For more information, see this week’s Research Report.

by Rushworth M. Kidder

At the risk of turning this column into a police blotter, here’s what we learned on the ethics front last week. It’s not pretty:

• Bernard Madoff, the Wall Street trader whose $50 billion Ponzi scheme collapsed in December, only pretended to invest his clients’ money on their behalf. According to the court-appointed trustee, Madoff’s firm bought no securities during the past 13 years despite having listed such purchases on client account statements.
• Texas billionaire R. Allen Stanford, whose investment firm was raided last week, has been charged by the U.S. Securities and Exchange Commission with fraudulently selling $8 billion in certificates of deposit. His banks and companies in the Caribbean island nation of Antigua and Barbuda have been seized by regulators. Like Madoff, he too may have been paying off previous investors with new investors’ funds.
• New York Yankees superstar Alex Rodriguez detailed his use of illegal steroids as a young player. After a succession of earlier denials, he finally admitted that he bought the drugs in the Dominican Republican and had his cousin deliver the injections.
• Sen. Roland Burris, appointed by former Illinois governor Rod Blagojevich to fill President Obama’s vacated U.S. Senate seat, admitted he tried to raise money for the disgraced Illinois governor while his appointment was under consideration, apparently contradicting his earlier statements.

I could go on, but you get the point. What’s common to these examples is deception. From the gargantuan frauds apparently practiced by Madoff and Stanford to the half-truths swirling around Rodriguez and Burris, they all come down to a single word: lying.

We may never know what causes people to lie. But a sobering survey published earlier this month suggests that we’re not educating the next generation about the value of truth-telling. Many of today’s teens are as thoroughly confused about lying as are these four headliners.

The survey of 750 males and females, ages 12 to 17, found that 80 percent of teens believe they are prepared to make ethical decisions when they join the workforce. Yet of that group, nearly half (49 percent) say that lying to parents or guardians is okay — and 61 percent have done so in the last year. The data also shows that, among the whole sample:

• More than quarter (27 percent) think that “behaving violently is sometimes, often, or always acceptable.”
• More than a third (38 percent) think that “you have to break the rules at school to succeed.”
• Only about half (54 percent) see their parents as role models, and many have no role models at all. Perhaps as a result, teens feel “more accountable to themselves (86 percent) than they do to their parents or guardians (52 percent), their friends (41 percent), or society (33 percent).”

The survey was conducted telephonically by Opinion Research Corporation for Junior Achievement and Deloitte in early October. (Editor’s note: Deloitte is a corporate sponsor of Ethics Newsline®.)

Reflect on what this data tells us. Not only are many teens using lies to negotiate their way through the world. Not only are large numbers persuaded that violence and rule breaking are appropriate tools for getting ahead. Not only are they wandering leaderless in a moral wilderness, looking only to themselves as guides. Despite all that, they feel they’re ready to make ethical decisions in the business world.

Which leaves us with two important lessons. First, don’t blame the teens. They’re only doing what they’ve been taught to do by their elders. If our middle- and high-school cultures telegraph to kids a moral relativism that naturally accepts cutting corners, dissembling, and spin, kids will reflect that culture. Unless we build deliberate moral countercultures, who can blame kids for falling back on themselves as role models? If we don’t bring moral clarity to their confusion — by showing them, for instance, the incongruity of saying, “Yes, I’m an ethical leader,” and in the next breath saying, “Yes, I break rules,” who else will?

Second, this survey helps explain why our economy is in such trouble. The character education movement, while spreading, is not far ahead of where it was 35 years ago. If kids in 1974 got as little instruction in integrity as they typically get today, should we be surprised that some of them, as they grow up to manage our investments, run our banks, set our athletic standards, and serve in our public offices, have scant regard for probity? Isn’t it clear that many of them, if handed the Junior Achievement/Deloitte poll, would say both, “Yes, I make ethical decisions,” and, “Yes, I lie, cheat, and defraud” — and yet see nothing odd about their answers?

But it is odd. It’s bizarre that we should be mired in a recession driven by moral collapses. It’s strange that the moral fecklessness underlying those collapses is so easy to spot and so hard to correct. The correction must involve renewed efforts to educate about character and ethics. Anything less simply enables a new generation to slip easily into apprenticeships at Madoff, Rodriguez, & Sons, where they finally can learn how to lie in the big leagues.

©2009 Institute for Global Ethics

Questions or comments? Write to newsline@globalethics.org.

