Canadian businessman Nazir Karigar is going to jail. This a small but important victory for citizens of developing nations across the globe.
Karigar’s been sentenced to do three years in prison for his role in a conspiracy (dating back to 2005) that tried — but failed — to land a $100-million contract to provide security for Air India.
This is an important case for Canada. For years Canadian officials have been criticized for their lax approach to overseas bribery, and to white-collar crime in general. As RCMP Assistant Commissioner Gilles Michaud put it, “It was felt that we weren’t doing enough.”
(I had the pleasure of meeting Michaud at an event I co-hosted with Canadian Business back in October. At that time, Michaud assured the crowd in no uncertain terms that the RCMP is now emphatically on the job.) The Karigar case is a small but significant move toward remedying Canada’s reputation for having a lax attitude toward enforcement, since it marks the first time an individual has been sentenced under Canada’s 1999 Corruption of Foreign Public Officials Act.
But it’s more than just an important case for Canada. It’s important for the developing world, where bribery and other forms of corruption are far more common than they are here.
Bribery is a scourge. It distorts markets, saps economies, and encourages decent people to violate their sworn duty. It’s a problem wherever it occurs, but it’s particularly corrosive in developing economies. Bribery is illegal everywhere, but sadly common in some places. And local efforts at changing that are not at all helped by businesspeople from affluent countries — with supposedly sophisticated markets and best-in-class business practices — show up with briefcases full of cash.
Chris MacDonald is director of the Jim Pattison Ethical Leadership Education & Research Program at the Ted Rogers School of Management.
Questions of human rights are almost continually in the news, whether reports of ongoing human-rights violations in South Sudan or North Korean accusations of human-rights violations in the U.S.
For many purposes, the language of human rights provides the lingua franca for discussing questions of ethics. Certainly debates over human rights have become prominent with reference to the world of business. The language of human rights come to mind pretty readily, for example, when we discuss dangerous working conditions, discrimination in employment, or environmental degradation. That’s why I recently co-hosted a day-long event called Where To From Here: A Canadian Strategy for the UN Principles on Business and Human Rights? The event was an attempt to begin the task of figuring out how to turn the United Nations Guiding Principles on Business and Human Rights into an actual agenda for concrete action for Canadian businesses, governments and NGOs. The discussion was fruitful, but I came away from the day with two lingering worries.
The first has to do with what is sometimes called the “business case” for human rights. During our day-long discussion, a lot of folks were concerned to make clear that respecting human rights is good for business. If we educate businesses on the business case, they suggested, then we can let executives’ built-in profit seeking impulse do the rest. And surely there is something positive to be said for the connection between respecting rights and doing well in business. Treating people well is conducive to productive long-term relationships, and productive long-term relationships are conducive to profits. But is respecting rights always conducive to maximizing profits? Clearly not. There will often be times when a business can increase profits by engaging in behaviours that put workers’ lives at risk or that stifle their right to free association or what have you.
But to look for a business case that establishes an iron-clad connection between human rights and profit is to ask for too much, and is perhaps not necessary in the first place. For practical purposes, you probably don’t need to prove (which you can’t anyway) that respecting rights always brings profits. It may be sufficient to establish that a) violating human rights brings substantial risks (risk of labour unrest, risk of litigation, risk of additional regulation), and that b) putting management systems in place to ensure that human rights are respected is not as expensive as you might have thought. In other words, the business case doesn’t have to be expressed in profits; it might be enough to express it in terms of avoiding losses.
The second point has to do with the notorious “hammer/nail” problem. When the only tool you have is a hammer, every problem looks like a nail. And when the only moral concept you have is “human rights,” then every wrong you see looks like human-rights violation. But of course, there are many ethical questions that have nothing to do with human rights, or that are at least not fruitfully expressed in such terms. Rights are important, but they aren’t all that matter. We also care about good consequences (for individuals and communities) and about character and about justice and so on. And sometimes it will simply make more sense to talk in terms of those concepts instead of in terms of human rights. An exclusive focus on human rights — and I’ve met people who literally could not express an ethical question without reference to the violation of some human right or another—brings two real risks. One has to do with what we might call “rights fatigue.” The language of human rights is incredibly potent, because human rights are ostensibly universal and because they are ostensibly inviolable. So such rights imply very strong obligations. If everything is about human rights, it tends to devalue the currency.
