. “And it’s rather condescending to think we need to do that (implement the code). That was not what the coaches wanted.”

“It’s tough to be labeled when just a handful of people are doing it,” added Cal coach Ben Braun. “But it’s happening enough now that we have to speak to it before it does get worse.”

Santa Clara’s Dick Davey, an NABC board member, told the Seattle Times, “There are a few who are making it tough for those of us who are trying to do it right. Maybe you can’t legislate morality, but we’re going to let people know the ground rules for the future.”

From Corporate Reputation Watch:

“In response to high-profile cases of corporate wrongdoing and diminished corporate reputations over the last two years, 65 percent of CEOs surveyed worldwide said it is their personal responsibility to manage their company’s reputation. Only 14 percent of the corporate executives polled said their company’s board was responsible and just 12 percent considered corporate reputation a responsibility of their communications department, according to the Fifth Annual Corporate Reputation Watch survey of senior executives.

“The survey, sponsored by global communications consultancy Hill & Knowlton and executive recruitment firm Korn/Ferry International (NYSE:KFY), examined corporate executive level perspectives on issues such as the importance of corporate reputation, influencers of corporate reputation, threats to reputation, governance issues, and corporate social responsibility initiatives.

“The survey revealed that corporate boards are putting more pressure on CEOs to build corporate reputation. When choosing a CEO successor, the CEOs overwhelmingly agreed (97 percent) that boards place at least some weight on a candidate’s ability to protect and enhance the company’s reputation.

“Among the global company CEOs, presidents, and chairmen who responded to the 2003 survey, 75 percent said their companies have improved internal controls in response to mounting revelations of corporate wrongdoing. In addition, 64 percent said that their companies have reviewed auditor and accounting relationships, and 55 percent said they have revised codes of conduct.

“‘These findings reveal that most of today’s corporate leaders believe their own ethical behavior is critical to how their companies are perceived, and more and more are increasingly implementing measures to ensure that the mistakes of yesterday are not repeated,’ said Paul Taaffe, chairman and CEO, Hill & Knowlton, Inc. ‘It is also significant that executives surveyed viewed customers as the biggest driver of reputation, which demonstrates their sensitivity to the link between corporate reputation and success in the marketplace.’

“Reflecting a change in attitude from previous surveys, a vast majority of respondents agree that a company’s corporate reputation is more important today than it was five years ago, and more than half believe it is much more important today….

“‘In today’s hypersensitive environment, including tougher public scrutiny, increased media coverage, and multiple shareholder interests, a minor blemish can later have a major impact on a company,’ said Paul C. Reilly, chairman and CEO, Korn/Ferry International. ‘Stewardship of corporate reputation can make a significant difference in share price, talent acquisition and retention, and ultimately on a company’s brand.’

“…CEOs agreed that corporate social responsibility (CSR) initiatives contribute to corporate reputation. Overall, eight out of 10 CEOs said that CSR initiatives contribute at least moderately to their companies’ reputation, but only three out of 10 said they contribute a ’significant amount.’ European CEOs place a higher weight on CSR initiatives…. Surprisingly, increasing sales and enhancing stock price are mentioned more frequently by CEOs as objectives of corporate reputation, than corporate social responsibility.

“The vast majority of CEOs believe the recent focus on more stringent corporate governance and board oversight is going to be a permanent fixture in the corporate landscape. While most CEOs believe boards of directors are doing a good or excellent job in performing an oversight role, a majority (68 percent) also believes that a higher proportion of independent directors will become a long-term outcome of increased corporate governance….”

“The important thing is this: to be able at any moment to sacrifice what we are for what we could become.”

– Charles Du Bos (French literary critic, 1882-1939)