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Corporate Ethics - Better or Worse than the Past?


There have been a number of high profile corporate scandals over the last couple of years. Former WorldCom Chief Executive Officer, Bernard Ebbers, was recently convicted of perpetuating the largest corporate fraud in American history. WorldCom, Enron, Tyco and other corporate scandals have cost millions of Americans their investments, retirement plans and even their jobs. VOA's Brian Purchia looks at possible causes.

WorldCom C.E.O., Bernard Ebbers, transformed a long-distance firm from Mississippi into one of America's largest telecommunications companies. But, he also was responsible for its colossal collapse and subsequent bankruptcy, the largest in U.S. history.

Former federal prosecutor, Jay Fahy said, "The amount of the fraud was so massive. An 11-billion dollar fraud is just mind boggling."

The WorldCom scandal is just one in a line of corporate frauds that became public after the Internet bubble burst and the U.S. stock market began to stumble. Among the companies under investigation or paying fines to settle charges: Qwest Communications, Fannie Mae, TimeWarner, and Adelphia Communications.

Some have suggested modern executives are more greedy.

"Absolutely not," says Professor Douglas McCabe of Georgetown University's business school.

He adds, "Corruption is no more greater now or less than 2000 years ago. It just seems that way, because of the instantaneous response of the media."

Mary Still is a sociologist for American University's Worklife Law program in the nation's capital. "We have a tendency to feel whenever some news scandal comes about, whether it's a political scandal, a business scandal, or a sports scandal, to feel that it's entirely unique and it's worse than anything that's ever come before."

Ms. Still continued, "I think there's always going to be a certain amount of malfeasance. I think we're definitely better at catching companies than we used to be."

Pierre-Yves Dugua, a business correspondent for the French paper, Le Figaro, says Europeans are surprised by the sheer number of recent scandals.

"There is clearly a feeling that the American capitalist system is not as transparent as it claimed to be. This being said, there is also a feeling that it is probably still more transparent than most other systems."

Ms. Still says increasing pressure on corporate executives to improve efficiency and benefits to shareholders is a factor in the scandals.

"The increasing competition on companies to be competitive on the global work world that we have now probably leads to more malfeasance on the part of people within the companies."

Douglas McCabe disagrees. "No. The pressure has always been the same. Whether you're Henry Ford a hundred years ago or Alfred P. Sloan at General Motors in the 1920s and 30s the pressure is always been there. I would just hope in my heart that C.E.O.s realize that the best way to achieve long term profitability is by practicing sound corporate social responsibilities and business ethics."

If C.E.O.s fail to practice sound ethics, it might be because they were never taught them in the first place. Ms. Still says studies show that by the time business students finish graduate school their ethical standards have changed: they have become more aggressive and care only about the bottom line: making money.

"Some where along in that very important M.B.A. education process in the United States, which really is the major channel for where we get our future managers, there's not enough attention to the ethical dimensions," says Ms. Still.

Professor McCabe says you can make a lot of money acting unethically in the short term, but in the long term it's going to hurt your corporate profits and negatively affect your shareholder return. In short, he says, good ethics are good for business.

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