“A haunting question.” That’s how an email last week from a New Hampshire reader, Paul McHugh, described a query that was sprung on him by a participant in a character-education workshop he was leading.

The subject had turned to core ethical values, he said, when the woman spoke up to say that she “enjoyed and endorsed fully these values.” But she was worried. “Am I preparing my children and my students for the real world,” she asked, “by fostering these personal and social qualities so seemingly at odds with success in today’s world?”

McHugh said he gave “some sort of soothing answer,” as good facilitators do. But he still found her question “disturbing.”

As well he might. There are questions behind her question. Is ethics a fool’s errand? Are values for sissies? Does the devil have all of the good tunes? Do nice guys finish last? Does competition trump integrity? Is “success in today’s world” defined not by conscience and probity but by corporate raptors and steroid-popping athletes who, unlike Enron’s Jeff Skilling or Tour de France cyclist Floyd Landis, haven’t yet been caught?

I was in Montgomery, Alabama, the day his email arrived — visiting a man who, without realizing it, had spent a lifetime answering her question. In 1990 Rod Frazer took over a business with $100 million in negative net worth. Everyone knew it couldn’t survive. His job: put it into bankruptcy, salvage some fraction of its value for the investors, and shut it down.

Instead, he did something strange and wonderful: He led the company back to profitability after filing for bankruptcy, repaid his creditors 100 cents on the dollar, brought the company out of bankruptcy, and continued the business. The company he saved, Enstar, is valued now at nearly $600 million.

The secret of his success? Frazer can sum it up in one word: integrity.

During a two-hour interview in his office at Enstar’s understated headquarters, a restored antebellum mansion in the Old Alabama Town section of Montgomery, I asked where that integrity came from.

Frazer was raised, he said, in “deeply troubled, almost tortured” circumstances by an alcoholic father and a divorced mother. “I’ve been self-supporting since I was 14,” he chuckled. That was in 1944, when he left Montgomery to work on a farm. Bright, scrappy, and hungry for knowledge, he saved his money and enrolled in Huntingdon College in Montgomery. From there he would go on to command a tank platoon in the Korean War, graduate from Harvard Business School, and set up a boutique investment firm. He was still a sophomore, however, when he learned his “first lesson in ethics” from a man named Henry I. Flinn, a friend of his grandmother and a successful entrepreneur.

“I thought he was rich as Croesus,” Frazer recalls. “He said, ‘Son, let me tell you something. Forget Judeo-Christian ethics. That’s got nothing to do with how you conduct your business. It’s just good business to play it straight. You take advantage of a man in the trade once, you’ll never deal with him again. And if you get the reputation for dealing with people [in that way], it will follow you.’ “

Frazer got the message: You practiced ethics in business not only out of religious obligation but from a practical desire to be successful. It was pretty much, he recalls, “what I was taught in Sunday School when I was a child.” So it just made sense. “Those things were never very complicated for me,” he observes.

That message was still there when Kinder Care, a fast-growing pioneer in the childcare business and a darling of investors nationwide, spiraled out of control and spun off Enstar. Joining Enstar’s board in 1990 to help set it straight, Frazer found himself stepping in to replace its ethically challenged CEO. Frazer quickly sold off assets, including a lavish new headquarters building and several corporate jets, and pared the company from 6,000 employees to six. And at crucial moments his reputation paid off powerfully. One came when he petitioned a tough government regulator in Atlanta, Jack Ryan, to give him time to do what was needed to salvage the firm. Even though the government was ready to shut Enstar down, Ryan agreed, betting largely on the strength of Frazer’s reputation for integrity.

Enstar is in the financial services industry, investing in troubled companies and dealing in troubled debt. With partner companies, it has invested in insurance and reinsurance companies in run-off, setting them right and letting them wind down. Trouble is our friend, Frazer explains, and trouble always comes where there is corruption, fraud, or other unethical practices. Not surprisingly, sellers and government regulators want a buyer who, in Frazer’s words, is “clean.”

