Archive for the ‘law’ Category
Academic Business Ethics and the Corporation as Political Actor
Filed under: corporate citizenship, corporations, CSR, ethics, governance, government, law, personhood, politics, regulations, rights |
Comments (1) I’m returning home today after spending the weekend at the Annual Meeting of the Society for Business Ethics, the world’s foremost association for academics engaged in the study and teaching of issues related to business ethics, corporate social responsibility, and so on. (It was a fantastic meeting and anyone with a professional interest in these issues should consider joining SBE.)
One of the dominant themes of this year’s meeting was the role of the corporation in the political realm. It’s an old topic, one revitalized by the US Supreme Court’s decision last year in the Citizens United case. Corporate involvement in the political sphere takes many forms (from lobbying to campaign donations to participation in collaborative approaches to regulation). Such involvement is probably inevitable, but definitely controversial, and so there’s lots to sort out regarding how we should understand corporations in the political realm, and what rights and responsibilities they should have in that world. Among several dozen scholars presenting their research at the SBE meeting, a striking proportion of them presented work related to this set of topics.
David Ronnegard and Craig Smith, for example, presented work that elucidated the connection between competing theories of business ethics, on one hand, and competing theories from political philosophy, on the other.
Anselm Schneider and Andreas Scherer presented their work on the changes in corporate governance necessitated by (what I would call) the quasi-governmental responsibilities that corporations sometimes take on in the international sphere.
Pierre-Yves Néron presented work arguing that the way we think of corporations in the public sphere ought to be strongly influenced by thinking about the kinds of corporate behaviours (including regulatory lobbying, for example) that can either improve or frustrate market efficiency.
Waheed Hussain presented his work on what it might look like to “civilize” the corporation to make its participation in the political realm less worrisome — essentially, by fostering among corporations a “public interest” ethos, and insisting that lobbying etc be framed in terms of the public good.
Wayne Norman encouraged his fellow business ethicists to pay more attention to regulation, rather than focusing (as the typically do) on the corporate ethical obligations that go “beyond mere compliance”.
I myself presented some of my current thinking on the various ways we might think of corporations in their interactions with government. In particular, I argued that while, in some cases, it makes sense to conceptualize the corporation as an agent in its own right, there are other cases (perhaps many more cases) in which it makes sense to think of the corporation as a tool or technology used by citizens to advance their goals. (This is something I’ve touched on before, informally, in a blog entry.)
Although I don’t want to speak for my colleagues, it seems safe to say that the scholars whose work is noted above share an interest in better understanding what it means, and what it should mean, for corporations to be political agents. They are part of a trend — I don’t yet want to say movement — that sees scholars attempting to take seriously the complexity of the practical and philosophical problems raised by having limited-liability, joint-stock corporations participate in a realm that is generally thought of as being rightfully the place of flesh-and-blood citizens.
Deaf Nudists, Rights, and the Responsibilities of Business
Filed under: corporate citizenship, discrimination, law, rights, values |
Leave a comment Here’s another “tempest in a teapot” story with much larger implications.
By Daniel Wiessner, for Reuters: Deaf man complains nudists would not provide interpreter
A deaf man has accused a nudist park in upstate New York of violating federal law by refusing to provide him with a sign-language interpreter at an annual festival.
Tom Willard, 53, of Rochester, filed a complaint with the U.S. Justice Department claiming Empire Haven Nudist Park violated the Americans with Disabilities Act (ADA) by refusing his requests for an interpreter.
“I am fed up with being turned away every time I try to do something, by idiots who somehow feel the ADA does not apply to them,” Willard wrote in the complaint….
Now it’s true that the ADA‘s “Public Accommodations” does require businesses and nonprofits to take reasonable steps to reduce barriers for the disabled. But according to this page explaining the application of the ADA, Willard is probably out of luck, legally speaking:
Q. Will a bookstore be required to maintain a sign language interpreter on its staff in order to communicate with deaf customers?
