Germanwings 4U9525: The art of asking the right questions

The crash of the Germanwings flight earlier this week is still dominating much of the (Western) news media. It is not just the fact that it happened with a well known Airline with a good safety record (Germanwings is a part of Lufthansa) right in the middle of Europe – in fact one of us sat on a Lufthansa A320 just a day before the crash. But it is also the absence of any good explanation as to the cause of the crash.

Now that story has evolved over the last hours. First, we learned from the voice recorder of the black box that the co-pilot was alone in the cockpit and did not open the door for the pilot to come back after his toilet break. It was interesting to see how Lufthansa, the prosecutors and most media then jumped to the conclusion that the co-pilot deliberately crashed the plane.

While that is indeed one option, only few reports raised the question why the flight data recorder – the other black box – could not be found. Or why when it was found the hard disk with the data was missing. Because only those data would clearly document which actions the co-pilot actually took while alone in the cockpit. It is still conceivable, that we saw a repeat of an incident on a Lufthansa A321 just five months ago when iced sensors sent the plane on route from Bilbao to Munich on a similar descent and could only be saved by the pilot switching off the autopilot.

And maybe it was not suicidal intent but other forms of incapacitation that made the co-pilot behave that way. After all, as we finally learned today, he had a history of psychological problems and should in fact have been on sick leave rather than flying.

Nearly unanimously, most commentators jumped to the conclusion that his medical condition just proves that the plane was brought down intentionally by a mentally sick individual. And in particular Lufthansa appeared to be relieved to identify a rare singular individual case as the reason for the accident – rather than technical or other reasons which might have put the company in a much trickier position.

Or does it? After all, air crashes have a long history as case material and illustrative incidents in the business ethics debate. Even if we assume that an individual is to blame - more often than not such behavior occurs in a specific organizational context which normally leads to this behavior. One of the most recent examples is certainly the 2009 Crash of the Colgan Air  commuter plane in Buffalo (similar to this week’s case, a supplier of Continental Airways), which initially all looked like pilot error. However, as a brilliant PBS documentary illustrates, this incident revealed a host of unethical practices and infractions not just with the airline but in fact with the wider industry.

So, this is the time to ask the right questions. The first of which would be to get some more insight as to why the co-pilot did conceal his mental illness from his employer. Does Germanwings have a procedure for this? Do they just fire people like him, when such condition is revealed? Do they care?

A next question would be how on earth his depression could have gone unnoticed by his colleagues? After all, pilots spend a lot of time together and observe each other from up-close. How could it be that the pilot was totally comfortable to leave this co-pilot in charge for a couple of minutes? What does this say about the culture at Germanwings? Does anybody care about how his colleagues are doing?

The more important questions would look at the wider context of work in the airline. Germanwings recently had strikes as Lufthansa tries to impose a low wage no frills-system of wages and working conditions on their low cost branch, which competes with the likes of Easyjet or Ryanair. This is an object of fierce dispute and Lufthansa itself is in a middle of a merciless battle with their pilots. Just last week, thousands of flights on Lufthansa were cancelled due to a strike. This climate does not exactly encourage a young aspiring pilot – on the way to live his childhood dream – to expect an empathetic reception when broaching his personal issues.

The problematic working conditions at other low cost carriers are by now common currency. So the question we have to ask is in how far Lufthansa has made its subsidiary Germanwings in nothing but a clone of Ryanair and the others. This raises the question if we are actually talking about an environment where someone with mental health issues would think the last thing to disclose to his employer and to hope for empathy would be his personal troubles and problems?

Overall then, there are a lot of questions to ask to Lufthansa, the investigating bodies, and in fact the media. But there are also larger questions unanswered. European pilots associations now openly challenge why so many facts of an ongoing investigation are leaked to the press. Or why certain questions, most notably about the flight data recorder have not been addressed. One cannot help but having some uncomfortable reminiscences with the disappearance of MH370 in South East Asia about a year ago. As even the CEO of Emirates, Sir Tim Clark (far from being one of the inevitable conspiracy theorists in these incidents), has very vocally set out, the way the public gets (mis-)informed about those disasters raises serious questions. Questions, to which we ultimately need an answer.

Image copyright Plane13.com, Reproduced under Creative Commons Licence. 

