Ethics Newsline®

Aren’t there any good-news stories about corporate ethics?

I got thinking about that last week when, to escape a blistering late-afternoon thunderstorm, we tied up our boat at a marina on a nearby island. It was after-hours, and several of the staff were waiting out the downpour on the porch before heading home in their boats. So we joined them. From our vantage, we could see the clouds boiling overhead and the harbor slowly fading behind the rain. When the storm finally hit, we retreated inside — six adults, a boy, and two dogs — to watch through the windows.

I’ve had some fascinating conversations with strangers while waiting out storms, and this was no exception. Maybe it’s that a storm overwhelms our petty human wills, forcing us to reschedule the living date-book we call our lives. Maybe it’s that our collective vulnerability makes our commonalities seem more obvious, so that it’s harder not to need each other. And maybe it’s that what sustains the moment is conversation, as engaging and unpredictable — and yet as purposeful — as the storm howling outside.

I found myself standing by a window with a man who had spent his life as a homebuilder. With typical Yankee canniness, he found out soon enough what I did for a living. Perhaps because of our location — with the rain pelting the glass but making no inroads into the room — we found ourselves talking about the ethics of windows.

He’d been installing them, he told me, for decades. And he’d always gone back to the same company, Andersen Windows — not only because of the quality of the product and their twenty-year guarantee, but because of their commitment to keeping their word. Again and again, he said, that choice paid off.

He recalled building a house not long ago where, as they sat on sawhorses eating lunch one day, a large windowpane suddenly snapped from top to bottom in a lightning-shaped crack. Over the weekend, two more did the same thing. Turned out, he said, that the company had used a bad lot of glass. Andersen replaced every one of the windows, no questions asked.

He also told me about a house where over time the windows began taking on an odd tint. When the owner called to complain, he phoned the Andersen representative. All the company wanted to know was the measurement of every bad window. A couple of weeks later, he said, a truck rumbled into the driveway. Two men got out in suits and ties, pulled on their coveralls, unloaded their freight, and set about replacing every bad window. As they left, they handed the dumbfounded owner a packet of window-cleaning cloths, a gallon of cleaner, and a long-handled squeegee — just by way of thanks.

But his most recent experience was the most thought provoking. Back in 1983, he said, he built a summer cottage on an island for a “really nice guy” and his family, and they’d stayed in touch ever since. Last year, the windows began fogging up. My friend wasn’t able to get out to check them right away. Meanwhile, the owner got an estimate from another company, which grimly informed him that he’d have to rip out the old frames and redo the beautiful interior pine trim and the well-weathered outside shingles — all at considerable expense.

So this spring my friend went out to count and measure the windows. He also wrote down the number on every pane of glass. Each number included an “83″ — the year the house was built, and now one year beyond the 20-year warrantee.

“Are you sure that number was 83 and not 84?” asked the representative at the lumber yard when he called them in. “Sometimes the light is funny, and a four can look like a three. Why don’t you go look again?”

It was meant as a helpful suggestion. And it could have saved a bundle of money for the owner. But it wasn’t right, and the contractor knew it. “No,” he said, sighing as he told me, “it was 83.”

He didn’t hear anything for a while. Then the representative called back. He’d added up the purchases this contractor had made with Andersen over the years. It came to over a million dollars. The replacement windows for the owners’ cottage were on their way, free.

Lessons? There must be dozens, but I see four. First, when you let people know you’re interested in ethics, you hear great tales. Second, it takes integrity to stay with what’s right — especially when, through a tiny shift in your reporting, you think you could save thousands of dollars for a friend.

So why did the contractor hold his position and not lie about that number? That goes to the third lesson. It’s all about corporate America, which (as readers of Ethics Newsline know) has been taking a beating over integrity issues. This lesson suggests that when you build a company on quality, service, and ethics, you build loyalties that last far beyond the life of your product. There’s another company he could go to, my friend said, selling pretty good windows for less. But he’s not budging.

