"Because I could..."

Dr. Michael Walsh

In response to a question from Dan Rather in a recent "60 Minutes" interview, Bill Clinton offered as the reason for his affair with Monica Lewinski "because I could." He then, with some grace, went on to say, "this is just about the most morally indefensible reason anybody could have for doing anything."

It is morally indefensible because it fails totally to address the central question of ethics which is not "what can I do" but "what ought I do".

Unfortunately, Clinton is by no means alone in acting unethically simply because he could. Newspapers and television are full of stories of such examples. In America, the ethical and legal failures of Enron executives are back in the headlines recently with the arrest of founding CEO, Kenneth Lay. There is a host of examples of senior executives engaged in price-fixing, fraud, conflicts of interest, bribery and such like. The obscene amounts of money involved would make many third world countries green with envy. Why do they do it? Not because they need the money; more likely, simply because they could.

Australian examples

Similar stories are to be found here at home.

What lay behind the collapse of HIH or One-Tel? To some extent it was simply because of group of wealthy and powerful men began to consider themselves beyond the restraints of the rules governing normal business practice.

Why did the young "rogue traders" at National Australia Bank do what they did? Apart from greed, it seems to have been born of a feeling that the rules did not apply to them. A quick reading of "Fake: My Life as a Rogue Trader" by David Bullen, one of the traders involved, certainly leaves the impression that he does not seem to be bound by rules of business, or professional ethics. Add to that a failure in appropriate supervision by people more interested in profits than the means employed to make them.

Alan Kohler describes the PriceWaterhouseCoopers report as "a gripping, page-turning yarn about greed, arrogance and incompetence." (Inside Business, 14/03/2004).

The current government inquiry chaired by Ian Temby, QC into the corporate governance and financial issues between the Penrith Panthers Club and Phyro Holdings provides a further example. Phyro Holdings, Panthers' CEO Roger Cowan's family company, made payments directly to individual players rather than via the football club. These payments may have contravened the salary cap. Asked to explain why they were made in this fashion, Cowan replied that "it seemed convenient at the time".

A common feature of unethical practice seems to be a lack of regard for normal ethical restraints. Those responsible probably did not really think what they were doing was correct. It is more likely that the dimension of ethics did not feature in their thinking. In such cases, it is rare to find evidence of reflection or questioning, usually it is simply doing what was convenient and suited their ends. To reach the positions of responsibility they had, they must have been aware of what is regarded as honest dealing or good corporate governance, why then did they do what they did?

Hubris

Hubris is a common theme in ancient Greek mythology and poetry. It refers to the attitude of the so-called "hero" who, after many feats of prowess, came to see himself as above the masses and akin to the gods. It referred to someone who possessed considerable gifts and who came to believe that he was superior to others and able to take advantage of them. The ancient Greeks present such cases as disturbances of the right harmony that ought to exist within the community and with nature.

Harm to the wider community is essential to the concept of hubris. It is not just a matter of unethical behaviour. Some powerful people bring shame on themselves more through thoughtlessness than hubris. They get caught out in infidelity or drug use, acts which are unethical or illegal but which do not necessarily harm the community at large. Others act in a way that clearly indicates their indifference to lesser mortals and harms the wider community. Clear enough examples are Richard Nixon and Watergate, Bill Clinton and Lewinski, or Leona Helmsley, the New York hotel tycoon who went to jail for tax evasion because paying taxes is only for the "little people". Hubris is tied up with the abuse of power and is a clear example of how power corrupts.

Early warning signs

Unfortunately, hubris is unlikely to be noticed by the perpetrator. They are people who are no longer concerned enough to reflect on their behaviour and its effects, except in so far as it furthers their personal goals. Success, as the Greeks knew, can be a very heady wine. Over a period of time and in a context where results can be emphasized at the cost of other values, a person can begin to lose track of other values, begin to see them as excuses for low achievers. But the early signs can and should be noticed by supervisors or colleagues. Accountability, transparency, reporting and disclosure are designed to pick up ethical failure and to keep people's feet "on the ground".

Lessons need to be learned from the current examples in the areas of sound corporate governance and careful supervision. Without wanting to stifle initiative, it is vital that checks and balances are instituted and applied.

Nick Leeson, who brought down Barings' says the lessons that should have been learned have gone unheeded. "The main flaw is the brightest talents go to the head of the organisation - which tends to be pushed towards the trading floor - while compliance, regulatory and settlement areas tend to be ignored," he says.

Getting back on track

Reform is possible, both for the individual and the corporation. It often takes a sudden jolt or failure and subsequent punishment. Perhaps in Clinton's case, the threat of impeachment was sufficient to shift him into a more reflective and self-questioning mode. For Nick Leeson, a spell in gaol seems to have helped him understand the need for barriers to restrain those who think they can conquer all.

Westpac's current concern for ethics and ethical performance indicates a marked change from earlier problems that had a negative impact on their reputation and their bottom line. It shows how a corporation can reform itself.

For an individual, it may be that the need to be able to look family and friends in the eye becomes a light to begin to recapture a sense of his or her own humanity.