Film Review 'The City Below'

Among the spate of movies inspired by the ongoing financial crisis, ‘The City Below’ (German: ‘Unter dir die Stadt’) is definitely one exceptional voice. While many of those – think ‘Too big to fail’ or ‘Margin Call’ - provide us with a tension filled account of the inner workings of events that led to the crash of banks and markets in 2008 this movie is anything but a thriller. Technically it is a romance, but it is essentially a portrait of the ‘sociotop’ which is the world of the ‘one percent’, the top echelons of a global bank in Germany’s banking capital Frankfurt.

As such the movie – rather than adding to feelings of anger, rage and disgust about greedy bankers – provides us, as it were, with a clinical diagnosis of the de-humanized, de-emotionalized and fake rational world which steers our contemporary version of capitalism. We enter a world actually devoid of glamour or anything to aspire to – and the film leaves us wondering whether the working life of the ‘one percent’ after all is, if anything, worth our pity rather than our envy. The synopsis of the plot runs like this:

A man and a woman at an art exhibition share a fleeting moment of attraction, which neither can act upon. Days later, a chance second meeting leads to an innocent coffee and the two strangers - both married - toy with their unexplainable fascination for each other. Svenja is curious and finds herself in a hotel room with Roland, but she does not consummate an affair. A powerful executive at the large bank where Svenja's husband works, Roland is used to getting what he wants. He manipulates the transfer of her husband to Indonesia to replace a recently murdered bank manager. Unaware of Roland's actions, Svenja now ceases to resist...

Watching the movie I could not help being reminded of Marx’s point in ‘Das Kapital’ where he differentiates between ‘dead labor’ (as in machines and assets) and ‘living labor’ (as in human workers). Marx made the point that capitalism ultimately results in the subjugation of living labor under dead labor, the ultimate de-humanization and alienation of 'human resources' (as we are called in today's business world)  through a rationale of maximal value extraction. In his fascinating book ‘Dead Men Working’, our colleague Peter Fleming argues based on studies of call centre workers and other low skilled labor jobs, that we increasingly witness an army of all but physically dead men and women roped into the relentless pursuit of productivity and efficiency. Mind you, in today’s movie, death is quite physically part of the business: Svenja’s husband Oliver only finds out after being transferred to run the bank’s operations in Indonesia that his predecessor there had actually been brutally butchered while doing his job. ‘Necrocapitalism’ – as as onother of our colleagues, Bobby Banerjee, has coined the current system of global capitalism – though is not just hitting the disenfranchised, under skilled and exploited working masses (such as those killed South African miners in their attempt to resist exploitation and abuse this summer). ‘The city below’ shows us the life of those at the top – the ‘dead men working’ in the power houses of capitalism - and how their capacity for true human interaction, emotion, and passion has been extinguished, channeled and crowed out.

What better backdrop for exposing this than the realm of romantic endeavors? When Svenja’s husband, as she puts it, is ‘annoyingly’ friendly to her she immediately knows there must be an agenda: she smells that he ‘invests’ some niceties into their relations for a ‘return’: her putting up with him relocating for two years to Indonesia. The grammar of their relationship is the one of business relations: they had some sort of contract, ‘a deal’ that they would stay for some time in Frankfurt and we witness Oliver’s skills - brilliant but utterly dismal for a lover – to re-negotiate.

Svenja’s affair with Roland (a board member at the bank where Oliver works) takes this even further. For Roland, who is used to being obeyed and not questioned, the ‘execution’ of his desire follows a strictly transactional pattern, hoping that his status and clout will open him the doors. Even after their first sexual encounters he occasionally lapses back into addressing Svenja in the third person – the polite German level of addressing business partners. Roland has lost any sense of a human, emotional touch: when they make love the first time Svenja has to remind him that she is not ‘made of glass’ – unlike the soulless, deceivingly transparent furniture of ‘dead capital’, which surrounds most of his living days. One time she asks him to extinguish their ritual post-coital cigarette on her arm. But this movie is not ‘Fight Club’, where at least the sensation of pain allows the heroes to feel human again in an otherwise commoditized and instrumentalized word. In 'The City Below' Roland just manages a hapless Freudian ‘Übersprungshandlung’ (Displacement Activity), he can all but inflict this pain on her purse. The movie is modeled on the biblical story of King David who sends the husband of his lover out to be killed in battle. But unlike the ancient romance, Roland and Svenja’s relationship goes nowhere – and even that is part of their negotiated arrangements.

