Ethics Newsline®

How are we to think about House Majority Leader Tom DeLay?

These days, that’s a more helpful question than what are we to think about him. Answers to the what question ooze from every media crevice inside the Beltway. But if our goal is not simply to pick sides but to make moral sense of this crossfire, we need frameworks rather than opinions. So we need a shift of focus from DeLay himself to the congressional committee responsible for investigating charges against him.

Those charges took on new resonance last week. As allegations of malfeasance continued to boil up around the Texas Republican, friends rushed to his side at a $2,000-per-table dinner in his honor at the Capital Hilton Hotel in Washington. Meanwhile, his critics ratcheted up their accusations that he misused travel funds and worked closely with lobbyists who now are under criminal investigation. His supporters, however, praised him as a tough politician fighting for conservative ideas and insisted that the attacks reflected nothing but partisan acrimony.

At the center of this vortex sits the House of Representatives’ Committee on Standards of Official Conduct, where charges against him are being considered. Colloquially, it is known as the House ethics committee. These two different names hint at the public confusion between ethics and standards of conduct — and help explain the difficulties the House has in addressing the DeLay accusations.

To sort through that difficulty, consider a useful definition from an early twentieth-century British parliamentarian, Lord Moulton of Bank. He defined ethics as “obedience to the unenforceable.” He then distinguished ethics from law. In Moulton’s lexicon, law entails enforcement, where breaches bring penalties. The phrase “standards of official conduct” suggests a law-based regime, under which sanctions are doled out to punish particular offenses.

The word ethics, by contrast, suggests a framework involving unenforceable but powerful canons of behavior. When breached, the remedy arises largely from public disappointment and disapproval, which can evolve into disrespect and distrust — and even, in a democracy, into dismissal. This framework gives ethics both its authority and its frailty. Because ethics affects us more broadly than law — determining our response toward numerous behaviors on which the law is silent — it can carry considerable clout. But because ethics (by Lord Moulton’s definition) hasn’t yet hardened into formal rules, it can’t exact penalties. Yet since such penalties are exactly what many in the House (and many voters) seem to desire, ethics can be misconstrued as a weak substitute for rules.

That misconstruction puts the Whatever-You-Call-It Committee in a bind. Seen through a legal lens, the committee looks a bit like a kangaroo court. Using only quasi-legal structures and approximations of due process, it nevertheless delivers verdicts that can end careers and produce seismic changes in government. Seen through an ethical lens, however, the committee appears hopelessly entangled in low-grade, tit-for-tat punishments. It appears incapable of grappling with the far broader question of a House member’s ethical principles and moral fitness for office.

The gap between these two views, unfortunately, leaves ample room for members under investigation to mount a familiar defense. “See,” they assert, “I broke no rules, and therefore I’m ethical.” While the first point may be true, the conclusion doesn’t follow. Why not? Apply Moulton’s framework, and the inconsistency stands out in bold relief. In his view, adherence to a basic legal standard is not enough to guarantee that the higher-order but unenforceable ethical canons are being honored.

That’s a point lost on some elected officials but intuitively obvious to many voters. Left unaddressed, it can lead to a collapse of public trust in politicians as well as in Congress. Indeed, that collapse is already occurring. A Gallup survey in early May found that:

• Congress’ job approval rating, at 35 percent, is at its lowest in eight years.
• Nearly four in ten respondents say that both Republican and Democratic representatives in the House are unethical.
• Eight in ten Americans think DeLay’s ethics problems are at least “moderately serious.”

What’s to be done? Three things. First, if the House wants a committee focused on rules, it needs to articulate those rules as explicitly as it does the laws it passes for the nation. Second, if it is serious about enforcement, it needs to set up investigative procedures that include all the due-process protections guaranteed to any other citizen brought to court — a hugely complex process, but necessary under a rule-based regime where trust and bipartisanship are fast evaporating.

Third, it needs to decide how to address situations where the rules are silent but where the majority feels there’s been a breach of the House’s own standard. That standard is articulated in Article 1 of the House “Ethics Manual,” which requires members to act “at all times in a manner which shall reflect creditably on the House of Representatives.” Lawbreaking obviously doesn’t meet that test. But neither do actions that, while legal, violate ethical canons.

Perhaps the House needs an official Ethics Committee, separate from its current conduct committee. The new committee could include not only House members but wise elders chosen by both parties. It could be invited to hand down judgments — nonbinding, unenforceable, but powerful — based on the credibility standard. Without that, the risk remains that members — DeLay among them — will either escape moral sanctions they should have incurred or be legally punished in ways they may not deserve. The DeLay case is too serious to let either happen.