The second risk is that in some cases focusing on human rights may result in making it harder to reach agreement on ethical questions that really shouldn’t be that controversial. Is paying an employee very low wages to work 14-hour days a violation of a human right? Well, I don’t know. I mean, it’s probably a bad thing, and seems contrary to the spirit of various labour-related human rights, but is it an actual violation of one of those rights? What about hiring a 13-year-old girl with no better option to harvest cotton in Burkina Faso? It’s certainly a regrettable set of circumstances, one we should want to make better. But if making things better requires that we first agree on whether some right has been violated, we have a vary high moral hurdle to overcome first. It may be better to agree that the situation isn’t so good, and get on with trying to make it better.
I’ve been working recently with online learning company Emtrain on the development of their new corporate ethics training course on Codes of Conduct. It’s a customizable product available to corporate customers who want a slick, fun, and informative way to do online training. The course includes video scenarios, traditional instructional elements such as definitions and explanations, and self-test segments.
While the course is in principle about codes, a lot of the focus is actually on fostering an ethical business culture. As a “Contributing Editor” for the course, my goal has been to work with the Emtrain team to hone the technical details and to make sure that the course fosters the right kinds of critical thinking.
You can learn more about the course HERE, and you can see a free demo of part of the course by clicking below:
How much is a human life worth? Or, to put a finer point on it, how much is your life worth, to you? How much would you have to be paid in order to risk your life as part of your job?
It is sometimes said that you can’t put a price on a human life. This is of course nonsense — we do it all the time. When I buy life insurance, it means figuring out how much I am worth, financially, to my family: how much money would they have to receive to make up for the loss of my income? We also put a price on our own lives when we buy cars. Unless you’re driving the absolute safest car you could theoretically afford, you are implicitly putting a price on your life. To do the math, take the difference in price between your car and (let’s say) a high-end Volvo, compare that to the difference in the likelihood of death in the event of a crash, and there you go: you’ve put a price on your own life — and perhaps on your children’s lives, too.
But what about in an employment context? What about paying people to do the relatively dangerous work of soldiers, firefighters, miners, or fishers? Is it OK to put a “price” on people’s lives that way?
It is a fact of life that there are dangerous jobs out there, and it is also a fact of life that there’s a limit to how much safer we can do to make them safer. No job is totally safe, and some are liable to remain downright dangerous. So employers are unable to avoid the fact that they are sometimes going to be paying people to risk their lives.
How much should they pay? To begin, let’s ask how much they need to pay. Other things being equal, an employer is likely to have to pay someone more to get them to do a job that is dangerous, that involves working in an isolated place, that is tedious, or that involves shift work. Those are all factors that most people would like to avoid, and so getting people to submit to such conditions is going to require some form of inducement. But that is really just a practical necessity, rather than a matter of ethics. It doesn’t answer the harder question of how much an employer should pay workers to do a dangerous job.
The problem with trying to answer that question is that not everyone sees risk the same, or sees risky activities in the same light. They may even disagree over whether a given activity (bungee jumping, anyone?) is risky at all. One person’s insanity is another’s adrenaline rush. Members of some occupations (miners, for example) apparently don’t see their jobs as especially risky, even though the relevant statistics put it among the riskiest. And some firefighters think that the risks of rushing into burning buildings pale in comparison to the agonies of sitting behind a desk all day. Putting the point quite generally, people weigh various costs and benefits differently, both because of differences in individual psychology and because of differences in their personal circumstances. And when it comes to sorting people according to the risks they see as worth taking, and compensating them accordingly, the more-or-less free market system we currently use is probably the best (or least bad) system anyone has ever devised.
In the end, an employer’s primary focus really should be on safety — it is much better to eliminate or minimize a danger than to pay people extra to subject themselves to it. Part of the focus on safety should include a commitment to making sure employees and potential employees fully understand the risks that come with the job, something that can be no small achievement in a complex workplace. And once a workplace is as safe as practical, and once employees understand the residual risks, then from an ethical point of view offering and accepting danger pay becomes a matter of free and informed choice.
I discussed these issues on a recent episode of CBC Radio’s The Current. Thanks to the team there, including especially host Anna Maria Tremonti and producer Sujata Berry.
