Why all these whistleblowers recently?

Whistleblowing, this obscure practice discussed in most business ethics textbooks (we do so in Chapter 7), has become a big topic of discussion these days. The latest incident is Edward Snowdon and his revelation about the ongoing surveillance of phone and internet usage of American citizens by the US government. But he is not alone: currently on trial is Bradley Manning, who provided Wikileaks with the material for exposing the diplomatic correspondence of the US government.

The general contention with whistleblowing is becoming clear in both cases: are these individual traitors who defaulted on their duties by breaching the rules and codes they had agreed to abide by when entering their job? Or are they ‘heroes’ whose behavior is governed by higher, more general, and persistent ethical standards than their day-to-day job environment would allow them to follow?

It is useful to look at some historic cases of whistleblowing – and indeed cases, where certainly by hindsight the general agreement seems to be that the whistleblowers are in the second category of ‘ethical hero’. Think of Jeffrey Wigand, the executive of tobacco company Brown&Williamson who exposed the practice of enhancing the addictive potential of cigarettes of his employer (famously turned into the movie The Insider). Or think of Sherron Watkins, who initially blew the whistle on the practices at ENRON and contributed to the uncovering of the scandal in 2001. Turning to the political sphere, currently many references are made to Daniel Ellsberg who in 1971 leaked the ‘Pentagon Papers’ disclosing that the US government for years had systematically mislead the public about the impact, casualties and costs of the Vietnam war.

Whistleblowing commonly seems to occur in a situation where the moral status of organizational practice – be it a private company or a public institution such as the NSA or the Pentagon – deviate from the wider moral values which society deems appropriate. And crucially, it has to be added, these actions also deviate from the professed moral standards of the organization against which those individuals blow the whistle.

This is rather evident in the case of Ellsberg: by the early 1970s, the public in the US all long thought that the war in Vietnam had lost its moral cause; his revelations proved that the US government, too, was all along aware that what it did in Vietnam no longer could live up to the public mission and norms according to which the American government professed to act. Similar are the cases of Wigand and Watkins: in the same way the Tobacco industry outwardly professed that they were not aware of the addictive impact of cigarettes, ENRON had always claimed to be an ethical company. The same applies to the current Manning and Snowdon cases: Obama ran on the promise to stop the abuses by the previous Bush administration and to restore basic civil liberties – and is now found out to do the same or worse.

The dilemma of whistleblowers all points to the fundamental differentiation established by Max Weber a century ago: Members of a social group (incl. an organization) can act according to an ethics of responsibility or according to an ethics of conviction. The first looks at the consequences of an action and basically suggests that a virtuous individual is one that lives up to the expectations of all who are affected directly by the consequences of an action. In practice, this boils down to abiding by the rules and procedures of the organization. The main arguments against whistleblowing then all come in the shape of what the effects of the revelations are on other people (that was the big argument against Wikileaks) or how it affects the general functioning of a secret service where everybody potentially can leak anything (the current debate on Snowdon).

What justifies whistleblowing then is Weber’s ethics of conviction according to which an individual makes an ethical choice based on personal moral convictions. The act is based on principles, rather than anticipated consequences. In most cases whistleblowers refer to general principles of either good business practice regarding customers (the tobacco case) or shareholders (ENRON) or good government based on some basic democratic principles (such as the Ellsberg, Manning or Snowdon case).

Historically, such reasoning based on an ethics of conviction always becomes more relevant at a time when fundamental values of society are in question and challenged. The Vietnam war raised basic questions about the moral limits of the cold war; the tobacco scandals exposed the lack of basic moral rules of consumer protection; ENRON initiated the ongoing moral scrutiny of a shareholder value dominated form of capitalism; the Manning and Snowdon cases now raise fundamental moral questions about civic liberties, civic rights to privacy and protection of personal data and the appropriate powers of the state in protecting these liberties.

It is somewhat tragic – as probably the cases of Ellsberg and Wigand best illustrate – that whistleblowers are mostly recognized as moral, conviction-driven human beings quite some time after the events. At the time of the whistleblowing defenders of the status quo always wield two crucial tools: they can either invoke arguments following an ethics of responsibility and point to the potential harm and the anarchic nature of the act; Bradley Manning’s trial can be followed as a textbook example of this reasoning.