Smoking, by the way, has an unmissably symbolic presence in this movie. Currently in most Western countries banned from all spaces of capitalist work, travel and relaxation as a pleasure ultimately leading to death, in the movie it becomes the great one thing where rules can be broken and intimacy is still possible. The affair between Roland and Svenja starts over the inadvertently shared cigarette in a museum. His first line ever to her is in fact ‘Smoking is forbidden here’, and arguably it is this moment when his passion is ignited. There is not a single of the love scenes in the film which is not – I am not sure what – clouded or mystified by cigarette smoke. In a world of those dead alive the forbidden is the sensual; and an arguably dangerous pleasure is the niche in where whatever is left of human passion and emotion can be fleetingly enjoyed.

Roland and Svenja’s affair shows that humans, of course, cannot totally survive in a world where every decision, every relation is governed by an instrumental, self-interest driven rationale for maximizing one’s own or the company’s returns and economic success. Roland carves out spaces where he tries to escape. Once a day his driver takes him to some dump where he watches Junkies injecting their drugs. In essence the affair with Svenja is a similar attempt, and towards her he tries to reconstruct himself as a human being by taking her to what he pretends to be his modest working class childhood home (which in fact is the home of the murdered employee). These are not just kinky distractions in the movie, these are common patterns among top executives. We should not be surprised, for instance,  that Ex-Goldman Sachs Boss and US Treasury Secretary Hank Paulson for all his life has been an avid environmentalist and nature conservancy wonk in his free time – a contrast to his day job which could not be more gasping and irrational.

Having worked as a consultant for three month at Germany’s largest Bank in Frankfurt 13 years ago the entire movie struck a strange déjà vu for me. It's silent pace, the sterile, nearly theatrical acting of the main protagonists, the architecture and interior design, the language ridden with Anglicisms - all this resonates very well with my memories from that time. Despite unearthing a rather dire reality the movie is a very watchable, even humerous experience leading us into an otherwise hard to be experienced space – the world of global finance taking place far above ‘the city below’...

DM

The movie 'The City Below' plays at the GOETHE FILMS@TIFF Bell Lightbox in Toronto, October 30, 6.30pm

Marx is back

Well, this headline only works if Marx was ever gone, if you know what I mean. But no, now he is literally back, and this in no less a becoming space than on the new edition of Mastercard issued by the German savings bank Sparkasse Chemnitz. And this by popular demand, no less. Customers in this East German city were asked to vote on what motive they would like to see on their credit cards – and Karl Marx won hands down!

Now, we have to be correct here. Technically, it is not Marx the philosopher who was voted in. The bank’s customer’s in Chemnitz (for 40 years under communist rule it was actually called ‘Karl-Marx-Stadt’) were given a choice of the city’s landmarks, and the humongous Karl Marx sculpture - that survived the zeal to eradicate the GDR legacy - won the competition. It is impressive; I had a chance to check it out last Christmas (see the picture below).

So here we are, Marx on a Mastercard. For many this is just hilarious, for some it’s a sad sign of how capitalism has now even commoditized and incorporated the very symbol of its critique. For me personally, Marx on a Mastercard is nothing short of a neat symbol that maybe Marx’s real contribution to the world gets slowly appreciated.

Apart from a few intellectuals who wear the brand of being a Marxist on their sleeves, after the fall of the iron curtain Marx was considered by most people as being disposed of to where he belongs: the scrap yard of history.

I am not a Marxist and my education did not give me a chance to study Marx in too much detail. The more though I become acquainted with his thinking I find that Marx today is more relevant and important than ever before. Francis Fukuyama (‘The end of history’) and all those other, mostly conservative, thinkers who gleefully touted the demise of Marx after the collapse of Communism in Eastern Europe in my view were seriously misguided. In fact I happen to believe that the true ‘Marxists’, the people who act like Marx predicted capitalism would make people to behave, are actually in the conservative end, or right wing, of the political spectrum.

An anecdote to this effect from the country of today’s Marx-tercard: in the run-up to Germany’s first election after the reunification in 1990 the opposition leader Oscar Lafontaine called the incumbent Chancellor Kohl ‘the last surviving Marxist’. Why? Kohl believed that the country could only be unified if it got a common currency immediately. Unifying a country for the political right in Germany at the time was all about creating common economic conditions. Exactly this is the core of Marx’ analysis: in a capitalist society the only dimension which governs all social relationships is the economic level. The Left at the time in Germany though saw very clearly what we know now: to unify a nation split apart for 40 years in very different circumstances a host of other policies would be more important than just the economic level.