Chris MacDonald is director of the Jim Pattison Ethical Leadership Education & Research Program at the Ted Rogers School of Management.
As the teaching term draws to a close, an ethics professor’s mind inevitably turns to the significance of the grades that get assigned in an ethics course. Part of my job — part of every professor’s job — involves assigning grades. Grades are supposed to reflect achievement in the course. A student who performs inadequately gets an ‘F’. Most students (performing adequately-to-well) will get a ‘C’ or a ‘B’. Exceptional students get an ‘A’ or even the occasional ‘A+’. Those grades serve as a signal both to the student, and to anyone reading her transcript, just how well the student did in my course. In a History course or a Finance course, the meaning of grades is pretty obvious. You either learned the relevant history (and theories about history) or you didn’t. You either learned how to apply various financial models or you didn’t. But what does it mean when a student gets an ‘A’ in Ethics? Many people seem to find that question perplexing, because ethics is both a subject of study and a guide to behaviour. When a student gets an ‘A+’ in Ethics, does that mean they are excellently ethical?
As it happens, I recently had the opportunity to reflect on the question of high marks in ethics in a different context, namely the context of corporate ethics. I recently made an appearance on CBC Radio’s The Current, during a segment about the significance and challenges of corporate ethics rankings. Corporate ethics rankings are published by a range of think-tanks, magazines, and NGOs, and purport to hand out grades for ethics (or corporate social responsibility, sustainability, corporate citizenship, or what have you.). One of the issues we discussed on air was the fact that the results of ethics rankings are frequently counterintuitive, and sometimes downright shocking. There have been cases, for example, in which tobacco companies have topped corporate citizenship rankings, and others in which oil companies have done remarkably well on sustainability rankings. Some critics have been quick to point out the irony; others have taken those results as reason to dismiss a particular set of rankings altogether; still others have thought that such results cast doubt on the entire project of ranking companies in terms of ethical performance.
Again, what does a high grade in an ethics mean?
Now, when I hand out an ‘A’ in my Ethics class, I hope it is clear that that is in no way an endorsement of the student’s character, or of his or her capacity to make reliably excellent ethical judgments. Twelve weeks isn’t enough time for form much of an impression of each student’s character, and I don’t have an objective means by which to certify the quality of their real-life ethical decisions. So an ‘A’ in my class just implies that a student has gained a superior command of a certain body of knowledge — knowledge of the key concepts, and an ability to apply them to cases. It implies an appreciation of the key debates concerning corporate ethics (e.g., just how far down the supply chain do a retailer’s obligations extend? How should managers balance the duty they owe to shareholders against the duties they have to other stakeholders?) It means they have demonstrated an understanding of the key psychological and institutional barriers to good ethical decision-making in the world of commerce. But does it mean they are ethically ‘good’ people? Most emphatically not.
Now, my hope is that a richer, more sophisticated understanding of the relevant concepts and issues will lead to better decision-making in the long run. But proof of that causal link is hard to come by. So, as is generally the case with university courses, I settle for educating my students, rather than aiming at the less plausible target of transforming them. The grades I give only represent a measure of students’ level of accomplishment as compared to the set of criteria outlined in the course syllabus. And it is entirely possible to do well in my course while at the same time being an awful human being.
The same is true for corporate ethics rankings. A grading system for corporate ethics gives grades on the basis of some system of evaluation, some system of measurement. It generally won’t measure ethics directly, but settles for some set of proxies that, taken together, give us some hopefully-meaningful estimation of a company’s capacity for ethics. Of course, there are differences. Unlike a university ethics class, in many cases corporate ethics rankings do measure actual performance on some subset of ethical issues. Has the company in question been cited for regulatory violations? Has it reported numerous workplace injuries? Are women well represented on the Board? And so on. But such measures are inevitably rough, and inevitably leave important questions unasked. And sometimes, corporate ethics rankings look at more abstract markers. Has the company got a code of ethics? Does it have a robust compliance program? In other words, they ask whether the company has the capacity to deal appropriately with ethical issues, rather than looking at actual ethical performance. That’s not a criticism of those measures; it’s just an inevitable fact about systems of measurement.
So we shouldn’t automatically be alarmed, or even surprised, when companies that we think are ethically reprehensible do well on a corporate ethics ranking. We should simply remember that any grading system only grates performance against some set of measures. Those measures can of course be smart or dumb ones — dumb inputs mean dumb outputs. But the key, really, is to remember that a system of measurement only measures what it measures. And in some cases, an imperfect measure is better than no measure at all.
