Sure, it’s ethical . . . but is it criminal?

In my decades of doing compliance and ethics work many times I have read and heard that we need to focus not on that box-ticking, bureaucratic, minimalist thing called “law,” but on the much higher plane of what is ethical.  Law is dismissed as some mindless, bureaucratic detail which is nothing but a bare minimum.  The high road is only defined by values and ethics.

Values conflict.  There may be some important omissions in this common approach. The first is failure to step up to a profound and disturbing reality:  There is no one set of golden values that determine all the answers.  The tough reality is that there are quite a few values which can, and frequently do, conflict. 

Where do values conflict?  As a starting example, consider conflicts of interest.  We tend to treat loyalty to the employer as if it were a deeply profound, almost religious dedication. An employee favoring a qualified family member for a position in that company would be considered almost an offense against all that is sacred.  But one could just as easily ask why one’s loyalty to family is so far below loyalty to some business that is paying you to work.  Is loyalty to those who raised you, helped you regularly, and cared for you when you needed it most, inherently less than loyalty to an entity that pays you money? I am personally trained that such a hiring decision is improper, but are my values the only ones that count? (On a practical note, there are certainly many harmful aspects of conflicts of interest in terms of their impact on a company, and the practical impact of conflicts should not be minimized, see here. But benefit to one’s employer is not the only possible value. Would you draw a line if your company started telling you how to live when you are not at work, because healthier employees reduce the company’s healthcare insurance costs?)    

Consider also your loyalty to your immediate boss. This person has helped you grow in your job.  She has mentored you, been someone who listened to you when you needed to talk, and treated you fairly.  Now you discover this person deliberately cheated the company on a $20 meal expense.  Does your loyalty to the company trump your loyalty to the boss who always stood by you? Again, I personally would feel compelled to report the misconduct and this may be important to the employer for other reasons, but there are other values involved.  Simply telling me to apply my values does not tell me the priority among the different values.

Being fair to a small competitor.  We all believe in being fair to those who are striving to get by.  In business suppose there is a small competitor company run by a pair of veterans who risked their lives to defend your country. There is a key contract they have with the government that is coming up for renewal. Their existence depends on that contract.  The only competitors are you and company X.  You know you don’t need the business, but there is no point you giving up on it if X would win.  So to be fair to the veterans – even generous – you call competitor X and you both agree you can pass on this contract. How fair, how generous, maybe even noble.  It is also a felony. Fairness is one value, but respecting the gains to society from free market competition is a different value (that happens to be embedded in the law).

Being honest to a foreign government’s minister. You are in a mineral-rich country negotiating a contract with the government to let you extract rare-earth minerals from the ground. The minister explains that she favors your company because it owns a 25% interest in a domestic company in that same country.  What the minister does not know is that your company is negotiating with a competitor company which plans to buy out your company’s local interest. This is confidential information that you are pledged not to disclose. (You are also loyal to your country, which needs access to those rare earth materials.)  But the minister is relying on your company’s connection to her country, and is now making a big mistake.  Which value is the top one:  honesty in dealing with others, trust, or your employer’s need to keep this deal quiet until it closes?

I am not trying to assign one value a higher ranking than another. Rather, the point is that there are various values and at times they do conflict.  While there are scholars who might dismiss some of these values as mere “rationalizations,” the use of that negative term may just as well reflect another person’s own values in making those dismissive judgements about competing values.

Without more thought on this aspect of values it is not a complete enough answer merely to tell people to be ethical or values oriented, without some additional guidance.  One key role of the law is to provide guidance on some of these conflicts.   

The law is not some dried-out bureaucratic detail. Here is the second important omission in these approaches.  This admonition to compliance and ethics professionals to focus our attention on values mostly gives no thought to what the law is and the reasons behind the law.  Why is bribery illegal?  Why must the bank file SARs?  What is the harm from human trafficking and the benefits from related due diligence requirements imposed by law? 

When people inveigh against “merely following the law,” or tell us that the law is only about what is required whereas ethics is about what is right, have they really thought about what the law represents? When they think about laws requiring anti-money laundering efforts or due diligence in selecting suppliers, can they picture the children locked away in the confines of slavery, forced to work for nothing, or oppressed people smuggled into forced labor facilities required to make endless scam calls to cheat elderly people out of their life savings?

Which of these laws merits contempt as a mere, necessary chore?  Instead of dismissing the law we should be focused on the evil these laws are intended to prevent.  When there is training for employees, it should not come across as a tick-box exercise.  The employees should see the pained faces of those children forced into endless days of labor.  They should see what bribery steals from everyday people in underdeveloped countries. They should talk with elderly people who have just lost their life savings.   

My advice? By all means, pursue compliance and ethics.  Certainly, focus on doing what is right.  But remember that the law is, in fact, a system for prioritizing values that may otherwise conflict.  While the lawmaking process is, in truth, typically not noble or pretty, in the end it does represent society’s judgment about values. We should treat it that way.  We should remember the real human beings who are protected by these laws. 

We should also recognize that preventing violations of these laws is a very challenging and never-ending task.  Let’s not minimize it as if it were nothing more than details and paperwork.  Remember the history and purpose behind these laws.  I believe that the only way to truly understand the law is to picture – feel inside of you – the human purpose these laws represent. 

In my career one central area of focus has been bribery. I do not see this as the detailed language of some statute.  I see this as a means of fighting cruel oppression by empowered kleptocrats. I strongly believe that any communication about bribery should include the word “evil.”  Am I personally emotional about the law?   Yes.  Should you be?  I do not know how you can truly motivate people if you don’t feel that passion.   

So when you are telling people to be ethical, or value oriented, please also remind them not to pay bribes, not to ignore the diligence that helps prevent human trafficking, not to overlook the human victims of business crimes.  Please also remember how difficult a task it is to prevent violations of these laws, how we need to remember the human victims of business crimes and to communicate their suffering to our employees. 

It is true that ethics is about what is right to do, but it is also true that law is about protecting victims whose voices you don’t otherwise hear.