“The fact that no one at all has been held accountable for this murder sends a very clear message to potential perpetrators: You can do it, and you can get away with it. Brazen killings have become almost routine in the Russian Federation.”

– Tatyana Lokshina, deputy director of the Moscow bureau of Human Rights Watch, speaking last week after a jury cleared the three suspects accused of gunning down prominent investigative journalist Anna Politkovskaya. After the verdict, the case’s presiding judge ordered the case reopened, saying he would give investigators material evidence, reports the New York Times. The Russian Prosecutor General’s office also announced plans to challenge the verdict, notes the paper.

Source: New York Times, Feb 21.

For more information, see: Related Newsline Commentary, Dec. 4, 2006.

Press reports note that rescue package is as much an ethical issue as a monetary one, with critics saying it rewards bad behavior; backers say it is crafted to protect the deserving

WASHINGTON
Arguments over President Obama’s $275 billion mortgage rescue plan volleyed across the nation last week, with much of the debate focusing as much on morality as on practicality.

At issue: whether the plan rewards people who acted recklessly and punishes those who were fiscally conservative.

Sen. Richard Shelby, the ranking Republican on the Banking, Housing, and Urban Affairs Committee, said the plan “appears to help those who least need it, and doesn’t help those that do,” the Agence France-Presse reports.

“The biggest outrage is that the president’s plan actually will use taxpayer money to pay people to do what they are already supposed to do — pay their mortgage,” Shelby said in a statement. “It also uses taxpayer money to pay banks to do what they should already be doing — modifying mortgages.”

Other GOP leaders in the House expressed concern that the plan would reward banks for gambling with risky mortgages and would aid people who falsified income in order to qualify for big mortgages, according to the AFP.

A major part of Obama’s plan calls for spending up to $75 billion to restructure loans and provide an incentive for lenders to reduce monthly interest rates to 38 percent of a borrower’s gross income.

TIME magazine notes that policymakers crafting the plan “had to walk a fine line between helping borrowers who have been caught off guard by tricky mortgage products and falling house prices and those who simply made imprudent decisions and genuinely can’t afford their homes.”

On one hand, TIME points out, the Treasury Department won’t subsidize loan modifications that reduce the interest rate below 2 percent, on the theory that “if you can’t afford a 2 percent mortgage, in the eyes of the government, you can’t afford your house.”

The plan also does not provide rescues for so-called jumbo mortgages, which typically are valued at more than $417,000.

But “those attempts to avoid moral hazard … might make the plan less effective in stemming the tide of foreclosures,” TIME concludes.

Controversy over moral hazard — the theory that if you reward recklessness, you encourage it — erupted on cable TV last week when CNBC reporter Rick Santelli spoke out against the housing bill on the floor of the Chicago Board of Trade.

After Obama announced details of the plan Wednesday, Santelli charged that “the government is promoting bad behavior” — a remark that drew cheers from others on the trading floor, CBS News reports.

Sources: AFP, Feb. 20 — CBS News, Feb. 20 — CNN, Feb. 20 — TIME, Feb. 19.

For more information, see: Related Newsline story, Feb. 16 — Related Newsline story, Feb. 16 — Related Newsline Commentary, Feb. 2 — Related Newsline story, Jan. 26 — Related Newsline story, Nov. 24, 2008.

The senator, appointed by impeached Illinois governor Rod Blagojevich, is facing calls for his resignation amid questions about his relationship with former governor

CHICAGO
The controversy over the Illinois Senate seat allegedly put up for sale by disgraced former governor Rod Blagojevich continued to simmer last week.

U.S. Sen. Roland Burris, who eventually assumed the seat, was interviewed by federal investigators over the weekend, according to a report from the Chicago Tribune.

Sources told the Tribune that Burris has learned that he is not a target of the probe, but that investigators are focusing on corruption allegations against Blagojevich.

Burris, though, continues to face calls for his resignation over allegations that he was more involved in Blagojevich’s political machinations than he first disclosed, reports PBS “NewsHour.”

Burris also faces a probe by the Senate Ethics Committee, according to Congressional Quarterly.

The latest turmoil bubbled up after Burris revealed that he had more extensive contact with Blagojevich’s brother and aides than he previously acknowledged, and had engaged in fundraising efforts for the ex-governor, according to the Hill, a newspaper covering Congress.

