I taught business ethics for years and always found it a goldmine of interesting though at times disturbing cases for discussion. One such case recently surfaced online and it is worth a moment’s reflection. In this day of the infamous 1% it is always instructive to try to see what goes on in the minds of those who control the wealth (and government) in this country. One rarely finds thoughts of duty or honor — though there are always exceptions like Warren Buffett. The article I refer to does not focus on the exception, as it happens. It is more of the same: men at the top who are busy accumulating more wealth than they know what to do with.
The story begins: HOUSTON (Reuters) – Aubrey McClendon, the CEO of Chesapeake Energy Corp, has borrowed as much as $1.1 billion over the last three years against his stake in thousands of company wells – a move that analysts, academics and attorneys who reviewed loan documents say raises the potential for conflicts of interest.
The man himself sees no conflict of interest because he doesn’t seem to understand what the words mean. But, then, dealing with such huge amounts of money might tend to blind a person to even the most obvious moral truths. At some point when dealing with large figures, the mind positively boggles. It is difficult for me to imagine having a loose million to spend, but a billion dollars is almost meaningless. But the article goes on:
The size and nature of the loans raise questions about whether McClendon’s personal financial deals could compromise his fiduciary duty to Chesapeake investors, experts who reviewed the documents told Reuters. . . .The revelation comes as McClendon is scrambling to help Chesapeake weather a multi-billion-dollar cash shortfall amid a plunge in natural gas prices.
One wonders how a man could continue to worry about personal gain at a time when his company is at risk. There is a phenomenon in business known as “embeddedness” in which people become so involved in what is close up they lose sight of the things in the distance — things that, in the end, truly matter, like family and loved ones. . . and the company that provides one’s livelihood in this case. One should also mention the man’s “fiduciary duty” to the investors. What becomes blurred in the process is “the right thing to do.”
What is of main interest here is what passes for “ethics” in a world such as this. It really collapses into the word “legal,” as in whatever is legal is ethical. McClendoin, says, for example, “these are private transactions that the company has no responsibility to disclose or to vet . .. There are no covenants or obligations in my loan documents or mortgages that bind Chesapeake in any way.” In a word, I have done nothing illegal, therefore I have done nothing wrong. That, of course, is nonsense. There are many legal practices that are unethical — such as the conflict of interest in this case. I would argue that legally increasing personal wealth at a time when your company is in dire financial straits is unethical. It might even be argued that accumulating great wealth, more wealth than one could possibly spend in a lifetime, is unethical at a time when there are people who cannot put food on the table. Even John Locke thought there were limits on how much wealth a person could accumulate without crossing an ethical line.
I recall inviting the “ethics officer” from Honeywell to campus years ago when we were sponsoring a business ethics series of lectures on campus. The officer was, of course, an attorney and her job was to make sure Honeywell wasn’t doing anything that could lead to law suits. That was the company’s conception of ethics. The woman had no training in philosophy and had never even taken a course in ethics. She was not an ordained minister. But it didn’t matter, because it was all about keeping Honeywell out of court. Interesting. But what is even more interesting is the fact that this misconception is all too common in the corporate mindset. The focus on the bottom line, embedded as it is on profits, cannot see the ethical implications of the choices that are made and ignores the people who are effected by those choices.
It is a different world from the one I live in, I must say. And if given the choice, I prefer my own world where things are clearer.