Here is why I think the people who voted Karl Marx the Millennium’s ‘Greatest Thinker’ in a BBC poll a decade ago were bang on the money: Marx was one of – maybe even the first –political philosopher who understood that modern capitalism, if allowed to prosper and dominate, will render the economic relations between members of a society as the most important and ultimately the only bond that keeps a community together. What keeps a society together in his view are purely the economic ties between the individual actors. For us today that maybe sounds a bit trivial. But at the time of him writing this it was truly a revolutionary thesis – and the fact that we consider this to be so normal just goes to show how correct Marx’ analysis was.

Communism in some ways is a footnote to Marx’s work, I sometimes think. If ownership of the means of production (i.e. capital) is the main bond of a society, a fair society would be like one where this ownership is evenly distributed. Communism did not work because his analysis of human beings as purely economic actors of course is a bit limited. But he came to this conclusion by analyzing the then emergent system of capitalism – and in our current capitalist system we just see how right he was.

His main legacy then is still powerful and visible today though. If Marx were to rise from the dead today I would venture the guess that the places where he would find himself most well understood would be the modern business school. He would not necessarily like what he hears, but he would have no problem to get the language and rationale of the place. Just take the model of the firm as an example: business school orthodoxy still is that firms are purely economic actors and that the only way to explain and to run them is by focusing on economic relations. The core tenets of Agency Theory as the dominating theoretical framework in business schools conceptualize human beings just along these lines: little predators whose only interest in life is the maximization of their economic goals.

The fairly new areas of CSR/Business Ethics/Sustainability etc. have entered the business school agenda just because it has become so blatantly obvious that businesses have other impacts and goals – for better or for worse – than just those economic ones. But even if we look at the CSR literature – the vast majority of it is still focusing on the ‘business case’ for CSR; if you want to do a good job in an MBA class on CSR you have to sell it as a means to sell more stuff, or to reduce cost, or at least as a way to manage risks. In other words, the only ‘correct’ way to be socially responsible is when it actually makes economic sense.

So putting Marx on a Mastercard is actually not so bad a place. Ask an (illegal) immigrant in Europe or North America how important it is to have a credit card: it establishes an economic relation, for sure. But that relation is so important as it is a basis for all other aspects of being a membership in today’s society. A credit card – especially in the age of the internet – is one of the most vital links to membership in the wider community; an economic relationship which crucially shapes all the other social, political or otherwise defined relationships in society. So Karl Marx fiercely staring at us from the Mastercard of the Sparkasse Chemnitz maybe just wants to tell us: ‘I told you so!’

DM

Cucumber ethics

Last week’s E-coli outbreak in Germany was another interesting case study in the ethics of risk management. A ferocious looking bacteria, thought to be carried by the very food we eat whenever we feel like a healthy option (i.e. salad vegetables) has led to a scare that has plummeted many of Europe’s farmers into severe financial troubles. On the face of it the numbers don’t quite hit home why exactly consumers and regulators across Europe (and especially in Germany) have reacted so strongly: while, sadly, 26 people have died so far from the E-coli outbreak, this number looks negligible in comparison to Germany’s 3,651 fatalities in road accidents annually (in 2010). Banning Spanish cucumbers – sure thing! But touching the fundamental right of Germans to speed without limit on the Autobahn? No way, no one even thinks about that.

Fair enough maybe - food is one of those things that does raise the risk perception more than almost any other. But one of the more curious things about the outbreak was the initial culprit: cucumbers (especially as attention eventually turned to those evil little bean sprouts). But of course it wasn't just any old cucumbers - still less German cucumbers - but Spanish cucumbers that were blamed. In a continuously integrating EU economy, suddenly a poor little vegetable becomes the carrier of nationalistic identities and accusations.

There is something about cucumbers, one has to admit. In the German context, the vegetable has once before been at the centre of a rather black humoured joke just in the wake of the unification in 1989. The German satirical magazine ‘Titanic’ opened with a picture of ‘Zonen-Gabi’ (‘Gabi from the East’) holding up ‘her first banana’: a cucumber, peeled in the style of a banana. This of course was to make fun of the chronic absence of exotic fruits in the East during the time of the wall. The cucumber became an epitome of the split national identity that divided the unifying halves of the country at the time.

