A conversation now on Enron ethics. Reverend Jim Wallis is the editor-in-chief
of SOJOURNERS magazine in Washington. In New York, Larry Zicklin is a former managing
partner at the brokerage firm of Neuberger Berman, and a professor of business
ethics at New York University. In California, Kirk Hanson is executive director
of the Markkula Center for Applied Ethics at Santa Clara University and was formerly
a professor at the Graduate School of Business at Stanford.Welcome to you all.
I want to begin with what appears to have happened at Enron. Larry Zicklin in New York, what were the ethical problems there?
Professor LARRY ZICKLIN (Former Partner, Neuberger Berman): I think Enron was the poster child of a company and a management that forgot why they were in business. They [were] in business to serve clients, customers; to serve shareholders, to serve employees. And they began to believe they were in business to extract the maximum amount of wealth for the management, and that was a critical and fatal error.
ABERNETHY: Kirk Hanson in California, what were the ethical problems as you saw them?
Professor
KIRK HANSON (Markkula Center for Applied Ethics): I see this as a case
of the ethics of new economy companies. This is an issue where in the new economy
we have released many of the regulatory constraints, we've permitted a lot of
experimentation. And unfortunately, in the process of doing that, executives have
taken advantage of some of their newfound freedom. And I think the untruthfulness
and stretching the bounds of acceptable behavior has resulted.ABERNETHY: So, lying, conflict of interest. Jim Wallis, what did you see?
Reverend JIM WALLIS (SOJOURNERS magazine): Well, I think there are religious issues here, not just ethical ones. Being very straight, the Bible -- biblical ethics -- condemns in the strongest terms the behavior of Enron executives: greed, selfishness, corruption, cheating, and the harshest kind of treatment of employees. This is directly contrary to Jewish/Christian faith.
ABERNETHY: I am interested in what you all think about the culture there, because the kind of climate in which people work is really essential. Kirk, what did you hear from your students about that?
Prof. HANSON: Well, I have had students who have come from Enron and have returned to it, some of them not to last very long there, by choice. I think culture is critically important, the ethical environment in which one operates, and unfortunately, Enron appears to have been a problematic ethical culture, which didn't encourage the kind of honesty, responsibility-taking, which is central to any ethical organization.
ABERNETHY: And the real issue, I think for us and for so many people, is the extent to which what happened at Enron came out of a culture that is common in many businesses. Larry Zicklin, is this a national problem?
Prof.
ZICKLIN: I think it is a national problem. I think Enron may be the most
egregious case. But when you look at this management, who for the last few years
were taking great responsibility for what was happening at the company, the great
success they enjoyed -- being on the cover of every magazine, in the newspapers,
being interviewed on television -- suddenly now appearing before Congress and
saying, "We didn't know, we didn't see, we weren't part of it, we didn't understand."
I mean, that's a lack of responsibility. That is total irresponsibility.
Rev.
WALLIS: By saying that this is not just a business scandal or even a political
one, but it is a cultural issue here. I hope it is a seminal event. My question
is: Where do Enron executives go to church? And are they hearing on Sunday mornings
or Saturdays in their houses of worship, are they hearing preaching and teaching
that talk about moral issues of economy? When this moves from a Sunday morning
issue to a Monday morning question and back and forth, that's when it becomes,
I think, a serious conversation.