Sources: Chicago Tribune, Feb. 22 — Congressional Quarterly, Feb. 20 — Hill, Feb. 20 –
PBS “NewsHour,” Feb. 20.

For more information, see: Related Newsline story, Feb. 16 — Related Newsline story, Feb. 2 — Related Newsline story, Jan. 12 — Related Newsline story, Jan. 5 — Related Newsline story, Dec. 15, 2008.

Facebook users stage privacy protest; website accused of altering online ratings for merchants who buy ads; another law against selling violent video games to minors is struck down on appeal

NEW YORK and LOS ANGELES
Ethical issues relating to advancing communication technology were featured in several news stories last week. Among the coverage:

• The social-networking site Facebook stumbled into a hornet’s nest after a short-lived assertion by the company’s legal representative that the firm owned all the information on a Facebook account — even after the user deleted that account. User groups and privacy watchdogs declared that the policy was invasive, according to a report from CNET, with more than 100,000 users joining one online protest group. The Electronic Privacy Information Center threatened to file a complaint with the Federal Trade Commission. Facebook reversed the policy by midweek.
• A popular website that rates service at stores and restaurants is in the eye of an ethics storm after an alternative weekly newspaper alleged that salespeople for the site said they could bury bad reviews if merchants purchased advertising, reports the Wall Street Journal. The site, named Yelp, denied the story and complained about the use of anonymous sources.
• A federal appeals court ruled that a California law banning sales of violent video games to minors is unconstitutional, Bloomberg reports. The court said there is not enough evidence to allow the state’s right to prevent harm to trump free-speech guarantees. Illinois, Louisiana, Michigan, Minnesota, Oklahoma, and Washington each have passed similar laws and have seen them struck down in similar appeals, according to the report.

Sources: CNET, Feb. 20 — Wall Street Journal, Feb. 20 — Bloomberg, Feb. 20.

For more information, see: Related Newsline story, Jan. 12 — Related Newsline story, Dec. 10, 2007 — Related Newsline story, Dec. 3, 2007 — Related Newsline story, July 25, 2005 — Related Newsline story, July 18, 2005.

In related story, India’s research leaders propose regulations stipulating that mothers may demand compensation if fetus in injured

NEW YORK and DELHI
A recent report published in the New England Journal of Medicine claims that the pharmaceutical industry is moving many drug trails to the far reaches of the globe — a trend that raises both ethical and medical issues.

According to U.S. News & World Report, researchers contend that one reason clinical trials are migrating abroad is U.S. firms’ desire to avoid complex domestic regulations, raising the question of whether subjects overseas enjoy the same level of protection as those afforded under U.S. law.

The New England Journal of Medicine article, written by several Duke University researchers, also questions whether it is ethical to test drugs on people in poor countries when the medications are intended for consumers in wealthy nations.

In related news, draft guidelines in India will allow mothers undergoing clinical trials to demand compensation if their fetus is harmed by the research. According to the Times of India, the draft says compensation must be paid regardless of whether the injury was foreseeable and irrespective of whether the mother had consented in writing to the research.

Sources: New England Journal of Medicine, Feb. 19 — International Herald Tribune, Feb. 19 — Times of India, Feb. 19 — U.S. News & World Report, Feb. 18.

For more information, see: Related Newsline story, Feb. 4 — Related Newsline story, Jan. 14 — Related Newsline story, Aug. 25, 2008 — Related Newsline story, May 5, 2008 — Related Newsline story, Apr. 7, 2008.

Racial implications of editorial cartoon, settlement of libel case, and apparent leak of beating photo prominent in week’s news

NEW YORK and LOS ANGELES
Three major media-ethics cases made news last week:

• A New York Post cartoon apparently depicting President Obama as a chimpanzee has provoked a blistering ethics debate, with the paper saying the cartoon was meant to satirize two stories — the escape of a chimpanzee and the turmoil over the financial stimulus bill — with detractors charging that the drawing unearths old racial stereotypes. Media ethicist Bob Steele, writing for Poynter.org, maintained that while editorial cartoons are supposed to “have some spice,” the drawing in question “failed the ethics standard” because it blended two unrelated stories and was “unfair, stereotypical, and harmful to African Americans.”
• The New York Times settled a lawsuit with a Washington lobbyist who sued over an article last year that she claimed wrongly insinuated that she had an affair with presidential candidate John McCain. According to a report from the trade journal Editor & Publisher, the settlement includes no payment, retraction, or apology — only an agreement by the Times to publish an online piece from the plaintiff’s attorneys.
• The Los Angeles Police Department is investigating the possible leak of a photo showing a popular singer after an apparent beating, according to ABC News. The photo of the singer Rihanna, ostensibly taken as evidence and showing her with swollen lips and eyes, appeared on several blogs and soon was seen on news sites worldwide. Various domestic-abuse watchdog agencies have protested the posting of the photo, saying it can trigger flashbacks and other emotional disturbances among prior abuse victims, according to the ABC report.