Or, they can try to discredit the ‘convictions’ of the whistleblower. Since these often reflect a wider moral consensus in society it is hard to attack those principles or norms directly. More effective seems to be an approach that discredits the whistleblower on a personal level. In Ellsberg’s case the CIA broke into his psychiatrist’s office to obtain information on his mental health and love life; in Wigand’s case a similar smear campaign was initiated. Currently with regard to Edward Snowdon, it is conspicuous how the entire political spectrum in the US is more or less embarking on this trajectory. From Bill Maher’s jokes last Friday night on Real Time to David Brook’s notorious profile in the New York Times - most seem eager to present him as some sort of self-aggrandizing nerd.

Whistleblowers turn up at a time when societies or organizations are deviating from commonly accepted and widely shared moral values. Whatever our concrete judgment about individuals and their motives - the fact that whistleblowing occurs at this point in history clearly points to a wider epiphany. Ironically, Snowdon relocated to the very country which for so long has been accused by the West of not respecting the human rights of their citizens in exactly this issue arena – much to the distress of Google, Yahoo or other companies. It looks like Obama currently has a bit of a hard time to explain to China, Russia or even his European allies, how his approach to privacy and data protection still reflects basic values of liberal democracies.

Picture by DonkeyHotey, reproduced under the Creative Commons License.

Canada's corruption problem

Barely a day goes by at the moment here in Canada without a new twist or turn in a corruption story hitting the headlines. Last week we got news of SNC Lavalin offering an amnesty for any employees providing information about their huge ongoing bribery scandal. The police also announced last week their intent to extradite Dr Arthur Porter for his part in allegedly receiving $22m in return for granting a contract to SNC to build the McGill University Health Centre in Montreal.

Meanwhile, Stephen Harper's government is embroiled in a major, and very persistent, scandal involving an attempted cover-up of some dodgy expenses claims by a conservative senator. This involved Harper's (now resigned) Chief of Staff giving a "gift" of $90,000 to Senator Mike Duffy to reimburse his questionable claim and stave off any further the investigation. Oh, and who can ignore the now internationally ridiculed mayor of Toronto, who in the wake of allegations about him being caught on video smoking crack, has now had 5 members of his administration resign or get fired for, so far, unspecified reasons. Add to that the other revelations trickling out of the ongoing Charbonneau Inquiry into corruption in Quebec, and a second Laval city mayor in a matter of months accused of taking bribes and clearly all is not well in the country formerly known for peace, order and good governance.

On the face of it, Canada has a serious corruption problem. So it was refreshing to hear last week at the aptly timed Spotlight on Anti-Corruption organized by Transparency International Canada that actually, with respect to upholding its obligations for combating international bribery, Canada is actually in the midst of a major upswing. Following years of apathy and a failure to prosecute any violations of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, in the last few years we have seen the setting up of a dedicated and fully resourced police department responsible for anti-corruption, and since 2011 the first handful of persecutions. Remarkably, the Canadian police are now investigating no less than 35 cases of alleged bribery by Canadian companies overseas.

The general consensus among the anti-corruption community here is that, if not a leader, Canada is no longer a laggard. So one way of explaining away what might seem like a major corruption problem is to put it largely down to increased enforcement and in general a greater attention to corruption in the country. As delegates at TI's Spotlight event last week put it, the 'moral compass' on corruption has shifted for the better.

This view has some truth to it. But in our view, there is more to it than that. After all, the corruption that is hitting the headlines is of a very specific variety. It's not just petty corruption but is in fact involving some of our most senior business and political leaders - CEOs, hospital directors, city mayors, even the PM's office. And many of these leaders are not seemingly ready to take a public stand condemning the practice and doing all they can to root it out. SNC Lavalin is still aiming for a 'rogue employee' defense, whilst the approach of Harper's government seems to be one of secrecy and a refusal to admit any kind of wrongdoing.

This is the kind of corruption that in terms of 'tone at the top' is sending a very dangerous message to the rest of us that no amount of increased enforcement is going to compensate. Corruption, these leaders are implicitly saying, is something we are immune to.

So what is to be done? Well, rather than necessarily seeing this as an intractable problem, all the attention around corruption at the moment also offers a couple of important opportunities.

First, now is the time for our leaders to take a genuine leadership position on corruption. The public is ready to support it, there is a renewed vigor in the anti-corruption community, and Canada has a genuine opportunity to start staking a place closer to the head of the table rather than just aiming for not being quite so bad.

Second, now is also the time for a rethink about the regulatory environment around corruption. The Corruption of Foreign Public Officials Act was a good start and the amendments proposed in the 2013 Bill S-14: Fighting Foreign Corruption Act will make some incremental improvements. But as several delegates at the TI Spotlight pointed out, one reason why the US and other countries are so much more effective at prosecuting corruption is that they can also prosecute through civil law through the SEC. This makes the burden of proof lower and the likelihood of a successful prosecution higher. Institutions like the Ontario Securities Commission should be playing a much greater role in enforcement. Consider that 70% of all of the equity raised for the world's public mining companies happened on the Toronto Stock Exchange last year. This is a real concentration of financing for a major corruption risk industry which means that greater devolution of powers to prosecute corruption here could help enhance the reputation of an industry integral to Canada's economic prosperity.

