Ethics Newsline®

The other day a friend described a process for problem solving in the military: Officers and civilians gather around a seminar table, each with a computer keyboard, but nobody talks. Instead, they type out their ideas and responses and post them to a large screen that everyone can see. The participants don’t sign their names, so nobody knows whether a general or a private is writing. Result: All deference to rank and personality washes away, leaving ideas to rise or fall by merit alone. It’s a great way to level the conversational playing field.

But on one occasion, a South American general came to the table. He categorically refused to touch a keyboard. In his culture, that was a clerical task beneath his dignity. So, calling in a secretary, he dictated his responses. But when the discussion turned to matters requiring a security clearance, she had to exit — leaving him fuming and inarticulate.

Is this a tale of silly stubbornness? A reminder of the difficulties of modernization? Yes, but it’s more. I think it points to an ethical problem of fatal proportions.

Think about the FBI. The Bureau recently announced the failure of its effort to create a high-speed, modern information system — a priority suggestion in the report of the independent commission investigating the 9/11 terrorist attacks. That system depended on building “virtual case files” (VCF) that could be accessed and updated rapidly by agents in and beyond the Bureau. The VCF software cost an estimated $170 million to produce. Now it may have to be entirely scrapped as unworkable.

Admittedly, it’s hard to figure out how to share often-secret information at high speed across different agencies, and hard to introduce new systems without closing down the entire Bureau during the changeover. But a deeper obstacle is identified by Coleen Rowley. She’s the FBI agent and Time magazine Woman of the Year who in 2003 went public with her accusations that the Bureau failed to investigate leads that might have thwarted the 9/11 attacks. Looking at the FBI’s computerization failures, she sees a shockingly simple reason that she calls “resistance to typing.”

In an email exchange with me, she attributes that resistance to “a carryover from male agents of the J. Edgar Hoover era considering [typing] to be women’s work and below their dignity.” At a VCF training program she attended last spring, she says she found that “the common agent complaint” was “reticence about becoming a mere ‘typist.’” While this reticence is not, she says, the “sole cause” for the FBI’s failure to modernize its computers prior to 9/11, she calls it “a big factor.”

Of course we can blame the old-guard agents — that’s easy. By the same token, we can celebrate progress: Young agents joining the Bureau today are generally happy to type. And for good reason: If a college student today tried to argue for the South American general’s position, he or she would be laughed out of the dorm — and left in the dust by friends who depend on keyboards for email and instant messaging.

But what about the inventors of the personal computer? We can’t blame them directly for the FBI’s problems. But shouldn’t they, like the developers of any new technology, have had some responsibility for trying to foresee the cultural, social, and ethical challenges always created by such sweeping technological change?

True, that change has happened faster than anyone foresaw. There’s hardly a senior manager alive today who grew up with a computer. But the resistance to such change was surely foreseeable. New technology has been disliked since the days of the Luddites. Armed with that piece of history, shouldn’t we have noticed hints of a passively aggressive digging in of heels around this question, at the FBI and elsewhere? Might we have looked over the horizon at the profound ethical consequences of that resistance — like the systemic problems addressed by Coleen Rowley’s famous letter to FBI Director Robert Mueller? Might we, in our imaginations, have spun out some scenarios to assess the impact of that resistance? Might one such scenario have included the death of, say, 3,000 people in a terrorist attack? As a result, might we have been fired up to correct this fatal flaw?

Perhaps this is mere 20/20 hindsight. But the point still stands: As we engage in fast-paced innovations — in everything from fuel cells and camera phones to genetic modification and global positioning — we have a responsibility to foresee their ethical consequences. We work hard to envision the upside benefits and potential markets for such innovations. Do we work hard enough to consider downside impacts and public resistance? If not, we leave ourselves open to situations in which terrorists may take up technologies faster than do bureaucracies. Bottom line? Innovation, lacking ethical foresight, can be fatal.

©2005 Institute for Global Ethics

“I was wrong to have spoken in a way that has resulted in an unintended signal of discouragement to talented girls and women. Despite reports to the contrary, I did not say, and I do not believe, that girls are intellectually less able than boys, or that women lack the ability to succeed at the highest levels of science.”

– Harvard University president Lawrence Summers, apologizing last week after making controversial lunchtime remarks at a conference held by the National Bureau of Economics. Summers said his remarks, which dealt with the dearth of women in the math, science, and engineering fields, were intended to provoke discussion and research into the under-representation of women. (“Harvard President Apologizes Again for Remarks on Gender,” New York Times, Jan. 20)

NEW YORK
JPMorgan Chase & Co. last week apologized for the actions of two of its predecessor banks, which accepted 13,000 slaves as collateral between the 1830s and the Civil War.

