Source: Transparency International. All figures in U.S. dollars.

It’s one thing to avoid unethical behavior. It’s something else to avoid even the appearance of such behavior. That distinction showed up in sharp relief during last week’s flap over the testimony of Richard A. Clarke.

Mr. Clarke, who served presidents Bill Clinton and George W. Bush as counterterrorism chief, told the commission investigating the 9/11 terrorist attacks that the Bush administration largely ignored the threat to the United States posed by al Qaeda. Predictably, his testimony enraged the commission’s Republicans and delighted its Democrats. But as he marshaled details and dates to support his conclusions and as he apologized directly to the families of 9/11 victims for the fact that “those entrusted with protecting you failed you,” he seemed to many viewers to speak with sincerity, authority, and credibility.

So he had the opportunity to be what the nation most needs: an objective political expert. Why are such creatures so rare? Because politics has its own version of Heisenberg’s famous indeterminacy principle. That principle of quantum mechanics says that you can know either the speed or the position of a particle in space, but not both. Its counterpart in politics would suggest that you can have either expertise or objectivity, but not both. The reason: Nonpartisan observers working outside the political fray don’t really know what’s happening on the inside — while those with inside knowledge are rarely free from partisan leanings. Objective political expertise is pure gold.

At times like this in our nation’s history, that gold is hugely valuable. The findings of the 9/11 commission will influence counterterrorism policy for years to come. Was al Qaeda merely fortunate in penetrating the defenses of an underzealous nation or are we up against an enemy of inordinate potency? If it’s the former, the nation needs to get its act together. If it’s the latter, the nation needs an entirely new act. These are two strikingly different policy options. Determining which is nearer the right may save thousands of lives. Despite this being an election year, this is no time for partisan bickering, political posturing, or electioneering. Just now we desperately need the pure gold of objective expertise.

If Mr. Clarke missed the opportunity to become that gold, it wasn’t for lack of moral courage. Speaking truth to power, even in a democracy, is rarely risk-free. Nor was it from any overtly unethical behavior. Even if inconsistencies appear between his views last week and his earlier support of the Bush administration’s post-9/11 approach, he might plausibly argue that his views have changed on mature reflection. Changing one’s mind is not, after all, prima facie evidence of unethical behavior.

No, what undermined Mr. Clarke’s efficacy was the appearance of unethical behavior. However he positions himself, he cannot now avoid the suspicion that he used his testimony before the commission to sell his new book, Against All Enemies: Inside America’s War on Terror. On learning of his appointment to testify, his publisher, Simon & Schuster, got him onto the CBS television program “60 Minutes” on Sunday, March 21. The next day his book was released, a week ahead of schedule. On Wednesday, Mr. Clarke testified. By Thursday, his book was the top seller on Amazon.com.

It’s certainly true, as his supporters say, that the book was written already and the topic already hot. It’s also true that former public officials deserve to be compensated well for sharing useful reflections in book-length formats. But it’s equally true that Mr. Clarke, until last week, had hardly any name recognition. So if last Wednesday’s testimony had been unremarkable, his book might have fizzled. In other words, he had every personal reason to stir up controversy and get noticed. And when the too-good-to-be-true opportunity presented itself — the chance for extensive national media coverage just as the book is about to appear — he took it.

And that’s where the appearances are so important. The most valuable gift Mr. Clarke could have offered the nation would have been his unique perspective untainted by any suspicion of self-dealing. On substantive matters, he may well be right. Maybe history will agree with his assessment of the Bush administration. But that’s not the point. Saying what’s right is one thing. Being heard, understood, and credited is something else.

Good codes of ethics focus on ethical behavior. Great ones focus, in addition, on the appearance of ethics. When the appearance fights with the ethics, as it did last week before the 9/11 commission, truth itself is sometimes the victim.

(c)2004 Institute for Global Ethics

“While the headlines are going to all the guys who are doing it wrong, there is a very strong corps of people who are really committed to doing it right. Part of doing it right is you’re not doing it to get headlines. You’re doing it to really make a difference in the lives of people.”

– Georgetown College President Bill Crouch, speaking last week at a business ethics conference sponsored by the Ethical Leadership Institute. (“Strong Ethics Help Businesses Succeed, Conference Speakers Say,” AP, Mar. 25)

BRUSSELS
The European Union last week hit Microsoft Corp. with a $613 million fine, ordering the company to change the way it does business and sell a stripped-down version of its Windows operating system.

The sweeping penalties follow allegations that Microsoft, whose software runs more than 90 percent of the world’s personal computers, uses its market dominance to quash competition and innovation.