As the old saying goes, never let a good crisis go to waste.

Photo by IntangibleArts. Reproduced under Creative Commons Licence

Danger due to: ethics

John Dalla Costa, the renowned business ethics writer and consultant teaches with us at the Schulich School of Business. He's also an occasional blogger at his site www.ceo-ethics.com. We love the piece he's just posted on the dangers of thinking that because you're doing ethics, you're going to be more ethical. With his permission, we're reposting it here since its a conversation we agree that needs to happen.

----------------------------------------------------------------------------------------------------------------------
Are ethicists more ethical than their peers in other disciplines? It’s an interesting question. A recent study published in the journal Metaphilosophy provides a limited data point, but the news, at least if you’re an ethicist like me, is not good. Comparing how university professors engage students, the researchers found no difference between ethics professors and other faculty. Even though the ethics experts set an ideal, and acknowledged that not following through on that standard was morally wrong, in action, the experts in ethics were indistinguishable from fellow academics.

Are you surprised? I’m not. But I am distressed.

I’m not surprised, because if ethics were truly relevant, or if we really understood them to be effective, we’d be invoking them with much more frequency and rigor. Canada is knee-deep is scandals, with Senators whitewashing expense reports, the Prime Minister’s Chief of Staff paying for the white paint, and the Mayor of Toronto careening from one violation of the public trust to another. Ethics are AWOL, and no one seems to be missing them.

The same is true in business. Ethics have become IKEA-like contraptions for compliance. All the imagination and enquiry have been purposefully engineered away, so that all ethics and compliance officers need to do is follow the illustrated instructions, and assemble the pre-cut pieces.

Before Lehman Brothers and Bear Stearns imploded in 2008, I managed to download the codes for ethics and conduct from their respective websites. It turns out that they were derived from a boilerplate, following numerically identical categories, and using mostly similar jargon, with only one or two cosmetic flourishes reflecting idiosyncrasies of corporate history. It would inconceivable for these global finance behemoths (or their peers) to use Quicken to do their taxes. But that’s basically what they did for their ethics – adopting a four-page template, in the name of the Board of Directors, to set the terms and scope for their ethicality. Not surprisingly, both companies got full return on their investment.

There is a good reason why we’ve talked so little about corporate ethics since the financial crisis: most corporations had already subscribed to compliance projects pre-2007, and nothing has changed since.

I’m distressed because ethics-without-ethicality repeats the diminishment of restraint and responsibility, which led to previous market failures and economic crises.

As bad as were the deceptions perpetrated by Enron, it was much worse that these accounting lies were intentionally papered-over by its auditor, Arthur Anderson. Similarly, as irresponsible as were mortgage tactics and securitizations floated by the banks in the run up to the financial crisis, it was much worse that the ratings agencies, like Standard and Poor’s, assigned Triple AAA credit value to derivates that their own in-house experts considered junk-grade. When sentinels sell-out, when they simultaneously over-estimate their virtue and under-deliver on the promise they are entrusted to uphold, bad things happen to everyone.

In his book, Confronting Vulnerability, Jonathan Schofer reminds us that moral laws and ethical rules need continuous replenishment. His point is that, while established as bulwarks against human vulnerability and exploitation, ethics are themselves vulnerable and exploitable. We fall-back on ethics as if on auto-pilot, with such doctrinaire rigidity that we cease using any critical thinking as we apply them in life’s complex ambiguities. Or, perhaps worse, we take them for granted until they become easy take-over targets for other ambitions or motivations. Principles share with practitioners the fragility of our human finitude. The most unethical thing is often denying our personal limitations for seeing what is right, and deciding what is true.

We don’t know if this research confirms that ethicists too have ceased being reliable sentinels. But it is the question that should distress and challenge us – ethicists and non-ethicists alike.

John Dalla Costa

www.ceo-ethics.com

Photo by blind dayze. Reproduced under Creative Commons licence

The rise of Islamic politics – just another mode of global capitalism?

