Archive for September, 2010|Monthly archive page

Forbes.com’s New White Collar Crime Blog, by Walt Pavlo

Posted September 4, 2010
Filed under: blogs, law, white collar crime |
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Here’s a new blog worth checking out. Walt Pavlo is now blogging for Forbes.com, a blog called simply White Collar Crime.

Walt is a special sort of expert on white collar crime: he was for a couple of years better known as “Inmate Number 52071-019” in the U.S. penal system. You see, Walt did time in a federal penitentiary for his part in the multi-million-dollar MCI-Worldcom fraud. So when he writes about white-collar crime — what motivates it, what allows it, and what its punishment looks like — he writes from experience.

I first blogged about Walt Pavlo in August of 2006, soon after meeting him in person (we were both speakers at the same event for MBA students at the University of Tulsa). Then, a couple of months later, I interviewed Walt to get his unique perspective on the 24-year sentence that had just been handed down to Enron’s Jeff Skilling.

Now, not everyone wants to hear what an ex-convict has to say. Fair enough. (As Walt himself wrote in his first blog entry, Not Every Felon Is Worth Hearing From.) For my part, I’ve already blogged on why I think convicted white-collar criminals are worth listening to. So for now, all I’ll say is that in my experience, Pavlo is a thoughtful and insightful guy. I’ll be reading his blog.

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Addendum:
Here’s a link to Pavlo’s book about his own role in the MCI fraud, Stolen Without a Gun.

Should Trapped Miners Be Paid?

Posted September 2, 2010
Filed under: disaster, employees, government, risk, taxpayers, wages, workplace safety |
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Most people don’t expect to be paid when they’re not doing work. Sure, most people get paid during coffee breaks, and lucky folks get paid vacations. And some people get paid sick days. But what about when you’re not working for months on end? Does any employer have an obligation to pay you under those conditions? What about when you’re not working, but physically at work, for months on end?

That’s the issue faced by 33 miners trapped 2,300 feet below ground, in a collapsed Chilean mine.

Here’s the story, written by Nick Allen for the Daily Telegraph, but featured in the Ottawa Citizen: Trapped miners may not be paid

The 33 Chilean miners trapped underground may not be paid for months while rescuers try to reach them, leaving their families with no income.

The San Esteban company, which operates the mine, has said it has no money to pay wages and is not even taking part in the rescue.

It has suggested that it may go bankrupt and its licence has been suspended.

Evelyn Olmos, the leader of the miners’ union, called on Chile’s government to pay the workers’ wages from next month….

My initial impulse: yes, of course the miners deserve to get paid. Granted, they’re not exactly doing productive work, but that’s not their fault. Even though they’re not working, they are in fact still on the job. The problem, of course, is that the company seems financially incapable of paying them, not just unwilling. Legal means can be attempted, but if it’s really true that the company is bankrupt — well, you can’t get blood from a stone. (Note also that, for what it’s worth, the mine’s owners have asked the miners for forgiveness.)

So that leaves the government (i.e., the citizens) of Chile. Should they pay? Now, to be clear — and this is a crucial distinction — I’m not just asking whether it would be a good thing if the miners end up getting paid. I’m asking whether Chilean taxpayers have an obligation to pay them. I think the answer to that is less clear than the question of whether a financially-capable company would have an obligation to pay them. Now, this isn’t a public policy blog, it’s a business ethics blog, so I don’t often delve into what constitutes the morally-best decision for government. But it’s worth thinking about what principles might apply to this case not just from the point of view of government’s obligations to citizens in need, but from the point of view of government’s obligations to take up the slack when industry undertakes dangerous operations that can end up requiring considerable financial resources when things go wrong. Is government’s willingness to clean up the mess part of what lets mining companies put miners at unreasonable risk in the first place? Or should we think instead that the government’s willingness to help out is just part of the insurer-of-last-resort role that we want government to take on, and that allows all sorts of companies (responsible or otherwise) to be in business in the first place?

As a post-script, I should point out that the moral parallels between the Chilean mine rescue and the BP oil spill cleanup, in this regard, are striking.

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Also of interest, on the Research Ethics Blog:
Could Research be Done on the Trapped Miners?

BP and Corporate Social Responsibility

Posted September 1, 2010
Filed under: consumers, corporations, CSR, energy, environment, honesty, shareholders, stakeholders |
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I’ve long been critical of the term “CSR” — Corporate Social Responsibility. (See for example my series of blog postings culminating in my claim that “CSR is Not C-S-R”.) Too many people use the term “CSR” when they actually want to talk about basic business ethics issues like honesty or product safety or workplace health and safety — things that are not, in any clear way at least, matters of a company’s social responsibilities.

But the BP oil spill raises genuine CSR questions — it’s very much a question of corporate, social, responsibility.

BP is in the business of finding oil, refining it, and selling the gas (and propane, etc.) that results. In the course of doing business, BP interacts with a huge range of individuals and organizations, and those interactions bring with them ethical obligations. Basic ethical obligations in such a business would include things like:

a) providing customers with the product they’re expecting (rather than one adulterated with water, for example),
b) dealing honestly with suppliers,
c) ensuring reasonable levels of workplace health and safety,
d) making an honest effort to build long-term share value,
e) complying with environmental laws and industry best practices, and so on.

Most of those obligations are obligations to identifiable individuals (customers, employees, shareholders, etc.). There’s nothing really “social” about those obligations (with the possible exception of compliance with law, which might better be categorized as an obligation of corporate citizenship, or more directly an environmental obligation). And it’s entirely possible that BP, in the weeks leading up to the spill, met most of those ethical obligations. The exception, of course, is workplace health and safety — 11 workers were killed in the Deepwater Horizon blowout. But even had no one been killed or even hurt during the blowout, a question of social responsibility would remain.

So, what makes the oil spill a matter of social responsibility? Precisely the fact that the risks (and eventual negative impacts) of BP’s deep-water drilling operations are borne by society at large. The spill has resulted in enormous negative externalities — negative effects on people who weren’t involved economically with BP, and who didn’t consent (at least not directly) to bear the risks of the company’s operations.

Now, all (yes all) production processes involve externalities. All businesses emit some pollution (directly or indirectly via the things they consume) and impose some risks on non-consenting third parties. So the question of CSR has to do with the extent to which a company is responsible for those effects, and (maybe) the extent to which companies have an obligation not just to avoid social harms (or risks) but to contribute socially (beyond making a product people value). From a CSR point of view, then, the question with regard to BP is whether the risks taken were reasonable. Most of us would say “no.” But then most of us still want plentiful cheap gas.

Thus the BP oil spill provides an excellent way to illustrate the way we should understand the scope of the term “corporate social responsibility,” and how to keep that term narrow enough for it to retain some real meaning.

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p.s., here are a few relevant bits of reading:

1) Did you know that, in 2005, BP made it onto the Global 100 list of the “Most Sustainable Companies in the World”, a feat the company repeated in 2006. (And yes, that’s a reason to be skeptical about such rankings!)

2) See also this bit on Which is the Most Ethical Oil Company?

3) And finally here is BP’s own take on CSR, from 2002, see this speech: The boundaries of corporate social responsibility
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Addendum:
Here are a few books on ethics & CSR in the oil industry. No endorsement is implied.

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