The difference between law and business ethics – four flavors of the month

Business ethics is one of those subjects that make people squirm.  Everyone has a sense of right and wrong and there’s a feeling that if you haven’t learned it by the time you’re an adult, it’s too late.  It sounds pretty straightforward.  But when bad things happen, things get sticky.  There is a lot of stammering and “yeah, buts . . . ”  and when the dust settles the “buts” explain what happened, but they don’t excuse it. 

All too often we’re still angry.  We want accountability.  We don’t want it to happen again and that means either enacting new laws or enforcing the ones we already have. 

1.        Witness the Big Bank hearings held in Washington, D.C. this week.  The titans of Wall Street were just pursuing capitalism and the American Dream.  They didn’t break any existing laws (at least that we know of so far).  According to them the crash was just another business cycle.   Yet the bonus backlash of an entire nation was summed up by a question Jonathan Karl of ABC asked JP Morgan Chase head Jamie Dimon as Dimon exited the hearing room.  “Mr. Dimon, does Wall Street get it?”  When enormous public interests are at stake and we’ve been betrayed, as during the housing bubble and subsequent financial bust, you can be sure that new laws will follow.  After all, it’s all about society as a whole being true to its core values.

2.       Sometimes, however, a company’s core values are at odds with the law of a foreign jurisdiction and the incongruity between reality and moral conviction is so strong that you can’t ignore it or rationalize it away anymore.  That’s what Google faced this week after it experienced a sophisticated cyber attack on its Gmail system in China, an attack aimed at identifying Chinese human rights activists.  To comply with Chinese law, Google had already been suppressing certain politically sensitive search results, such as democracy movement, Dalai Lama, and Tiananmen Square demonstration of 1989, among other.  The massive cyber attack was someone taking things a fit further.  It caused Google to challenge whether it wanted to continue doing business in China.  Google is reportedly not the only company reexamining the existing legal and ethical risks surrounding the risks and rewards of the Chinese marketplace.

3.       While some companies like Google take their legal obligations seriously, others prefer blissful ignorance and they collide with the law in a more common way.  Their modus operandi is to prefer begging for forgiveness instead of asking for permission.  A recent example of that is the generous use of Barack Obama’s picture near the Great Wall of China on giant billboard in Times Square, New York, to hawk its goods.  Yes, Obama was wearing one of their jackets, but they ignored Obama’s right to publicity for commercial endeavors such as outdoor advertising aimed at consumer buying decisions.  Oops.   Can you say, “White House, on line one”

4.       Further down the scale of blissful ignorance is the “boys just wanna have fun” category.  That was illustrated by an outfit called South Butt who recently created a line of sportswear in an effort to parody the popular North Face brand.  Parodies are legal, but . . . if it’s being done for a commercial purpose a trademark holder can recover damages because presumably the only reason you’re engaging in the parody is not for a laugh, but to capitalize on the good will accrued on the item you’re mocking.  It’s that ca-ching factor again.  North Face is suing.

So there you go.  Clearly, the “buts” have it!