The Business Ethics Blog

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

OK, so by now everyone is really, really aware of the controversy over the new movie version of Dan Brown’s The Da Vinci Code. Here’s a new twist that makes the controversy germane to this blog. The movie’s most vocal critic, the Catholic prelature Opus Dei, has issued a press release criticizing Sony (the firm behind the film) for having violated its own Code of Conduct. Here’s the press release: Sony’s Other Code.

The press release quotes the following passages from Sony’s code:

“Recognizing that conduct that is socially acceptable in one culture or region may be viewed differently in another, Personnel (of Sony) are required to give careful consideration to cultural and regional differences in performing their duties” (section 1.3);

“No Personnel may make racial or religious slurs, jokes or any other comments or conduct in the workplace, that create a hostile work environment” (section 2.4);

With respect to publicity, Sony commits itself not to engage in false publicity that misleads or slanders others (section 3.4).

Holding Sony to its own code of conduct is a nice (and very legitimate) tactic. But I’m not sure that the passages cited by Opus Dei support the group’s claims.

• Section 1.3 only enjoins “careful consideration,” rather than any particular behaviour. Sony may well have given such consideration, and arrived at the conclusion that this movie doesn’t fail to respect social & cultural differences.
• Section 2.4 is about ethics in the workplace, so it’s not terribly relevant, here.
• Secion 3.4 forbids slander. Whether a work of fiction can count as slanderous is open to question. Lots and lots of movies attribute evil deeds to all kinds of groups and organizations (drug companies, the CIA, Freemasons, various govenments, the legal profession, and so on). I have to admit, I haven’t read the book, so I don’t know whether the portrayal of Opus Dei in the book is so outrageous as to be different in kind from these other portrayals.

OK, so let’s look beyond the “letter of the law,” to look at the spirit of Sony’s code. Perhaps the point of the Opus Dei press release is that Sony has violated the spirit of its own Code of Conduct. It’s pretty clear that the Code requires Sony employees to be sensitive to other people’s values. Does that requirement preclude distributing a movie that the members of a particular religion (or perhaps a range of religions) object to? Is that how we should read Sony’s Code? That depends in part on whether the “sensitivity” is synonymous with avoiding all insult. It also depends in part upon the observer’s views on what sorts of values & beliefs ought to be protected from criticism. To a committed, principled atheist, a negative portrayal of a religious group (or of a religion, or of all religions) might be a positive good. Some people believe that religion ought to be mocked. I’m not about to promote that idea, but it’s worth noting that a movie (a work of fiction, let’s recall) that makes a bad-guy out of a powerful institution is quite different from a movie that, let’s say, demonstrates insensitivity by making villains out of a disempowered or threatened minority.

(p.s., It’s also worth pointing out — lest anyone should overreact to Opus Dei’s protests — that the group’s protests most definitely do not count as an attempt at censorship. The group is decrying the move, and has asked Sony to put a disclaimer on the film, informing audiences that it is a work of fiction, rather than a portrayal of history. They’ve got every right to make their views known, and to encourage changes in corporate behaviour.)

Relevant Links:
Sony‘s corporate website
Sony Group Code of Conduct (pdf file)
Opus Dei page at Wikipedia

Book Links:
The Da Vinci Code (by Dan Brown)
The Da Vinci Code Illustrated Screenplay: Behind the Scenes of the Major Motion Picture
Opus Dei: An Objective Look Behind the Myths and Reality of the Most Controversial Force in the Catholic Church
Sony (a history of the Sony corporation)

Thanks to Michael Cook for alerting me to Opus Dei’s press release.

For many Americans, “Buy American” is a moral slogan (just as “Buy Canadian” is for many Canadians). But as this Wall Street Journal article points out, that advice is hard to follow, at least when it comes to cars (and, I suspect many other consumer goods that have many components): Mom, Apple Pie and…Toyota? (Only the first couple of paragraphs are available for free, unfortunately.)

Here are a couple of key paragraphs:

FEW SPORTS CARS have captured the nation’s imagination like the sleek Ford Mustang, a 21st-century reincarnation of an American classic. The Toyota Sienna minivan, by contrast, speaks to the utilitarian aesthetics of Japan: refined interiors, arm rests and lots and lots of cup holders.

Yet, by a crucial measure, the Sienna is far more American than the Mustang. Statistics from the National Highway Traffic Safety Administration that were publicized in “Auto Industry Update: 2006,” a presentation by Farmington Hills, Mich., research company CSM Worldwide, show only 65% of the content of a Ford Mustang comes from the U.S. or Canada. Ford Motor Co. buys the rest of the Mustang’s parts abroad. By contrast, the Sienna, sold by Japan’s Toyota Motor Corp., is assembled in Indiana with 90% local components.