Sources: ABC News, Feb. 20 — Editor & Publisher, Feb. 19 — Poynter Online, Feb. 19 — AP, Feb. 19 — New York Times, Feb. 19 — New York Times, Feb. 19.

For more information, see: Related Newsline story, Aug. 25, 2008 — Related Newsline story, Aug. 11, 2008 — Related Newsline story, Mar. 31, 2008 — Related Newsline story, Sep. 18, 2006 — Related Newsline story, Feb. 22, 2005.

Minority hiring, need for ethics education, and anthropologists’ role in classified research top issues of the week

VARIOUS DATELINES
Moral issues figured in last week’s top education stories. Among the coverage:

• Minority hiring at college athletic departments across the United States is slipping, according to the watchdog Institute for Diversity and Ethics in Sports. The organization, which conducts a yearly survey of hiring trends, produced what it describes as the worst report card in many years when it evaluated hiring for positions ranging from coach to athletic director to university president, according to a summary in USA Today.
• A major study in Britain has concluded that an entire generation of children in the primary school system has been let down by schools’ focus on tests and memorization, the London Telegraph reports. To correct the situation, the national curriculum should be redesigned to include “domains” such as ethics, faith, arts, and language, contends the Cambridge Primary Review, a national review panel.
• Members of the American Anthropological Association overwhelmingly approved a new code of ethics that appears to advise members against producing classified research, partly in response to a controversy over anthropologists working for the U.S. military in Afghanistan and Iraq in an attempt to identify and persuade cultural opinion leaders. But the journal Inside Higher Ed notes that the code’s language was left intentionally ambiguous while debate over more overhauls of the code continues.

Sources: USA Today, Feb. 20 — Inside Higher Ed, Feb. 20 — Telegraph, Feb. 20.

For more information, see: Related Newsline story, Feb. 16 — Related Newsline story, Jan. 5 — Related Newsline story, Mar 24, 2008 — Related Newsline story, Dec. 3, 2007 — Related Newsline story, Aug. 21, 2006.

BBC/Harris poll examines views of Obama administration, including “health care, climate change, Iraq, Afghanistan,” and other issues

From the BBC World News America/The Harris Poll:

“The first BBC World News America/The Harris Poll of American public opinion addresses five topics related to the new Obama administration — public priorities among all the issues facing the president, climate change, Iraq, Afghanistan and America’s reputation around the world….

“When asked about the most important issue other than the economy that President should address, Americans think of many, and there is no consensus. The people interviewed were not shown or read a list of issues. Health care, mentioned by 21%, tops the list by a wide margin, with many more mentions than the next issues on the list, ‘the war’ (6%), ‘the war in Iraq’ (5%), employment/jobs (5%), immigration (4%) and education (4%)….

“A slender 52% majority of all adults thinks that President Obama will be more successful than the Bush administration in addressing climate change and only 10% think he will be less successful. However, fully 38% think he will be neither more nor less successful, which suggests that many people recognize how difficult it will be to slow global warming….

“A key plank in candidate Obama’s election campaign, particular in the primary battles with Hillary Clinton, was his opposition to the war in Iraq and his call for the withdrawal of all combat troops within 16 months. This new poll finds that only just over a third of the public (36%) believe he should keep to this time table even if his military commanders advise against it. This finding means that the president has some political wiggle room to delay the departure of all combat troops….

“One of the frequent criticisms of President Bush was that his administration damaged the global standing and reputation of the United States. Three-quarters of all adults (74%) believe that this happened. Even almost half (47%) of Republicans agree with this….

“Almost everyone (83%) believes it is important (including 56% who think it very important) that President Obama should work to improve the U.S. image around the world….”

For the full press release from Harris, Feb. 4, click here .

“From fortune to misfortune is but a step; from misfortune to fortune is a long way.”