And that’s lesson four, which is that what goes around comes around. The company’s ethics brought out an ethical response — even in the face of great temptation. My friend didn’t try to put something over on the manufacturer. And in the end he didn’t have to. That’s a story worth getting rained out to hear.

©2004 Institute for Global Ethics

“CLARIFICATION: It has come to the editor’s attention that the Herald-Leader neglected to cover the civil rights movement. We regret the omission.”

– The Herald-Leader of Lexington, Kentucky, in a self-published exposé earlier this month criticizing efforts by former management to deliberately downplay coverage of the civil rights movement. (“Front-Page News, Back-Page Coverage,” Herald-Leader, July 4)

NEW YORK
Shortly before last week’s landmark sex discrimination trial was scheduled to begin, Wall Street giant Morgan Stanley agreed to pay $54 million to settle allegations that it denied equal pay and promotions to women.

The settlement, which allows Morgan Stanley to avoid the public airing of possibly embarrassing testimony, covers all women who worked at the company’s institutional-equities division since 1995, reported the Reuters news agency.

Nearly 350 of those women had filed claims accusing Morgan Stanley of gender bias, citing alleged instances of denied promotions and pay, men-only golf trips, and visits to strip clubs.

Morgan Stanley, which has denied wrongdoing, was not required to admit any fault.

Of the firm’s $54 million settlement, $40 million will be set aside for claimants and $2 million will go toward a new independently monitored diversity program, reported the New York Times.

The remaining $12 million will be paid to former Morgan Stanley bond trader Allison Schieffelin, whose 1998 complaint against the firm led to the federal charges filed by the U.S. Equal Employment Opportunities Commission (EEOC) in 2001.

“With this settlement, Morgan Stanley has taken an important leadership step in adopting progressive programs to promote diversity that should serve as a model for the financial services industry,” EEOC chairwoman Cari Dominguez said last week.

“I expect that we will hear more from women on Wall Street and from racial minorities,” added EEOC lead trial lawyer Elizabeth Grossman, saying that Wall Street discrimination is still “very much a problem.”

WASHINGTON
The head of the U.S. Park Police, which protects the nation’s monuments and historic sites, was fired last week, seven months after angering her superiors by telling reporters that budget shortfalls were causing problems.

Teresa Chambers, the first person from outside the National Park Service to head the police, accused the Bush administration of punishing her for publicly acknowledging widely held budgetary and safety concerns.

Her firing came seven months after Chambers was suspended and slapped with a gag order after discussing her concerns in an interview with the Washington Post.

The Post’s piece examined concerns laid out in a November 28 memo from Chambers to the director of the National Park Service, which oversees the police.

“My professional judgment, based upon 27 years of police service, six years as chief of police, and countless interactions with police professionals across the country, is that we are at a staffing and resource crisis in the United States Park Police — a crisis that, if allowed to continue, will almost surely result in the loss of life or the destruction of one of our nation’s most valued symbols of freedom and democracy,” she wrote.

Three days after the Post piece was published, Chambers was suspended for improperly making public remarks about budget and security issues, reported the Post.

Last week, Chambers petitioned for reinstatement. Hours later, she was fired.

“There’s been a lot of talk from Chief Chambers about the Park Police budget. I’d like to report that the Park Police operating budget has increased by 39 percent since the Bush administration took office,” said Interior Department spokeswoman Tina Kreisher.

Critics say that increase still leaves the agency vastly underfunded, falling far short of the amount needed to meet expanded security duties demanded of the agency after the terrorist attacks of 9/11, according to the Post.

Chambers, who has appealed her firing, is supported by a raft of watchdog and employee groups who contend that the Interior Department is squelching transparency and public dialogue about public safety and the administration’s funding priorities.

This fight is “not about me,” Chambers told CNN last week, insisting that she is only a small “player” in the dispute.