Last week, the US Supreme Court heard oral arguments in an important pair of cases, namely Sebelius v. Hobby Lobby and Conestoga Wood v. Sebelius. Hobby Lobby and Conestoga are companies that want to be allowed to opt out, on religious grounds, of the U.S. Affordable Care Act’s requirement that employer health plans pay for contraception. The First Amendment to the U.S. Constitution, after all, forbids the government from passing laws that restrict the free exercise of religion, and the practice of some religions includes refusal to engage in (or, apparently, to promote) the use of certain forms of birth control.
(Set aside for now the apparent hypocrisy implied by the fact that Hobby Lobby apparently invests some of its 401(k) employee retirement plan’s money in the pharmaceutical companies that produce the very contraceptives that Hobby Lobby is so hell-bent on avoiding paying for.)
The cases before the Court seem to hinge on the question of whether corporations can have religious beliefs. For some, the answer is obvious. The corporation, they say, is “merely an inanimate vessel,” and as such it cannot have beliefs or exercise a religion. But as Kiel Brennan-Marquez rightly points out, it is of course possible for corporations to be religious, because we have an entire category of religious corporations called churches, whose entire raison d’être is religious and who are given special treatment on that basis. The question, then, is really whether for-profit corporations like Hobby Lobby should enjoy the same protections that non-profit corporations like the Catholic Church enjoy. The key difference, for Brennan-Marquez, is that a church — as a non-profit — cannot be owned. Because a corporation can be owned, and because its assets are therefore transferrable, attributing a religion to a corporation would raise thorny questions in cases of corporate acquisitions, mergers, and so on.
More to the point, perhaps, is the question of instrumentality. As I argue in a forthcoming paper in the Georgetown Law Journal, there are cases in which we should think not in terms of the rights the corporation should enjoy, but in terms of the appropriate limits to be placed on the corporation, understood as a tool for achieving human objectives.
Now, there are cases in which it may be genuinely useful to think in terms of the corporation itself as having rights. The interests of corporations are not always directly reducible to the sum of the interests of its various stakeholders. But in other cases, it is more illuminating to think of which legal protections are necessary to protect the rights of persons who make use of the corporation as a way to carry out their own objectives. In such cases, the legal protections that the corporation should have are just those necessary to protect the human beings involved.
So, consider the difference here between a church and a for-profit corporation. A church just is an instrument for engaging in the exercise of religion. People form churches in order to express their religious beliefs and carry out their religious commitments; failure to allow religious freedom to a church is a failure to allow religious freedom to the people who make it up. A corporation, on the other hand, is many things to many people &mash; an investment, an employer, a supplier, and so on. And it will only be in rare cases that the exercise of a single religion is a fundamental goal of a sufficiently broad range stakeholders to justify attributing freedom of religion to the corporation as a whole.
Thinking of the question this way lets us avoid thorny metaphysical questions about what sorts of things can “have” religion. If we think of the corporation (for-profit or otherwise) as an instrument or technology by means of which people seek to achieve their goals, then it becomes clear that the rights (or “rights”) of different kinds of corporate persons depend not on what kind of entity they are, but on the the demonstrable goals of the human beings involved.
In government, as in business, it’s important to think not just about the direct effects of your actions, but also about the indirect effect your actions have in terms of the example they set for others, and the way your actions shape who you are.
Bearing that in mind: what message do you think the cynical letter-of-the-law approach that the government of Japan has heretofore taken to the question of whaling has on business culture in Japan?
As you may have heard, U.N. Court recently ordered Japan to stop whaling in the southern ocean. And it seems like Japan has decided to honour the order, announcing plans to cancel its whale hunt off Antarctica, at least for this year.
Japan has flouted the 1986 moratorium on whaling, making use of a loophole that allows whaling for scientific purposes. In effect, the country’s fleet kills whales for what it claims are “scientific” purposes, and sells the meat for human consumption. You don’t have to be an ardent defender of the world’s whales to see the problems inherent in an having a key player in the world’s economy flouting an international standard.
