What is the price of corporate misdeeds? LINKEDIN | 5 FEBRUARY, 2017

What is your organization’s ethics score on a scale of 1 to 10 (10=best)? 9…? 8….? 7…? Wrong! The only two right answers are 0 and 10. Ethics does not have shades. The worst organizational pandemic in the 21st century is breach of business ethics – think of this club – VW, WF, BP, DB, Toshiba, JPM, Satyam, Petrobras and smaller cases (sic) of some big names. Massive dodges by AIG, Lehmann, Madoff and Merrill Lynch have already been relegated to old memory. The fine coffers are swelling rapidly (over $50 billion in a decade, by one count). Despite some high profile investigations, the crimes are unabated, be it smaller breaches (with the hope that no one will find out) or bigger loots (on the premise that it is difficult to prove misdemeanour). Any stigma association is wearing off as companies consider paying fines as a ‘business as usual transactions’.

Is there a spurt in personal greed or organizational greed? Or are ego trips of managers crowding the corporate crime scene? How is the system continuing to throw up dishonest managers quite routinely? What is the moral baton that is passed to younger and junior employees? What are the implications for our education system? Many questions, few answers.

Companies have moved forward with easy, innocuous steps like ‘Whistle blower policy’, but not on others that carry teeth. Auditors are still caught napping when scandals hit the roof. Arthur Anderson’s infamous blow-up is not reminding others to raise their game. The blame is always on a few rouge managers rather than the system and all the people involved in it. There are question marks on whether the deterrents are enough. Not many managers are jailed for white collar crimes. Their inglorious exits wash away quickly, with their big stash intact (unaffected by token cuts in severance packages). Wilful managerial misconduct is not viewed as bad as corruption. It’s the shareholders who fork out the fines from the reserves or future profits. (Even petty thieves go to jail and in many cases have their lives ruined). What if convicted companies lose their status or get operating restrictions imposed or are banned from government businesses, depending upon the gravity?

It has become fashionable for companies to organize workshops on ethics. For the crooked minded, that is like teaching non-violence to armed gangsters. Three things can set the system right: Very severe punishments to individuals involved, making their recovery to normal life that much tougher; deeper punishments to corporates rather than only $ fines and rewarding ethical behaviour (including whistle blowing) shown in trying circumstances. At a societal level, ethics should be in all the school and college curricula in ways that get absorbed under the skin. May be also an ethics test in recruitment? (like the polygraph administered during criminal investigations).