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

by Rushworth M. Kidder

LAKE WORTH, Florida

“What do you think of ethics awards?”

The question popped up at a meeting of community leaders here in Palm Beach County the other day. If each year we recognized an individual or organization of outstanding integrity, I was asked, wouldn’t that help promote ethics, especially when our community needs visible moral role models?

The questioner was right about the need. Headlines in the local paper, the South Florida Sun-Sentinel, sadly refer to this place as “Corruption County,” and for good reason. Five local politicians — three former county commissioners and two West Palm Beach city commissioners — have been sentenced to prison terms recently, brought down by an FBI operation launched several years ago. The area’s former congressman, six-term Republican Mark Foley, left office in 2006 over a sex scandal involving teenage pages working at the Capitol.

What’s more, convicted financier Bernie Madoff played out his giant Ponzi scheme on investors who lived in the same exclusive Palm Beach neighborhood where he had a home. And last week Florida governor Charlie Crist called for a statewide grand jury to investigate what he called “a culture of corruption,” predominantly in South Florida. At his press conference, he noted that he has suspended or fired 31 public officials since he took office early in 2007.

To their credit, the citizenry here is exercised over these matters — part of the reason this community meeting was convened. Are they fighting a hopeless battle? I don’t think so. History is on their side. In the nineteenth century, when New York City fell into the clutches of Tammany Hall, it took 80 years to break the corruption of the Democratic Party’s political machine. By the end of the twentieth century, Hong Kong took only several decades to do it: After a siege of corruption so notorious that firemen at burning houses refused to turn on the water until the owners paid a bribe, an Independent Commission Against Corruption, set up in 1974, helped Hong Kong become one of the cleanest jurisdictions in the world. And just this year, former Illinois governor Rod Blagojevich was thrown out of office in a matter of months over his efforts to sell the Senate seat vacated by Barack Obama to the highest bidder.

All of which should make the case for ethics awards. Shouldn’t the investigators, reformers, and leading citizens in these cases be honored? Shouldn’t those with the moral courage to stand up and fight be celebrated? Shouldn’t a thoughtful award committee be able to determine the best candidates?

In theory, yes. But before rushing into it, the good citizens of Palm Beach County might look across the state to Hillsborough County and its county seat, Tampa. There, a moral courage award sponsored by the county commissioners and named for Ralph Hughes, a prominent local anti-tax campaigner, has just come a cropper. After his death, the IRS billed his estate for nearly $70 million in unpaid levies, and the U.S. Department of Justice is suing the company he owned to recover $300 million in back taxes. Perhaps because this embarrassing story was featured in a page-one Wall Street Journal story several weeks ago, the county won’t be making an award this year.

The problem with such awards is that ethics is not an inoculation, but a process. It’s something you measure over time. And that measurement can be difficult. To be sure, community leaders may engage in specific acts of undeniable moral courage. In a given instance, they can speak truth to power, defend noble but unpopular causes, or publicly announce their own mistakes. But what if, after they do so, they descend into blatant moral idiocy? Does their later history invalidate their earlier integrity? Not unless new facts have come to light. Then don’t they still deserve the award? That depends on the purpose of the award. If the honoree is plagued by subsequent moral failings, how effective will the award be in inspiring a new generation? Should we hold up as a moral exemplar someone who, one cold winter night, stood up for the homeless — only later to become a notorious wife-beater?

The problem is that we can’t — and shouldn’t — compartmentalize ethics. There’s no such thing as “political ethics” that is separate from personal ethics or business ethics or legal ethics. There’s only ethics. It’s part and parcel of everything we do. Most awards in the business or community arenas don’t have to rise to that high standard. They can focus just on leadership or excellence in innovation or skill in athletics or the arts. Yet even there, ethics is inherent in every award. Should a baseball Hall of Fame recipient be removed if future investigations discover that he excelled only because he used illegal steroids? Should we honor a CEO of the Year if we later learn she cooked the company’s books to win the prize? Should a highly praised new author be admired if he’s later found to have plagiarized? No in each case, we say — not because these people didn’t have outstanding records, but because the ethical lapses compromised everything they did.