A. No, not if employees communicate by pen and notepad when necessary.
In other words, a business doesn’t have to provide a customer’s chosen accommodation, as long as they do something to achieve a fair outcome. (If someone reading this understands the application of the ADA better, please comment!) At a bookstore, you don’t need a translator as long as you’ve got a pen and paper. The same would pretty clearly apply at a nudist park.
Now all that is about the law, not about ethics per se. Ethics and the law are two different things, and that goes for the legal and ethical responsibilities of business, too. But that doesn’t mean that legal issues are “merely” legal issues. The legislation with regard to how businesses need to accomodate disabilities is right there, in black and white. But such legislation is must be interpreted, and interpretation inevitably involves the application of ethical principles, and the relevant ethical principles here include not just the principle that we ought to do more to lower barriers, but also a principle of reasonableness that says that the needs of the disabled have to be balanced against the legitimate interests of businesses and other organizations (and of their other stakeholders). Judges and juries end up having to apply such principles, among others, when discrimination cases reach court. In the 99.999% of cases that never end up near a courtroom, it’s up to businesses — and the people who work for them — to do their best to apply those principles too.
Corporate Rights as Stand-in for Human Rights
Filed under: corporations, law, personhood, rights, shareholders, stakeholders |
Comments (5) The rights of corporations are back in the news this week, as the US Supreme Court decided that a California law restricting sale of violent video games to minors constituted an infringement of the constitutional right to free speech.
Far from being shocking, the notion that corporations should be protected by certain rights ought to be utterly commonplace. Here’s why.
Do you believe that human individuals should have a right against unreasonable search and seizure?
Do you believe that human individuals should have strong rights to free speech?
If so, then you must, logically, be in favour of according such rights to corporations. Why? Not because corporations are legally persons, and not because corporations are “like” human individuals in any particular way. We don’t necessarily need to appeal to any checklist of characteristics that a thing must have in order to be accorded rights.
The reason you must logically be in favour of granting such rights to corporations is that granting them to corporations is — in at least some cases — an essential part of protecting such rights for individual humans.
Consider the right against unreasonable search and seizure. Such a right (for individuals) is a central tenet of all civilized societies. It is crucial for our wellbeing that the government not be allowed simply to show up, search our homes, and take our stuff. What about a corporation’s “stuff”? It must be protected as well. Why? Not because corporations feel fear or have interests of their own to protect. No, corporations’ property must be protected because the interests of real, flesh-and-blood people depend on the protection of such property.
Roughly the same argument goes with regard to free speech. It is literally impossible to shut up a corporation without thereby shutting up human persons. If a human being has the right to speak freely, then she also has the right to speak freely about her commercial interests, including about the products and services and viewpoints of the entities (corporations, partnerships, unions, etc.) that advance those interests.
None of this suggests that the rights accorded to corporations must be exactly the same in kind and in character as those accorded to humans. Rights for corporations are largely instrumental, and need only be accorded where doing so protects important human interests. Nor must such rights be unlimited: there are limits on free speech for humans, and those limits generally should also apply to non-human persons such as corporations and unions and clubs and churches. What is essential, here, is to see that corporate rights are not the bogeyman. Just like human rights, they are a tool for helping us get along, and thrive, as a community.
Should Rioters be Fired?
Filed under: crime, employees, law, privacy, risk, scandal, trust |
Comments (5) The post-Stanley Cup riots in Vancouver last week have generated a minor landslide of commentary. Much of it has focused on just who the malefactors were. In an age of social media, this has amounted to more than mere speculation: the identities of quite a few of the trouble-makers have come to light. Those who participated in the riots have thus brought very public shame upon themselves and their city. But what about the shame brought upon their employers?