“The American people should be afraid of this kind of silencing of professionals in any field,” she contended. “We should be very concerned as American citizens that people who are experts in their field either can’t speak up, or, as we’re seeing now in the parks service, won’t speak up.”

WASHINGTON
A U.S. Senate report released last week slammed the eminent Riggs Bank for a series of failures and violations allegedly undertaken to protect multimillion-dollar business deals with corrupt dictators.

Riggs, which paid a record $25 million fine in May to settle charges that it violated federal banking laws in its handling of accounts in Equatorial Guinea, is accused of hiding funds for deposed Chilean dictator Gen. Augusto Pinochet and for current African officials.

Riggs’ Washington bank received suitcases stuffed with shrink-wrapped cash, set up offshore accounts hidden from regulators, and kept quiet about transactions that should have set off alarms, according to the report from the Senate Subcommittee on Investigations.

The firm’s alleged violations, which the report said began in the mid-1990s and included personal visits to Pinochet by Riggs’ former chief executive, continued after the dictator was arrested and his accounts frozen, reported the New York Times.

The Senate inquiry also criticizes Riggs for accepting between $400 million and $700 million in funds from the government of Equatorial Guinea, whose ruler is suspected of torture and human rights abuses.

Oil firms Exxon Mobil, Amerada Hess, and Marathon Oil have been implicated in the scandal, reported the Times.

Despite such misgivings and in defiance of stricter laws against money laundering in the wake of the terrorist attacks of 9/11, the report says Riggs “turned a blind eye to evidence suggesting the bank was handling the proceeds of foreign corruption, and allowed numerous suspicious transactions to take place without notifying law enforcement.”

The report is a “sordid story about a bank with a distinguished name that was blatantly disregarding its anti-money-laundering obligations,” said subcommittee member Sen. Carl Levin (D-Mich.).

Both Riggs and the U.S. Office of the Comptroller of the Currency, which has been criticized for lazy oversight, said mistakes had been made and that reforms to prevent similar abuses were being undertaken.

“In general, we have acknowledged that the Riggs situation represents a failure of supervision. We were too slow to act, we gave the bank too many opportunities,” Comptroller spokesman Robert Garsson told the Los Angeles Times. “We were too willing to believe that the bank was sincere in its promises and effort to make changes.”

NEW YORK
In what some observers feel will become one of the most prominent textbook cases in corporate ethics, home-decorating maven Martha Stewart last week received the minimum sentence on her conviction for lying to federal investigators about a stock trade.

U.S. District Judge Miriam Goldman Cedarbaum said she had received about 1,500 letters arguing for leniency, letters that made it “apparent that you have helped many people outside of your own family and that you have a supportive family and hundreds of admirers,” reported the New York Times.

Unless she is able to reverse the conviction on appeal, Stewart will serve five months in prison, five months under house arrest, two years of supervised probation, and pay a $30,000 fine. The time to be served is at the bottom of the federal sentencing range, and the way it is to be served gives Stewart the minimum time in actual prison confinement.

Stewart’s former stockbroker, Peter Bacanovic, received an identical sentence except for a smaller $4,000 fine.

The Boston Globe reported that the light sentence could be seen as “a cautionary note to prosecutors that perhaps they have been overreaching in their charging decisions,” according to Mark Pearlstein, a Boston defense attorney and former federal prosecutor in Massachusetts. The Stewart case, said Pearlstein, may be a “message that judges are going to be less willing to impose extreme sentences in at least some of these types of white-collar cases.”

But the Globe also noted that a jury consultant for the prosecution, Howard Varinsky, disagrees, saying the light sentence was due in part to Stewart’s lack of a criminal record. In addition, Varinsky told the Globe, Stewart’s crimes were minor in comparison to other recent white-collar cases.

The case is unusual in that unlike most other alleged white-collar criminals in the news, Stewart has received a measure of popular support from those who feel she was unfairly singled out for prosecution.