Ethics awards are inviting, to be sure. And I suspect, with immense care, they can be properly done. But I have one request of any award committee. First, go see the movie The Informant! (the punctuation is part of the title), based on the true story of Mark Whitacre, a top corporate executive at agribusiness giant Archer Daniels Midland. Was he a whistle-blower and a reformer — or a mole and a con man? When lying becomes so subtle, what does it mean to say, “There stands a noble life”? If you’d given him an award, at what point would you wish you hadn’t?

In questions of awards, the old Russian adage still rings true: “Trust, but verify.”

©2009 Institute for Global Ethics

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“For a long time, matters that should have been investigated were just ignored, so we’ll have to see what type of accountability we have now.”

– Fred Wertheimer, former president of Common Cause and current president/CEO of Democracy 21, talking to the New York Times about the slow pace and absent punishments by congressional ethics committees.

The Times notes that the House and Senate both rushed to embrace strict ethics enforcement two years ago after the Jack Abramoff scandal. “Since then, however, no member of Congress has been censured, the toughest punishment short of expulsion, despite a number of recent scandals involving sexual impropriety, financial dealings and conflicts of interest. The record illustrates how Congress has struggled to police itself after years in which its ethics committees were often derided as ineffectual.”

The last formal censure in Congress came in 1990, notes the paper, despite the gravity of the Abramoff affair and other scandals involving members of Congress, including Larry Craig (R-Idaho), Randy Cunningham (R-Calif.), Tom DeLay (R-Tex.), John Ensign (R-Nev.), Mark Foley (R-Fla.), William Jefferson (D-La.), Charles Rangel (D-NY), and David Vitter (R-La.).

Source: New York Times, Oct. 17.

For more information, see related Newsline Commentary, Oct. 12.

U.S. Congress casts an eye on bonus payouts at AIG; British regulator warns against return to high-flying compensation practices; President Obama rails against health insurance industry; Japan’s economic head says there will be no “aping” of U.S. business practices on his watch; Nigeria’s banks are in the midst of crisis thanks to a huge roll of deadbeats, say press reports

VARIOUS DATELINES
The week’s top ethics news dealt with a variety of global issues revolving around banking, business, and finance. Among the stories:

• AIG was back in the news last week after a new watchdog report criticized the U.S. Treasury Department for failing to properly oversee bonus payout plans at the troubled firm, reports ABC News. AIG, which melted down after becoming heavily involved in exotic mortgage-based financial instruments, ignited a business-ethics firestorm when it paid out millions of dollars in retention bonuses after being bailed out by the government. Neil Barofsky, the special inspector general for the government’s $700 billion Troubled Asset Relief Program, said Treasury essentially abdicated its oversight duties of compensation structures, according to ABC. Barofsky’s remarks came during a congressional hearing into whether Wall Street-style bonuses are merited at a firm that is propped up by taxpayer dollars and is blamed widely for playing a part in the global economic collapse, notes the Christian Science Monitor.
• London is seeing an “unacceptable return” to past practices of excessive bonuses, says U.K. Business secretary, Lord Mandelson. The London Daily Telegraph reports that the government may crack down if banks show they are handing out excessive rewards to high-earning staff. The remarks came after it was disclosed that Goldman Sachs, one of the better-paying financial institutions in London and New York, is on track to pay record bonuses this year, reports the Telegraph.
• President Obama slammed the health insurance industry last week, saying that its quest for profits is leading the industry to “kill reform at any cost.” In his Saturday radio and internet address, the President said that the health industry is “rolling out the big guns and breaking open their massive war chest to marshal their forces for one last fight to save the status quo,” reports the Washington Post. “They’re filling the airwaves with deceptive and dishonest ads,” Obama continued. “They’re flooding Capitol Hill with lobbyists and campaign contributions. And they’re funding studies designed to mislead the American people.”
• Japan’s new Financial Services minister last week demanded that firms in his nation return to “traditional business practices,” saying there must be no “aping of America.” Shizuka Kamei told the Times of London’s Asia business correspondent, Leo Lewis, that companies are not “money-making tools” for enriching shareholders and management, asserting that they must embrace the “social meaning” of being corporations. Kamei called for a return to the spirit of “unity and cooperation” in which employees were offered what amounted to jobs for life and profits were equitably distributed among employees, business partners, and subcontractors. The Times notes that many investors likely will be displeased by those comments because “traditional” Japanese firms had gained an international reputation for putting shareholder returns well down on their list of priorities. Also, the Times notes, “traditional” business models were regarded by some as factors in making Japanese business sluggish and uncompetitive.
• Nigeria is caught up in a banking crisis, reports the BBC, with debtors failing to repay almost $2.5 billion in loans. The scandal, which includes alleged deadbeats who occupy high positions in government and commerce, has resulted in a government takeover of several banks as well as several arrests, according to the BBC.