Over at the “Double Hearsay” law blog, the question is asked from a legal point of view: Can employers fire Vancouver rioters? The short version of the legal analysis there is this. Any employer can fire an employee “without cause” as long as they give proper notice. In order to fire without giving a couple weeks’ notice, an employer has to have “cause:”
Generally speaking, an employee can be fired for his private conduct if that conduct is “wholly incompatible” with the proper discharge of his employment duties, or if it would tend to prejudice the employer….
The latter possibility is the relevant one here. If an employee participates in a riot and is widely known a) to have participated in shameful behaviour and b) to be your employee, then the employee has effectively done something “prejudicial” (i.e., likely to negatively effect your business).
OK, so that’s the legal side. Labour law draws a reasonably clear line around what you as an employer can do, and what the court will support your having done. But that still leaves open the question, should you even attempt to fire an employee who you know to have participated in a riot, say like the recent one in Vancouver or last year’s at the G20 in Toronto?
Here are a few quick considerations:
1) The legal issue of an employee behaving in a way that is “prejudicial” to the employer is also of course a very reasonable ethical consideration. A riot like the one in Vancouver is accompanied by significant public outrage, and guilt by association is a very real problem. In many industries, a business lives or dies by its reputation. As Warren Buffett has said, “Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”
2) By participating — even somewhat passively, let’s say — in a riot, an employee reveals quite a lot about his own character and judgment. Do you really want someone with that little judgment working for you? Your company, no matter how laid back its corporate culture, has some sort of authority structure. It’s fair to ask just how suitable an employee is to work within any authority structure when they’ve publicly egged on another human being in burning cop cars or assaulting firefighters.
3) Even from an ethical point of view, the legal notion of “due process” is relevant. So if you’re considering firing someone for taking part in a riot, you can’t in all fairness do so based on mere hearsay, or without giving him a chance to defend himself. The right process is at least as important as the right outcome.
4) Finally, it is worth considering whether there are alternatives to firing. Maybe being laid off for a few weeks is sufficient. Or perhaps the employee can demonstrate his contrition by doing volunteer work. But it should be remembered that the solution has to fit the reason for firing in the first place. If your worry is that participation in a riot demonstrates a fundamental lack of judgment, then volunteer work isn’t going to erase that worry.
As a lawyer friend of mine put it, “rioting seems to strike at the core of social order.” And social order is at the core of business. It’s not unreasonable to think that participation in a riot is a disqualification for employment — but such a conclusion still has to be implemented prudently and fairly.
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Thanks to Dan Michaluk for tweeting this story and bringing it to my attention.
Insider Trading at the FDA
Filed under: conflict of interest, employees, ethics, finance, intellectual property, investing, law, science, trust, white collar crime |
Comments (3) A scientist employed by the US Food and Drug Administration has been arrested and charged with insider trading.
Here’s the story, from Diana B. Henriques at the New York Times: U.S. Chemist Is Charged With Insider Stock Trades
A 15-year veteran of the federal Food and Drug Administration and his 25-year-old son were arrested on Tuesday and charged with systematically using confidential information about pending drug applications to reap millions in illegal trading profits since 2007.
As part of its drug-approval process, the FDA is given sensitive information by companies seeking such approval. And the status of a company’s application within the FDA’s own decision-making is itself sensitive information. Since FDA approval is essential to getting a drug to market, the announcement that a company’s drug has been granted, or denied, approval by the FDA can have a huge impact on the value of a company’s stock. And what FDA chemist Cheng Yi Liang did is to use information available only to FDA insiders to make profitable trades on the stock of companies then seeking FDA approval.
Just what was so wrong with what went on here?
In a statement announcing the case, Lanny A. Breuer, the assistant attorney general for the criminal division, said: “Cheng Yi Liang was entrusted with privileged information to perform his job of ensuring the health and safety of his fellow citizens. According to the complaint, he and his son repeatedly violated that trust to line their own pockets.”