The firm disclosed the link after an internal investigation required by the city of Chicago, which in 2003 ordered firms doing business with the city to probe their past dealings for any ties to slavery.

JPMorgan found that the two firms, Canal Bank and Citizens Bank, accepted roughly 13,000 slaves as collateral for loans and eventually took ownership of 1,250 of them when plantation owners defaulted, the company said in a press release.

Canal and Citizens, both based in Louisiana, failed during the Great Depression, when they were partly absorbed by a federally chartered bank. That bank eventually became Bank One Corp., which was bought last year by JPMorgan, reported the Associated Press.

“We all know slavery existed in our country, but it is quite different to see how our history and the institution of slavery were intertwined,” JPMorgan chief executive William Harrison and chief operating officer James Dimon wrote in a letter to staff. “Slavery was tragically ingrained in American society, but that is no excuse.”

The company said it will establish a $5 million scholarship program to pay tuition for African-Americans in Louisiana seeking in-state college education.

SAN FRANCISCO
Checking in on a growing bioethics debate, the Associated Press last week profiled Monsanto Co.’s efforts to fight seed piracy by filing lawsuits that seek fines and prison terms for farmers holding to age-old seed-saving traditions.

Monsanto is targeting farmers who use the company’s genetically engineered seeds, which carry with them not only protection against bugs and herbicides, but also a contract barring farmers from saving the seed for next season’s planting.

That stipulation is behind roughly 90 lawsuits filed in half of the nation’s 50 states, where Monsanto has tried to hit 147 farmers and 39 agricultural companies with penalties steep enough to deter others from following suit and saving seed from season to season.

Monsanto says it is simply defending its patents and protecting revenue vital to supporting the company’s $400-million-plus annual research and development outlay, reported the AP.

But farmers like Homan McFarling, a Mississippi soybean grower sued in 1999, say the rules buck decades of family tradition and are often a surprise to farmers who either failed to closely read their contract or never received the notice in the first place.

Monsanto’s patent-protected seeds now account for roughly 85 percent of the U.S. soybean crop, and for about 200 million acres of the world’s farm crops — a jump of 20 percent in one year, according to the AP.

Using a web of hotlines, private investigators, and stealth tactics, Monsanto says it goes after only the most egregious seed pirates, saying they should not be able to get a leg-up on contract-abiding farmers.

“We have to balance our obligations and our responsibilities to our customers, to our employees, and to our shareholders,” Scott Baucum, Monsanto’s chief intellectual property protector, told the AP.

While it tries to settle most cases, Monsanto says it has won each of the five cases that have gone to court. Last year, a Tennessee farmer was sentenced to eight months in prison and a fine of more than $1.7 million after hiding a truckload of cotton seed culled from patented plants.

PARKERSBURG, West Virginia
Federal regulators last week asked a scientific panel to weigh the possible health risks posed by a chemical in DuPont’s popular non-stick Teflon coating, accusing the company in a separate action of hiding studies into dangers for decades.

The Environmental Protection Agency (EPA) alleges that DuPont knew that perfluorooctanoic acid (PFOA), the chemical compound responsible for hundreds of non-stick and non-stain products, posed serious health risks but kept quiet.

The allegations were made after DuPont was forced to release emails, memos, and other documents in the course of several court cases accusing the chemical giant of contaminating groundwater with PFOA.

Those documents revealed that DuPont scientists told company executives to avoid human contact with PFOA more than 40 years ago. Yet for nearly 20 years, the company did not disclose that its tests showed PFOA in the water supplies for thousands of people in West Virginia and Ohio, according to the Chicago Tribune.

DuPont insists that it disclosed all documents required by law, saying PFOA never has been legally classified as a toxic chemical that poses a “substantial risk.” The EPA appears to be countering that the chemical retained its less toxic rating because DuPont never disclosed the compound’s dangers as required by a 1976 law.

When two of five babies born to plant employees in 1981 had eye and face defects similar to those in newborn rats exposed to PFOA, DuPont did not notify the EPA. According to documents, DuPont lawyers urged the firm to settle lawsuits quickly and quietly to avoid publicity and class-action cases, reported the Tribune.

“DuPont remains confident that based on over 50 years of use and experience with PFOA there is no evidence to indicate that it harms human health or the environment,” company spokesman R. Clifton Webb said.

In October, the EPA disagreed, writing that “drinking water data in possession of DuPont ‘reasonably supports the conclusion’ that PFOA ‘presents a substantial risk of injury to health.’”

