Last Thursday, the Enron trial concluded with resounding convictions of the company’s two top executives, Kenneth Lay and Jeffrey Skilling. That same day, Gallup reported that “Americans’ perceptions about moral values in the United States are more negative today than at any other time in the last five years.”

The two announcements are not unrelated. While there’s more to come from the Enron story — including sentencing and appeals — the core moral issue has been settled. A jury of thoughtful citizens, finding Enron’s executives guilty of fraud, has said essentially that the nation doesn’t do business this way — that arrogance, recklessness, self-aggrandizement, and deception are unacceptable. The gravest challenges facing the prosecution — that Enron’s financial manipulations might prove numbingly complex, or that the “Gosh, I had no idea what was happening” defense might succeed in painting the two executives as clueless dupes — proved hollow. The jury looked at something simpler: character. As their post-verdict comments suggest, the jurors couldn’t square the actions of Lay and Skilling with the character-defining values of honesty, responsibility, fairness, and respect. Their verdict was a ringing assertion that corporate ethics matters.

The verdict came not a moment too soon for a public in such an ethical funk. According to Gallup’s figures, 77 percent of Americans hold “negative views about the nation’s moral climate.” Another 12 percent aren’t sure. That leaves only 7 percent with positive views. These figures have worsened significantly since 2003, when only 62 percent were negative and 13 percent were positive.

For a nation so famously bullish on the future and so typically willing to see silver linings in every trouble, the Gallup numbers are disturbing. Gallup creates its “morality rating index” from two questions. One, focused on future trend lines, asks whether “the state of moral values in the country as a whole is getting better or getting worse.” The other, probing current conditions, asks respondents to “rate the overall state of moral values in this country today.”

What will be the impact of Enron on this index? It may worsen it still further: The fact that the company profited from its deceptions for so long suggests that “the state of moral values” is in serious decline. Or it may lift it higher: The fact that a jury found the two executives resoundingly guilty suggests that the moral climate may be improving. Which is nearer the truth?

It helps to reconstruct the chronology. Remember that Enron’s collapse in the spring of 2002 didn’t happen in a vacuum. It came in a context of a profound moral and metaphysical angst brought on by the terrorist attacks of September 2001. Those attacks jarred our self-perceptions to their foundations. They shifted what our European cousins have long seen as America’s ready-fire-aim mentality and impatience with philosophy into a sobering introspection. The questions were endless. Who are we? Why do they hate us so much? What’s the meaning of life? Are we doing things right? Are we doing the right things?

These last two questions are inherently ethical. They force us to come to terms, sometimes uncomfortably, with both our moral habits and our choices. They were ringing in our ears as Enron collapsed — followed in quick succession by WorldCom, Global Crossing, Adelphia, Arthur Andersen, and the rest. Had those questions not been so insistent — had Enron’s fall happened during the roaring markets of the 1990s, uninterrupted by 9/11 — would the story have risen to such prominence? Would the public (as distinct from the markets and the business press) have cared very much? Watching the crumbling of corporate excess, we no doubt would have gone on asking the small reportorial question: Who are these people, and what do we know about them? Instead, the spring of 2002 found us asking the huge ontological one: Who are we, and what does this collapse tell us about ourselves?

Recall what came next: the Sarbanes-Oxley Act. Because it tightened government regulation over corporate finance and governance, it had been resisted fiercely by corporations that favored professional self-regulation. It was a hastily cobbled-together piece of legislation. Yet such was the climate of concern about the ethics of corporate America that in July 2002, less than a year after 9/11, Sarbanes-Oxley passed the Senate without a single dissenting vote and passed the House with only three opposed.

Yet the moral index has continued to deteriorate. It’s as though a public still sensitized to introspection has been waiting, watching, and asking one more key question: Will Sarbanes-Oxley only address the surface issues of compliance with the law, or will it actually affect ethics and integrity? Judging from the public interest in the trial and the almost jubilant tone of the commentary following the verdict, last week’s denouement engendered a kind of moral relief. It’s as though that big question — Who are we? — has been answered. We are people who still care enough about ethics to stand up for our values. We are people who condemn those who run roughshod over integrity, responsibility, and compassion. And just maybe we’re a people who, seeing the guilty verdict, have new reason to think that, in Gallup’s words, “the state of moral values in the country as a whole” isn’t quite as bad as we had feared.

©2006 Institute for Global Ethics

A reader responds to last week’s commentary by Rushworth Kidder, “Is Congress Corrupt?”:

You indicate that there is a culture of bribery in Congress and that changing the names on the doors won’t change the situation. I totally agree. But if I could expand your notion of culture a bit to include the “terms and conditions of governance” we might get at the root cause of dysfunctional congressional behavior.