Now Mr Breuer is clearly engaging in a bit of prosecutorial rhetoric. He’s right of course that Cheng Yi Liang was entrusted with privileged information, but there’s no obvious reason to think that his use of that information for personal gain jeopardized anyone’s health or safety. But fair enough: Mr Breuer is playing his role in an adversarial system, and that licenses a certain amount of hyperbole.
But what really is wrong with the kind of insider trading that Cheng Yi Liang engaged in? The precise worry about insider trading is the subject of some debate, and I’ve blogged about that before. (See: Ethics of Insider Trading.)
There are several ways we could get at just what was unethical about what Cheng Yi Liang did. One worry is that he profited unjustly, gaining money that he didn’t earn and had no right to. Also, in engaging in insider trading, he traded on information not accessible to others. That means that the people he traded with were at an unfair advantage, and likely lost money as a result. It also means that, subject as it was to significant information asymmetries, the market in which he traded was rendered slightly less efficient, as a whole.
There is of course another ethical worry: if chemists working for the FDA take a personal financial interest in the fate of various approvals, that could quite easily corrupt the work they do. In other words, it puts such a chemist into a conflict of interest. In a conflict of interest, what is fundamentally at stake is our trust in an individual’s judgment. If FDA scientists have a personal stake in their scientific work, then we have reason to doubt their judgment. And, worse, if the judgment of FDA scientists becomes subject to doubt, then the public ends up having a reason (though perhaps not a sufficient reason) to doubt the work of the FDA as a whole.
Corporate Citizenship, Apple, and WikiLeaks
Filed under: corporate citizenship, decision-making, law, media, NGO, privacy, stakeholders, transparency |
Comments (8) What kinds of political obligations do corporations have? In particular, do they have obligations, like governments do, not to interfere with things like people’s ability to express themselves?
See this short blog entry by Leander Kahney, at Cult of Mac: Apple Pulled Wikileaks App Because It “Violated Dev Guidelines”
Apple has joined the shameful list of companies that have denied support for Wikileaks.
Apple confirmed that it removed a Wikileaks App from the online App Store, as reported earlier, and did so because it “violated our developer guidelines.”
“Apps must comply with all local laws and may not put an individual or group in harm’s way,” Apple spokeswoman Trudy Muller told the New York Times.
However, exactly how or why the app doesn’t comply with the law — or puts individuals or groups in harm’s way, Muler didn’t explain. She also didn’t discuss the First Amendment or the freedom of the press….
(I’ve already blogged on the more general question of whether companies are justified in ceasing to do business with WikiLeaks. See: Should Companies Judge the Ethics of Those With Whom they Do Business?)
But what’s particularly interesting in the bit quoted above is that Kahney mentions the First Amendment, implying that Apple ought to support WikiLeaks because it has a First-Amendment obligation to do so.
On the face of it, from a legal point of view, that’s surely false. The First Amendment says:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances
Now, on the face of it, that’s a restriction on what the US Congress may do; it implies nothing at all about what private organizations (including corporations like Apple) may or may not do. (If there are experts on US Constitutional Law out there, please feel free to correct me!) But it may well be that the precepts enunciated in the US Constitution and Bill of Rights (or in other nations’ constitutional documents) should be thought of as having not just legal force, but also moral force, and that that moral force should be thought of as extending to all kinds of institutions, not just government. If that’s the case, then you could argue that, even though corporations are not legally bound by such principles, they ought ethically to be guided by them.
The whole issue of whether corporations have specifically political obligations to citizens (and not just more general ethical obligations to consumers) is a difficult one. Are we gaining something, or losing something, by thinking of corporations that way? Does thinking about corporations as playing a quasi-governmental role illuminate their moral obligations, or obscure them? In this regard, if you’re academically inclined it’s worth taking a look at this masterful article by my friend Pierre-Yves Néron: “Business and the Polis: What Does it Mean to See Corporations as Political Actors?”
Why Privacy Matters
I have a short piece on privacy in the Fall/Winter 2010 newsletter of the Canadian Centre for Ethics & Corporate Policy.
