Business ethics
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- Published on Tuesday, 06 December 2011 06:30
- Written by John Draper
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Should a business sell a product that can be used unethically? Let's say you make electronic technology that can censor the internet (e.g. as made by Canadian company Netsweeper). It's usually used for censoring pornography at schools or stopping viruses at your ISP - but it's advertised as being hugely scalable so can easily be used on a country basis to stop freedom of speech as decided by that country. Countries like Saudi Arabia, Qatar, China, Iran and others are making sure their citizens have limited access and they use technology such as provided by Netsweeper. So if a Saudi Prince comes in and slaps down an order for millions of dollars worth of equipment - should Netsweeper sell it to them? It's the age old question of ethics in business. The problem to me is that you can't trust those countries to respect freedom; you also can't expect any abuses to be successfully challenged by citizens. So I say no - but it seems they are selling to those countries. (Canadian Business).
I am a great believer in Capitalism and free enterprise but I also know there are abuses and unethical things done in many businesses. They do them because not all unethical practices (that is immoral practices) are illegal. They may be contrary to standard accounting practice but few think of this as fraud. For example, it's common to ship unfinished goods on New Years' eve, claim the goods as billings and then return them to be finished or finish them in the field. The "only" people hurt are the shareholders since bonuses are paid out on false pretenses. Shouldn't that be called fraud? And aren't shareholders people who deserve to be protected from theft? Shouldn't the fraudsters be caught, return their bonuses and jailed?
Another different case is where a big contract is let (usually in Government) where both sides know that it will be virtually impossible to do the job for the agreed price. There are many provisions for adjustment due to "unforeseen" change and everyone knows these will be used to significantly increase the price. Isn't that fraud? But it's hard to prove that "everyone knows".
And the leftist unions are just as bad - except they use intimidation and coercion. Just ask the people in Quebec about the current scandal where unions insist that jobs use only union labour and also that it includes a good percentage of overtime. Not only that, but when the provincial Government tried to fix the problem, Unions threatened supporters. (Toronto Sun.)
Another unethical practice is failing to pay on time. I know a local businessman (can't name him - he'll sue) who gets construction work done then doesn't pay. No police action - the unpaid contractor has to put a lien on the project and will only then get paid in 6-12 months instead of the 1 month promised. The "businessman's" mistake is that in a small town, he is gradually running out of suckers. But there's no other recourse - the contractor should be able to get paid on-time. If the reverse is done and a contractor fails to finish a job and walks with the deposit, it's clearly fraud and a criminal case.
So what to do? In the case of selling high-tech equipment to unethical countries, all commerce involving any high-tech equipment, munitions, military equipment should be banned - not just the current very limited range of items. The catch is that if we can't sell to Saudi Arabia, they can buy from Canada via say France. If we ban any export at all, then the companies would set up shop elsewhere and we lose jobs and business. If we get clever (e.g. for Netsweeper) and add software to make the product not ban free speech, then a Saudi hacker could fix that fairly quickly. I don't see any answer that works. If there is one, I don't know what it is.
For other ethics in business, if governments added a premium to a price based on a previous history of escalation with that company - a risk of escalation premium - then in time this practice might stop. If some of the borderline cases of false reporting were prosecuted as fraud by a diligent prosecutor, then that might stop too. We need to see more fraudulent business people in jail. There are some companies who believe that honesty results in more business that is in fact more profitable. But with short term goals and "winning the next contract" always the most important thing, then honesty goes out the window.
For small business, late payments can be fatal - the public needs to convince the police to focus on some of these cases as breach of contract, But first we need to convince the public.