The Business Ethics Blog

It’s Friday, so how about something fun:

Officials faulted for not singing karaoke (from Reuters) [Dead link deleted Nov. ’08]

In Vietnam, where karaoke is not only recreational but also business etiquette, failing to show your talent can cost you dearly.

Tien Phong (Pioneer) newspaper reported Wednesday that state oil monopoly Petrovietnam’s financial arm PVFC ordered 21 officials to make “self-criticism” reports for not singing karaoke at a contract-signing ceremony near Hanoi Saturday.

Just how stringent is the ethical requirement to be a “team player?” The Reuters story talks about etiquette, not ethics. But clearly there’s a link. Etiquette (or manners) is in fact closely related to ethics. According to Sarah Buss, manners are a crucial way of signaling that we see others as having value, and as objects of moral concern. “When we treat one another politely,” writes Buss, “we are directly expressing respect for one another….” (“Appearing Respectful: The Moral Significance of Manners.” Ethics 109, July 1999. 795-826.) So etiquette in business — where the trust generated by shows of mutual concern is crucial — is no small matter.

Of course, one of the great things about most bits of etiquette is that they take so little effort. Greeting someone using the correct term of address, or dressing appropriately for business typically implies little burden, and so the benefits clearly outweigh the costs. But that’s not always the case. In the case of the story cited above, proper etiquette apparently required employees (managers, in this case) to spend considerable additional time away from family (i.e., to bear a significand hardship). Whether this is reasonable or not will clearly depend largely upon the terms of the contract — formal or informal — between employer and employee, something about which this news story tells us nothing.

Relevant Books:
Customs & Etiquette of Vietnam
Business Etiquette for Dummies
Karaoke Nights : An Ethnographic Rhapsody
Karaoke, Karaoke, Karaoke!

Here’s an AP story, reported in the Boston Globe: Mine deaths rise with coal price: Worker fatigue from overtime cited as factor

With coal prices at record highs, mining companies have been pushing to increase production, adding overnight and weekend shifts and generating more overtime hours for miners who have some of the most physically grueling jobs in the country.

Industry groups and mine regulatory agencies are wondering if fatigue might be a factor in the sharp increase in coal-mining deaths this year. So far this year, 33 coal miners have been killed on the job in the United States, including 12 in January at the Sago mine in West Virginia and five on May 20 at Kentucky Darby No. 1. That was an increase from 22 coal miners killed for all of 2005, according the federal Mine Safety and Health Administration.

This is interesting enough, on its own, and would make a great workplace health & safety case-study for use in a business ethics class. But wait, it gets better. Next comes a bit about the problems posed by having to balance multiple, competing objectives:

Coal-mine operators have been pressing miners to keep up the pace. In a memo to employees last fall, Massey Energy’s chief executive officer, Don Blankenship, raised controversy by saying production is the top priority.

“If any of you have been asked by your group presidents, your supervisors, engineers, or anyone else to do anything other than run coal…you need to ignore them and run coal. This memo is necessary only because we seem not to understand that the coal pays the bills,” Blankenship wrote.

A week later, Blankenship sent employees another memo, saying safety is the top priority.

From Bloomberg.com: FDA Whistleblower Says Agency Smeared Him Over His Vioxx Views

A U.S. Food and Drug Administration whistleblower who claimed Merck & Co.’s Vioxx painkiller caused 140,000 heart attacks and strokes testified that co-workers at his agency tried to damage his reputation.

“I experienced threats, intimidation and actually what, in my view, appears to have been a very organized and orchestrated campaign to smear and discredit me,” Dr. David Graham said in a May 9 videotaped testimony taken for Vioxx litigation. FDA officials worked “hand in glove” with Merck to tarnish him, Graham said according to a sealed transcript of his remarks obtained by Bloomberg News.

Without prejudging the outcome of this case, it seems like another in the long list of stories about publically-minded whistleblowers who suffer a range of dangers and indignities as thanks.

This story is mostly about accusations of mistreatment of Dr. Graham by the FDA itself, but there seems to be little chance Merck will come out of this with its hands clean. All the charitable donations and other corporate social responsibility endeavours in the world won’t improve drug company reputations if they keep behaving disreputably in their core business practices.

So, here’s one to watch: Hwang Woo-suk, the stem-cell scientist at the heart of a recent research ethics & fraud scandal is looking to get back into the research biz: Hwang Woo-suk Wants to Resume Stem Cell Research

South Korea’s disgraced stem cell researcher Hwang Woo-suk has expressed hope in resuming his research, Hwang’s lawyer said.
“Hwang expressed the hope when he visited a ceremony marking the opening of a law firm Friday,” his lawyer Lee Geon-haeng said. Questioned about the scientist’s detailed plans for research, he briefly answered, “I cannot say because there is nothing specific.”