Sources: Washington Post, Oct. 17 — Telegraph, Oct. 16 — Times of London, Oct. 15 — ABC, Oct. 15 — Christian Science Monitor, Oct. 15 — BBC, Oct. 15.

For more information, see: Related Newsline story, Oct. 12 — Related Newsline story, Sep. 21 — Related Newsline story, Sep. 14 — Related Newsline story, Aug. 24 — Related Newsline Commentary, July 13.

Filmmaker alleges some British tabloids were ready to buy what they thought was private medical information on movie stars; Boston hospital bans social networking because of privacy concerns; Canadian government shelves plans to expand privacy protections, according to report

VARIOUS DATELINES
The ethics of privacy captured headlines worldwide last week. Among the stories:

• Without fanfare, the Canadian government has quietly abandoned plans to expand privacy laws, according to a report from the Canadian Press news service. Privacy advocates say that current policies are outdated and do not cover the threats posed by modern technologies such as surveillance cameras and DNA databases. But Canada’s justice minister said that the proposed expansion of the laws, as planned, would be difficult to enforce and would inappropriately expand government power.
• Three British tabloids discussed buying confidential medical data about famous actors — unaware that they were being filmed in a hoax set up by documentary filmmakers, according to Reuters. The filmmakers posed as members of the public to offer fabricated stories to the papers, with one hoaxer claiming to be an aide at a fictitious cosmetic surgery clinic. According to the Reuters report, representatives from three tabloids said they would need to see proof of the claims, with one saying the information could potentially be worth thousands of dollars. Under British law, obtaining medical records without consent can be a violation of privacy laws unless the media can prove that obtaining the information served the public interest, notes Reuters.
• A Boston hospital has banned the use of Facebook and other social media within the building, according to technology trade journal InformationWeek. New England Baptist hospital said it made the move after checking with other hospitals in the city — some that have similar bans, but others that view social networking as a way to build morale and community. A spokesperson for New England Baptist said that in the end the decision came down to protecting patient privacy. InformationWeek notes that many hospital officials in Boston and elsewhere worry that informal chatting on social media may cross the line into discussion of specific patients.

Sources: Canadian Press, Oct. 15 — Reuters, Oct. 15 — InformationWeek, Oct. 15.

For more information, see: Related Newsline story, Oct. 12 — Related Newsline story, Oct. 5 — Related Newsline story, Sep. 28 — Related Newsline story, Sep. 21 — Related Newsline story, Sep. 14.

Researchers take an interesting view of how to convince people to protect others and themselves from the spread of swine flu

LONDON
A potentially severe public-health issue was coupled with moral debate over one of the most mundane of all actions last week — and the conclusion came down to an examination of the effectiveness of public shaming.

The issue is washing one’s hands after using the restroom.

TIME magazine reports that a recent study tracking hand-washing habits in England found that only a third of men and two-thirds of women washed their hands with soap and water.

But the study didn’t stop there: Researchers posted various signs on an electronic display at the entrance to restrooms in an effort to gauge the most effective way to promote hygiene.

Overall, the most persuasive message prompting hand washing was, “Is the person next to you washing with soap?” reports National Public Radio.

After that, the effectiveness of messages was found to vary between men and women. Women responded better to gentle reminders such as “Water doesn’t kill germs, soap does,” reports the CBC. Men were more strongly persuaded by messages that prompted disgust, including, “Soap it off or eat it later.”

According to the U.K. Guardian, there’s a potentially deadly serious side to the study. Health officials all over the world are stepping up efforts to promote hand washing in order to prevent the spread of the H1N1 flu virus.

Authors of the study, faculty from the London School Tropical Medicine, write that hand washing with soap is the most cost-effective method of disease control. “It could save more than a million lives a year from diarrhoeal diseases, and prevent respiratory infections — the biggest causes of child mortality in developing countries,” they write in the American Journal of Public Health, according to the Guardian.

Incidentally, the results were monitored by internet sensors attached to the faucets and soap dispensers. No cameras were placed inside the restrooms.