©2005 Institute for Global Ethics

“A church that cannot openly discuss issues is a church retreating into an intellectual ghetto.”

– Catholic magazine America, in an editorial that appeared shortly after Cardinal Joseph Ratzinger was elected to become the next pope. Last week, America editor Rev. Thomas Reese resigned under orders from the Vatican’s office of doctrinal enforcement after reportedly falling out of favor for questioning official Catholic positions on same-sex marriage, abortion rights, and the supremacy of Catholicism. The order was issued while Ratzinger, now called Pope Benedict XVI, was head of the doctrinal office. (“Vatican Is Said to Force Jesuit Off Magazine,” New York Times, May 7)

WASHINGTON
Following high-profile reports of serious misconduct by some of its recruiters, the U.S. Army last week said it will hold a one-day “values stand-down” to reemphasize the importance of sticking to legal and ethical standards.

“It’s ethics-under-pressure training,” recruiting command spokesman Douglas Smith told the New York Times. “We want to emphasize that bending the rules is not the way to make mission.”

The one-day nationwide suspension of all recruiting activities follows reports that recruiters have helped applicants’ conceal criminal records, drug problems, diseases, academic shortcomings, and other issues that would disqualify them from serving in the armed forces.

The unusual move comes amid high pressure on Army recruiters, who have failed to meet quotas for the last three months despite repeatedly relaxing requirements and boosting incentives.

The stand-down, scheduled for Friday, May 20, affects all of the Army’s 7,5000 recruiters and 1,700 stations across the country, according to the Los Angeles Times.

COLORADO SPRINGS
A U.S. Defense Department task force spent three days last week at the U.S. Air Force Academy in Colorado Springs, investigating allegations of heavy-handed Christian proselytizing by academy officers and cadets.

The investigation follows an academy-wide survey, an independent review, and mounting complaints that some evangelical Christians at the academy are pushing their views on cadets who subscribe to other belief systems.

Academy chaplain Capt. MeLinda Morton, who conducted a review of religious practices and criticized the academy for evangelizing, last week continued pushing for change, accusing officials of breaking down the constitutional wall separating church and state.

“It’s the Constitution, not just a nice rule we can follow or not follow,” Morton told the New York Times in an interview. “We all raised our hands and said we’d follow it, and that includes the First Amendment, that includes not using your power to advance your religious agenda.”

Press reports note that the academy, which is 90-percent Christian and nearly one-third evangelical, is based near Colorado Springs, home to many of the nation’s most powerful conservative Christian groups.

“There’s certainly an impression that evangelicals here have that the leadership is kind of on their side,” a staff member told the New York Times on condition of anonymity. “And there’s a feeling among people who are atheists or people who are other varieties of Christian that the leadership does not really accept them.”

Academy officials have said they are working on the problem and value the diversity of their campus population.

The task force’s report is due May 23, according to USA Today.

WASHINGTON
Vice President Dick Cheney does not have to disclose the names of energy industry insiders who helped craft the nation’s energy policy, a federal appeals court ruled last week, likely ending a legal effort to enforce government transparency in the energy issue.

Cheney, who headed oil services giant Halliburton until running for office, led a task force in 2001 that devised a national energy policy whose recommendations largely mirrored industry wish lists, including expanded oil and gas drilling on public land, a push for nuclear power, and drilling in the Arctic National Wildlife Refuge, reported the Associated Press.

Critics accused the task force of excluding input from environmental and conservation groups, while at the same time opening its deliberations to many of Cheney’s former industry colleagues, including former Enron chief Kenneth Lay.

After the White House refused to provide details of who met with the task force, two organizations û the environmental group Sierra Club and the conservative legal group Judicial Watch — sued.

The groups alleged that Cheney’s task force gave so much preferential treatment to energy executives that they became de facto members, making the panel a federal advisory committee subject to transparency laws.

After a series of back-and-forth lower court rulings, the U.S. Court of Appeals for the District of Columbia Circuit last week ruled unanimously against the plaintiffs, saying their lawsuit should be dismissed.

Saying there was no proof that energy executives played a role more substantial than advising the task force, the court said the executives were like congressional aides, noted the New York Times.

“An aide might exert great influence, but no one would say that the aide was, therefore, a member of the committee,” formally known as the National Energy Policy Development Group (NEPDG), the court ruled.

“Neither Judicial Watch nor the Sierra Club explicitly claimed that any nonfederal individual had a vote on the NEPDG or had a veto over its decisions,” Judge A. Raymond Randolph wrote for the court.