– Yiddish proverb

For more information, see this week’s Research Report.

by Scott Ventrella

Over the past week, I’ve been following the reaction to congressional hearings led by Rep. Barney Frank. He’s been listening to, and chastising, eight bankers whose companies received a staggering $165 billion in TARP funds issued last fall. Like most taxpayers, I’ve got a single question: Are these funds being put to good use?

Judging from many of the headlines, the answer is no. Although it’s not clear how accurate this sentiment might be, the public perception is that the TARP has been grossly mismanaged. This perception has been reinforced by stories of multimillion-dollar bathroom renovations, extravagant Super Bowl parties, private jet usage, massive bonus payouts, and a host of other affronts. What was played out during last week’s hearings, from government officials and citizens alike, was a collective, gathering rage.

From an ethical standpoint, however, what’s most interesting is that these eight bankers were not accused of breaking any laws. Otherwise, we would have been following reports from a courtroom, not a hearing room. Instead, these titans of the banking industry were being upbraided for behaving unethically. Publicly, their actions seemed to lack the integrity so critical to rebuilding the public trust.

Which is why I was perplexed by the 2009 Global Ethics Summit, held in New York earlier this month. Hosted by Dow Jones and Ethisphere, the summit was primarily designed for chief ethics and compliance officers of large multinational organizations. This year’s theme was “Closing the Door on Corruption.” Stepping into the conference, I expected to hear about ethics and integrity. Instead, I found myself in a two-day-long discussion that more suitably might have been titled, “Opening the Door to More Laws and Regulation.”

It was a good program, but the focus was heavily on legal and compliance issues. Where, I asked myself, is the focus on ethics, values, character, and integrity — the very things that, when they collapsed, produced the current economic crisis? Clearly, organizations have made great strides as a result of stronger compliance programs. They’re catching so many more of the bad guys who are likely to be held personally responsible that we may need to build bigger prisons. But according to the latest National Business Ethics Survey (NBES) from the Ethics Resource Center, published in 2007, misconduct in companies is so high that more than half of the employees surveyed report that they observed it. But those same employees, fearful of retaliation and skeptical that speaking up would make a difference, too often are unwilling to report it.

Maybe we’re not catching the bad guys fast enough. Or maybe we need to impose more regulations with stiffer penalties. But I think it’s more likely that we need to concentrate on shutting down the breeding ground of corruption by focusing on the culture. A corrupt corporate culture breeds nothing but wrongdoing. Last fall, Earl E. Devaney, the inspector general of the Interior Department, told the Wall Street Journal that “a culture of ethical failure pervaded the agency that collects royalties on oil and gas, including self-dealing, improper gifts, sexual misconduct and drug abuse.” Apparently this type of misconduct had gone on for years.

A toxic culture contains all of the elements that breed pervasive, unchecked, unethical behavior at all levels. The only remedy is to build what we at the Institute are calling cultures of integrity. According to the NBES, “ethics risk is most effectively reduced by an enterprise-wide cultural approach to ethics that extends beyond a compliance mentality” (italics mine). But where do we begin to build a culture of integrity? While it may seem to be a cliché, we absolutely must start at the top of the house. During the Global Ethics Summit, I was encouraged when Paul McNulty, a former U.S. deputy attorney general, told the audience that the most important factor to consider in building a sound ethics program is to “demonstrate leadership commitment.” He referred to this as “tone from the top,” which should first and foremost be sincere.

The entire leadership team is responsible for setting the right tone and leading through example. Although there are many other aspects to building cultures of integrity, it all starts with commitment and involvement at the top.

The time to begin building cultures of integrity in our own organizations is now. Given the serious condition of the economy, early indicators reveal that unethical behavior is on the rise, perhaps due to pressure to achieve results to save one’s own job. Unfortunately, even the most apparently ethical individuals can yield to temptation under extreme duress. How are organizations responding? Sadly, by trimming their training budgets, including the programs that address ethics, values, and decision making.

All the more reason, then, for those at the top to act decisively to build and maintain corporate cultures of integrity. As an eternal optimist, I’m confident that corporate America will rise to the occasion. Think of it this way: Either we self-regulate through ethics, or we get more regulation heaped onto the existing pile. Perhaps next year’s conference can be titled, “Slamming the Door on Corruption: Building Cultures of Integrity.”

©2009 Institute for Global Ethics

Scott Ventrella is managing director of the Center for Corporate Ethics, a division of the Institute for Global Ethics. He is the author of The Power of Positive Thinking in Business: 10 Traits for Maximum Results, and the forthcoming HONESTLY! How to Work and Succeed with Integrity.