Poor cucumbers have also been at the centre of many jokes about the regulatory frenzy of EU bureaucrats in Europe. Allegedly there exist norms that lay out not merely how long, hard and green a cucumber must be but which even stipulate the degree of a cucumber's curvature: at maximum, its arc can be no more than 10 millimetres per 10 centimetre length. Imposed on poor Polish or Czech farmers prior to their countries’ accession to the EU, these regulations made the vegetable a symbol of the hegemonic power of Brussels and the nearly totalitarian zeal of regulating even the smallest little detail. All symbolized by, yes, cucumbers!

How political the innocent vegetable can become was demonstrated nowhere more strongly than in Iraq. According the UK newspaper the Telegraph, a few years ago Al-Qaeda leaders in Anbar province allegedly banned women from buying cucumbers because they considered them to be ‘male’ vegetables, and therefore in violation of religious law. Tomatoes, however, were perfectly fine for women to buy because they were considered female.

Well, if we were to do more research on the cultural history of cucumbers, who knows where we might end up - but Crane and Matten have no intention of jeopardizing the ‘General Audiences’ rating of their blog! Still, who would have thought that the lowly green vegetable could be such a repository of ethical values and a tool for inter-cultural conflict. So next time you're in the supermarket remember to take a second look at those cucumbers. There's so much more to them than meets the eye.


Top photo by Surian Soosay. Reproduced under creative commons licence

Nuclear fallouts

These last weekshave been, if anything, exciting times for anybody interested in the mechanics of international news cycles. While the earthquake, tsunami and nuclear meltdown in Japan were continuing to unfold, the new war in Libya seemed to dominate the headlines for a few days. Now, with more bad news from Japan the topic seems to be back on the agenda.

It is interesting to see how many of the debates of the 1980s on nuclear power are slowly coming back to the fore. Furthermore, the same irrationalities in dealing with risks are coming back on to the agenda. Since nuclear risks mainly exist in the individual’s perception, the debate over the last two weeks has been a splendid laboratory in understanding the social construction processes of reality.

One of the more surprising comments to read came from long-time environmental activist and commentator George Monbiot. In his regular column in The Guardian he shocked many with a relatively straightforward plea in favour of atomic energy. Mostly on the grounds of it being more climate friendly than coal. While his arguments are worth listening to it was surprising how he made his case: even taking the Chernobyl disaster into account, he argued that far fewer people died from nuclear power so far than will potentially do so in the future from global warming.

The interesting point here is not so much this weighing-against-each-other of life, disease and hazards but the fact that in the second decade of the new millennium, one crucial difference to the debate in the 1980s is visible: the spectre of global warming. The way we evaluate and compare these risks largely depends on our subjective evaluation. Monbiot in the British Isles probably has a very different recollection of the Chernobyl disaster than, say, people in Continental or Eastern Europe.

Arguably the country where the Japan disaster has caused the biggest ripples for business and politics is Germany. Not only did Physics-PhD and staunch nuclear supporter Angela Merkel announce immediately a 180-degree turnaround in the nation’s policy on nuclear energy. This was enough to anger large parts of the German business community. It did not help that her Economics minister Rainer Brüderle told industry leaders in a meeting that this was just ‘electoral tactics’ – a comment promptly leaked to the public and leading to his resignation from his role in the Liberal Party FDP.

The biggest winners of the debate in Germany currently are – to no surprise – the Greens. For the first time in history, they have scored enough votes to gain power in one of the most important states (Baden-Württemberg) in the southwest of Germany. The Green party now for the first time leads a state government and Germany has its first Green state premier. And this in one of the most conservative and industrious states of Germany, home to many crown jewels of German business, including Mercedes and Porsche. According to many commentators it was mostly the nuclear topic which swung voters to turn out for the Greens.

Funny enough, our own comments on this blog attracted some interesting attention from the media. We gave a couple of interviews recently – interestingly enough mostly for Chinese and Indian TV stations. Click on the clip (for Omni 2, a Canadian Chinese language program) – it is curious to see what journalists find worth quoting. It was probably the most trivial and banal thing we said in an interview which went on for more than 30 minutes. Which brings us back to news cycles. What a funny world we live in...

