a. A financial crimes `SWAT' team in the Justice Department. (Presumably the experts on this team will swing into action and attack suspicious balance-sheets with sharp pencils and dressed in pin-stripe black masks.)

b. Corporate Boards should stop giving loans to executives. (WorldCom CEO had received a $480 million loan, but do did Bush, the Younger, when he was on the Board of Harken Energy).

c. The lawyers working in companies are to be obligated to report evidence of fraud or misconduct (even if it is about their bosses) to the chief legal counsel or CEO of the company, or to the Board of directors. The American Bar Association opposes this move as it feels that lawyers' ethical duties may be compromised and also interfere with the lawyer-client relationship.

If all this sounds to you like taking a pill for your headache without trying to figure out why you got the headache in the first place, that is what it is. The law makers have rushed to fix the perceived symptoms without debating the underlying problem, which is the rapid slide in ethics. Although the recent problems have surfaced under the watch of Bush, the slide in ethics and values began even earlier during the Clinton era.

Politicians have never been expected to hold a high moral ground but Clinton reached new lows. His sexual encounters with an intern in the oval office provided an amusing distraction while we were all busy making money in a booming stock market. When he successfully dodged the legal and political persecutions, we applauded him for his tenacity and said, "Tut, tut, men will be men!'

The slide in ethical behaviour has passed on from the political arena, to the church, corporate world, and now into academia. The Roman Catholic Church in the US has been under the spotlight for several months now. Various individuals have come forward and accused priests of having sexually molested them many years ago, and the church hierarchy stands accused of not taking action even after such incidents were brought to their attention.

Faced with multi-million dollar lawsuits, the Boston diocese is considering filing for bankruptcy. Princeton University, a highly reputable institution, has admitted that its officers checked into the student application files on the web site of Yale University using personal information provided to it by the same students. The objective was to find out what the students have stated in their application as their academic preferences and also whether they have received admission from Yale.

Fixing the loopholes

The various measures now being taken to fix loopholes are necessary but do not completely address the situation. Adam Smith, who provided us the philosophical justification for pursuing self-interest also warned that business men can be crooked in this pursuit. Self-interest rapidly deteriorates into greed and while laws can clearly specify what is and is not acceptable, there are several business decisions that fall into the grey area of ethical behaviour. And clearly, ethical behaviour has been at a deep discount for several years now.

Some may even argue that there has been no change in the ethical behaviour of people, but that in times of prosperity, ethical issues are winked away and now that the times are tough, we have suddenly woken up. The foundation for ethical behaviour is laid in the homes and in educational institutions. But surveys conducted at the latter are not very encouraging.

A magazine called the MBA Jungle surveyed business school students recently and the results should give us some pause for thought. 52 per cent of the respondents said they would buy shares based on inside information supplied by a friend and 26 per cent said that they would allow a gift from a client to sway a company purchasing decision. Unfortunately, business has developed a reputation for `anything goes' which may counter any ethical base laid in the home. The National Association of Scholars in the US, an association of academics, organised a survey of final year students in colleges. When asked to rank ethical behaviour among eight different professions, business was the lowest (the others included journalism, teaching, civil service, military, etc).

Moreover, a majority of the students also felt that the approach to ethics conveyed by their professors was to do `your own thing.' Incidentally, ethics is big business in the US. An Ethics Officers Association that was formed in 1992 now claims to have 775 members that includes ethics officers from more than 50 per cent of the top 100 corporations.

They have been encouraging corporations to develop a code of ethics, publicise it, and monitor its adherence. But it is not enough to have an ethics code if the top management of the company ignores it in practice and sends the wrong signals to the rest of the employees.

It is estimated that 80 per cent of major corporations already have some sort of an ethics code.

But let us not forget that the board of directors of Enron voted to suspend their ethics code each time they took a decision that would violate it!

(The author is a professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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