Ever since the Iranian revolution up until the aftermath of the Arab Spring most of us were made to believe that the advent of Islamic regimes is the ultimate rise of the common man and woman in societies previously repressed and exploited by ruthless dictators. Against entrenched élites of  crony regimes and their entourage, Islamic politics could be perceived as the overdue liberation of the impoverished masses from pseudo-nobility, military dictators or other élites, having had nothing other in mind than to line their pockets for decades and transfer their wealth to Swiss bank accounts.

It is about time to get rid of this stereotype.

Recent evidence comes from Iran, as it were the prototype of this type of regime change. Former president and revolution-veteran Ali Akbar Hashemi Rafsanjani in his attempt to re-enter political life now turns out to be a billionaire – as do many of his fellow ‘religious’ leaders. Now this may appear just a co-incidence of yet another political class not resisting the temptation once given free reign over the cookie jar.

But it is not just that: the main policies of his presidency (1989-2007) read like the script book of the Washington Consensus: liberalization of the economy, creating ‘free’ markets, privatization - Rafsanjani used the classic toolbox of what often is dubbed ‘neoliberal’ capitalism in the West. The result is rather similar, too. His policies created a new super rich upper class and made life rather tough for the vast majority of Iranians. I don’t know if there was an ‘Occupy Tehran’ camp – but the story of the 1% versus the 99% would certainly resonate there. And this after three decades of Islamic fundamentalist rule.

This in itself is surprising and widely overlooked in the Western media. The Iranian revolution, together with the more recent uprisings in the ‘Arab Spring’ of 2011, had this strong whiff of a grassroots movement, driven by the disenfranchised, poor, working class, common-man-on-the-street. Much of the rhetoric of Islamic fundamentalists – from Tehran in the 1980s to Cairo or Tunis in the 2010s – sounds like left wing, anti-establishment, people driven political movements with an eye of empowering the lower and middle classes in hitherto repressed dictatorships. In reality, nothing could be further from the truth.

The best example for understanding the way Islamic fundamentalism and a capitalist ideology can be the coziest of bedfellows comes from Turkey. Founded in 1923 on the remains of the Ottoman Empire Turkey is the oldest democracy in the Muslim world. For ten years now, the country has been ruled by Recep Tayyip Erdoğan and his Islamic Fundamentalist party AKP. The Islamic aspect – while blatantly obvious in local politics - only became more visible in Turkey’s recent conflicts with Israel in the context of support for the Palestinian state. For most of his tenure though, Erdoğan was praised in the west for his economic policies. He continued the economic policies of his predecessor Özal by reducing trade and FDI barriers, liberalizing the economy, privatizing many of the large assets of the Turkish state and creating a new class of Turkish entrepreneurs, the so-called ‘Anatolian Tiger’.

Erdoğan’s base (he won his third term by nearly 50% of the popular vote) is clearly in the poorer, underdeveloped and more backward parts of Central and Eastern Turkey and the poor, fast growing neighborhoods of Turkey’s big cities. Very much what on the surface looks like a working class movement. Conspicuously though, under Erdoğan we have also seen a systematic dismantling of worker’s rights and a trade union movement deeply rooted in the 90 year tradition of a social democratic state envisigaed by Modern Turkey’s founder Atatürk. 

While Erdoğan’s Islamic ‘projects’ – from a re-instatement of headscarves in public institutions to the recent gaffe about a ban of red lipsticks for stewardesses on Turkish Airlines – have slowly garnered some attention in the West, the anti-labor inclinations of his politics have largely been under the radar. After all, they did not differentiate him too much from most other Western capitalist economies recently. Suffice to add, that Erdoğan himself and his wider family is said to have amassed a fairytale fortune over the last decade which puts him just on par with the Ayatollahs next door.

On May 1^st (the European version of Labor Day) trade union rallies and demonstrations are common on in many larger European cities. This year though in Istanbul they were banned for the first time. The hard core of labor activists that still defied the ban and turned up on the city’s central Taksim Square were met by more than 4,000 police with water cannons, rubber bullets and oodles of tear gas, leaving many injured and hospitalized. Scenes, by the way, very much reminiscent of the way US authorities dealt with the Occupy protesters from New York to California.

But this is not just one isolated incident. In 2012, Turkish Airlines fired 300 employees who went on a strike opposing imminent legislation by the AKP targeted at further limiting rights to industrial action. In the built-up to a workout planned for May 15 this year one could read paternalistic messages from the company on large screens in every sales office of Turkish Airlines, encouraging workers to trust the company rather than the union. No wonder the strike went nowhere with the union complaining about intimidation and threats to workers.

