Category Archives: Business Ethics

How AT&T Turned Its “Big Mistake” Into An Example Of Ethical Behavior

When was the last time you heard a corporate officer unequivocally acknowledge a serious error?

Did it occur after United Airlines instructed police officers to assault a passenger who declined to surrender his oversold airplane seat? CEO Oscar Munoz eventually expressed regret, but only after his firm “seemed to go on the offensive when it circulated a letter in which (it) appeared to blame (the passenger), saying he “defied” the officers …

What about BP’s declaration of contrition regarding its massive Gulf oil spill? Indeed, its Chairman Carl-Henric Svanberg did express sympathy for residents of the region, but he was later compelled to apologize for his self-described “clumsy” choice of words when he referred to Gulf residents as “small people.”

So it is downright refreshing to hear a corporation clearly and unambiguously acknowledge a major blunder. When such an acknowledgment is honestly proffered, we may be able to encourage such behavior in the future by simply recognizing its ethical value.

Consider, for instance, AT&T CEO Randall Stephenson’s recent comment that its consulting contract with President Trump’s personal attorney Michael Cohen was a “big mistake.” Shortly after the election of 2016, AT&T agreed to pay Cohen’s firm $50,000 per month for advice regarding a “wide range of issues.” One such issue was its battle with the federal government to approve its merger with Time Warner, a battle that rages on today.

Special counsel Robert Mueller is now reportedly inquiring about the appropriateness of AT&T’s motivation for signing the contract. How has the corporate giant responded?

Stephenson could have simply stated that he would not comment about the matter. Or he could have noted that the contract concluded at the end of 2017, and thus is no longer a current concern of his firm. Instead, the CEO candidly confessed that “There is no other way to say it – AT&T hiring Michael Cohen as a political consultant was a big mistake.

Was Stephenson’s behavior impeccable? No, not perfectly so. Instead of issuing his statement to the public, he included it in an internal company memorandum that was shown to the Reuters news service.

Nevertheless, if blunt and unvarnished honesty is an indicator of ethical behavior, then AT&T should be recognized for this example of appropriate action. Honesty is not always practiced throughout the corporate realm; thus, whenever we manage to find it, we should be willing to commend it.

Can A Case Be Made To Justify Corporate Bribery From The Corporation’s Perspective?

Imagine that you are the chief executive officer of a global energy corporation. You are attempting to secure a contract to drill for oil on the territory of an emerging African nation. If you believe that a bribe might help “facilitate” the securing of the contract, would you offer to pay one? And if so, how much would you offer?

That is the situation that Royal Dutch Shell (i.e. Shell Oil) and the Italian firm ENI faced in 2011 while they pursued drilling rights for an oil field in Nigeria named OPL 245. The field was believed to contain nine billion barrels of oil, valued at approximately $500 million.

The corporations paid $1.3 billion to the Nigerian government prior to securing the contract. In April 2017, the BBC reported that $466 million of this payment may have been diverted to the personal bank accounts of various politicians.

Two weeks ago, Italian prosecutors arrested 15 individuals in connection with the contracting process. One would think that it would be difficult for the individuals to justify the payment, wouldn’t it?

But let’s think about the situation from the contrarian perspective. What if such payments are legal activities in the emerging nation? What if other energy corporations, based in nations where such payments are commonplace, are ready and able to step in and develop the oil field? And what if these other corporations are already well established in the emerging nation?

If Shell and ENI didn’t decide to pay the $1.3 billion and then recoup the cost from the contract’s operating revenue, another company would have likely done so. The Chinese economy, for instance, has become the African continent’s largest economic partner. It supports many firms that can manage oil fields.

The question is not a simple one. Although some can certainly argue that bribery is a pernicious activity that must remain illegal, others can reply that the types of payments made by Shell and ENI are justified because they support the development of the Nigerian and European economies and societies. Without such payments from European firms, the Nigerian economy and society will simply become more interdependent on firms from societies where bribery is commonplace.

Incidentally, this is not an isolated case. Global energy corporations have grappled with such questions for decades. And several years ago, Michael Kraten (the author of this blog) developed a corporate training case with other professionals to address this issue amid other business concerns.

It’s called Save The Blue Frog, and it is available online at SaveTheBlueFrog.com. The case is named after a different issue that challenges global energy corporations; namely, the existence of an endangered species on the proposed oil field site.

If you’re feeling aghast at the very idea that bribery may be justifiable, you need not worry. At the moment, there are no significant initiatives underway to repeal the Foreign Corrupt Practices Act in the United States or similar laws elsewhere.

But you may wish to keep in mind that there are reasons why China has become Africa’s largest economic partner. In other words, there are costs to be paid — and opportunities to be lost — when a nation enacts laws that are based on moral codes of conduct.

The Ethics Of Data Scraping

What is your position on the ethics of data scraping? Is it right, or is it wrong?

Huh? You’ve never even heard of data scraping? That’s not unusual; most people probably haven’t heard of it either.

But if you utilize a professional networking web site like LinkedIn, you place yourself at considerable risk if you fail to consider the presence of data scrapers.

Why? Because these firms “scrape” information off publicly available web sites and then use the data to produce products and services. One such firm, a small organization named hiQ, culls information from LinkedIn’s public profiles. Then it relies on that data to identify employees who may be seeking jobs elsewhere, and it reports those employees to their current employers.

How can hiQ possibly know if a LinkedIn user is looking for another job? It might assume, for instance, that an individual who suddenly updates his LinkedIn job profile might be tidying up his resume for a career search.

It certainly isn’t a foolproof method, but data scrapers don’t guarantee the predictive accuracy of their information. That’s why hiQ’s web site promises employers that it will simply “provide a crystal ball that helps you determine …turnover risks months ahead of time.

LinkedIn, needless to say, is displeased with hiQ’s use of its data. It is now engaged in a legal action to compel hiQ to cease these activities.

So what do you think? Is hiQ acting in an ethical manner? Is it right to make a profit by using a person’s data, without notifying him, to inform his employer that he might be looking for employment elsewhere?

To be sure, reasonable minds may differ about whether data scraping is an ethical business activity. But regardless of your opinion about this question, perhaps we can agree on a practical implication.

The next time you’re ready to update your LinkedIn profile, you should stop and think for a moment. Do you really want to do it?

It may not be a harmless action. After all, your employer may be tracking you.