And just think for a minute about that approach to compliance. It effectively means adopting the credo, do what you want, spirit of the law be damned, as long as you can find even the narrowest of loopholes. What example does has the country’s leadership been setting for the business community? How can government ministers look business leaders in the eye and encourage them to cleave to the meaning and intent of regulations? How can the government ask business, without risking hypocrisy, not to make cynical, self-serving use of loopholes?
Naturally, the government of Japan is not alone in this dilemma. The demands of political expediency often mean that political leaders get caught in a do-as-I say, not-as-I-do self-contradiction. But Japan’s stance on whaling seems a particularly blatant example. And the future of the issue still remains unclear. Japan has only committed to cancelling its whale hunt for this year. Time will tell whether the Japanese government, on this issue at least, demonstrates character worthy of emulation, or instead goes back to an approach aimed merely at securing short-term gains.
Bribery and other forms of corruption continue to pose a challenge to international business. Bribery is a problem because it distorts markets, saps economies, and hurts local communities. For all these reasons, bribery is illegal just about everywhere that has a functioning legal system. And as reported recently in the Wall Street Journal, many countries are stepping up efforts at enforcing anti-bribery laws. Both because of the possibility of prosecution, and because of the slippery slope between bribery and other forms of criminality, bribery poses significant business risks.
Clearly, improved enforcement is an important part of combatting bribery, and combatting corruption more generally. The temptation to win ‘by any means’ will always be there, and so tough rules need to be in place.
But another element is the promulgation and adoption of good, clear, international business standards. As it happens, I’m currently in Madrid as part of the Canadian delegation to an International Standards Organization working committee that is drafting a new “Anti-Bribery Management Systems” standard (ISO 37001).
Christian Levesque, Chair of the Canadian ‘mirror committee’ and head of the Canadian delegation here in Madrid, had the following to say about the project:
“It is important that we, as Canadians, be part of this discussion and this drafting process. We are pleased to see that the matter of Anti-bribery is seen by ISO, and by many countries, as an important matter that needs to be addressed at an international level. We need to be vigilant about bribery as a global community, and ISO is the international platform to offer solutions to deal with that challenge.”
The ISO’s working committee is still in early days of its 3-year process. When completed, the standard will describe a set of best practices for companies that want or need to establish management systems that will help them avoid, detect, and deal appropriately with bribery wherever it is encountered — either in their own operations or potentially in the operations of business partners. And, to the extent that their business partners are compliant with the standard, businesses will have some assurance that those partners have processes in place to ensure the integrity of their own operations, thereby reducing risk. The standard will constitute the core of an eventual ISO certification regime, alongside certification regimes for Quality Management (ISO 9000), Environmental Management (ISO 14000), Social Responsibility (ISO 26000) and many others.
Establishing an ISO standard, of course, doesn’t mean the problem of bribery is going to go away. But it does give global businesses a target to aim at, and it gives companies of all sizes access to a set of best practices, such that if they really want to be diligent about avoiding bribery, they’ve got the tools to put that ambition into practice.
Accusations recently arose that Lady Gaga’s charitable foundation, the Born This Way Foundation (BTWF), was spending its money in what looked like an irresponsible way. For example: according to 2012 tax filings, BTWF spent almost $60,000 on publicity fees, $50,000 on social media, and nearly $80,000 on travel, but spent “only” $5000 in the form of “grants to organizations or individuals.”
BTWF was founded in 2011 to “foster a more accepting society, where differences are embraced and individuality is celebrated.” But how, commenters wondered, could the foundation accomplish that mission when the vast majority of its spending is goes to what many organizations would consider mere overhead?
Gaga’s mom (who is also co-founder and president of BTWF), Cynthia Germanotta, responded recently, saying that the nature of BTWF had been misunderstood:
“First and foremost, we are an organization that conducts our charitable activity directly, and we fund our own work. We are not a grant-maker that funds the work of other charities, and were never intended to be.
Our activity has included The Born Brave Bus Tour, which has travelled to 23 communities, interacting with more than 19,000 young people and raising awareness to the tune of more than 300 million media impressions. The foundation’s messages of kindness and bravery have touched more than half a million online users via our website, which includes the Bravest Map Ever and the Play Brave Game, as well as social media channels such as Twitter and Facebook — which on a peak week can hit 50 million individual users.”