Jonathan Turley, a professor of constitutional and environmental law at George Washington University, said the court’s ruling creates “an absurd standard” by forcing the plaintiffs to prove that energy executives played an undue role without allowing them access to the documents needed to investigate the charge.

“It’s impossible to establish that industry substantially participated in these meetings, if you deny them basic discovery needed to show those facts,” Turley told the Washington Post.

Cheney’s office welcomed last week’s ruling as a “complete vindication,” saying it upheld the White House’s claim that concealing the identities of consultants and advisors is necessary to ensure that their input is full and forthcoming.

Judicial Watch president Tim Fitton disagreed, saying the White House position and appeals court decision create a troubling standard for doing business behind closed doors.

Given last week’s ruling, “the public will simply have to take the word of the government that no outsiders are improperly influencing the decisions of their government,” Fitton told Bloomberg.

NEW YORK
Department store chain operator Saks Inc. last week announced the firing of three senior executives and an undisclosed number of managers and other workers for wrongdoing involving the overcharging of vendors.

Saks said it was firing its chief accounting officer, the chief administrative officer of its Saks Fifth Avenue chain, and Saks Inc. general counsel Brian Martin, who is the brother of chief executive Brad Martin.

The three were among those terminated after an internal audit committee concluded that they had abused the process of collecting payments from vendors to the tune of at least $20 million.

The firings came after the audit committee investigated Saks’ practice of collecting “markdown money” — funds that retailers charge vendors for products they say are not selling well, forcing sales or markdowns.

Critics say such claims are sometimes bogus, allowing retailers to move product while simultaneously extorting funds from vendors who must either pay quietly or have their products pulled entirely, noted the New York Times.

Saks’ audit committee concluded that its Saks Fifth Avenue chain improperly demanded roughly $20 million in markdown money from 1999 to 2003.

In addition to calling for the firing of the three senior executives and anyone else “who was directly involved,” the committee said bonuses for chief executive Brad Martin and chief financial officer Douglas Coltharp “should be reduced or eliminated.”

The committee also called on management to create an ethics “hotline” and “an action plan for enhanced ethics training,” according to a company press release.

Last week’s findings by the Saks internal audit come on the heels of announced investigations by the U.S. Securities and Exchange Commission and the U.S. attorney for the Southern District of New York.

In addition to examining Saks’ collection of markdown money, regulators are investigating the firm’s practice of collecting “chargebacks” — funds deducted from payments to vendors for product that allegedly arrives damaged or different from what was ordered, noted the Times.

Retailers will “say they didn’t receive all 60 pairs of pants — when they did — and they’ll deduct the money for the ‘missing’ pairs,” explained industry insider Allan Ellinger. “Or they’ll subtract a whopping percentage because they claim the shipping labels were on the wrong carton — or any other excuse.”

Since markdown money and chargebacks are widespread throughout the industry, the pending investigations could lead to expanded charges against other retailers, reported the St. Louis Post-Dispatch.

LONDON
British bank Lloyds TSB was accused last week of pushing massive loans onto consumers ill-qualified to repay the large sums, violating industry standards and prompting internal and regulatory investigations.

The charges were leveled by the BBC, which obtained an internal Lloyds review of 185 loans with a value of more than $27,000 each.

Lloyds’ investigation concluded that more than one-half of the loans were granted without sufficient background checks, and more than one-sixth offered despite information indicating “that affordability was doubtful.”

“It is our opinion that some of the issues identified during our review have the potential to expose the bank to significant reputational risk,” the internal audit concluded.

The BBC, which has been monitoring Lloyds’ lending practices since last year, said its investigation was prompted by complaints from both consumers and Lloyds employees, reported the Press Association.

Following the BBC report, the British Banking Code Standards Board (BCSB), which oversees voluntary guidelines and best practices, said it would investigate and take disciplinary action if needed.

BCSB chief executive Seymour Fortescue said Lloyds, which has pledged to be a “responsible lender,” deserved “some credit for commissioning these internal reports to see what was going on.”

In addition, Graeme Miller of the Scottish Consumer Council said that while lenders often are aggressive, “consumers themselves need to act responsibly and ensure they are not asking for money they cannot afford to repay,” noted the Scotsman.

In the wake of last week’s report, Lloyds reportedly has agreed to forgive the debt of David and Wendy Dickerson, whose plight helped put the spotlight on abusive lending practices, reported the Western Mail.

Even though David Dickerson is unwell and on benefits and Wendy Dickerson earns less than $10,000 a year, the couple was encouraged by Lloyds to borrow $185,000 over 12 months. Pressure to repay the multiple loans pushed Wendy Dickerson to thoughts of suicide.