The EPA is seeking as much as $300 million in fines for DuPont’s decision to not report the possible dangers of PFOA. Next week, the company is expected to settle a class-action case over groundwater contamination in West Virginia and Ohio for as much as $343 million, according to the Washington Post.

EPA officials say it may take as long as a year before an independent panel concludes whether PFOA’s risk status should be upgraded, but says there is no need to avoid non-stick products.

While PFOA is getting most of the headlines, the Tribune report warned that there may be other threats as well. According to the story, the EPA “reported in 1998 that it had no toxicity data or ’safe level’ for 43 percent of the 2,800 chemicals produced in volumes of 1 million pounds a year or more.”

NEW YORK
In a bid to help companies protect the human rights of their overseas factory workers, Reebok International Ltd. last week said it would provide access to software created by the firm to monitor working conditions.

Reebok, which has taken heat over factory conditions in the Far East, announced the initiative last week at the National Retail Federation’s annual conference in New York, reported the Boston Globe.

The software tracks such variables as the number of fire escapes, ages of workers, and pay scales.

The company will release its Human Rights Tracking System software in a spin-off nonprofit dubbed the Fair Factories Clearinghouse, allowing firms to pool their data and avoid costly redundant reviews of overseas conditions.

Reebok chief technology officer Peter Burrows said his company will donate the software, but will charge subscribers between $5,000 and $60,000 each year, based on company size, in order to keep the tool on the cutting edge.

“We need 20 or 25 significant commitments from companies to really make this a viable tool,” Burrows told the Globe.

BEIJING
The Chinese government last week said it would file charges against 69 people accused of participating in a massive fraud scheme aimed at bilking a state-owned bank of $900 million.

The crackdown is the latest to target large-scale corruption — a step China says it must take in order to better market itself and raise capital by trading on foreign stock exchanges, reported the Associated Press.

The latest salvo centers on an alleged network of forged documents and false claims of property that were used to secure bank loans from the Industrial and Commercial Bank of China, which is controlled by the government.

Businessman Feng Mingchang is accused of masterminding the scheme, which included roughly $240 million in overseas transfers still unrecovered by the government, according to the Xinhua news agency.

The sprawling scandal has implicated more than 230 people, including 80 Communist Party officials. Nearly 70 people, including 30 officials as well as Feng Mingchang, have been arrested and are awaiting indictment.

Special to Newsline from Canadian correspondent Errol P. Mendes

OTTAWA
The Canadian Broadcasting Corporation is reporting that human rights activists are urging Canadian Prime Minister Paul Martin not to forget human rights when attempting to grow Canada’s trade and business investment with China.

Alex Neve, the secretary general of the Canadian English section of Amnesty International, is quoted as saying that the emphasis on opening markets and global trade has not “delivered the goods” on human rights.

Tenzig Dargyal, a spokesperson for the Canada Tibet Committee, also asserted that there has been no progress on human rights with Canada’s focus on economic engagement with China.

The two activists urged Martin to be vigorous on human rights issues with the Chinese leaders at last Friday’s meeting.

Other commentators, including this reporter, have urged a trade and human rights agenda that includes promotion of the rule of law as part of Canada’s economic and political policies with the Asian superpower.

The three-day visit to Beijing was scheduled to be part of a nine-day Asian tour that took the Canadian prime minister to the tsunami-stricken countries of India, Sri Lanka, and Thailand, and then on a trade mission to China, India, and Japan.

WASHINGTON
The FBI failed to adequately investigate charges of espionage by a former translator, and fired her mostly for her repeated attempts to blow the whistle on alleged wrongdoing at the agency, the Justice Department’s inspector general has determined.

Inspector General Glenn Fine’s conclusions were released last week under pressure from senators frustrated that the findings had been kept classified since July, reported the Chicago Tribune.

The worker at the heart of the controversy, Sibel Edmonds, was fired in March 2002 after repeatedly cautioning her managers that a coworker was allegedly blocking translations and warning targets of surveillance.

Edmonds sued after being fired, saying the Justice Department was retaliating against her. The government says it fired her for typing a classified document while at home, though she had her supervisor’s permission.

Edmonds’ lawsuit was thrown out last year after outgoing Attorney General John Ashcroft invoked state-secrets laws and retroactively classified a 2002 congressional briefing on the matter, insisting that exploring Edmonds’ charges would compromise national security.

While Fine’s report did not weigh Sibel Edmonds’ allegations, it said the FBI’s behavior was “significantly flawed” and that her charges “raised substantial questions and were supported by various pieces of evidence,” according to the Associated Press.

Fine noted that Edmonds was outspoken and “not an easy employee to manage,” but said her treatment at the Justice Department had targeted her not for her work habits, but for her allegations.

