UNIT 10 ....

ETHICS

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BUSI N ESS BRI EF ·
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Bribery and corruption

Whether persuading key officials to give authorisation to set up in business, grant government
contracts or just let your goods through customs, the alternatives for the word bribe are many
and varied: kickback, sweetener (Am E), backhander (BrE), baksheesh and the greasing of palms
(international). The law courts, if it gets that far, will refer more prosaically to illicit payments,
and defendants in such cases may just talk about commissions. If payments go to a slush fund
to finance a political party, this form of corruption may be referred to as sleaze, especially by
journalists.

The corporation as good citizen

All businesses increasingly want to be perceived as good citizens. Different types of business
face different ethical issues.

• Following the accounting scandals at Enron and WorldCom, which gave a false view of their
profits, despite the work of their auditors, the outside accountants who are meant to prevent
this, there has been pressure on legislators and regulators to improve accounting standards.

• When the strain of competing gets too much, competitors may go for the easier option of
price fixing, so that each can maintain a reasonable profit margin. Competitors who do this
form a cartel. This is an area where outsiders may only find out what is going on i f one of the
managers involved contacts the authorities. Someone doing this is a whistleblower.

• Financial institutions try to prevent insider trading by erecting notional barriers called
Chinese walls between different departments: to prevent someone in share trading from
discovering from the mergers department that a particular company is involved in merger
talks and that its share price will soon rise.

• Financial institutions also have to guard against money laundering, where money passes
through the banking system in a way that disguises its criminal origins.

• Manufacturers increasingly claim that their products are green or environmentally friendly in
all stages of their production, use and disposal.

• Clothing companies claim to trade fairly and that their products were not made in sweatshops
paying subsistence wages and using child labour.

• Companies in general will talk about equal opportunities or, in the US, their affirmative action
program, to ensure that people are recruited and promoted on the basis of merit and not
discriminated against on the grounds of race or gender. Women who get promoted so far and
no further complain of the glass ceiling. These are part of the social issues of equality and
diversity.
And, of course, the near-collapse of the banking system in 2008 was blamed by many on the
greed of those who ran them, including their willingness to sell ultimately worthless securities as
high-grade financial investments.

Codes of ethics and mission statements

A company's internal code of ethics contains its ethical credo and may cover any of the issues
mentioned above. Some of the financial, environmental and diversity-related issues may also be
referred to in its mission statement. And there may even be an ethics ombudsman to check that
they are put into practice and deal with complaints when they are not. All the issues mentioned
here are part of the wider picture of corporate social responsibility (CSR). Companies have to
pay attention to the triple bottom line of economic, social and environmental sustainability.

Read on
Wayne Visser et a/: The A to Z of Corporate Social Responsibility, Wiley, 2007

Simon Webley and Lise More: Does Business Ethics Pay? I nstitute of Business Ethics, 2003

Doris Rubenstein: The Good Corporate Citizen, Wiley, 2004

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