Regardless, says University of San Francisco business professor Eugene Muscat, the Stewart case serves up a prominent lesson for the business world.

“Today, faced with the SEC investigations, faced with stockholders asking questions, I think the white lie has become an untenable business option,” Muscat told KGO Television.

The stock of Martha Stewart’s company rose $3.17 a share, closing Friday at $11.81. In a statement, the company said the sentence was “an important step toward closure.”

JACKSON, Mississippi
Continuing a debate over how much responsibility companies bear for the violent outbursts of their employees, the federal government has accused Lockheed Martin of failing to sufficiently rein in a racist employee who went on a shooting spree.

Lockheed worker Doug Williams, who reportedly had threatened black employees, brought a concealed weapon to work in July 2003, shooting 14 workers — 12 of them black — before turning the gun on himself. Six of the victims died.

After victims’ families announced their intention to sue Lockheed, the EEOC began investigating, eventually authoring a private July 6 letter finding fault with Lockheed, reported the Washington Post.

The EEOC found that Lockheed management allowed a racially hostile work environment “to grow in intensity” and said its response to the violence “has been inadequate in reducing the level of hostility” toward its black workers.

Lockheed says it did all it could to ensure a safe workplace, including sending Williams to anger-management classes.

Attorney Jackie Smoke, who helped the EEOC draft its letter, said more should have been done, especially after Williams repeatedly threatened to kill black coworkers, two of whom were so frightened that they increased their life insurance coverage to safeguard their families, reported the Associated Press.

Lockheed last week said it could not comment on the pending litigation, but noted that both the local sheriff and the federal Occupational Safety and Health Administration had cleared the company of responsibility.

Lockheed “is confident that the same conclusion will be reached by the court,” the firm said in a statement.

Special to Newsline from Canadian correspondent Errol P. Mendes

CALGARY
Mark Hill, the vice president and cofounder of upstart Canadian airline company WestJet Airlines, has resigned in the middle of a nasty court battle in which two of Canada’s leading airlines are accusing each other of dirty tricks.

In a brief statement, the company said only that his resignation was related to “the ongoing scrutiny of Mr. Hill’s actions.”

Air Canada is alleging that Hill illegally obtained confidential information about its flight and seat data from an Air Canada employee’s Web site, allowing WestJet to redesign its routes and gain a competitive advantage.

Air Canada is claiming punitive damages in the amount of nearly $4 million and damages for lost profits.

WestJet is intending to allege in a countersuit that Air Canada sifted through Hill’s garbage to digitally reconstruct confidential information on WestJet.

OTTAWA
In an escalating dispute over the integrity of justice, Canada last week assailed Iran for blocking access to the murder trial of an Iranian intelligence officer accused of killing a Canadian photographer last July.

Canadian Foreign Affairs minister Bill Graham lashed out at Iran for sealing off the trial of an Iranian intelligence officer accused of killing Zahra Kazemi, a Canadian photographer of Iranian descent.

Kazemi was arrested one year ago in Iran after taking photographs of Evin prison in Tehran. She died on July 10 while in custody, reported the Globe & Mail.

Iran initially said Kazemi died of a stroke, but later admitted she was killed by a heavy blow to the head.

Kazemi was buried in Iran and requests by her family to extradite her body for an independent autopsy have been rejected, reported the CBC

Iran’s judicial branch says it has the killer in custody, though the intelligence officer has pleaded innocent. Iran’s moderate president, Mohammad Khatami, last week said he did not believe the officer was guilty.

Amidst the infighting between the moderate Khatami and the conservative judiciary, the Canadian government says it has been forced to sit on the sidelines after being barred from the trial.

Canada last week retaliated by recalling its ambassador to Iran, condemning Iran’s judiciary for violating human rights codes and international legal standards, reported the CBC.

Iran says it never promised to allow Kazemi’s family to attend the trial, noting that 2003 Nobel Prize winner Shirin Abadi, a lawyer and human rights activist, will be allowed to attend as their representative.