Photo by spacepleb. Reproduced under Creative Commons Licence

‘Baron zu Googleberg’

Our last blog looked at the role social media and other internet or mobile based communications technologies and their role in shaping a somewhat new, ideology-free form of revolution in Egypt. One of our readers hinted to Malcolm Gladwell’s comment on the web edition of the New Yorker which poured some water into the wine of excitement about the potential of new technology. And what we saw from Yemen, Bahrain and other Arab countries this week seems to add to the perspective: it is not just new media which makes revolutions inevitable. There are still a number of other factors which mediate the eruption and impact of widespread discontent in the Middle East.

On a different note though, last week has shown the power of the internet for holding politicians accountable in a somewhat new and quaint context. Since a couple of years, Germany has a new rising star in politics, the current Secretary of Defence Karl-Theodor zu Guttenberg (his real name runs over half a page of nobility titles and stuff – we spare you this). He is young (39), smart and eloquent, good looking, filthy (old money-) rich as a Baron with a long ancestry of Franconian nobility, boasts a beautiful wife and cute kids and so far has done quite a good job as a federal top politician in Berlin. He is well connected, also beyond Germany and one of the few German politicians who can actually talk coherently in English (then Industry Secretary). Many touted him for future Chancellor (German for Prime Minister).

Earlier last week though events took an ugly turn. Andreas Fischer-Lescano, a law professor from Bremen University, published a book review of Guttenberg’s recently published PhD thesis in some law review. Initially drawn to the work by scholarly interest – the book is a comparative study of constitutional law in the US and Europe – he had some strange déjà-vu’s while reading Guttenberg’s 435-page tome. He googled a few paragraphs which appeared familiar and as a result, he published in the appendix to his review dozens of passages, where Guttenberg had just copied and pasted newspaper articles, speech manuscripts and journal papers. Of course without any citation, any reference and without even mentioning most of them in his 50-page reference list. Immediately, an online community of bloggers and researchers zoomed in on the case. The immediately set up website ‘GuttenPlag Wiki’ so far has digged up around 120 alleged incidents of plagiarism in Guttenberg’s PhD.

Now one has to consider that in Germany carrying a ‘Dr.’ in front of your name - rather than indicating academic ambitions – is, however, by now almost a requisite to enter the higher echelons of politics and business. So getting the title by what now appears to be a thesis rampant with plagiarized parts is no small feat. No wonder this lead to widespread debate about whether such a cheating and disingenuous individual could still be in such senior political role. Especially as his brand was very much predicated on being ‘authentic’, ‘straightforward’ and ‘genuine’ – unlike all those clichés the public normally harbours about the political class. The glee about ‘zu Copyberg’, ‘Baron Cut-and-Paste’ or ‘zu Googleberg’ is limitless in European media.

Now the interesting thing about this is not necessarily the fact that we come across yet another sleazy politician. Fair enough, if the allegations are true, zu Guttenberg has cheated and there is no way he could keep his degree. More serious, it now came out that he also used the Parliamentary Research department and pasted their reports into his PhD - without any reference. In fact, suspicions that the whole tome was written by a Ghostwriter are now popping up all over the web. The Minister has announced on Friday: "I will temporarily, I repeat temporarily, give up my doctoral title." Crisis management German style.

The really interesting story in our view though is the pivotal role the internet has played in this case. The initial review in the law journal was only possible because some young guy in a provincial university was able to use Google and other software to detect plagiarism comprehensively. And the subsequent frenzy of research online which discovered even more incidents of plagiarism just put up the heat on Guttenberg. Politicians – like most of us these days – are so much more transparent and thus also accountable for their legacy and actions – just because technology empowers ‘normal’ citizens to access so much more information. One of the funnier incidents in cypberspace is the facebook page on this (‘If Guttenberg has a Doctor, I want one too!’) or the new keyboard designed for PhDs a la Guttenberg - with all keys removed except the 'c'ut and 'v'-paste ones...

The lessons from this are clear. Yes, it still matters how people think, what ethical convictions drive them and what values are held in high regard. For many other places in the world, this scandal just sounds a little quaint, German, parochial. In the Anglo-Saxon World, politicians are more prone to fall over irregularities in their love life. But the dynamics and the mechanics of political processes – be it the fairly prosaic plagiarism in the PhD thesis of a German politician or the far more substantial way of organising a revolution in Egypt – are fundamentally altered by the way we can access, process, analyse and distribute information these days. Kadhafi’s shoutdown of social media in Libya today just seems to underline this point.

