Integrity may be a mere value, but lack of it has brought down giants in the business world.
By FRANCIS FONDO
Despite having developed codes of ethics, many organisations the world over still experience an escalation of corrupt practices from within. Whether the organisation operates in the private or public sector, bribery and corruption have become rampant with the perpetrators being either top management or junior employees. The result in most cases has been a shutdown of the operations of the organisation when all its cash has been milked dry and none is left to run the business, causing loss of investment and jobs causing misery to many families of the people who were employed in the organisation.
Where it begins
Unethical behaviour has several causes. The first root cause is lack of personal ethics. As individuals at an early age we are typically taught that it is wrong to lie and steal, that it is right to behave with integrity and honour and to stand up for what we believe to be right and true. This is generally true across many societies. Personal ethics that guide our behaviour come from many sources, including our parents, our schools, our religions and the media. Our personal ethical code gained at that early stage exerts a profound influence on the way we behave later in life. If this code does not exist and children grow up with unethical behaviour, such behaviour will continue in adulthood wherever they will be employed. An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business or organisational setting. It follows that the first step to establishing a strong set of business ethics for a society or organisation is to emphasize strong personal ethics.
Leader impact
The second root cause of unethical behaviour is leadership. Nowhere is this well exemplified than in the case of Enron, an American energy company which collapsed and went into liquidation in 2001 due to financial mismanagement and theft of funds. From a share price as high as USD91.00, the share price plummeted to USD1.00 within a short period of time causing untold loss of wealth to shareholders. Using accounting loopholes and poor financial reporting, the Chairman Kenneth Lay, CEO Jeffrey Skilling and the Chief Finance Officer Andrew Fastow were able to siphon millions of dollars from the company’s cash to accounts held in senior executives’ bank accounts. In order to succeed in this, the three executives compromised the external auditing firm Arthur Andersen through the payment of hefty auditing fees amounting to USD25 million in the year 2000 and USD27 million in consulting fees. Subsequently, because of playing a dirty role, Arthur Andersen was in August 2002 charged with and found guilty of obstruction of justice for shredding its Enron audit files. The company surrendered its Certified Public Accountant license and all its 85,000 staff worldwide lost their jobs.
A culture of bribery
This is when bribery becomes a way of life and the sole means by which the organisation wins its business orders. A good illustration of this root cause is the case of Siemens, the Germany Electronics firm. As documented by Laurie J. Mullins in her book International Business: competing in the Global Marketplace, since 1999 the company had apparently paid USD1.4 billion in bribes to win mobile phone and telecommunications contracts, to build power plants, to supply medical equipment and so on. Corruption in the company was deeply embedded in the business culture. Prior to 1999, bribery of foreign officials was not illegal in Germany and indeed, bribes were a deductible expense under the country’s tax law. When the law was changed in 1999, Siemens, in their wisdom, continued with the practice. Money was transferred to bank accounts which were hard to trace in Switzerland and were then used to hire outside consultants who would help win overseas contracts and deliver the cash to the ultimate recipients, typically government officials. To justify the culture of corruption, the leadership rationale was that it was about keeping the business alive and not jeopardising thousands of jobs. Sadly, the practice left behind angry competitors worldwide who were shut out of contracts. Additionally, it left angry nationals of poor countries who paid too much for government services because of the loaded costs which could escalate by as much as 40 per cent of the contract price.
Inculcating moral courage
It is important to give moral courage to employees to reinforce their compliance with personal and business ethics. Moral courage gives the employee strength to say ‘’No’’ to a supervisor who instructs her to pursue actions that are unethical. Moral courage also gives the employee the courage to blow the whistle on persistent unethical behaviour in the organisation. An organisation should state clearly in its code of ethics, its encouragement to employees to bring to the attention of the Board or to that of senior management, any breach or suspected breach of ethics. Provision should be made for all employees to be able to report such cases in confidence and that no employee will suffer because of doing so.
Dr. Francis Kalama Fondo is a member of KIM (MKIM), ICPAK and ICSPK. Email: francisfondo@gmail.com
