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ARE U.S. BUSINESS ETHICS SLIPPING? : Observers are troubled by what is seen as a trend toward increasing corporate corruption.

The recently disclosed FBI investigation into trading fraud on the Chicago commodity exchanges, along with continuing concerns about insider trading on Wall Street and defense contracting abuses, have focused attention on business corruption. How widespread is corruption in U.S. business and how deep is its influence in American life? Free-lance writer Meredith Chen asked various authorities for their opinions, and excerpts of their comments follow.

Sol Price, chairman emeritus of the San Diego-based Price Club chain:

“I suspect that the basic rule is that bad behavior drives good behavior out of the marketplace. . . . The problem that the businessman has is that if everybody is doing it, how does he compete and survive if he doesn’t do it?

“We have a public and government that doesn’t get very excited at cheating. Society doesn’t get very outraged about things that go on. We tolerate and accept corruption. If anything, people are becoming more and more numb about it.

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“It worries me as a businessman, and it worries me more as a citizen. It worries me about my kids and grandkids. The only way we keep score in our society, unfortunately, is by how much money you acquire and not how you’ve acquired it or what else you’ve done.

“Improvement has to start at the top. You’ve got to start with the government and people who say they are community leaders ostracizing people who do naughty things; not accepting them in high society and in councils of government.

“I think about this all the time and it is tough one. We think we run a clean company, but I recognize what the pressures are.”

Richard Lamm, former governor of Colorado and the current director of the Center for Public Policy and Contemporary Issues at the University of Denver:

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“There are lots of problems in the American business community, but outright corruption is certainly not at the top of the list. In Mexico and South America and a number of other countries, corruption is a way of business. In the United States, corruption is the exception, not the rule.

“The recent scandals have made me believe that it is more prevalent than I thought it was. In other societies, this would be just shrugged off. The fact that it is such big news shows that it is a breach of the overwhelming business ethic. I think that we have to keep it in perspective.

“As we get to be a more materialistic or self-serving culture, I suspect we are going to have more and more scandals. What bothers me is that the trend is toward more and more corruption. The current amount of corruption as a way of doing business in America does not bother me, but the trend very much bothers me. . . . There is a social cancer out there that is really worrisome.”

Kirk O. Hanson, a business ethics expert teaching at the Claremont Graduate School:

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“I suspect that corruption on Wall Street and in the commodities business and the defense industry has always existed. The highly publicized incidents which we have observed are evidence in part to more aggressive enforcement and better reporting by the media on behavior that was there all along.

“The perception that there is more corruption is having a significant impact on American culture. Many individuals undoubtedly conclude that anyone in a position of power or influence is misusing that position for personal gain. This, coupled with a rampant materialism in American society, has undoubtedly had a negative influence. This may well be leading to increased corruption among average Americans.

“What I fear is that the average citizen will conclude that it is impossible to get ahead without misusing power or authority or shaving a few ethical corners along the way. Certainly the drive for short-term profitability in many sectors of the economy has created pressure on many business people and led them to misconduct which they would not have engaged in without that pressure.”

Shirley Hufstedler, a former U.S. Circuit Court of Appeals judge and Secretary of Education in the Carter Administration:

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“Dishonesty worries me and the more powerful the person or entity that is dishonest, the more it worries me. Persons very high up, indeed, were manipulating securities markets for their own benefit and for very great profits, and they were not underlings.

“The trouble is that although dishonesty is not tolerable at any level, it creates the maximum mischief when the persons who are corrupt are either at high levels of government or at high levels in business management. . . .

“The very conspicuous defections from the path of honesty by some highly prominent figures should not be taken as a view that business overall is corrupt or dishonest because that is just not true. Most businesses are run faithfully with a great deal of very hard work and with considerable concern about the public weal as well as the success of the business.”

Stanley Sporkin, a U.S. District Court judge in Washington and a former Securities and Exchange Commission enforcement chief:

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“I don’t know how deep corruption is or whether it is any deeper today than it was in the past. It is clear that there is more of it than there should be.

“Some of the business fraud is the price we have to pay for the free market system that we have. It is a deregulation environment, a free market environment which has tremendous positives and benefits about it. Our system is the best in the world, but there is a price that we are paying. Hopefully, we are not going to get to the point where the price we pay for it is going to be in terms of life and death. And that is a real possible problem.

“You take the airline deregulation. If you are going to get to the point where you don’t have any profit margin and where people are going to be competing on safety factors, then you’ve got a real problem.”

Robert C. Bonner, the U.S. Attorney in Los Angeles:

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“I believe that there is an alarming deterioration of ethics. . . .

“The area of defense procurement fraud and corruption has an impact on every taxpayer in the country. Some of these cases do implicate the integrity and reliability of military weapons systems and potentially our military preparedness and our national security. . . .

“In a lot of business crime or corruption, we are talking about individuals who are viewed as pillars of the community. High-level executives are cheating because they are not happy with a million-dollar income. The greed factor enters in, which has the effect of lowering the moral tone of society in general.

“Very frequently, we’ve seen the reaction of lower-level employees, who are otherwise good citizens in the community, look at what’s going on and they see the greed, corruption and deceit. There is a tendency to think that if the big guys are getting away with it, why shouldn’t I be getting my share?”

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Father Theodore Hesburgh, president emeritus of the University of Notre Dame:

“In general, I find the level of ethical conduct quite high in American business. I wish I could say the same for European business. I find that foreign businesses are very much more prone to pay bribes and do all kinds of things to get orders. I think some of our toughest competitors overseas are the worst--the Europeans and Japanese.

“I’m not one of your totally pessimistic guys in this area. I think the level (of ethical conduct) is generally quite high, but I’m perfectly willing to grant that there are operators up and down the line, especially down the line, that do things if they think they can get away with them and promote their own personal interest.”

Lawrence S. Ritter, a professor of finance and economics at New York University and a past president of the American Finance Assn.:

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“Corruption has a considerable effect on our lives because it is all around us. The emphasis on making money is so great, the emphasis on getting rich no matter how, is so tremendous that I think it influences virtually every aspect of our society.

“I think the situation could improve, but I don’t think it is likely to. All the emphasis seems to be in the other direction. . . . The philosophy that the only things that matter are to win, to get to the top and to make a lot of money is conducive to corruption. I see it everywhere, and I don’t think it is in the process of being reversed.”

E. Raymond Corey, a marketing professor at the Harvard Business School:

“The problem is that a lot of people who are involved in what is perceived as corruptive behavior don’t recognize it. It’s only later when the spotlight is put on it that people suddenly say, ‘Wow, this is not right.’

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“The pervasiveness of it is sufficiently great so that we’ve got to pay a lot of attention to it. And a lot of managers don’t see it that way. . . . The financial markets, the defense industry and construction are all areas where one finds a tremendous amount of corruption.

“Some people, at some point and time, become inured to their involvement. But for other people, it developes a tremendous feeling of schizophrenia. It’s hard to teach your kids one way to live as citizens or in a family and to do business another way.”


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