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Corporate Charades: Introduction and Part 1. Ethics Programs

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If the 16th century statesman and philosopher Sir Francis Bacon could have foreseen America's 21st century corporations he would have appended "and so too is pretense" to his dictum, "knowledge is power." Corporations today along with their government stooges maintain power partly by keeping the public in the dark and by pretending to be and do what they are not being and doing.

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A corporation is made up of many parts. Some of them are charades. One of them is the corporate ethics program. This article is about it. Others will eventually follow on the other parts. The next essay will be about corporate social responsibility programs.

As long as the general public is duped and stays duped corporations and their government stooges will continue pretending they are putting people, peace and the environment over profit and power. When you think about it, the entire corporation is a charade, not just particular parts of it. The U.S. Supreme Court farcically ruled in 2010 that corporations are persons. People who really believe that carry on conversations with stuffies. If only corporations were as benign as stuffies!

Part 1. Corporate Ethics Programs

Corporations have become masterful at talking but not walking ethics.  I will share with you a true story of a corporation where ethics was reserved for showcasing in the window.  It is a story with thousands of small variations throughout Corporate America.

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A True Story

After allegedly repeated and egregious wrongdoing, the defense contractor General Dynamics finally got a directive from the government in 1985 barring the company from further business orders until it established a compliance program. [1] The company quickly responded by retaining an ethics consulting firm to draft an ethics code, creating an ethics committee of outsiders to serve on the board of directors, hiring an outsider to be the corporate ethics program director, holding ethics workshops for employees, and opening a hotline for whistleblowers.

The ban was lifted in three months (Uncle Sam needs its war products). The ethics program director was honored in a feature article of a professional journal in which he was quoted as advising companies to "do a few things very well because only a few things really need to be done." [2]

Well, not exactly, Mr. Ethics Program Director. While a compliance program may help a company meet its contractual and other legal obligations, it can't help put a company on higher moral ground, and may even perpetuate wrongdoing by giving the company a false sense of immunity. This particular defense contractor is a case in point. The author tracked publicity about General Dynamics for several years following its heralded compliance program. Among the reported misdeeds were low balling bids, violation of safety regulations, a bonus plan for the top 25 managers deemed "just outrageous" by a government official, and, in the last file entry (before I went on to other matters until now), giving a 10-year employee a layoff notice the very day the employee returned from bereavement leave following the death of the employee's young son. [3-6]

And Decades Later, A Web of Pretense

Currently, if you go to General Dynamics' website you will see a picture of a "Stryker armored combat vehicle" that was used heavily in the Iraq war (add bells and whistles to a tank, give it a new name and make a killing). [7] Under the picture is this caption, "STRENGTH ON YOUR SIDE"  "We adhere to the highest standards of conduct and ethics." You are then directed to click on "About Our Ethics."  Before going there, stop and think a moment about the sheer hype and falsity of what you have just seen and read. There is absolutely nothing ethical about a combat tank and everything immoral and murderous. Moreover, the implication that there's "peace through strength" is sheer PR. 

Now, let's "click" and see what's there.  "---we know each day our employees will make decisions that are critical to our success [as a war profiteer]. To help ensure those decisions meet our company's ethical standards, General Dynamics Board of Directors and management have devoted significant time and resources to maintaining an active and robust ethics program."

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Well, let's see what that program is. There's 13 business unit ethics officers and 120 local ethics officers who implement the ethics program by carrying out a list of seven responsibilities that include distributing the ethics handbook, maintaining "a 24-hour-a-day, seven-day- a-week, confidential Business Ethics Helpline-callers may remain anonymous if they wish (they sure as H--- better), and "conducting and overseeing prompt, thorough and objective investigations of all reported allegations of suspected ethical misconduct and taking corrective action, if necessary."

De'j- Vu. Has General Dynamics been implicated in fraud cases since its ethics program was touted nearly 30 years ago? In 1990 it settled (paying a meager $8 million fine) a government lawsuit charging the company with defrauding the Army on contracts for M-1 tanks. In the mid-1990s there were indications that General Dynamics had bribed the South Korean president to facilitate a deal to spend $5 billion on the company's F-16 fighter jets. In 2004 it and General Motors signed a consent agreement to settle charges that they violated the Arms Export Control Act through the unauthorized export of technical data and defense services. In2008 its Electric Boat subsidiary signed a consent order with the state of Connecticut and paid $75,000 to settle violations relating to the discharge of pollutants into the Thames River. In 2008 a Congressional committee blamed poor management by the Defense Department and General Dynamics for billions of dollars in cost overruns and delays in a Marine Corps tank program. [8] In 2008 General Dynamics settled for $4 million for fraudulently overbilling the Navy. [9]

Has General Dynamics been whistle clean since 2008? I don't know if it's now fraud-free but it certainly hasn't stopped its war profiteering. Its lobbyists, backed up by huge political campaign donations managed to override the Pentagon's objections (because it had too many tanks and was mothballing some of them) and "bribe" Congress into extending at a cost of billions to taxpayers the M1 Abrams tank program. [10] That is an example of how one of the five largest defense contractors in the world operates presumably fraud-free.

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Retired organizational psychologist.

Author of The Devil's Marriage: Break Up the Corpocracy or Leave Democracy in the Lurch; America's Oldest Professions: Warring and Spying; and Corporate Reckoning Ahead.

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