The terms and conditions of governance (including cultural norms) help explain the prevalence of these behaviors. In particular, campaign finance, relationship of lobbyists to lawmakers, gerrymandering, and some processes for congressional decision making (earmarking and closed-door conference committee sessions that exclude minority party members) have created conditions that make it very difficult for members to consider the broader public interest in decision making. When a corporate sponsor, for example, provides private jets at highly discounted rates, a lawmaker feels obligated to reciprocate these kind acts. The reciprocity may be in the form of earmarking expenditures, intervening in regulatory agencies, and/or providing them extraordinary opportunity to influence the writing of legislation.

This does not meet the formal definition of bribery or corruption — where money is directly exchanged for a specific congressional intervention. In fact, I would argue that far greater harm is generated by this informal system of reciprocity than all the outright examples of bribery. A skillful lobbyist working with clients knows how to create an obligation. This might help explain why we start to deal with issues (immigration, global warming, energy, health care, etc.) only when they reach crisis proportions. Most of the time, lawmakers are addressing the short-term needs of those who played a major role in sponsoring their campaigns.

We have a governance system that is broken. If the processes of governance are not well designed, it is no surprise that our policies rarely address our most compelling long-term problems. As practical idealists, can anything be done about this condition?
Perhaps our only hope is to rethink the terms and conditions of governance that have been invented to implement the Constitution. Develop recommendations that would be considered fair and increase the possibility for civil discourse in political engagement, and lead a good government reform movement that would influence meaningful change. 

– Donald G. Zauderer
Professor Emeritus
American University
Washington, DC

“We can think of no workable test or principle that would distinguish ‘legitimate’ from ‘illegitimate’ news. Any attempt by courts to draw such a distinction would imperil a fundamental purpose of the First Amendment.”

– A California appeals court, ruling last week that “online reporters are protected by the same confidentiality laws that protect traditional journalists,” according to the New York Times. Last week’s ruling overturns a lower court victory for Apple Computer, whose attempts to force online reporters to expose their sources sparked widespread concern that new-media journalists and bloggers could be exposed to risks for reporting leaked information. (“First Amendment Applies to Internet, Appeals Court Rules,” New York Times, May 27)

HOUSTON
The fraud and conspiracy convictions of former Enron chiefs Ken Lay and Jeffrey Skilling resonated throughout the business world last week, with some observers predicting that the verdict will reinforce changing attitudes about corporate ethics.

“The convictions of former Enron leaders Lay and Skilling put an exclamation point on a government crackdown on fraud — sparked by the energy giant’s stunning 2001 collapse into bankruptcy — that is having a surprisingly broad effect on corporate behavior,” according to Los Angeles Times staff writer Joseph Menn.

Menn noted that the most lasting legacy of the Enron debacle is a “sea change” in public opinion toward business that has made a wide range of corporate activity — including oversight by boards of directors — fair game for public criticism and scrutiny.

As Time magazine reported in a story prepared for its June 5 print edition, a federal crackdown on corporate fraud, including stiffer penalties, has perceptibly altered the climate in corporate boardrooms.

“Behavior has clearly changed since the Enron crisis,” Roman Weil, an accounting professor at the University of Chicago, told Time, noting that provisions of the Sarbanes-Oxley bill that hold the boss criminally accountable if the books are cooked means that CEOs are less likely to turn a blind eye to shady practices.

“The criminalization has made executives more alert to what they are signing,” Weil said.

In the end, it was the Enron jurors’ belief that bosses could not and should not be unaware of such systemic corruption that sealed the defendants’ fates. In a highly unusual joint press conference after the verdict was announced, jurors told reporters that they simply could not believe that Lay and Skilling were telling the truth when they claimed they did not realize that Enron was hollow — and rotten — at the core.

One juror, elementary school principal Freddy Delgado, said he could not reconcile how the defendants could testify that they “had their hands firmly on the wheel” of the company, but somehow had no knowledge of the accounting fraud, the New York Times reported.

“I can’t say that I don’t know what my teachers were doing in the classroom,” Delgado said. “I am still responsible if a child gets lost.”

Reaction to the verdict was particularly visceral among those who had seen their savings wiped out and careers crushed by the massive fraud. As CNN reported, the reactions from former Enron employees were “swift and unambiguous.” Debra Johnson, who worked in the firm’s international office until losing her job in the 2001 bankruptcy, told CNN the verdict is “about being fair to everyday working people.”