As Enstar contemplates potential deals, he says, it always “looks and looks to see what could go wrong. We have made an array of investments, and our work has been vetted by some really smart people experienced in American and global finance. They’ll come down here and sit where you’re sitting and say, ‘What can go wrong?’ “

His answer: “The biggest thing that could go wrong would be for us to turn corrupt.” But that’s extremely unlikely, he says — not only because the company is run by good people, but because “the quickest way our managers who are owners could [destroy their own personal wealth] would be to shake up our ethical image.”

“Our ethical profile,” he concludes, “is a corporate asset.”

I want to bottle Rod Frazer. These days, with so much news about corporate malfeasance and executive selfishness, I want to send him all over the country, pour him out liberally in boardrooms and corner offices, and just let him work his magic.

And I want to send him to McHugh’s questioner in New Hampshire. That way, when the headlines get her down and she fears she’s playing Pollyanna to her pupils, she’ll remember that in “the real world,” integrity can be a multimillion-dollar asset.

©2006 Institute for Global Ethics

“I’m not aware of any situation in the world where there is a system of jurisprudence that is recognized by civilized people, where an individual can be tried and convicted without seeing the evidence against him. And I don’t think that the United States needs to become the first in that scenario.”

“Would the administration find these procedures that you’ve put forward to be acceptable to one of our members if they were being tried by a foreign government?”

“I think probably not.”

WASHINGTON
As the world commemorated the five-year anniversary of the terrorist attacks of September 11, 2001, several stories last week examined the long-term ethical impact of the event. Among them:

• The U.S. Army produced a new edition of its manual governing treatment of prisoners, and for the first time specifically addressed some of the issues related to treatment of terrorism suspects that have become so contentious in the post-9/11 war on terror. The Associated Press reported that the revision, the first since 1992, specifically forbids beating prisoners, sexually humiliating them, threatening them with dogs, depriving them of food or water, staging mock executions, inflicting electrical shocks, burning them, causing other pain, or using a technique called “water boarding” that simulates the sensation of drowning.
• The New York Times last week presented a broad retrospective of life in the post-9/11 world, addressing ethical issues including alleged discrimination against Muslims, infringement of civil liberties, and the beefing-up of municipal preparedness — which the Times reported had been compared by many to “old-fashioned pork.” According to the report, many critics complain that politics “have colored the process” of allocating emergency equipment and manpower, and sloppy management of millions of dollars in federal funds have undermined confidence in the system.
• U.S. politics increasingly revolve around the aftermath of 9/11, with both sides of the aisle using the event to frame the political debate leading up to crucial midterm elections. The Reuters news agency reported that Democrats are pointing to a new report that indicates there was no real link between Iraq and al Qaeda, and accuse the Bush administration of misleading the public during the run-up to war. President Bush spent the days before the anniversary of the attacks delivering a series of speeches insisting that the United States is safer than ever before, according to the Reuters report. The president last week also confirmed for the first time the existence of secret prisons run by the Central Intelligence Agency that held suspected terrorists, Bloomberg reported.
• Former “Nightline” anchor Ted Koppel, who prepared a three-hour documentary and “town hall” meeting for the Discovery Channel on the balance between security and individual rights, says post-9/11 change has been steady if not always totally perceptible. “When you start looking at everything that’s happened over the past five years, you realize how big a change there has been,” he said during an interview with TV Guide. “It doesn’t directly affect most of us, only when we pass through an airport. But things [have] happened behind the scenes.” As examples, Koppel cited “Guantánamo, black sites, renditions, where people are sent overseas to countries where almost certainly they will be tortured. We still don’t know all that has happened, because it’s all been done secretly.”

CHICAGO
Former Illinois governor George Ryan, telling a federal judge he was proud of his work in public office despite his failures, last week was sentenced to six and a half years in prison for corruption.

“When they elected me as the governor of this state, they expected better, and I let them down. For that, I apologize,” Ryan said during his sentencing hearing, according to a report from the Chicago Sun-Times.

“The result deeply pains me,” Ryan said. “Without question, this is the saddest day of my life…. I should have been more vigilant. I should have been more watchful. I should have been a lot of things, I guess.”

The convictions and sentencing followed a massive federal corruption probe that highlighted the legacies of corruption that still haunt the state, according to the New York Times.

Ryan was convicted of steering state business to supporters and misusing state funds for political benefit. According to the Times, Ryan’s lawyers attempted to mount their defense by asking jurors to draw a line between what was a crime and what was politics as usual in Illinois.