For more information, see: Related Newsline story, Sep. 15, 2008 — Related Newsline story, Dec. 3, 2007 — Related Newsline Commentary, Oct. 24, 2005 — Related Newsline story, Oct. 17, 2005.

Questions or comments? Write to newsline@globalethics.org.

Last week’s commentary “Daschle and the Moral Commons,” in which Rushworth Kidder examined the outrage over Tom Daschle’s tax problems, drew many responses from readers.

“Your editorial on Daschle’s demise covers part of the picture,” wrote one reader. “I am more troubled by the revelations of his ties to the lobbyists and special interests who have specific interests in solving our medical care crisis…. At the same time, I am troubled that solutions to this serious problem will be delayed because of the focus on an individual — Daschle — and his ethics.”

Another reader saw the Daschle controversy as part of a larger issue: “Rush’s commentary article this week reminds of the even broader moral matter that he has visited in the past. Perhaps another verbal visit to the ruinous effects of the lack of trust that accompanies a lack of integrity might be helpful in these morally challenging times. Surely, we are experiencing seriously decreasing public credibility toward so many of our society’s fundamental structures, all dependent on trust to continue to provide society’s needs — e.g., our political system, our financial institutions, charitable organizations, corporate executives and their shareholders, international relations, etc. At worst, a complete collapse of trust (integrity) could lead to a collapse of the social structure. At best, despite the difficulty and time required to rebuild trust once lost, a return to integrity and the concomitant trust might lead us back out of this quagmire.”

Finally, one email summed up one of the frustrations encountered by millions of Americans at this time of year: “Would we have less circumventing of tax laws, less deliberate, covert cheating, if the tax code was structured more simply, and all state tax laws consonant? This bothers me annually!”

– Compiled by Ethics Newsline® editor Carl Hausman

“I go thru this about once a week…. I will hold my breath ………. again.”

– Peanut Corp. of America president Stewart Parnell, responding to a plant worker in June 2008 after being told that products from the Georgia plant again had tested positive for salmonella.

After a nationwide outbreak of the disease began killing and sickening people, Parnell wrote employees, claiming “we have never found any salmonella at all.” Last week, Parnell refused to answer questions during testimony before Congress, invoking his Fifth Amendment rights against self-incrimination.

Last week, a second Peanut Corp. plant, this one in Plainview, Texas, was shut down after lab tests indicated possible salmonella, notes the New York Times. The scandal has put the spotlight both on Parnell’s alleged role in distributing contaminated products and on lax state and federal food inspection procedures.

Source: Forbes, Feb. 11.

For more information, see: Washington Post, Feb. 12 — New York Times, Feb. 10 — Related Newsline story, Feb. 9.

Foreclosures, executive compensation, and banking standards are in the spotlight

WASHINGTON and TORONTO
The ethics aspects of the economic crisis continued to dominate headlines last week. Among the coverage:

• Reacting to what may be the most ethically sensitive and volatile issues relating to the economic implosion, President Obama last week said he soon will present a plan to tackle the housing foreclosure crisis. The Agence France-Presse reports that Obama’s plan, to be announced by midweek, is expected to allocate federal money to help lower monthly payments for homeowners facing foreclosure. Controversy has dogged the foreclosure question as some critics contend that homeowners willingly got in over their heads and public assistance simply will provide a reward for financial recklessness.
• In a related story, Citigroup and JPMorgan Chase announced that they will temporarily suspend foreclosures as the debate continues on ways to rescue the housing market. MarketWatch reports that the move follows a request from Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, which oversees the housing and banking industries. Frank says he expects about 90 percent of U.S. banks to suspend foreclosures until comprehensive plans are finalized.
• The Washington Post reports that the economic stimulus packaged approved by Congress on Friday night includes stringent limits on Wall Street executive compensation — restrictions far tougher than those originally proposed by the Obama administration. The provision limits bonuses for executives at all financial institutions, imposing a ceiling of one-third of annual compensation. In addition, reports the Post, the bonuses must be paid in company stock that can be redeemed only after the bank has paid back the government’s investment. “With the measure, lawmakers seek to address public outrage over extravagant Wall Street paydays even as taxpayers bail out the industry,” notes the Post.
• In Canada, executives of three of the nation’s biggest banks have agreed voluntarily to steep pay cuts, reports the Toronto Star. The move comes after some shareholders began to agitate for a say in executive compensation, and taxpayer scrutiny grew more intense after Ottawa committed billions to shore up lending. Canadian banks, however, are performing better than their U.S. counterparts because of more stringent home-loan standards and a lower ratio of leveraged assets, reports Canada’s Financial Post.