The key tension here seems to be between the values of globalization (and the efficiency it brings) on one hand, and patriotism on the other. We can think about this from the points of view of 2 different decision-makers:

The Corporation: Does a company have an obligation to promote the interests of the country (or the citizens of the country) in which it is incorporated? Believers in the efficiency (or fairness) of free markets should presumably answer this question in the negative. Strictly speaking, if the social obligation of business is to provide a product that the market desires in order to return a profit to investors, then moves (investments, policies) driven by patriotism ought to be counted as optional (and driven, like corporate philanthropy, for example, by either altruism or strategic PR concerns). On the flip-side, those who acknowledge the limits of free markets can freely accept the idea that values other than profit-maximization (such as patriotism) ought to drive business decisions.

The Consumer: Does an individual consumer have an obligation to favour products in proportion to their national content? Those who favour a more simple-minded consumerism (and I say that without prejudice!) will assert that a product’s country of origin matters little, if at all. Such consumers merely want to know if the product is well-made, well-priced, and meets their needs. Other consumers will see their purchases as having a broader impact, and perhaps as a way of making a statement. Of course, this puts supporters of “Buy American” in the same philosophical camp as the traditional critics of free, globalized markets. Strange bedfellows indeed.

Relevant Books
How Americans Can Buy American: The Power of Consumer Patriotism (by Roger Simmermaker)
Exporting America : Why Corporate Greed Is Shipping American Jobs Overseas (by Lou Dobbs)
Outsourcing America: What’s Behind Our National Crisis And How We Can Reclaim American Jobs (by Ron Hira)

(Thanks to Dave Chandler for the pointer. You can sign up to receive Dave’s insightful weekly “Strategic CSR” newsletter by emailing him at david.chandler@phd.mccombs.utexas.edu.)

The latest in the ongoing battle over genetically modified crops, intellectual property, and international trade: Soy imports delayed as Argentina fights Monsanto over GM (Food Production Daily)

Argentina’s government joins a group of meat producers in Denmark in a court battle against Monsanto over genetically modified soy, one that has led to imported supplies being held up at the EU’s ports.

The court case, originally brought against meat producers and processors by Monsanto, highlights the problems arising from strict patents relating to genetically modified (GM) crops and other ingredients used as feed in the EU. Currently GM crops can only be imported as feed into the EU.
Monsanto brought the court case against the Danish importers, alleging they were importing soybeans from Argentina derived from a Monsanto-made seed, whose patent is recognised in Europe but not in Argentina.

I’m no expert on international trade, but my guess is that this issue (and the court case) would be a no-brainer if the product in question were anything other than genetically modified crops. At stake, essentially, is whether a corporation should be able to prevent retailers in Country A (which does generally recognize the company’s intellectual property rights) from importing products (ones based upon the company’s I.P.) from Country B (which doesn’t recognize the company’s I.P. rights).
A comparison: if Nokia asked an E.U. government to stop retailers in the E.U from importing rip-offs of Nokia phones from China, would anyone find Nokia’s actions the least bit controversial?

(Interesting side note: just 5 years ago, Monsanto won a corporate citizenship award in Argentina. Go figure.)

Links:
Monsanto
Monsanto @ Wikipedia
An anti-Monsanto page

Relevant Books:
Against the Grain : Biotechnology and the Corporate Takeover of Your Food
Genetically Modified Foods: Debating Biotechnology
Food, Inc. : Mendel to Monsanto–The Promises and Perils of the Biotech Harvest
Agribusiness and Society : Corporate Responses to Environmentalism, Market Opportunities and Public Regulation

When I blogged about Wal-Mart’s move into organic foods last week, I forgot to include a link to this NY Times Editorial: Editorial: When Wal-Mart Goes Organic.
Here’s a snippet:

But here are the pitfalls. Wal-Mart will now become the 800-pound gorilla among the other, slightly smaller gorillas that have tried repeatedly to weaken the Agriculture Department’s definition of what organic means. There is no chance that Wal-Mart will be buying from small, local organic farmers. Instead, its market influence will speed up the rate at which organic farming comes to resemble conventional farming in scale, mechanization, processing and transportation. For many people, this is the very antithesis of what organic should be.

I’ve said enough about this already. Andrew Potter, over at the Rebel Sell, has a nice angle on this: the organic shuffle