That measure failed to placate the Canadian government, which says it has no way to verify a fair and honest trial. “Justice will not be done behind closed doors in Iran,” said Graham.

NEW YORK
Hoping to help with the mounting problem of toxic computer waste, Office Depot and Hewlett-Packard last week said they would recycle consumers’ old computers and tech devices for free until early September.

The joint program allows anyone to drop off unwanted computers at any of Office Depot’s 850 stores, where they will be collected and sent for safe dismantling to HP plants in California and Tennessee.

The tech industry has come under increasing fire for failing to make it easy to recycle their quickly outdated products — computers, cell phones, PDAs, and the like — that often are full of toxic metals.

While the European Union and at least two U.S. states — California and Maine — have adopted laws requiring manufacturers to help recycle their old products, most places lack such policies, reported USA Today.

Less than 10 percent of electronics are recycled, Sheila Davis of the Silicon Valley Toxics Coalition told the paper.

The new no-cost program, which breaks from previous recycling programs that assessed a fee, is both good public policy and good PR, Office Depot executive Chuck Rubin said at a news conference.

“We believe this initiative represents our most comprehensive environmental project to date,” said Rubin, according to CNN. “It’s critical to us that our customers see us as more than just a provider of goods and services.”

The program runs through September 6, at which time it will be reassessed, according to press reports.

LONDON
In a bid to block the continued rise of bullying, the British government last week announced plans to build a network of anti-bullying czars to offer advice and solutions on stanching violence in English schools.

The anti-bullying experts will be installed in every administrative region of England, with duties that include designing educational programs and supporting parents of victims when working with authorities.

The new Anti-Bullying Alliance, launched as reports of school-age abuse and intimidation continue to rise, will operate under a roughly $1 million annual grant, reported the Guardian.

While the U.K. government already has taken some steps to reduce bullying, new technologies — text messaging, email, and Internet chatrooms among them — are forcing them to play catch-up, noted the report.

And while more than 4,000 schools have adopted the government-mandated zero-tolerance policies for bullying, other schools have failed to follow suit quickly enough, according to the BBC.

As of September, U.K. schools will be inspected for progress on such issues, with the Anti-Bullying Alliance providing tools and back-up.

“Schools who deny they have a problem with pupils being bullied often have a problem with teachers being bullied too,” Anti-Bullying Alliance president Esther Rantzen told the Guardian.

In research for the U.K. Department for Education and Skills, Rantzen’s charity ChildLine last year found that more than half of primary- and secondary-school students said bullying was a problem at their school, noted the BBC.

“Bullying is not acceptable, it’s not character building, it’s not part of the rough and tumble of growing up,” Rantzen said last week. “This really is an attempt to change culture. It really is about creating a zero-tolerance approach at every school.”

From the U.K. Commission for Racial Equality (CRE):

“The CRE launched the findings of a … survey today showing that the UK’s white majority population is integrating less with other communities than the non-white population.

“Most white people (94 percent) have few or no ethnic minority friends, while nearly half (47 percent) of non-white people, say most or all of their close friends are white….

“The findings also show that older people from ethnic minorities are far more likely to integrate than younger people from ethnic minorities, with 58 percent of over 50s having mainly or entirely white friends, compared to only 36 percent among the under 30s. The reverse is true of younger white people (43 percent) who mix more than the older population, that are more likely to have white-only friends (60 percent).

“The pattern is repeated in terms of contact with those who practice major faiths….

“The findings suggest that racial barriers have to some extent come down, but integration is far from complete. 70 percent of white people and almost as many non-white people (65 percent) agree that ethnic minority Britons too often live apart from the rest of society.

“Big majorities of both white and non-white people support specified measures to bring communities closer together….”

“No person was ever honored for what he received. Honor has been the reward for what he gave.”

– Calvin Coolidge (30th U.S. president, 1872-1933)