Sources: Washington Post, Feb. 14 — Times of London, Feb. 14 — MarketWatch, Feb. 15 — AFP, Feb. 13 — Financial Post, Feb. 11 — Toronto Star, Feb 3 — National Post, Feb. 2.

For more information, see: Related Newsline story, Feb. 9 — Related Newsline story, Feb. 2 — Related Newsline story, Feb. 2 — Related Newsline story, Jan. 26 — Related Newsline story, Dec. 22, 2008.

Embarrassment in Illinois leads to plans for ethics reform; House continues probe into Rep. Rangel; and NY Times columnist reflects on “tsunami of populist rage” that coursed through the nation after series of ethics scandals

WASHINGTON
Media reports last week continued to cover a range of ethics scandals roiling the political sector. Among the coverage:

• Legislative leaders in Illinois put ethics reform on the front burner for the spring legislative session. The Chicago Tribune reports that Illinois’s Senate president and House speaker both vowed to create a joint legislative committee to consider reform measures. Senate president John Cullerton told the Tribune’s editorial board that it is “important to send the right signal” because the state has been so embarrassed by the actions of former Gov. Rod Blagojevich. Over the weekend, Sen. Roland Burris, the man Blagojevich picked to assume Barack Obama’s U.S. Senate seat, was embroiled in scandal again following news that he may have perjured himself during testimony before the Illinois House impeachment committee. Burris denies any wrongdoing, insisting that the discrepancies between his testimony and a newly disclosed affidavit were simply accidental and unintentional, reports the New York Times.
• The U.S. House Ethics Committee last week voted to continue its probe into the finances of New York Rep. Charles Rangel, but in a separate vote the House defeated a Republican resolution to remove Rangel from his post as chairman of the powerful Ways and Means Committee, Politico.com reports. Rangel is being investigated for alleged violations related to rent-stabilized apartments, taxes on income from rental property, and fundraising for a nonprofit center named after him.
• In a recent piece, New York Times columnist Frank Rich reflects on a rough couple of weeks in Washington, arguing that public anger over ethics indiscretions fueled the flameout of Tom Daschle and may very well impair future efforts of the administration. “The tsunami of populist rage coursing through America is bigger than Daschle’s overdue tax bill, bigger than John Thain’s trash can, bigger than any bailed-out C.E.O.’s bonus,” Rich writes. “It’s even bigger than the Obama phenomenon itself. It could maim the president’s best-laid plans and what remains of our economy if he doesn’t get in front of the mounting public anger.”

Sources: New York Times, Feb. 15 — Politico, Feb. 13 — Chicago Tribune, Feb. 13 — New York Times, Feb. 7.

For more information, see: Related Newsline story, Feb. 2 — Related Newsline story, Jan. 26 — Related Newsline story, Jan. 12 — Related Newsline story, Jan. 5 — Related Newsline story, Dec. 15, 2008.

They face more than seven years in prison

WILKES-BARRE, Penn.
Two Pennsylvania judges last week pleaded guilty to taking $2.6 million in kickbacks. The reason, according to a report from USA Today: They were covertly paid to send juveniles to privately run detention centers.

The American Bar Association Journal reports that the two Luzerne County judges, former president judge Mark Ciavarella, Jr., and semi-retired judge Michael Conahan, entered their pleas in return for prison sentences of 87 months. They also will be disbarred.

Federal investigators say the two had financial interests in the juvenile centers to which they sent offenders, often ordering confinement when probation officers requested lesser sentences, the Pittsburgh Post-Gazette reports.

A spokeswoman for the nonprofit Juvenile Law Center claimed that many of the juveniles who appeared before the judges received excessively harsh sentences, reports the BBC.

It is unclear whether any of the centers in question will face prosecution or are subjects of further investigation, according to the Post-Gazette.

In a related development, a class-action lawsuit has been filed on behalf of hundreds of children who appeared before the corrupt judges, reports MSNBC.

Sources: Pittsburgh Post-Gazette, Feb. 15 — AP, Feb. 14 — MSNBC, Feb. 13 — BBC, Feb. 13 — USA Today, Feb. 12 — ABA Journal, Feb. 12.

