The last 50 years have seen major shifts in defining the ethical. While this is especially true in the realm of sexuality, there have been great shifts in the economics sphere, much of it positive. We no longer have sweatshops, workplaces must meet minimum safety requirements, and we have minimum wages and employment insurance. And whatever one’s view of unions, there’s no doubt they did much to improve the lot of workers at a time when they were often taken advantage of.
However, many of these improvements have yet to occur in many countries around the world, where corruption of all kinds is all too often the price of doing business. Companies operating in these locales are, sadly, often forced to choose between good business and good morals.
In order to combat the incentive for corruption, Ottawa recently passed rules that prohibit the awarding of any public contracts for 10 years to any company that has been convicted of a crime such as bribery. “The government of Canada has an obligation to ensure that it is doing business with ethical suppliers, especially in the increasingly global marketplace,” a Public Works spokesperson said.
Three objections have been raised by the Canadian Council of Chief Executives. These business leaders argue that Canadians will suffer, since if corporations are barred from bidding on projects, there will be less competition, higher prices and possibly lower quality work; that the firms affected will be forced to lay off workers; and that there’s no mechanism to clear firms that have fired perpetrators and set up systems to ensure violations don’t happen again – they’ll still be barred from public contracts for 10 years.
Each argument has a certain logic and truth to it, but I’d like to respond and defend these policies, which send a very clear and important moral message.
While there may be some impact on competition and pricing, in Canada the impact will be marginal at best. There should be no lack of firms without convictions offering their services. More importantly, morality comes at a cost. If there were no material benefit to engaging in illegal and corrupt behaviour, no one would do so. To reject high moral standards because it might cost money is just another way of saying money should trump morals. I’m on the side of morals.
The fact that innocent employees may suffer for the misdeeds of others is absolutely true. It’s sad, but not really relevant. When you work at a firm, much of your success is tied to the success of others. That’s the nature of business, and the fact you must pay the price for the failings of colleagues is part of what it means to work with others.
My last job as an accountant was at Arthur Andersen. That firm no longer exists, because a few corrupt individuals in the Houston office bungled the Enron file. It’s sad and quite unfair that partners around the world suffered greatly for the actions of a few. But you can’t have it both ways. When companies expand and operate around the world, each local branch reaps the benefits of being associated with an international firm. Earned or not, people assume a certain degree of professionalism, expert resources and innovation from such a firm – again, much of it unrelated to the local office.
The third claim that there is no mechanism for clearing a company regardless of new policies it puts in place is the most compelling. While one might quibble with the details, if the law is to have any teeth, harsh punishments must be given.
The easiest way to avoid such penalties is to enact rules before corruption happens and to ensure better screening of potential hires and better oversight of all employees. The federal government is to be commended for introducing rules with teeth in the battle against corruption.
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