Fine concluded that many of Edmonds’s accusations “were supported, that the FBI did not take them seriously enough, and that her allegations were, in fact, the most significant factor in the FBI’s decision to terminate her services.”

The FBI last week said it would continue investigating Edmonds’ charges and would protect whistle-blowers who raise “good faith concerns,” noted the Tribune.

PRESTEIGNE, Wales
A longtime teacher fired after allegedly making sexual advances toward two students was cleared last week by an employment tribunal, which criticized the school and local authorities for “flawed” investigations.

Iwan Rees, a 20-year veteran teacher with an unblemished record, was sacked by his employer after two girl students, aged 12 and 16, accused him of touching and trying to kiss them, reported the BBC.

After local authorities on the Powys County Council reviewed the charges, the John Beddoes School fired Rees after two years on the job.

A tribunal in Cardiff last week concluded that those early inquiries were skewed against Rees, used improper methods, and failed to pursue discrepancies that surfaced in the girls’ stories.

Tribunal chairman John Thomas lashed out at the school’s head teacher for failing to provide “the kind of leadership expected of him in ensuring fair play and should not have taken the backseat he took.”

“Teachers as well as children are entitled to protection from malicious or irrational complaints,” Thomas added. “We don’t think the matter should have advanced to a disciplinary hearing when all one had as a result of the investigation was a single statement which is not substantiated in any other way.”

Rees, who now works in a warehouse, told the Telegraph that he doesn’t see last week’s ruling, which included a $41,000 settlement, as a victory, but rather as a light being shed on a proceeding that failed to treat him and his family fairly.

“No amount of money will make up for the hell we have been put through,” Rees said. “But I certainly hope to go back to teaching. Teaching is the job I love.”

“This is a teacher’s worst nightmare,” noted Jenni Watson of the teachers’ support group Redress, who represented Rees at the tribunal, saying local education authorities failed to follow safeguards. “They have no real understanding of the devastation their inability to do what the law requires of them causes,” she said.

A spokesman for the Powys County Council last week told the BBC that the “procedural issues raised by the tribunal are already being addressed.”

From the Huron Consulting Group:

“Huron Consulting Group today released a summary of its 2004 Annual Review of Financial Reporting Matters. The report revealed that amended filings for financial restatements rose to a record 414 in 2004 from 323 the previous year.

“‘Financial restatements dramatically increased in 2004. After the leveling off in restatement filings observed in 2003, we had hoped that the upward trend in accounting errors might be over,’ said Joseph J. Floyd, managing director and national practice leader of Huron’s Disputes and Investigations practice. ‘It seems that the scrutiny placed on company internal controls and other pressures surfaced a large number of reporting problems this past year.’

“Huron’s report analyzed the leading causes and trends in financial restatements filed in amended filings with the U.S. Securities and Exchange Commission (SEC) for the year ending December 31, 2004….

“‘There were several trends and events affecting financial reporting in 2004, but among the most significant was the impact of Sarbanes-Oxley Section 404 procedures,’ said Floyd….

“The year 2003 had marked the first time restatement filings had leveled off after an upward trend over the past five years (2002 had 330 restatements, 2001 had 270, and 2000 had 233)….

“Huron’s analysis revealed that 63 financial restatements, or 15 percent, had been filed in 2004 by ‘repeat filers’ or registrants that reported erroneous financial information on more than one occasion since 1997.

“‘While a large number of companies have experienced problems with their accounting, it is notable that many of the errors are by repeat filers,’ said Floyd. ‘This means that fewer companies are contributing to the problem than the number of filings would indicate.’

“While investors rely on both quarterly and annual financial statements of public companies, there is a different level of procedures and responsibility assumed by the auditors for each. Annual financials have a higher level of effort and association required since an audit opinion is rendered. An audit opinion is not given for quarterly financials.

“In 2004, the number of filings involving restated annual audited financial statements rose to a record high of 253, representing 61 percent of total restatements filed during the year. This compares to 64 percent in 2003, 56 percent in 2002, 52 percent in 2001 and 42 percent in 2000.

“Huron’s report uncovered a rising trend in the number of periods contained in each restatement. For the fifth consecutive year, the number of filers reporting errors in at least three of the prior annual periods rose to nearly 40 percent of the 10-K/A filings.

“‘Multiple period restatements point to flawed accounting policies, practices, and errors occurring over a period of time, as opposed to one-time errors,’ said Floyd….”

“Dogma does not mean the absence of thought, but the end of thought.”

– G. K. Chesterton (English journalist and author, 1874-1936)