In the intro to the article, I delve into just what privacy is, why it is that we value it in the first place:
Privacy, at its most basic, is about having a sphere of personal control from which others can be excluded at will. It refers not just to information, though that is certainly a key component of privacy. Privacy is also about freedom of action, action that is not hindered by the prying eyes of neighbours, governments, or corporations. The more such freedom we have, the more privacy we have….
In the second half, I discuss why it is that companies should think carefully about privacy. I note that it’s not just a question of protecting customers’ private information, though that is certainly important. It’s also worth considering that companies themselves tend to value privacy, and they ought to keep that in mind:
…when a company asserts its own privacy rights, it is in at least some cases thereby protecting the privacy of its clients, along with the rights of its shareholders. But the key point here is that when companies think about the value of privacy, they would do well to consider how much privacy also matters to them.
The newsletter also includes a commentary on privacy from Ontario’s Privacy Commissioner, a piece on privacy concerns in the hiring process, by lawyer Avner Levin, and an article on privacy law more generally by lawyer Christine Lonsdale. You can download the entire newsletter here: Management Ethics Newsletter.
Wikileaks & Mastercard: Should Companies Do Government’s Bidding?
Filed under: accountability, corporate citizenship, corporations, CSR, environment, government, law, politics, values |
Comments (4) 
The controversy over Wikileaks has raised the question of whether companies should do government’s bidding. One popular suspicion is that Mastercard, Visa, and PayPal stopped acting as conduits for donations to Wikileaks not on principled grounds, but rather due to government pressure. If that’s true, is it ethically acceptable for business to act that way, as a tool of government? I’m not talking about government contractors, including military contractors like Blackwater, though I suppose the comparison is not entirely ridiculous. I’m thinking broadly of companies (ones not in the employ of government) helping to enact public policy or to implement the will of government more generally.
From a moral point of view, the question has to hinge in part on the moral quality of the particular thing business is being asked to do, and that may in turn hinge in part on the moral character of the particular government involved. Think, for example, of the controversy over Google participating in censorship in China. Many people thought it was wrong for Google to implement government policy in that case because they believe the Chinese government’s censoring of its citizens’ internet access to be morally problematic.
It’s worth pointing out that there are times and places where participating in implementing government objectives has been seen as unobjectionable, even patriotic. During both World Wars, companies were expected to participate in the ‘war effort’ by ramping up production, by shifting production to products needed for the war, and by conserving key raw materials. And that sort of active, corporate civic responsibility isn’t limited to times of war. Note that the US Department of Homeland Security expanded its “If You See Something, Say Something” to…
…hundreds of Walmart stores across the country – launching a new partnership between DHS and Walmart to help the American public play an active role in ensuring the safety and security of our nation.
I think it’s also instructive here to consider the relationship between “the state” (roughly, the government) and society. Many people are happy to think of corporations as instruments of society — that’s what motivates much of the CSR movement. We think it right for businesses to be environmentally responsible because we, as a society, value the environment. We want to conserve our resources, and we expect business to do its part. But the democratic state, like it or not, is a legitimate instrument of society. Now, government (including democratic government) is notoriously imperfect. As Churchill said, democracy is the worst system in the world, except for all the rest. But it’s hard to see how you can approve of (or insist upon) corporate implementation of social objectives and at the same time object entirely to corporate implementation of government objectives when those objectives are the reasonable objectives of a relatively-legitimate government.
In the end, it seems to me that if the behaviour in question is not intrinsically unethical (as Microsoft and Yahoo helping China’s government spy on dissidents arguably was) and if the behaviour doesn’t violate the firm’s fiduciary obligations to its shareholders, then it is at least permissible (though not necessarily obligatory) for a business to help implement public policy.