The EU ruling comes six years after Sun Microsystems accused Microsoft of withholding vital information about its code, keeping Sun and others from building server software that would run smoothly on Windows PCs.

Over the years, EU investigators switched their focus from servers to media players, which enable PCs to play music and video files, reported the Washington Post.

Last week, the European Commission concluded that Microsoft used its market dominance in one area — operating systems — to achieve dominance in another by bundling its Media Player with Windows.

As punishment, the EU ordered Microsoft to pay a $613 million fine and release two versions of Windows for Europe — one with Media Player, the other without — within 90 days. Microsoft also must divulge details about its code to competitors within 120 days, reported the New York Times.

“Dominant companies have a special responsibility to ensure that the way they do business doesn’t prevent competition,” said EU antitrust head Mario Monti, reported the Associated Press.

“We are simply ensuring that anyone who develops new software has a fair opportunity to compete in the marketplace,” Monti said. “Our decision is about protecting consumer choice and stimulating innovation.”

Microsoft last week denounced the EU ruling as “unwarranted and ill-considered,” arguing that the EU ruling actually would hurt consumers and creativity by giving rivals less incentive to chase the leader, reported the Post.

Microsoft noted that EU regulators rejected several settlement proposals, including an offer to install three competing media players on Windows PCs — a move the company said would have been more to consumers’ benefit.

“The European Commission has the first word, but the European courts have the final word,” Microsoft general counsel Brad Smith said last week, vowing an appeal of the ruling.

GENEVA
The tiny island nation of Antigua and Barbuda last week bested the United States in a trade dispute over Internet gambling, sparking renewed debate over the ethics of online betting and U.S. trade policy.

The flare-up follows a ruling by the World Trade Organization (WTO), which sided with Antigua and Barbuda’s complaint that the current U.S. ban on Internet gambling violates WTO free-trade rules.

The ruling — interim and originally confidential — was disclosed by the small Caribbean state, moving the issue into the headlines and prompting U.S. promises to appeal, reported the New York Times.

Antigua and Barbuda claimed that the U.S. law banning online bets was protectionist — designed to insulate U.S. gaming operators from the stiff competition of foreign rivals operating over the Internet.

U.S. authorities say the law was designed to cut down on possible money laundering and online betting by minors, prosecuting U.S. banks and other finance firms that process the wagers.

Despite the law, millions of U.S. residents have found ways to gamble online, accounting for 65 percent to 75 percent of the $6 billion Internet gambling industry, according to the Interactive Gaming Council (IGC).

Last week’s ruling should force U.S. regulators to face that fact and begin installing effective regulations against abuses instead of believing an outright ban does the job, IGC deputy director Keith Furlong told the Agence France-Presse.

“Prohibiting credit cards creates other alternatives like anonymous e-cash, which causes more concerns like money laundering and underage gambling,” he said.

The WTO ruling, which is expected to become final in about a month, sparked outrage among some U.S. lawmakers, who said they will consider pushing for a U.S. pull-out from the trade group.

“It’s appalling,” Rep. Bob Goodlatte (R-Va.), told the Times. “It cannot be allowed to stand that another nation can impose its values on the U.S. and make it a trade issue.”

Sir Ronald Sanders, chief foreign affairs representative for Antigua and Barbuda, dismissed such pronouncements, saying the issue is not social policy but consistent and honest trade policies.

“The U.S. says it wants open competition,” Sanders contended to the Times. “But it only wants free trade when it suits the U.S.”

The WTO ruling could take longer than a year to become effective, though a promised appeal by the U.S. Trade Representative’s Office could push back that date even further, reported MSNBC.

NEW YORK
As prosecutors try to reel in corruption convictions at Enron, WorldCom, and other scandalized U.S. firms, many observers are examining the breeding grounds of tomorrow’s executives — business schools — to ascertain whether the ethics lesson is being learned.

According to a survey of program changes — or lack thereof — the New York Times last week noted that the signs seem to point in several directions.

While some schools — including Harvard — have announced beefed-up ethics programs, others say they are making no changes, insisting that their programs always have emphasized ethics sufficiently.

But such assurances may not be borne out by a recent Aspen Institute survey, which polled 1,700 graduate business students and found that 20 percent said they were not being prepared at all to make tough ethics decisions.

An informal survey from the Association to Advance Collegiate Schools of Business, which accredits MBA programs, recently found that only 35 percent of its member schools required an ethics course. That figure is up only two percent from a 1988 survey predating the recent wave of corporate scandals, noted the Times.

