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Ethics Aren't Just For The Classroom

My colleague Paul McDougall has been taking quite a beating in the comments section of the InformationWeek Weblog for suggesting that it's a bad idea for executives to take massive gifts from vendors bidding on company business. Paul is making the crazy, wild-eyed assertion that bribery is, perhaps, ethically speaking, the nonoptimal solution. You might even say it's wrong.

Paul has been following an ongoing wrongful dismissal lawsuit against Morgan Stanley. The discussion--and beating--are happening on three separate blog entries: "Better Have Season Tickets If You Want To Sell IT Equipment To Morgan Stanley" and "Morgan Stanley E-Mails Reveal Outsourcing's Dirty Little Secret," by Paul, as well as "What Happened To Morgan Stanley Could Happen To Any Of Us," by yours truly.

Among the charges filed by Arthur Riel, a former Morgan Stanley IT manager who set up the company's E-mail archive, is that CTO Guy Chiarello received hard-to-get sports tickets and other favors from tech vendors that do business with the firm. According to the lawsuit, Chiarello used one of the company's vendors to set up a network in his home.

There are other charges, too--that Morgan Stanley investment bankers pressured the firm's IT department to buy from vendors as a way to win their banking business, and that former CFO Stephen Crawford tried to wall himself off from all E-mail communications coming from outside his inner circle to make it virtually impossible for whistle-blowers to contact him.

The finger of accusation points both ways in this dispute. Morgan Stanley says Riel's allegations are false and claims that Riel was fired for snooping into people's E-mail--itself an ethical violation.

We sometimes view ethics as an ethereal concern, suited to college classrooms but not the rough-and-tumble real world. And yet Riel's lawsuit is all about ethics. 1) Should a company executive accept lavish gifts from vendors seeking to do business with the company? 2) Should a company be permitted to give its own customers preferential treatment when selecting partners? 3) Does an executive have an obligation to open his E-mail inbox to everyone and read all those messages on the chance that some whistle-blower might be contacting him?

None of these seem like hard questions. Question 3: No, because the person would end up drowning in E-mail. The company as a whole has an obligation to listen to whistle-blowers, but the CFO doesn't have to be the guy to do it. Question 2: It depends. The company has a right to use whatever criteria it wants in selecting suppliers, within the parameters of the law. One company might choose to give its own customers preferential treatment; another might choose to make the decision on cost and technical merits. A third company might decide its systems have to be top-of-the-line, regardless of cost. In the end, the most profitable company will win.

Question 1 also seems to be a pretty easy one to answer: Just don't accept big gifts. Don't do it. You want to see the big ball game? Buy the tickets like everybody else, or watch the game at home on your big-screen TV. You want a home network? Do it yourself or pay someone to do it for you.

Some of the people commenting on the blog say this view is naive, that gift-giving is pervasive and everybody does it. But the popularity of gift-giving is irrelevant; a popular wrong action is still a wrong action.

I've been compiling the best comments from previous blog posts on this subject for Monday's print and online issue of InformationWeek, which will also feature an in-depth report on the ongoing Morgan Stanley situation.

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