Once dubbed the “pride of Korea” for his landmark papers on stem cell technology, Hwang was dismissed from Seoul National University after experts and prosecutors confirmed the papers were based on manipulated data.

I doubt any sane public institution will have Hwang, despite his former superstar status. So that leaves industry as his only choice. So, will some daring/desperate venture capitalist jump at the chance? Is there a market for investment in the work of disgraced scientists? Who would trust him with a research budget? Who would risk being associated with the next scandal? Maybe Hwang would be better off making an appearance on Oprah, apologizing to the world, and then going on the speaker’s circuit, lecturing college students on the importance of ethics…

From today’s Washington Post comes a story about a company’s advertising of it’s place in a “corporate citizenship” ranking: Freddie Mac, Becoming a Model Corporate Citizen?

You’d think that being ranked the 38th best corporate citizen in the country wouldn’t be all that much to brag about.

But it is if you’re Freddie Mac, the McLean-based mortgage finance company that is struggling to clean up its books from a $5 billion accounting scandal.

In a news release last week, Freddie Mac crowed that it ranked higher than any other Washington area company that made Business Ethics Magazine’s list of “100 Best Corporate Citizens…”
…
Freddie’s news release didn’t mention its larger cousin across the Potomac, but it was issued a day after Fannie Mae said it would pay $400 million to settle charges by federal regulators stemming from its $10.6 billion accounting scandal.

Here’s the list. [Link updated Nov. ’08] What exactly is the value of such lists, you ask? Good question. One answer is that they give credit where credit is due: some companies manage to earn a hefty profit while at the same time treating people & the environment well, and they deserve to be recognized for doing so. Also, a move up or down the list from year to year can provide either a carrot or a stick to motivate better corporate behaviour. Of course, the methods used for arriving at such rankings is a difficult and controversial issue.
Two rules of thumb:
1) Always read the footnotes.
2) Look for patterns. The fact that company that ranks high on ONE list might be a very good thing, or it might be a fluke of the evaluation method. Companies that consistently rank high on lists employing different evaluative methods deserve serious praise.

Here’s a fascinating resource: Corporate Crime Reporter’s Top 100 Corporate Criminals of the 1990’s

Despite the fact that the 90’s were over more than 6 years ago, the report is still a pretty interesting read:

The point of the list contained in this report, The Top 100 Corporate Criminals of the Decade — is to focus public attention on a wave of corporate criminality that has swamped prosecutors offices around the country.

This is the dark underside of the marketplace that is given little sustained attention and analysis by politicians and news outlets.

To compile The Top 100 Corporate Criminals of the 1990s, we used the most narrow and conservative of definitions — corporations that have pled guilty or no contest to crimes and have been criminally fined.

The 5 firms topping the list (apparently ranked in terms of the size of financial penalties)…
1) F. Hoffmann-La Roche Ltd.
2) Daiwa Bank Ltd.
3) BASF Aktiengesellschaft
4) SGL Carbon Aktiengesellschaft (SGL AG)
5) Exxon Corporation and Exxon Shipping

Actually, what’s most surprising to me about the list is the number of firms I’ve never heard of (or only vaguely recall hearing of). And don’t bother looking for Wal-Mart: it’s not listed. Nor is Enron, of course (since its troubles started after the 90’s). In fact, here’s a fun classroom activity for you business (or business ethics) profs out there: get your class to name 10 “corporate criminals” from the 90’s, and then see how few of them are listed in this report. Then get the class to figure out why.

Some relevant reading:
Corporate Crime Reporter (Magazine)
Corporate Crime (Law and Society Series)
Encyclopedia of White-Collar & Corporate Crime

[Thanks to Joe Heath for bringing the CCR & its report to my attention]

A couple of days ago, from Reuters: Merck cancer vaccine faces Christian-right scrutiny

Merck’s vaccine to prevent the world’s most prevalent sexually transmitted infection sailed through a panel of U.S. health experts, despite early fears of opposition from the Christian Right that it might lead to promiscuity and a false sense of security.

The drugmaker’s efforts to educate Christian groups while touting the vaccine’s top selling point — prevention of cervical cancer — helped win them over.

But Merck may ultimately find itself at loggerheads with those same groups as it seeks to make the vaccine mandatory for school admission, a step considered key for widespread acceptance and one that many of the groups oppose.