One particularly compelling statement entered during the sentencing hearing came from Scott and Janet Willis, who watched their six children die in a 1994 car crash when a steel part came off a truck and slid under the family’s van, slicing the gas tank and setting their vehicle ablaze.

Investigators found that the driver was unqualified to operate the truck but had obtained his license through a payoff system eventually linked to Ryan’s campaign fund, according to WMVI-TV in Chicago.

“How could this happen?” the Willis couple wrote in a letter to the judge. “How could a man, a father, a public servant allow this?… Decisions concerning life and death were not decided on principle but on politics.”

Shortly after the sentence was announced, the head of the state retirement system asked the Illinois attorney general to investigate whether Ryan is entitled to keep any or all of his $197,000-a-year pension, the Chicago Tribune reported.

The judge set January 4 as the date for Ryan to report to prison.

SAN FRANCISCO
Computer-products manufacturer Hewlett-Packard last week became embroiled in an ethics controversy after it was disclosed that investigators working for the firm had impersonated board members in an effort to obtain phone records used to uncover the sources of leaks to the media.

The San Francisco Chronicle reported that the firm’s embattled chairwoman, Patricia Dunn, said she was “shocked” by the revelation but said she retains the support of other board members.

Meanwhile, California attorney general Bill Lockyer said the tactics used by private investigators hired by Hewlett-Packard are illegal and has opened a probe to determine who is responsible. The phone records were obtained by investigators who used Social Security numbers of their targets and impersonated them when contacting AT&T, according to the Chronicle.

Whether Hewlett-Packard can be held legally accountable for the actions of subcontractors will depend largely on how many links there are in the chain between the company and the private investigators contracted to do the investigation. Each step the contractors are removed from the company makes it more difficult to prove a case, legal experts told the Chronicle.

The situation unfolded when Chairwoman Dunn, frustrated over information leaking to the media from the company’s boardroom, ordered an internal investigation and later asked for the resignation of a board member, the Los Angeles Times reported. Subsequently, a former board member blew the whistle on the investigative technique, known as “pretexting.”

According to National Public Radio, “pretexting” investigators also obtained phone records of reporters who were covering Hewlett-Packard.

OTTAWA
The Canadian Senate’s Legal and Constitutional Affairs Committee is set to resume deliberations this week on an ethics reform act proposed by Canadian prime minister Stephen Harper.

According to the Toronto-based Globe & Mail, the measure, touted as the centerpiece of Harper’s minority government, faces a bumpy road, with members of the opposition Liberal party saying they will propose several amendments to the bill, which would mean that the whole package would have to be returned to the House of Commons.

Conservative senators last week accused the Liberals of trying to stall the bill, and Liberals said the measure is designed to unfairly penalize candidates who are receiving donations under current limits, according to reports from the Canadian Press and Ottawa all-news radio station CFRA.

The bill would place limits on individual donations to political parties and candidates, reward whistle-blowers reporting fraud or other government misconduct, and place new restrictions on lobbying.

Senators plan to listen to more than 70 witnesses on the act during the next several weeks, according to the National Post.

LONDON
In another incident that raises the legal and ethical question of how far one locality can go in banning Internet behavior that is legal in other areas, police in New York yesterday arrested a British executive of an online-gambling company and are preparing to extradite him to the state of Louisiana.

The Reuters news agency reported that Peter Dicks, the non-executive chairman of an Internet gambling firm called Sportingbet, was arrested at John F. Kennedy airport after a routine check flagged him as having an outstanding warrant from Louisiana.

That state has mounted a crusade against Internet gambling, according to the London-based Independent, which claimed that offshore gambling sites are a threat to the finances of Louisiana, which licenses 12 riverboat casinos and four land-based casinos.

In Britain, Internet gambling sites operate legally, although they typically are headquartered in Caribbean nations, and are traded on the London Stock Exchange. BusinessWeek reported that more than $1.5 billion in trading in Sportingbet was suspended after the arrest.

It’s the second time in two months that a British gambling executive was arrested in the United States. The former head of BetOnSports was taken into custody two months ago in New York, and, according to the Times of London, shares of his firm still remain off the stock market, adding to speculation that the company may not survive.

