“Flexible Ethics”—an Oxymoron
by Miki Saxon
According to a post in Forbes by Gregory Unruh, citing one at Motley Fool, many corporations include “ethical waivers” in their corporate Ethical Codes of Conduct, including Goldman Sachs, ExxonMobil, Citigroup, Altria and many others.
Waiver clauses leave the door open for companies to violate their own code of ethics if executives and the board decide it’s a “good” idea. In effect, waivers are a “code of ethics safety valve,” the metaphorical opposite of a blow-out preventer. Why have them? Waivers will just cause problems; a corporate code of ethics is created and designed to limit management decision options to ethical choices. Usually it’s not a problem, but ethics can sometimes impinge on profits. Corporations and their shareholders don’t like to miss out on profits, so the safety valve allows them to sacrifice their ethics if the price pressure is high enough.
Why am I not surprised?
Both authors do an excellent job lambasting the idea that if it pays enough ethics can be waived, so I’m not going to restate the obvious.
Granted, it does take Board approval to use the waiver clause, but that doesn’t seem to be a problem.
Enron’s Board waived the Code of Ethics that prohibited self-dealing by corporate officers and approved off-balance sheet “special purpose entities” and we all know the result of that.
Again, no surprises; not when so many companies put profits, share price and looking good ahead of everything.
What did surprise amaze flabergast, me was that the Goldman Board has issued no waivers.
Confronted about this waiver, a Goldman spokesman responded to blogger ZeroHedge by saying: “The ethics code, including waiver provision, was required under [Sarbanes-Oxley] (Note: It’s not.). No waivers have been requested.”
Isn’t it nice to know that Goldman considers all their actions over the last few years to be ethical.
Wow! I’m not just surprised, I’m speechless.
Flickr image credit: http://www.flickr.com/photos/saeba/3479264260/
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