“Skilling and Lay thought the money, the power was everything,” Johnson told CNN. “This will let executives at other corporations know that it can happen to them.”

Sentencing is scheduled for September.

WASHINGTON
When President Bush last week ordered the Justice Department to seal records seized by the FBI in an investigation of a Louisiana congressman, the move set in motion a series of confrontations over the legal and ethical implications of the probe.

Bush’s order came after many powerful members of Congress, from both sides of the aisle, demanded that the FBI return documents and computer files seized in a highly unusual — and perhaps unprecedented — raid on a congressional office. The records were taken from the offices of Rep. William Jefferson, a Democrat who has been at the center of an FBI probe into allegations that he took bribes in return for promoting several business ventures, according to the Washington Post.

Jefferson, who has not been charged, has denied any impropriety.

The late-night raid sparked protests from senior Republicans who claimed that the Bush administration, by allowing the intrusion, had violated the Constitution’s guarantee of separation of powers between the executive and judicial branches of government.

Bush finally ordered the documents sealed for 45 days so the constitutional tug-of-war could be straightened out. But the political damage already had been done, according to reports from USA Today, because the case further undermined relations between the president and Republicans in Congress.

While Republicans initially said the allegations would help them blunt the Democrats’ “culture of corruption” attacks on the GOP as midterm elections approach, the incident could pose problems for both parties, according to the Chicago Tribune. Many analysts are predicting that the turbulence will continue to muddy the political waters and deepen the public’s suspicion about members of Congress.

The case escalated into a media-ethics issue after House speaker Dennis Hastert (R-Ill.), one of the most vocal critics of the raid, accused the Justice Department of trying to retaliate against him by leaking a report that Hastert was under investigation in the bribery probe related to disgraced lobbyist Jack Abramoff.

According to the Hill, a newspaper covering Congress, the Justice Department took the unusual step of publicly denying that Hastert was under investigation, and Hastert called on ABC News, which had reported that Hastert was “very much in the mix” of the probe, to retract the story.

ABC News stood by its report, saying that although Hastert was not a “formal” target of the probe, he was involved in circumstances that are the focus of part of the inquiry. According to ABC, letters were sent by Hastert and others urging the secretary of the Interior Department to “block an Indian casino that would have competed with casinos represented by Abramoff.”

LONDON
The case of a man who perished on Mt. Everest — after about 40 climbers passed him by as he lay dying — has sparked a furious ethical debate not only about the obligation of one person to help another but also about the commercialization of what has became an extraordinarily dangerous avocation.

David Sharp, a 34-year-old Briton, became one of 11 people to die on Everest in the past six weeks — the worst season ever for individual fatalities — according to the London-based Independent. But what riveted attention to Sharp’s demise was the fact that as many as 40 climbers observed Sharp in a state near death on May 15, and while some did share oxygen with him, all continued on their individual treks to the summit.

Some of those climbers maintained that Sharp’s condition was hopeless and that any rescue attempt would have been futile and ultimately cost more lives. Australian climber Bob Killip, interviewed by the Sydney Morning Herald, maintained that “David was not left to die … he was as good as dead. Max [a Lebanese climber] and sherpas had spent an hour trying to help him. But it was a hopeless situation. Some might judge it as being callous, but at another level, it was just reality.”

But other mountaineers took sharp issue with that sentiment. Sir Edmund Hillary, who in 1953 became the first mountaineer to scale to the summit, told the New Zealand Press Association that he would have abandoned his own trek to the summit in order to save a fellow climber, according to the Associated Press. “It was wrong if there was a man suffering altitude problems and was huddled under a rock, just to lift your hat, say ‘good morning’ and pass on by,” he said.

Hillary said that his expedition “would never for a moment have left one of the members or a group of members just lie there and die while they plugged on towards the summit.”

The Toronto Star reported that many veteran climbers cite the commercialization of the Everest experience as a factor in Sharp’s death. While the mountain was once the domain of an experienced few, who generally could be counted on to assist one another, inexperienced climbers today pay up to $60,000 for a guided trip up the mountain, accompanied by guides who are under extraordinary pressure to get them to the summit, according to experts interviewed by the Star. As a consequence, many die in the race to the top.

Sharp’s death was punctuated by a late-breaking story about the survival of Lincoln Hall, a 50-year-old Australian, who was rescued last week after a guide, American Dan Mazur, abandoned his own attempt for the summit and sat with Hall until help arrived, according to a report from the International Herald Tribune.