The Guardian reported that Dicks, who apparently traveled to the United States for the board meeting of an unrelated firm, made bail and is fighting extradition to Louisiana, where he could face five years in prison.

MIAMI
Ten journalists in South Florida are under scrutiny, and several have been fired already, after it was revealed that they received payments from a U.S. government program that beams pro-U.S. programming into Cuba.

The Miami Herald learned of the links after filing a request under the Freedom of Information Act. The documents revealed that reporters and freelancers had received a total of more than $300,000 for side-job appearances on the U.S. government’s Radio Martí and TV Martí, which broadcast anti-Castro programs.

According to a report from the Associated Press, the Herald has fired two journalists and one freelancer who work with the Herald’s Spanish-language sister paper. According to Jesús Díaz, Jr., president of the Miami Herald Media Co., which is the publisher of both papers, the reporters violated a “sacred trust” by accepting the government money.

“I personally don’t believe that integrity and objectivity can be assured if any of our reporters receive monetary compensation from any entity that he or she may cover or have covered, but particularly if it’s a government agency,” Díaz said, according to the AP.

According to the Reuters news agency, the total payments since 2001 ranged from $1,550 to $174,753 per journalist, and no instances were uncovered in which the journalists had disclosed that they were being paid by the government, which operates the Martí services under the U.S. Office of Cuba Broadcasting, which in turn is part of the U.S. International Broadcasting Bureau.

Journalism ethics experts cited by Reuters maintained that accepting the payments was a fundamental conflict of interest that would undermine the credibility of any reporter covering U.S. policy toward Cuba. They also drew similarities to the 2005 incident in which pundits including Armstrong Williams were discovered to have taken money from the Bush administration to promote policies in print, radio, and TV broadcasts.

Other journalists found to have accepted government payments in the most recent incident included broadcast reporters and writers for various Spanish-language newspapers in the South Florida area.

According to the Voice of America, which also operates under the parent International Broadcasting Bureau, Pedro Roig, director of the Cuba Broadcasting operation, said it is up to each journalist to follow personal and employers’ individual ethics codes.

VOA reported that some of the journalists in question had stated they were only sharing their opinions as part of panel discussions, and did not believe that the appearances created a conflict of interest.

SANTIAGO, Chile
Chile’s Supreme Court last week cleared the way for former dictator Augusto Pinochet to face human-rights charges.

The court stripped the 90-year-old of immunity in the case, confirming an earlier court decision and keeping open a legal avenue for Pinochet to be charged with human rights abuses, murder, and torture related to the infamous Villa Grimaldi prison.

According to a report from the BBC, Pinochet had enjoyed immunity from prosecution under a law he created before leaving office in 1990. The Jurist, a legal news site, also noted that the ruling clears him to face charges related to tax evasion.

Another circumstance affecting the trial is Pinochet’s claim that at 90, he is too ill to stand trial. But as the Washington Post reported, court-appointed physicians disputed that claim and cleared him for trial. Several previous cases had been dropped because of Pinochet’s claims of poor health.

Pinochet’s accusers, who include current Chilean president Michelle Bachelet, say secret police under Pinochet’s command orchestrated a reign of terror that was most severe between 1974 and 1977 and involved widespread kidnapping, murder, torture, and detention.

The Australian’s Santiago correspondent Pave Jordan reported that an estimated 3,000 people died or disappeared. While dozens of military officers and secret police have been convicted of human rights crimes, the cases never had been successfully extended to Pinochet.

WASHINGTON
Olympic track star Marion Jones, who was implicated in doping when a routine drug test registered positive for a banned substance, apparently was cleared last week when a backup sample came back negative.

Jones, who categorically denied use of performance-enhancing drugs despite repeated press reports linking her with various scandals, said she hoped her vindication would prompt better testing and more secure confidentiality of initial results.

“I hope this whole situation with me is used as a catalyst, a catalyst for more research in testing, a catalyst for better confidentiality of samples and just to protect the athletes,” she said, according to a report from Reuters.

In June, Jones provided a urine sample after competing in the U.S. track and field championships in Indianapolis. The International Herald Tribune reported that the sample was divided into “A” and “B” samples, sealed in separate containers, and sent to the Olympic testing lab at UCLA.