Sources: TIME, Oct. 15 — CBC, Oct. 15 — NPR, Oct. 15 — Guardian, Oct. 15.

For more information, see: Related Newsline story, Aug. 24 — Related Newsline story, Aug. 10 — Related Newsline story, July 20 — Related Newsline story, July 6 — Related Newsline story, May 4.

In other news from ethics and education: Singapore focuses on medical ethics, and an Indian conference looks at business-ethics curricula from the viewpoint of a spiritual guru

VARIOUS DATELINES
Several reports from the world press last week focused on aspects of ethics education. Among the coverage:

• The implications of zero-tolerance rules were debated last week following the suspension of a six-year-old boy who took a camping utensil to school. The device contains a small fold-out knife. The boy was suspended by his Delaware school district and ordered to a school for troubled children, prompting national scrutiny. According to the New York Times, the district now says it will tone down punishments for kindergartners and first-graders, but will retain policy provisions for older students caught with “dangerous instruments.” The case echoed a previous incident in the district in which an elementary school student was suspended for a year for bringing in a birthday cake with a knife to cut it, reports the Times.
• Ethics education has become an increasingly important component of the curriculum in Singapore, reports AsiaOne, one of the region’s largest news portals. Last year, Singapore recruited Alistair Campbell, a highly regarded medical ethicist, to expand its curriculum. Campbell told AsiaOne that his goal is to keep ethics front and center in medical studies and care. Ethics, he says, often moves to the background as studies and clinical work pile up, and busy clinicians begin to focus on diseases instead of people. ” The patient is the ‘hip fracture in Bed Six’ rather than someone’s grandmother,” Campbell said.
• Integrating ethics into business management education was the central theme of a major international conference held last week in Bangalore, reports the Times of India. While management curricula across the globe are under scrutiny after the recent economic meltdown, the Bangalore conference took an angle not commonly discussed: analysis by spiritual guru Swami Sukhabodhananda. “Lack of harmony between internal energies is preventing us from following ethical principles involved in a business. Ego is the biggest disorganizer. We need to creatively address this issue in education,” Swami Sukhabodhananda said, according to the Times.

Sources: New York Times, Oct. 15 — AsiaOne, Oct. 15 — Times of India, Oct. 11.

For more information, see: Related Newsline story, Oct. 5 — Related Newsline story, Sep. 28 — Related Newsline story, Sep. 28 — Related Newsline story, Sep. 21 — Related Newsline story, Sep. 14.

Protests over blogging rules, a commercial that some say ridicules a political candidate for his weight problem, and a campaign that encourages consumers to brag about their sexual conquests raise issues and eyebrows

VARIOUS DATELINES
Advertising and ethics had some uneasy encounters last week. Among them:

• Political advertising in New Jersey crossed an ethical line by getting too personal about one candidate’s weight, according to some critics who say a commercial attacking candidate Chris Christie, who is challenging incumbent governor Jon Corzine, goes too far. Newark Star-Ledger columnist Steve Adubato comments: “It’s been hard to avoid a Jon Corzine commercial on the air accusing Chris Christie of ‘throwing his weight around’ in connection with some highly publicized traffic incidents in which he wasn’t ticketed. The argument is that Christie used his influence as U.S. Attorney to get out of what most New Jerseyans would have taken a hit for. But the visual of Christie getting out of a car as the ad talks about him ‘throwing his weight around’ is embarrassing at best. He looks big — really big. He is a big guy and this, clearly, is not the best angle of him. To any reasonable person, the spot is intended to draw attention to Christie’s girth. The Democrats will deny it, but I’ve got pretty good sources in the Corzine campaign who know exactly what this ad was intended to accomplish.” Corzine has denied that the commercial intended to mock Christie’s weight, the Philadelphia Inquirer reports.
• PepsiCo’s attempt at innovative advertising for its high-caffeine Amp Energy Drink is causing a controversy because of its lurid approach, reports the San Francisco Chronicle. The drink was advertised via an iPhone application called “Amp Up Before You Score,” promising “up-to-the-minute info, feeds, lines and much more to help you amp up and talk to your favorite kinds of women — 24 in all.” Pepsi has apologized for the pre-programmed pickup lines as well as for urging Amp drinkers to upload details of their sexual conquests on social networks, reports the Chronicle. As of this writing, though, the application is still available.
• New U.S. Federal Trade Commission rules requiring that bloggers disclose any freebies or other in-kind benefits they’ve received for writing product reviews was attacked as unconstitutional by a trade organization last week. AdWeek reports that the Interactive Advertising Bureau claims that the restrictions unfairly target Internet communications and threaten to muzzle free speech. “What concerns us the most in these revisions is that the Internet, the cheapest, most widely accessible communications medium ever invented, would have less freedom than other media,” wrote Randall Rothenberg, the trade group’s head. “These revisions are punitive to the online world and unfairly distinguish between the same speech, based on the medium in which it is delivered.”