For more information, see: Related Newsline Commentary, Dec. 15, 2008 — Related Newsline story, Dec. 8, 2008 — Related Newsline story, Nov. 17, 2008 — Related Newsline story, Oct. 27, 2008 — Related Newsline story, Oct. 27, 2008.

Canadian privacy head worries about new legislation allowing “mass surveillance”; London man objects to requirement that he videotape drinkers in his pub; U.S. regulators propose restrictions on collection of data to produce targeted advertising

VARIOUS DATELINES
The intersection of technology and ethics was the venue for several stories last week from both sides of the Atlantic. Among the stories:

• Canada’s privacy czar said she is opposed to any legislation that would allow “mass surveillance” of private emails and phone calls. The Globe & Mail reports that privacy commissioner Jennifer Stoddart was reacting to news that the federal government wants to update wiretapping laws with new powers allowing police to monitor criminal suspects in chat rooms and over cellular communication networks. One particularly controversial piece of proposed legislation would require Canadian Internet service providers to create a technical framework to intercept communications and provide subscriber information to police.
• A man who wants to open a pub in the North London borough of Islington says he’s outraged that police weighing his license application want him to promise he will hand over videotape of any drinkers on request. The U.K. Guardian reports that it’s the latest salvo in an ongoing battle over surveillance in Britain, coming a week after the House of Lords stated that the steady expansion of the “surveillance society” risks undermining civil liberties.
• Federal regulators in the United States introduced new guidelines for Internet companies that track user behavior to deliver customized advertising. The Federal Trade Commission report asks the industry to impose “meaningful, vigorous self-regulation,” or possibly face government regulation, according to the San Francisco Chronicle. But some privacy groups denounced the voluntary guidelines, saying they don’t go far enough to control the collection of private information on the Internet, notes the Chronicle.

Sources: Guardian, Feb. 14 — Globe & Mail, Feb. 13 — San Francisco Chronicle, Feb. 12.

For more information, see: Related Newsline story, Feb. 9 — Related Newsline story, Jan. 12 — Related Newsline story, Dec. 22, 2008 — Related Newsline story, Dec. 15, 2008 — Related Newsline story, Nov. 3, 2008.

Alex Rodriguez admits using performance-enhancing drugs, but says it only occurred from 2001 to 2003; ethicists weigh in on what the reaction should be

NEW YORK
The firestorm continued last week in the wake of U.S. baseball superstar Alex Rodriguez’s admission that he used banned drugs.

Rodriguez made the admission after news reports indicated that he tested positive for two steroids in 2003, Bloomberg reports. Now, the pressure is on baseball executives to figure out what punishment, if any, will be inflicted on Rodriguez.

It’s a complex decision, according to an ethics professor interviewed by the Houston Chronicle.

“It’s a moral issue, but it’s more complicated than I think people give it credit for being,” said Tamler Sommers, a University of Houston assistant professor of philosophy who specializes in issues relating to ethics, free will, and moral responsibility. “There was a time where it was just kind of accepted. Everybody kind of knew it was going on, and they let it go on. Then all of a sudden, it became this terrible crime,” Sommers told the Chronicle.

Another ethicist, Hamilton College professor Robert Simon, offered this view to the Chronicle: “One of the issues clearly is: Where is the reasonable place to draw the line between what we allow and what we don’t allow? The more we allow equipment and drugs to make a difference, the more we’re changing sport from a competition among athletes to a competition among scientists and equipment manufacturers.”

One of the more intricate problems involving recent scandals is whether records and statistics should be revised to reflect the use of performance-enhancing drugs, notes the Atlanta Journal-Constitution.

Rodriguez claims his steroid use was limited to 2001-2003 when he played with the Texas Rangers. He now plays for the New York Yankees.

The New York Times reports that Yankees’ general manager Brian Cashman says the team has no reason to suspect Rodriguez of currently using performance-enhancing drugs because he has not failed a drug test in his four seasons with the club.

Sources: New York Times, Feb. 15 — Bloomberg, Feb. 13 — Atlanta Journal-Constitution, Feb. 13 — Houston Chronicle, Feb. 12.

For more information, see: Related Newsline story, Feb. 9 — Related Newsline story, Feb. 2 — Related Newsline story, July 28, 2008 — Related Newsline story, June 9, 2008 — Related Newsline story, May 27, 2008.