More hopeful signs come from the University of California at Berkeley, which recently added new ethics courses and a Center for Responsible Business, and from the Wharton School of the University of Pennsylvania, which will begin offering a Ph.D. program in business ethics next fall.

“It’s been slow going,” noted Fred Evans, dean of the business school at California State University at Northridge, who told the Times that many MBA professors are not prepared to teach ethics.

“Schools bear some of the responsibility for the behavior of executives,” Evans added. “If they’re making systematic errors in the world, you have to go back to the schools and ask, ‘What are you teaching?’”

BOSTON
Putnam Investments, the first U.S. firm to settle charges in the roiling mutual-fund scandal still gripping the country, last week took a swing at U.S. regulators, who they accused of trying to gouge the firm with unreasonable penalties.

Putnam has admitted that at least six employees, including four portfolio managers, engaged in at least 251 improper trades, making more than $1 million in profits at the expense of average investors.

Federal authorities have accused Putnam executives, including general counsel William Wolverton, of suppressing knowledge that such trades were ongoing from 1998 until 2003, reported the New York Times.

When the scandal went public, it cost the jobs of Putnam chief executive Lawrence Lasser and of the soon-to-be-replaced Wolverton, who also served as both the compliance officer and code of ethics officer.

It also has cost Putnam an estimated $54 billion in funds yanked by investors angry about the illicit trades, noted the Times.

While Putnam agreed last November to settle federal charges, last week it balked at the SEC’s proposal to fine the firm the equivalent of the fees earned on the $54 billion pulled by investors.

Had Putnam been honest with investors when it learned of the problems in 2000, those funds likely would have been withheld given investors’ current ire, according to the SEC. Any profits, therefore, are unfair and should be forfeited.

Putnam concealed knowledge of wrongdoing “to protect the jobs and reputation of several high-level executives and to avoid the massive loss of clients and their management fees that would — and eventually did — follow,” the SEC said. “By concealing its fraud, Putnam unjustly received massive amounts of management fees during nearly four years in which it continued to operate its business as usual.”

Last week, Putnam denounced that claim, accusing the SEC of “a transparent attempt to find a way to reach a headline-making number.”

“Putnam is prepared to pay a reasonable penalty,” company spokeswoman Nancy Fisher told the Washington Post. “Any such penalty, however, must be proportionate to the conduct at issue.”

A recent investigation by a panel of independent Putnam trustees faulted the company for the problems, but also said the firm “made extensive efforts to identify and deter excessive short-term trading.”

WASHINGTON
The U.S. Senate last week passed a bill that would make it a federal crime to commit a violent act against a pregnant woman’s fetus, a move critics claim is part of a backdoor strategy to eventually outlaw abortion.

The new law, strongly backed by President Bush, would make it a crime to harm a fetus during the commission of any of 68 violent federal crimes, such as interstate kidnapping or a crime on federal land.

The bill’s wording, deeming a fetus to be a human “at any stage of development,” will write into law a new definition of personhood that extends from conception to birth, said Sen. Diane Feinstein (D-Calif.) according to a report from the Los Angeles Times.

“Once you give an embryo at the point of conception all of the legal rights of a human being you’ve created the legal case to go against” the constitutionally protected right to choose,” Feinstein charged.

Sen. Mike DeWine (R-Ohio), lead sponsor of the Senate bill, insists the measure is “about simple justice” and further penalizing those who attack pregnant women, noting that the bill specifically does not cover women who choose to have an abortion.

Such assurances failed to assuage the concerns of pro-choice proponents, who say the terminology of supporters, including President Bush and anti-abortion activists pushing for such a law since 1999, suggest otherwise.

“We must continue to build a culture of life in our country, a compassionate society in which every child is welcomed in life and protected by law,” Bush said in a statement after the vote.

By writing into law a premise that likely will be used later to challenge the legality of abortion, the new law could lead to court findings that “embryonic stem cell research becomes murder and abortion in the first trimester becomes murder as well,” Feinstein claimed.

An alternative law proposed by Feinstein, which would have allowed for double charges to be filed against those who attack pregnant women without wading into the firestorm over the debate about when life begins, was defeated on a largely party-line 50-to-49 vote, reported the Times.

The Senate bill gained momentum after the 2002 murder of Laci Peterson, who was eight months pregnant at the time of her death. Her husband Scott, charged with murder, has pleaded not guilty.

SYDNEY
Nearly one-fifth of Australian workers have faced sexual harassment while on the job, according to a new national survey released last week by the government.

Nearly 30 percent of women and 7 percent of men reported being targeted by harassment, including unwelcome touching, suggestive comments, explicit email, graphic imagery, or intimidation, reported the Age.