Intellectual Property and the Chilean Miners
Filed under: contract, ethics, honesty, intellectual property, international, law, profits, workplace safety |
Comments (1) Last month I posted about some Ethical Issues for the Chilean Miners. There, I pondered the moral force of the contract that the 33 trapped miners signed while still underground, promising each other to share equally the eventual profits of any future publicity. This month, I’m quoted in an article on that same topic, in Canadian Business. Here’s the online version: Intellectual property: Underground dealing in Chile, by Angelina Chapin
The story of “los 33,” the Chilean miners stuck underground for 69 days has all the makings of a good narrative: complication, action, mystery and a happy ending. Presciently, the miners made a pact while they were underground to share whatever profits come from telling their story and are rumoured to have decided to collectively author a book. According to The Guardian, they even had a lawyer send down a contract to make the “blood pact” legal, meaning when Hollywood producers come knocking, they’ll have a whole group to bargain with.
Not much is known about its content, but the circumstances under which the contract was signed have experts wondering about its validity and whether the specifics should be abided by now that they’ve survived the rescue….
The article gives the last word to Toronto-based lawyer Calin Lawrynowicz, who makes a simple, practical suggestion: rather than wonder about the force of the subterranean contract, the miners ought to sit down to talk about it:
Lawrynowicz says, since the miners don’t have 33 lawyers explaining their individual rights, the group should reconvene with an arbitrator to make amendments to the contract, allowing for reductions and benefits in terms of the wealth distribution.
“It’s like a shotgun wedding in Vegas,” he says. “You may be able to have a great relationship after the fact, but have to reconfirm why you got together in the first place.”
California’s Marijuana Industry: Ethical Issues
Filed under: competition, consumers, CSR, employees, health, law, natural, pharma, politics, product safety, profits, regulations, retail, snacks, wages |
Comments (4) 
I’ve blogged about the insurance industry, the mining industry, the auto industry, even the donut industry. But the pot industry? Yes, it’s time.
From the Sacramento Bee: Growth of California’s Pot Industry is Good News for Unions
As Californians prepare to vote on a November ballot initiative that would expand legalization to recreational pot use, labor groups see the potential for perhaps tens of thousands of unionized jobs.
United Food and Commercial Workers Union, Local 5, which has 32,000 members in California working in trades including the grocery and food processing industries, began organizing marijuana “bud tenders,” greenhouse workers, packagers and laboratory technicians last spring….
So, here a budding industry, built around a controversial product that is illegal in most jurisdictions. There’s plenty of grass-root support for broader legalization (both for medicinal and recreational use). But there may be enough opposition to blunt the enthusiasm of law-makers about sudden moves. The support of politically-powerful unions is another ethically-significant factor — as is the potential capture of this new industry by unions.
This is such a rich and interesting story that there’s too much in it for me to try to hash it out by myself without resorting to quick, potted answers. So here are a handful of questions to seed the discussion. I’ll let you weed the good from the bad.
- Ryan Grim reports that “The teachers union, citing the revenue that could be raised for the state, is also backing the initiative.” Is that sufficient reason? You don’t have to be an anti-pot puritan to worry about anything that might (inadvertently) encourage use of pot by school-age kids.
- What business ethics issues are faced by producers and sellers of pot in the illegitimate parts of the drug industry? What new issues will the newly-legitimized industry face?
- What CSR-type responsibilities does the (expanding) legal marijuana industry have?
- Why are California Beer & Beverage Distributors lobbying against the proposed change? (See useful discussion over at Marginal Revolution).
- What sorts of regulations should the industry seek? What motives will be foremost in industry’s mind in his regard — protecting revenues? protecting its image? protecting consumers?
- Will the other drug industry — the pharmaceutical industry — move into this line of business? Why or why not?
- Is the unionization of this industry generally a good or bad thing? Unionization improves the lot of workers, but also tends to raise prices. Since unionization itself is controversial, let’s ask it this way: is the case for unionization stronger or weaker, with regards to the marijuana industry?
I’ll open the floor for discussion.
The Business Ethics Blog 