The lab reported that the A sample tested positive for EPO, a banned substance that increases the ability of blood to carry oxygen. But the B sample came back negative, something that happened only three or four times in nearly 4,000 cases last year in which the A test was positive, according to experts interviewed by the Herald Tribune.

The Jones case immediately prompted a new angle on the ethical debate surrounding allegations of doping: the circumstances surrounding the disclosure to the media, by anonymous sources, of the positive A-sample test.

Boston Globe sports reporter John Powers noted that Jones has been in athletic limbo since the first test, and that, “had the results of her first sample not been leaked, prompting widespread assumptions of guilt, Jones likely would not have interrupted her season.”

Jones withdrew from a European track meet, citing only “personal reasons,” shortly after the A-sample result was leaked to the media.

The U.K. Guardian and the London Free Press of Ontario, Canada, reported that the incident has raised questions about the reliability of the test. The World Anti-Doping Agency (WADA) said it will conduct an independent review.

CBS Sports noted that WADA head Dick Pound did not seem entirely convinced that the matter was settled as of late Sunday, and wanted to learn the reason for the “disturbing” disparity.

Jones was the third high-level U.S. athlete in recent months to be hit with a positive drug test. Cyclist Floyd Landis tested positive for elevated testosterone during the Tour de France, and sprinter Justin Gatlin, who shares the world record in the 100 meters, failed a drug test last April.

GLENDALE, Ariz.
A graduate school in Arizona specializing in international business education announced last week that it will require all incoming students to take an oath promising ethical behavior after graduation.

The Arizona Republic reports that the oath required by Thunderbird, the Gavin School of International Management, is believed to be the first of its kind for a business school.

“Our belief is management is a real profession in the same way we treat medicine and law,” Thunderbird president Angel Cabrera said, according to the Republic. “When you are trained … you are also taught the (ethical) rules of the game, followed by an oath to abide by those rules.”

The Phoenix Business Journal reported that the oath stemmed from a student-led initiative and was backed by Cabrera.

According to the education trade publication Inside Higher Ed, the oath reads:

While Inside Higher Ed noted that some business professors disputed the notion that an oath would lead to better behavior and noted that such promises are unenforceable, others, such as Eric Orts, the Guardsmark Professor of Legal Studies and Business Ethics at the University of Pennsylvania’s Wharton School, said that as in other professional ethics codes such as law and medicine, the words and the oaths themselves assume a symbolic and philosophical importance and can make a difference by clarifying expected behavior.

Thunderbird, which received its unusual name from its original location on the Thunderbird Airfield in Glendale, Arizona, is ranked high among international business schools by national media and trade publications, according to the school’s website.

From Harris Interactive®:

“A new Harris Poll of almost 10,000 people in France, Germany, Great Britain, Italy and Spain finds that a plurality continues to believe that the United States is more of a threat to global stability than Iran, North Korea, Iraq, China or Russia.

“The online survey was conducted among adults aged 16 and over in France (2,050), Germany (2,019), Great Britain (1,936), Italy (2,011) and Spain (1,946) between August 2 and 11, 2006 by Harris Interactive®.

“An average of 30 percent of adults in these five countries see the United States as the biggest threat of six countries listed, followed by Iran (23 percent), China (15 percent), Iraq (14 percent), North Korea (8 percent) and Russia (2 percent). The 30 percent who believe that the United States is the biggest threat to global stability compares with 36 percent who held this opinion in June and 30 percent in July of this year.

“In this new survey, 36 percent of the British see the United States as the greatest threat, followed by Iran at 19 percent. In France, the numbers are 28 percent for the United States, and 24 percent for Iran. In Spain, a full 44 percent see the United States as the greatest threat, with only 15 percent seeing Iran as the greatest threat. In Germany, 24 percent see both the United States and Iran as the greatest threat. Only in Italy do more people see Iran (31 percent) as the greatest threat to global stability, followed by the United States (21 percent)….”

“I believe in human dignity as the source of national purpose, human liberty as the source of national action, the human heart as the source of national compassion, and in the human mind as the source of our invention and our ideas.”

– John F. Kennedy (35th U.S. president, 1917-1963)