Needless to say, that those cases also raises some challenging implications for private corporations, whose ethical behaviour now - just by dint of the technical means - faces a new wave of transparency. But that's a topic for a whole now blog, we guess.

Photo by isafmedia. Reproduced under Creative Commons Licence.

Britain's bribery shame to end?

For the past few years, we have watched with sagging spirits the abject failures of the UK authorities to get to grips with overseas bribery by British firms. It's been a real stain on the reputation of the country, its rule of law, and its businesses. With the US pressing ahead with numerous convictions under its beefed up enforcement of the Foreign Corrupt Practices Act (i.e. any firm listed in the US is liable to prosecution for bribery wherever in the world it may have occurred), Britain has become something of an international embarrassment. So much so, that at the end of last year, the former head of Transparency International UK, Laurance Cockcroft bemoaned "Britain's bribery shame".


Cockcroft's article in the magazine Ethical Corporation, written following a damning report from the OECD's working group on bribery, made the case pretty starkly:

"This extraordinarily feeble performance by the UK is regarded as symptomatic of a profound lack of commitment to addressing corruption. The report of the OECD working group suggests the UK government’s inaction is creating a situation where UK-based companies can behave with impunity in the payment of bribes to win overseas business. ... [Earlier] the OECD had raised the question of whether the UK’s failure was effectively “systemic”. This implied that the nexus of inadequate legislation, feeble prosecuting agencies and a political willingness to buckle to an ally (Saudi Arabia) made uncomfortable by a criminal investigation meant that the UK was totally unable to address corruption. This fear was quietly reinforced by the fact that in Transparency International’s corruption perceptions index, published in September this year, the UK fell from 12th to 16th place."

We've talked here before about the huge BAE scandal in the UK, and the country's decline on the TI rankings. In the new edition of our business ethics book, which is just going into production, we explore the events in even more detail. But those of you that want the 2 second overview, the bottom line is that the Serious Fraud Office was forced by the British government to cave in on its investigation of BAE's alleged millions in bribes paid to Saudi Arabian officials after heavy lobbying from the company and the Saudi government. The whole episode spoke of a huge ethical failure - and even a wrenching of the basic rule of law. As Cockcroft put it (and he was among the more reserved commentators): "Ten years ago, the international community relied on the UK to be progressive in this arena. Now, disappointment at the lack of a serious stand has turned to disbelief, and disbelief to anger."

Today though, comes news of a small but significant breakthrough, with the announcement by the SFO of its first conviction of a major British firm for overseas bribery. The firm, Mabey and Johnson, a signifant player in the world of bridge-building firm, was found to have paid bribes totalling £1m to foreign politicians and officials to secure export orders. Operated through covert middlemen, the bribes were paid to officials in a range of developing countries in Africa, Asia and the Caribbean. The SFO, learning something from its US cousins, tconcluded its first plea bargain type conviction which saw Mabey and Johnson slapped with more than £6.5m in fines and reparations to foreign governments.

This can only be good news for the beleagured SFO which only a few months ago had been left dispirited and demoralized by the BAE failure. Its head and the main BAE investigator had both left the organization soon after the government had effectively closed down their biggest ever bribery investigation. Now, media reports suggest that the new director, Richard Alderman, may be ready to push for a plea bargain at BAE too.

Today's news can only be welcomed by those of us with an interest in seeing the UK get back into the driving seat on dealing with overseas bribery. However, it will take more than one prosecution to wash away the shame of its pitiful performance over the past decade. The country's record of investigating and prosecuting bribery is still woeful in comparison to its peers – at the end of 2008, only two cases had been brought, compared with 103 in the US, 43 in Germany and 19 in France. Let's not pretend that this is because British companies are so much more honest when it comes to bribery than their contemporaries - it's more a case of them simply being able to get away with it. And realistically, only a conviction of BAE is going to change the perception of Britain as a soft-touch country, at least in the short to medium term. The SFO has little time to lose - especially if they don't want to be further embarassed by the Americans prosecuting the iconic British firm before they do. But it's still not clear if the ethics will simply get submerged by the politics again.