WASHINGTON
A little-known provision in the immigration bill recently passed by the U.S. Senate has raised alarms among those who say the measure — which would allow unrestricted immigration of nurses to the United States — would drain nurses from poorer countries where they are most needed.

The New York Times reported that the sponsor of the nursing proposal, Sen. Sam Brownback (R-Kan.), says it is essential to overcome the critical shortages of nurses in the United States.

While saying he doubted it would have an impact on Africa, he did acknowledge that the provision could affect Indonesia and India, which already send thousands of nurses per year to the United States.

Critics argue that the measure would accelerate the “brain drain” from underdeveloped nations.

“The cost will be borne by African mothers — already 175 times more likely to die in childbirth than their Western counterparts — and by millions of patients who suffer in grossly understaffed African hospitals…. The burden will also fall on African nurses who stay home, as their jobs become harder and more dangerous,” Eric Friedman, a global health policy analyst for the group Physicians for Human Rights, and Isabella Mbai, head of the Nursing Sciences Department at Moi University in Kenya, wrote in a commentary published in the Philadelphia Inquirer.

As the Times noted, many developing countries are calling on developed nations to offer some sort of compensation for the medical brain drain.

In an editorial protesting the U.S. immigration proposal, the Philippine Daily Inquirer reported that the United Kingdom offers about $186 million for compensation to poor nations that provide nurses, but that the United States immigration bill makes no such provision.

LONDON
A press investigation of relationships between some British members of Parliament and lobbyists has prompted a call for substantial changes in how those two groups interact.

At the center of the controversy are what are called “all-party groups,” political organizations from across the political spectrum that bring together MPs to discuss various social, economic, and political issues.

According to the Guardian, there are currently about 440 all-party groups. Although they have no official status, business and nonprofit groups contribute to them in hopes of influencing policy and legislation.

The groups sometimes question ministers on issues and make recommendations to the government on proposed policies, according to the BBC.

The Times of London recently reported that lobbyists from the nuclear, pharmaceutical, and beverage industries were funding the activities of various politicians and even writing policy reports.

In response, the Parliamentary Commissioner for Standards, Sir Philip Mawer, last week said that all-party groups should be required to reveal links to any firms with a vested interest in their work, according to reports from the BBC and the Edinburgh Evening News.

Mawer said that transparency about possible outside influences was critical to ensuring that the groups were not abused.

A parliamentary committee must formally consider and endorse the suggested changes before they can be implemented.

OTTAWA
An Ottawa-based watchdog group has filed a formal complaint against the Conservative government for allegedly breaking campaign promises to tighten ethics and accountability measures in the new prime minister’s proposed Accountability Act.

The group, called Democracy Watch, claimed that the latest draft of the Accountability Act omits 13 specific promises made during the campaign, according to reports from the Calgary Sun and Maclean’s. Among them are promises to require ministers to report all contacts with whistle-blowers, disclose whistle-blowing complaints in a timely manner, and allow the public to launch ethics complaints.

But what seems to have attracted the most press attention was the group’s charge that the new government has broken its promise to insert in the Accountability Act a sentence requiring office holders “to act with honesty and uphold the highest ethical standards.”

The Toronto-based Globe & Mail reported that the government argues that it is not able to pass a law requiring that politicians be honest. Instead, a government spokesman tells the paper that the Accountability Act contains a detailed list of prohibited activities.

A committee studying the Accountability Act is expected to hear a final panel of witnesses this week, including a representative of Democracy Watch, and then move on possible amendments. The government wants the measure passed before the end of the summer.

Prime minister Stephen Harper’s Accountability Act was a centerpiece of his party’s successful election platform.

WASHINGTON
The U.S. Veterans Affairs Department last week confirmed that an agency employee routinely had taken home sensitive data on a laptop computer before it was stolen from his house by burglars.

The case has highlighted the continuing controversy over the ethical obligations to protect information in an age when vast quantities of sensitive data can easily be transported — and just as easily lost.

The stolen data included names, Social Security numbers, and birth dates — a volatile mixture that could easily be exploited by identity thieves, according to a report from the New York Times. The loss compromised the records of 26.5 million veterans.

The Times also noted that the Veterans Affairs Department has been criticized for lax computer security by its own inspector general’s office. Agency secretary Jim Nicholson last week told a congressional committee that security had lagged because of “embedded cultural resistance” to change.

While the employee who took the data home on his laptop violated agency policy, there appeared to be no violation of law.

While the incident prompted some papers, such as the San Jose Mercury News, to call for cyber-security laws with more teeth, other editorials and news reports noted that the crisis surrounding insecure personal data apparently has not slowed business in data collection.