In other words, the ShowBiz411 story betrayed a lack of understanding of what BTWF is for, and what it takes to run a foundation of that kind. It doesn’t make sense to insist that a charity give away more money to charity — when it is itself dedicated to doing what most charities do, namely spending donated money in ways that aim to help people directly.
Of course, the fact that BTWF (or any other foundation) is dedicated to doing good does nothing at all to put them beyond critique. Indeed, a do-good mission is itself a good reason to insist on accountability, since a do-good mission is liable, in at least some cases, to make those who run a foundation feel a sense of entitlement. And the need for accountability is all the more relevant with regard to charities that accept donations from the general public: when people are trusting you with their money and when all they get in return is your promise to use it well, well, you’ve got an obligation to live up to that trust.
So yes, accountability at charitable foundations is an important topic. Too many (that is, more than zero) foundations spend too much on overhead and too little on doing good. Were I a donor to BTWF, I would like to know a little more about just how the foundation spends its money, why it had to spend so much in 2012 on lawyers ($150,000).
The lesson here is one that should be heard not just by charitable foundations, but by organizations of all kinds. It’s not enough to be doing good. You have to communicate that to key stakeholders. And that means telling them not just that you are doing good, but letting them know how you’re doing it.
Manufacturing technology is evolving rapidly. Technologies like 3D printing and production concepts such as mass customization are allowing the kinds of changes in manufacturing not seen since the industrial revolution. And those changes are ethically important. These modern technologies promise significant increases in the speed and efficiency of many kinds of manufacturing, and are already allowing increasingly tailored products to heighten consumer satisfaction. There are of course worries about the uses to which some of these technologies will be put. Much has been made of the possibility of 3D printed guns, for example, and of the fact that many people will soon have the ability to 3D print consumer products at home has intellectual property lawyers watching very carefully.
But there’s another ethically-important aspect of this revolution in manufacturing, and that’s the promise it holds to bring to a broader population the ability to make stuff. The desktop PC and computer-aided design software has for years now put the basic tools of design into the hands of millions. But actually making stuff — creating prototypes, holding your invention in your hand — has until recently been a privilege reserved to relatively few. Today, 3D printing and on-demand computer-guided fabrication mean that just about anyone with a computer and an idea can see their idea take form, quickly cheaply. This is a radical change.
What these technologies promise is nothing less than the diffusion and decentralization of the fundamental tools of design and production. While the 20th century saw massive corporations build vast factories to churn out the products of an elite class of industrial geniuses like Edison and Ford and Jobs, the 21st century is more likely to see what we might loosely call the democratization of design, production, and ultimately innovation, as the means of technologically-sophisticated design and manufacturing become widely available.
This is a point that Chris Anderson emphasizes in his 2012 book, Makers: the New Industrial Revolution. Anderson points to the example of his own grandfather, an inventor who struggled through the long process of tinkering, building a prototype, acquiring a patent, and eventually — necessarily — licensing his idea for a new, smarter lawn sprinkler to a big company with the manufacturing capacity to turn his invention into a consumer product. Those days, Anderson argues, are gone. Today, someone with a good idea can relatively easily acquire the tools for rapid prototyping and, ultimately, for consumer-grade production. No factory is required. The bottleneck is gone. And while Anderson clearly sees this democratization as a good thing, he doesn’t focus explicitly on its ethical significance. That ethical significance is two-fold.
First, the democratization of innovation is good for those who make use of these new technologies. As a matter of economic and creative freedom, it is good to know that large numbers of people are being empowered to create and to build. No longer do creative types need to be beholden to those with the vast quantities of capital required to build factories and to hire armies of workers. The means of production, if you will, can be in the hands of hands of the workers. If you can dream it, you can build it.
Second, the democratization of innovation promises to be good for society as a whole. It promises to unleash the creative power of an an entirely new generation of would-be inventors and entrepreneurs, and eliminate the cost barrier that has heretofore existed between good ideas with production capacity. Society will benefit from seeing the tools that truly enable productive creativity put into the hands of many, many more bright individuals.
So we should continue to watch carefully the increasing quality and diminishing cost of these new manufacturing technologies. There will of course be risks, but there will also be benefits. And enabling a new generation of creative geniuses and would-be entrepreneurs is far from the least important.
Chris MacDonald is Director of the Jim Pattison Ethical Leadership Education & Research Program at the Ted Rogers School of Management.