There is a growing stream of work on this topic in the Academic world. Işık Özel , a professor at Sabancı University in Istanbul has done inspiring work on how contemporary political Islam is informed by pretty much the same mindset as modern capitalism. In one of her papers, she cites the mayor of Kayseri, one of the towns at the centre of the ‘Anatolian Tiger’: "To understand this town and its flourishing economy, one would have to read Max Weber!". In short, one can argue that much of what made Protestantism the ideological midwife of modern capitalism can now be applied to many contemporary streams of political Islam.

We lack the space here to explore this further. But one take-away is fairly obvious: political Islam and the rise of regimes predicated on its religious tenets is anything but an alternative path to oppose global capitalism. As much as the rhetoric seems to juxtapose this political movement against its arch-enemy, the United States as the ultimate capitalist system, the empirical proof on the ground points in a markedly opposite direction.

Islamic fundamentalism is not an alternative to global capitalism. It is exactly the same project, albeit under a different ideological cloak.

DM

(An edited version of this blog entry was published as an Op-Ed in The Globe and Mail on June 3, 2013)

Photo by MVI , reproduced under the Creative Commons License

Tales from the organ trade

Imagine that you live in poverty. A chance arises for you to earn a year's salary in one day. All being well, no one will get hurt. In fact, what you're going to do will save someone's life. Sounds like quite a deal. Or at least it does until until you realize that what we're talking about here is selling one of your kidneys. And that it's illegal almost everywhere.

The decision to sell an organ is a stark choice. It speaks so much of all that is wrong with our global inequities. It shouldn't be happening. But, like it or not, it does happen. For many people looking to get out of poverty, the sale of one of their organs is clearly a desperate choice ... but it is also a choice that they are sometimes willing to make.

The illegal organ trade is not for the faint hearted. Sure, it saves lives, but it's an ugly business. Ric Esther Bienstock, the documentary-maker behind the award winning "Sex Slaves" documentary about global sex trafficking has taken on the subject head first and eyes open with her new film, Tales from the Organ Trade. It's getting it's North American premiere tonight here in Toronto at the Hot Docs festival. We sat down with her recently to find out exactly what lay behind her decision to focus on such a moral minefield and to ask what she's trying to achieve.

"I'm not advocating for incentivised donation. That door is shut. But I'd love the film to spark debate" says Bienstock. Unlike Sex Slaves, Tales from the Organ Trade doesn't take any sides. As Bienstock says, "sex trafficking is a very black and white issue". But making Tales from the Organ Trade took Bienstock into a lot of grey areas. "It shook me up," she admits. "When I started making the film I had a very different view from when I finished making the film. I started off thinking, its purely exploitative, period. And that's 90% of how it's characterised in media reports, films, and anything I've seen.... but there are thinkers out there, surgeons and ethicists who think that a regulated, incentivised system is the way to go. And there are people who think it is repulsive and exploitative. So I really have a sense of what they all believe, and why they believe that."

The turnaround for Bienstock was going to countries like the Philippines, Ukraine and Moldova and meeting donors. The fact is, she says, so many of the people she met were not coerced. They actively sought out the brokers who would find them a buyer. "You don't need to coerce people in the Philippines," she argues. If they are coerced, she says, they are, as she puts it, "effectively coerced by their own poverty." And what is more, they are forced into the black market, where there are virtually no protections. "If you think about it," she says, "it's a situation where you have extremely desperate people on both sides, crashing together in a black market." It's a situation ripe for exploitation.

Bienstock took more than 3 years to make the film, crisscrossing the world to talk to the different people involved in the organ trade, from donors and recipients, to the brokers and surgeons that make it all happen. Although these characters are operating outside the law, and are often portrayed as evil, exploitative crooks, Bienstock had little trouble finding them - and again, saw them as much more complicated than the typical black-and-white narratives. But getting them to give their side of the story to camera was much more difficult.

One doctor wanted by Interpol only agreed to be filmed after his mother had approved of Bienstock following a lunch date in Istanbul. Another only agreed after Bienstock had flown to Israel to meet him for coffee. "The first thing he said to me", recounts Bienstock, "is I'm not going to be in your film." He eventually agreed after Bienstock convinced him that she wasn't out to vilify him; she simply wanted his side of the story.

Tales from the Organ Trade ends up being powerful for resolutely avoiding taking sides. Rare among documentaries tackling such sensationalist subjects, it doesn't look to reinforce prejudices but invites us to make up our minds. This may make for uncomfortable viewing, but it's a necessary approach to a subject that often defies conventional ethical logic. As the film's publicity materials put it: "This is a world where the villains often save lives and the medical establishment, helpless, too often watches people die. Where the victims often walk away content and the buyers of organs - the recipients - return home with a new lease on life "