Evidence for the Value of Ethics
| Date | 01 March 2001 |
| Pages | 26-29 |
| DOI | https://doi.org/10.1108/eb026004 |
| Published date | 01 March 2001 |
| Author | Ronald D. Francis |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 9 No. 1
Evidence for the Value of Ethics
Ronald D. Francis
INTRODUCTION
It has become a truism that ethics is now being treated
with the importance that it so obviously deserves.
One of the singular merits of ethics is the commercial
benefit that it confers. It has been argued in various
forums that ethics is beneficial: it is the purpose of
this paper to examine the forms that the evidence
has taken, and to draw a conclusion about that
evidence. It will be argued that the evidence supports
the conclusion, but not in the most obvious ways.
Given that ethics is valuable, but often under-
valued, it is worth examining the barriers that are
perceived to exist. Among these barriers are those
of complexity, imprecision, and the lack of knowl-
edge about the basic infrastructures that would
make an ethics programme work in a commercial
environment. Given that there are ready answers to
these concerns there seems small justification for not
being ethical. It is possible to find model codes, to
set up procedures for monitoring codes, for resolving
cases,
and finding clear guidance about how to be
more precise about ethical issues. One of the most
pressing questions that ethics experts are most com-
monly asked is exactly how is ethics shown to be
profitable. It is the purpose of this paper to look
briefly at three lines of enquiry. Following notes on
legal-compliance and ethics there are three lines of
approach outlined: the use of logical argument; the
use of statistical evidence; and the evidence of case
studies.
LAW AND COMPLIANCE
Compliance may take a gradation of forms ranging
from minimal legal compliance (box-ticking)
through to sincere and deep commitment to compli-
ance with various ethical canons such as honesty, and
openness. It is possible to comply with regulations in
such a way as to subvert the intention of the guide-
lines.
A striking illustration, experienced by the
present author, was when an airline was obliged to
provide half of the seats in an aircraft in a non-
smoking section. The airline subverted that by desig-
nating the left-hand side of a single-aisle aircraft as
non-smoking and the right-hand side as smoking.
Under this arrangement everyone got a seat where
smoke was pervasive. The box was ticked but the
rule was undermined.
Governments have it in their power to give legal
force to codes of conduct. The public availability of
codes,
ministerial control, proper supervision and
legal consequences might all be improved by legis-
lation. A danger here is that a code that is inadequate
could receive the legal protection that it does not
deserve. It is argued here that the courts are the
appropriate arbiters of what constitutes 'adequate'.
Further, compliance has different subject matter:
thus there is financial, occupational health and
safety, environmental protection, competition, priv-
acy etc. While it is clear that legal compliance must
have primacy, that is not to say that ethical com-
pliance does not complement that process. Where
the law quite rightly sets minimum standards, ethics
sets aspirational ones. Where the law seeks sanctions,
ethics may seek flexible and creative solutions.
Courts, when meting out penalties for compliance
transgressions, may take the existence of a compli-
ance programme, which is sincerely followed, into
account. The idea that the courts could take genuine
ethical commitment into account has been set out for
Australia in the Goldberg test for compliance. This
landmark case was ACCC v Australian Safeway
Stores Pty Ltd.1 In that case Mr Justice Goldberg indi-
cated that one needs to look at the company's compli-
ance programme in two ways: whether or not there
has been a substantial compliance programme in
place, and actively implemented; and whether or
not the compliance programme was successful."
His Honour did not set out the detail of com-
pliance, but that seems already to be found in the
Australian Standard on Compliance Programs (AS
3606—1998). Among the salient considerations is
that compliance be 'top-driven' by the appointment
of someone senior with direct responsibility. All of
this commitment needs to be adequately resourced.
The court found that a compliance programme was
not successful in that the failure was not an isolated
one '. . . but had occurred on different occasions
and with different officers'. It was noted there that
the courts have been inclined increasingly to the
view that an effective compliance programme 'can
be useful in mitigating penalty'.
Journal of Financial Crime
Vol.
9, No. 1, 2001, pp. 26-29
© Henry Stewart Publications
ISSN 1359-0790
Page 26
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