The Miami Herald reported that while Congress promised federal regulation after the firm LexisNexis was hacked, jeopardizing the data of about 300,000 people, no such legislation has appeared yet. In fact, business at LexisNexis is booming, the Herald reported, with more than 100 employees added to the payroll last year.

In another perspective to the story, Washington Post ombudsman Deborah Howell noted that the paper’s reporting of the incident prompted complaints about a different aspect of information ethics — releasing details of the theft in the first place. Several readers protested that by mentioning the fact that data containing names and Social Security numbers could be used for identity theft, the paper alerted burglars to the nature of their stolen goods.

Howell countered that the Veterans Affairs Department had wanted the details circulated so that veterans would know to monitor their bank and credit statements — “reason enough,” she wrote, to publish the story.

SAN FRANCISCO
Less than half of all companies encourage discussion of moral dilemmas and public criticism of unethical conduct, according to a recent survey.

The survey from the International Association of Business Communicators Research Foundation found that only 46 percent of those surveyed said their firms encourage discussion of moral dilemmas and of conduct that would be censurable in the workplace.

But about 61 percent of respondents said their companies generally encourage “openness” about ethical and unethical conduct, according to a summary of the report from the San Jose Business Journal.

Almost 70 percent of respondents said their firms do make clear what is and what is not ethically acceptable, according to a summary of the study in HR Business and Legal Reports.

The study was conducted among 1,827 communication professionals in various businesses.

From the Kaiser Family Foundation:

“Electronic media is a central focus of many very young children’s lives, used by parents to help manage busy schedules, keep the peace, and facilitate family routines such as eating, relaxing, and falling asleep, according to a new national study released today by the Kaiser Family Foundation. Many parents also express satisfaction with the educational benefits of TV and how it can teach positive behaviors.

“The report, The Media Family: Electronic Media in the Lives of Infants, Toddlers, Preschoolers, and Their Parents, is based on a national survey of 1,051 parents with children age 6 months to 6 years old and a series of focus groups across the country.

“According to the study, in a typical day more than eight in ten (83 percent) children under the age of six use screen media, with those children averaging about two hours a day (1:57). Media use increases with age, from 61 percent of babies one year or younger who watch screen media in a typical day (for an average of 1:20) to 90 percent of 4 to 6 year-olds (for an average of 2:03).

“In many homes, parents have created an environment where the TV is a nearly constant presence, from the living room to the dining room and the bedroom. One in three (33 percent) children this age has a TV in their bedroom (19 percent of children ages 1 year or younger, 29 percent of children ages 2-3 years, and 43 percent of those ages 4-6 years). The most common reasons parents give for putting a TV in their child’s bedroom is to free up other TVs in the house so the parent or other family members can watch their own shows (55 percent), to keep the child occupied so the parent can do things around the house (39 percent), to help the child fall asleep (30 percent), and as a reward for good behavior (26 percent). As one mother who participated in a focus group in Irvine, CA said, ‘Media makes life easier. We’re all happier. He isn’t throwing tantrums. I can get some work done.’

“A third (32 percent) of children this age live in homes where the television is on all (13 percent) or most (19 percent) of the time and a similar proportion (30 percent) live in homes where the TV is on during meals all (16 percent) or most (14 percent) of the time….

“‘Parents have a tough job, and they rely on TV in particular to help make their lives more manageable,’ said Vicky Rideout, vice president and director of Kaiser’s Program for the Study of Entertainment Media and Health. ‘Parents use media to help them keep their kids occupied, calm them down, avoid family squabbles, and teach their kids the things parents are afraid they don’t have time to teach themselves.’

“At a time when there is great debate on the merits of educational media for children, many parents are enthusiastic about its use. For example, two-thirds of parents (66 percent) say their child imitates positive behavior from TV, such as sharing or helping. A large majority of parents (69 percent) say computers mostly help children’s learning, and a plurality (38 percent) say the same about watching TV (vs. 31 percent who say TV ‘mostly hurts’ and 22 percent who say it doesn’t have much affect either way.)

“The study found that how parents feel about TV’s benefits is related to how much time children spend watching. Children whose parents say TV mostly helps learning spend an average of 27 minutes more per day watching than children whose parents think TV mostly hurts. In focus groups, parents noted many specific benefits of TV viewing for their children, such as spurring imaginative play, teaching letters and words, and learning a foreign language….”

“Temper is what gets most of us into trouble. Pride is what keeps us there.”

– Mark Twain (pen name of Samuel Clemens, U.S. writer, 1835-1910)