STRASBOURG, France
France last week witnessed a multi-pronged push to improve the rights and rewards of workers, with efforts to limit work hours, diversity the workforce, and improve pay for female employees. Among the developments:

• The European Parliament, meeting in France, last week voted 378-to-262 to enforce a maximum workweek of 48 hours, saying an opt-out used in Britain should be abandoned, reported the Associated Press.

• The BBC last week checked in on French efforts to diversify the workforce, profiling a push by government and industry to ensure that employment opportunities are distributed fairly among the country’s growing minority population.

• Also last week, the French national assembly renewed its efforts to equalize pay for women, who continue to earn wages 25 percent lower than men doing comparable work, according to the Guardian.

SAN FRANCISCO
Obese workers may be having their paychecks cut to cover higher healthcare costs, according to a new study of employment wages released last week by researchers from Stanford University.

Extremely overweight employees receive a lower wage than their normal-weight colleagues, according to an analysis of data from 1989 through 1998. While the differential in hourly wages averaged $1.20, it hit $2.58 in 1998.

Researchers said the findings were especially interesting because the apparent pay discrimination was found only at firms where employers subsidized their workers’ healthcare costs, reported the San Francisco Chronicle.

The finding suggests that employers may be curbing overweight workers’ pay to compensate for the higher medical and healthcare costs spent on caring for overweight workers, noted study co-author Kate Bundorf.

“The fact that we don’t find the differential in workers without health insurance suggests it is attributable to the higher cost of health insurance,” Bundorf told CBS MarketWatch.

While that may be the case, both Bundorf and Paul Fronstin of the Employee Benefit Research Institute say any such cost-weighting is likely unconscious, given employers’ fear of expensive discrimination litigation.

Special to Newsline from Canadian correspondent Errol P. Mendes

TORONTO
The Globe & Mail is reporting that Canadian television viewers have bombarded the Advertising Standards Canada (ASC), an industry self-regulation body, with complaints about sexually explicit ads.

Over 1,540 complaints have been lodged with the ASC concerning beer ads that feature women with “exposed buttocks” getting rubbed with suntan lotion, women kissing women, and other ads that have women that are nude or scantily clad.

A creative director at one of the advertising companies, Benjamin Vendramin, has defended some of the ads, claiming that there is nothing wrong with sex in advertising as long as it is in good taste.

Television viewers also have complained about misleading ads and ads that encourage aggressive and high-speed driving.

From the Alliance For Board Diversity:

“Uniting under the common goal of increasing representation of women and minorities on corporate boards, three leadership organizations — Catalyst, The Executive Leadership Council, and Hispanic Association on Corporate Responsibility (HACR) — today announced their collaboration as the Alliance for Board Diversity and released the results of their first joint research, ‘Women and Minorities on Fortune 100 Boards,’ which assesses diversity in the boardrooms of the Fortune 100 companies….

“Key findings include the following:

• “There is a severe under-representation of women on boards. Just 16.7 percent of board seats in the Fortune 100 are held by women.
• “Racial and ethnic minorities are similarly under-represented. Only 14.9 percent of board seats are held by a minority individual. Minority women fare worst of all, holding just 3 percent of board seats in the Fortune 100.
• “Particularly low is representation of Hispanics, who hold 3.9 percent of board seats, and Asian-Americans, who hold just 1 percent of board seats.
• “There is a recycling of the same minority individuals — especially African-American men — on multiple boards….

“‘Good governance acknowledges the interests of all stakeholders, including shareholders, employees, customers, suppliers, and communities that businesses and organizations serve,’ said Alfonso E. Martinez, president and CEO of the Hispanic Association on Corporate Responsibility. ‘Having a diverse board sends a clear message to each of these groups.’…

“‘To remain competitive globally, the United States must recognize and embrace the power of inclusive leadership. We want to help companies make the case that diversity is as essential in the boardroom as it is in the executive suite,’ said Carl Brooks, president of The Executive Leadership Council, an organization representing the most senior African-American corporate executives in Fortune 500 companies….

“The Alliance for Board Diversity plans to track trends in boardroom diversity by conducting research to measure changes in the demographic makeup within Fortune 100 boards…. The National Association of Corporate Directors (NACD) is a key partner helping to advance the Alliance’s mission. The Alliance will continue to ally with and support like-minded organizations or individuals who are highlighting the issue of boardroom diversity as a vital shareholder concern….”

“At 18, our convictions are hills from which we look; at 45, they are caves in which we hide.”

– F. Scott Fitzgerald (U.S. writer, 1896-1940)