Even more troubling, according to the country’s Human Rights and Equal Opportunity Commission (HREOC), is the fact that less than one-third of victims reported the harassment.

Of those who did report, most took the matter to their supervisor or boss. Only one percent lodged an official complaint with a government agency, according to poll figures cited by the Age.

“There is a large group who don’t report it because they don’t think that think it will be dealt with seriously and a lot even fear that they will sacked or disadvantaged at work,” federal Sex Discrimination Commissioner Pru Goward told the Australian Broadcasting Corporation.

Goward said the HREOC will use the poll as a prod to encourage employers to redouble their efforts to fight harassment.

Special to Newsline from Canadian correspondent Errol P. Mendes

OTTAWA
The Canadian government is demanding more than $120 million from Hewlett-Packard (HP) Canada for work that the government claims was never done by subcontractors involving information technology defense contracts.

Claiming that no work was actually done by the subcontractors even though the invoices for the work were paid, the Canadian government sent a letter to HP Canada demanding repayment of the monies by March 22.

The company refused to pay, denying any responsibility for the subcontractors or for what happened.

The government is currently contemplating legal action against HP and has hired a leading Canadian corporate lawyer to look into legal avenues to recoup the money claimed.

This latest controversy arose as a result of the findings of an internal Defence Ministry audit and subsequent police investigation into the billing by subcontractors for alleged work done on the defense contracts.

LONDON
In a scathing report, a British watchdog group last week claimed that a voluntary initiative to stop embezzlement, skimming, and backroom deals between international energy firms and corrupt governments has failed.

Global Witness said such deals are continuing to cripple the economies of developing nations while lining the pockets of their corrupt leaders and making Western executives wealthy, reported the Guardian.

The group concludes that a voluntary initiative backed by U.K prime minister Tony Blair has failed, claiming that, “political and business elites currently have a vested interest in avoiding transparency.”

The group’s report focuses on five struggling nations — Angola, Congo-Brazzaville, Equatorial Guinea, Kazakhstan, and Nauru where, the group says, the situations are especially dire and egregious.

In Angola, according to Global Witness, a quarter of the nation’s oil revenues — $500 million last year — go missing annually, leaving the oil-rich nation’s people among the poorest in the world while its leaders send an enormous amount of funds to a bank in Washington.

As those missing funds add up each year, international donors and other nations are forced to make up the difference, paying an estimated $200 million each year in food aid, Gavin Hayman of Global Witness told the BBC.

The group’s report claims that Tony Blair’s voluntary Extractive Industries Transparency Initiative has failed, with powerful Western energy firms continuing to sign “confidentiality clauses” with oil-rich governments that shelter bribes and illicit fees from scrutiny.

“These scandals could not have happened if companies had been obliged to publish their payments to governments, and governments to publish their earnings,” Hayman charged in the Guardian report. “But leading countries and companies are doing next to nothing and revenues that should be used to reduce poverty are being wasted.”

Masood Ahmed of the International Monetary Fund denies that the voluntary scheme has failed, saying that Azerbaijan, Ghana, and Nigeria are planning to join the effort.

Even if it were failing, he told the BBC, the British government cannot afford to make the voluntary guidelines into law since doing so would put U.K. firms at a competitive disadvantage as long as other nations refuse to follow suit.

From Transparency International:

“‘Political corruption undermines the hopes for prosperity and stability of developing countries, and damages the global economy,’ said Peter Eigen, Chairman of Transparency International (TI), launching the TI Global Corruption Report 2004 (GCR 2004) today.

“‘The abuse of political power for private gain deprives the most needy of vital public services, creating a level of despair that breeds conflict and violence. It also hits the pockets of taxpayers and shareholders worldwide. The problem must be tackled at the national and international level,’ he said.

“‘The GCR 2004, with a special focus on political corruption,’ said Eigen, ‘is a call to action to bring integrity and accountability into governance, to stop bribery by multinational companies, and to curb the flow of stolen assets into secret bank accounts in the West.’…

“The GCR 2004 details funds allegedly embezzled by political leaders of the past two decades. During his misrule, Mohamed Suharto, president of Indonesia from 1967 to 1998, is alleged to have stolen $15 billion to $35 billion in a country where the GDP per capita hovers at around $700. Suharto tops the table of corrupt politicians….”

Much madness is divinest sense
To a discerning eye;
Much sense the starkest madness.
‘Tis the majority
In this, as all, prevails.
Assent, and you are sane;
Demur, — you’re straightway dangerous,
And handled with a chain.

– Emily Dickinson (U.S. poet, 1830-1886)