Quick list of ethically interesting features of this story:

• The school-vaccination connection. Apparently (and here I’m just repeating what I read on the Women’s Bioethics Project Blog) “the vaccine is more effective when it’s given between the ages of 10 to 15.” Talk about an ethically touchy product to market: one that helps prevent sexually transmitted disease, but which is aimed at kids. Wouldn’t want that job!
• Wow, does the religious right ever have a lot of power in the U.S.! I live in Canada, and find it hard to imaging this story even being an issue, here. Wow. I don’t think Canadian-based companies (often?) have this particular issue to deal with.
• The whole idea of expanding the market for your product by getting it onto lists of state-required vaccinations raises interesting issues. State-enforced vaccination of any kind is not universally popular. And cervical cancer is not exactly the kind of disease for which vaccinating school-kids makes obvious sense on public health grounds.
• Maybe I read too quickly, but I didn’t see any mention of any risks associated with this vaccine. Surely there must be some? And if so, that adds another dimension to the state-enforced vaccination issue. (If you can help me on that question, let me know.)

Here’s a bit of a “man-bites-dog” story (i.e., a story that’s interesting in part because it involves a reversal of a more common story-line).
The biotech firm, Vaxgen, is “pursuing legal remedies” after the U.S. government (in particular, the Department of Health and Human Services) apparently changed the requirements in a contract to develop a new anthrax vaccine. HHS is apparently asking for further human tests (or perhaps, depending on whose story you believe, asking for tests what were originally scheduled to be conducted after delivery of the product to be done before delivery & payment).

Here are a couple of different versions of the story:

• From the Washington Post: VaxGen Shares Fall on Vaccine Uncertainty
• From Pharmaceutical Executive Magazine: Anthrax Contract Dispute Could Reverberate Across Biotech Industry
• U.S. Wants More Tests of VaxGen’s Anthrax Vaccine

Two issues jump out as reasons why VaxGen must be treading very carefully here.
First, the tests at issue are tests to determine (or further certify) the safety of the new vaccine for use in humans. VaxGen will want to make very, very clear that it’s not resisting efforts to ensure that their product is safe.
Second is the issue of patriotism. I’m sure VaxGen is painfully aware that the programme funding their project is “Project BioShield,” part of the US government’s effort at fighting bio-terrorism. It wouldn’t be surprising to see VaxGen’s actions characterized as unpatriotic, uncooperative, etc…despite the fact that it’s the government, not them, that changed the rules of the game. Question: should it matter (to our ethical evaluation of this situation) that the product being contracted for is an anthrax vaccine, rather than desktop computers or snowplows?

The pharmaceutical industry’s deep, pervasive links to organized medicine are a big problem.
Here’s a story from the NY Times: Unease on Industry’s Role in Hypertension Debate.

The story is about changes in the definition of “hypertension” (high blood pressure), changes which could affect the number of people diagnosed with that illness, and hence affect the quantity of anti-hypotensive drugs pharmaceutical companies sell. The story tells of how the efforts of the group trying to re-write the definition were funded by 3 drug companies (Merck, Novartis and Sankyo), through “unrestricted” (no-strings-attached) grants.

Of the seven doctors who wrote the proposed new definition, six have said that they served as consultants and speakers for pharmaceutical companies that make blood pressure medications. The seventh is a consultant and stockholder in a company that markets a diagnostic method to measure damage to blood vessels.

Such industry affiliations are not unusual among prominent doctors at academic research centers. And for years, the American Society of Hypertension, known as ASH, has operated with industry support.

But some members of ASH have become vocal critics of the influence wielded by the drug industry…

Of course, many physicians deny that the money lavished on them by the drug companies skews their judgment in any way:

But many members of the society have taken umbrage at suggestions that their work for drug makers affects their scientific independence.
“There are those who accuse us of being nothing more than shills of industry; a lot of us take pretty great offense at that,” said Dr. Joseph L. Izzo, a professor of medicine at the University of Buffalo who was part of the group that developed the new definition. “We’ve basically devoted our careers to researching this disease and how to treat it.”

I have only two quick comments about this defence:
1) No one is saying (or no one needs to be saying) that the docs involved are consciously acting as “shills” for industry, or that they would ever knowingly allow their scientific independence to be compromised.
2) Nonetheless, both evidence & common sense suggest that drug company money does have an effect.
See, for example:

• Association of funding and conclusions in randomized drug trials
• Changes in drug prescribing patterns related to commercial company funding of continuing medical education
• Physicians and the Pharmaceutical Industry: Is a Gift Ever Just a Gift?

Relevant books:

• Let Them Eat Prozac: The Unhealthy Relationship Between the Pharmaceutical Industry and Depression
• The Truth About the Drug Companies: How They Deceive Us and What to Do About It
• Selling Sickness: How the World’s Biggest Pharmaceutical Companies Are Turning Us All into Patients