Sources: Philadelphia Inquirer, Oct. 16 — San Francisco Chronicle, Oct. 15 — Newark Star-Ledger, Oct. 15 — AdWeek, Oct 15.

For more information, see: Related Newsline story, Oct. 12 — Related Newsline story, Oct. 5 — Related Newsline story, Aug. 10 — Related Newsline story, May 18 — Related Newsline story, Apr. 20.

Are insurance companies who say they won’t pay avoiding responsibility? Should homeowners confess to having the problem and risk not having policies renewed?

NEW YORK
The Wall Street Journal reports that at least two Florida insurance companies have found themselves in an ethical crossfire after dropping policyholders who filed claims linked to allegedly defective drywall imported from China.

Federal and state agencies are probing the circumstances surrounding the drywall, examining allegations that the Chinese product emits fumes that corrode wires and plumbing and creates health problems, the Journal reported.

One insurance company contacted by the Journal said the firm had not paid any claims for drywall because builder defects and pollution are excluded from coverage under the terms of its policies.

A spokesperson said other provisions of the policies require that coverage not be renewed if problems such as corrosion are not fixed, because they could lead to further damage.

The case touches on three ethical areas: the circumstances surrounding allegedly defective Chinese products, whether insurance companies should be obligated to pay and continue coverage, and the question of whether homeowners should own up to the problem by reporting it.

David Durkee, an attorney for some of the affected policyholders, put it this way in an interview with the Journal: “If you go ahead and disclose and do the honest thing, you are subject to possible cancellation or nonrenewal. It is truly a cruel predicament.”

Source: Wall Street Journal, Oct. 14.

For more information, see: Related Newsline story, Mar. 2 — Related Newsline story, July 13 — Related Newsline story, May 11 — Related Newsline story, Mar. 16 — Related Newsline story, Aug. 25, 2008.

“Majority in the West favors taxing marijuana sales to boost state revenues,” poll finds

From Gallup:

“Gallup’s October Crime poll finds 44% of Americans in favor of making marijuana legal and 54% opposed. U.S. public support for legalizing marijuana was fixed in the 25% range from the late 1970s to the mid-1990s, but acceptance jumped to 31% in 2000 and has continued to grow throughout this decade.

“Public opinion is virtually the same on a question that relates to a public policy debate brewing in California — whether marijuana should be legalized and taxed as a way of raising revenue for state governments. Just over 4 in 10 Americans (42%) say they would favor this in their own state; 56% are opposed. Support is markedly higher among residents of the West — where an outright majority favor the proposal — than in the South and Midwest. The views of Eastern residents fall about in the middle.

“The new findings come as the U.S. Justice Department has reportedly decided to loosen its enforcement of federal anti-marijuana laws by not pursuing individuals who buy or sell small amounts of the drug in conformity with their own states’ medical marijuana laws. This seems likely to meet with U.S. public approval, as previous Gallup polling has found Americans generally sympathetic to legalizing marijuana for medical purposes. In 2003, 75% of Americans favored allowing doctors to legally prescribe marijuana to patients in order to reduce pain and suffering.

“The highest level of support for decriminalizing the use of marijuana today is seen with self-described liberals, among whom 78% are in favor. In contrast, 72% of conservatives are opposed. Moderates are about evenly divided on whether the use of marijuana should be legal, although they tilt against it (51% vs. 46%)….

“Public mores on legalization of marijuana have been changing this decade, and are now at their most tolerant in at least 40 years….”

For the full release from Gallup, Oct. 19, click here.

“Peace is not merely a vacuum left by the ending of wars. It is the creation of two eternal principles: justice and freedom.”

– James T. Shotwell (Canada-born U.S. history professor and diplomacy advocate, 1874-1965)