Ethics Over Compliance: The Dutch Banker’s Oath

bankers oath

“Professional ethics” is a never-ending battle between compliance and ethics, between rules and penalties on one side, and principles and values on the other. Compliance is easier: all you do is tell people with rules and regulations what they must or can’t do, and promise that there will be consequences if those rules are violated. For ethics to work, people actually have to understand ethical values and be committed to living by them in a professional context.

Compliance has little to do with ethics. Jack the Ripper will follow rules if they are clear, if he knows he’ll get caught if he violates them, and if the punishment when he does will be  harsh enough. That won’t make him ethical. In fact, compliance–rules-based professional conduct control—is often antithetical to ethics. Rules and laws are merely a challenge to the type that Oliver Wendell Holmes called “The Bad Man”-–which includes bad women—to find ways to do things that are wrong but that avoid violating rules sufficiently to justify punishment.  This is why most compliance codes have language in their introductions noting that it’s impossible to make a code that will cover every wrong someone can think of, so ethics are important too.

Pure compliance-based systems don’t improve ethical conduct. The financial collapse in 2008 was largely caused by financial manipulators operating in the grey areas of the rules and laws—that’s why so few of them could be prosecuted. In politics, The compliance mindset is extremely convenient for clever liars and cheats like the Clintons, which is why Hillary could try to explain her e-mail shenanigans by saying that “I fully complied with every rule I was governed by (heh-heh-heh!).” Unethical people will always find ways to get around rules. Ethical people, in contrast, barely need rules at all.

Another benefit of ethics over compliance is that ethics rules–compliance codes—have to be long and detailed, otherwise it’s too easy for Clinton-types to find loopholes, though they usually will find some anyway. Ethical values, on the other hand, can be stated very simply. An ethical employer thinks, “Hmm, that intern is cute, but I am married and have duties of loyalty and honesty to my wife and family, and it would be an abuse of power and influence as well as irresponsible for me as a leader to have an affair with someone under my supervision in the organization.” The Bad Man thinks, “Wow, she’s hot; my wife won’t care as long as I’m not caught; getting a hummer isn’t considered sex where I come from, and there’s nothing that says a President can’t fool around!” For the former, “A leader should not have sex with subordinates” is clear as a bell; his values tell him why. The latter, though, is thinking, “Hmmm. How can I get around this? That rule says “should” but not “shall”— that’s good. No punishment is specified. Sounds like more of a guideline than a rule. “Sex”—that must mean sexual intercourse: great! Lots of wiggle room there. And “subordinate”—is an intern really a subordinate? And I bet I could argue that this is personal, not official conduct. All good…now where’s that cigar?

Invoking ethics rather than compliance is a new oath required by the Dutch Bankers Association. It could be printed on a postcard, and if a banker is ethical, it is all he or she needs:

I swear within the boundaries of the position that I hold in the banking sector…

…that I will perform my duties with integrity and care;

…that I will carefully balance all the interests involved in the enterprise, namely those of customers, shareholders, employees and the society in which the bank operates;

…that in this balancing, I will put the interests of the customer first;

…that I will behave in accordance with the laws, regulations and codes of conduct that apply to me;

…that I will keep the secrets entrusted to me;

…that I will make no misuse of my banking knowledge;

…that I will be open and transparent, and am aware of my responsibility to society;

…that I will endeavor to maintain and promote confidence in the banking system.

So truly help me God.

And if a banker isn’t ethical,

it won’t matter anyway.


Pointer: Legal Ethics Forum

Sources: Bloomberg, The Conglomerate

Graphic: Bloomberg

Ethics Dunce: CNN Morning Anchor Carol Costello

Sorry Carol; you should have had this years ago.

Sorry Carol; you should have had this years ago.

I just checked. I was certain that I had named Carol Costello an Ethics Dunce a half-dozen times at least, and discovered, to my shock and shame, that she has never been designated one here. Unethical Quotes of the Month, the chief offender in various disgraceful and biased performances by CNN or the news media as a whole, but somehow the most throbbingly ethics-challenged broadcast journalist not employed by MSNBC or Fox has never been honored as an Ethics Alarms Ethics Dunce!

Well, that streak ends now, and I can make it short and sweet.

This morning, Costello once again confidently proclaimed her lack of familiarity with the concept of ethics by summing up the conviction of former Virginian Governor Bob McDonnell and his wife for bribery and corruption this way:

“Now the Virginia legislature needs to pass tough new ethics laws so this never happens again.

I’m just going to go into my shed with a hammer, and club myself into oblivion, because obviously my life is pointless and an utter failure. Continue reading

Virginia’s McDonnells, Masters Of Rationalization


The only question regarding the multiple count federal corruption indictment of Virginia’s most recent ex-Governor Bob McDonnell (R) and his wife is whether or not the relevant laws are so porous that they can’t be convicted on the evidence. Did they use McDonnell’s high office for personal enrichment? Yes. Did they go to great lengths to disguise the fact? Yes. Did the Governor betray the public trust? Yes. Were the gifts, loans and cash, totaling at least $165,000, received from a dietary supplements company CEO essentially bribes? Of course they were. This is another excellent example of why the admonition that the accused are innocent until proven guilty is often technical rather than true. Based on irrefutable facts, the Virginia’s former First Couple is guilty as hell—of dishonesty, greed, corruption, obstruction of justice, bribery, betrayal of trust, the appearance of impropriety and outrageously unethical conduct. They just may not have broken any of the laws regulating those actions.

The legal case will ultimately rest on whether there was a specific, provable quid pro quo, which is to say, were the gifts and loans from Jonnie Williams Sr., former CEO of Star Scientific, expressly made in exchange for the governor’s assistance in helping his company in the state? Williams, who has made a deal, will testify that this was his understanding; why else would he allow himself to be used as a piggy bank by McDonnell and his wife? But in politics, as we all know, the myth is otherwise. Big companies give lawmakers big campaign contributions out of the goodness of their hearts and patriotic fervor, and it’s just a coincidence that those same lawmakers subsequently support laws that make those same companies millions, or block laws that would get in their way. It’s a coincidence! The Feds are going to have to show that what McDonnell did was significantly more sleazy than what virtually the entire population of Congress does by reflex, and also a clear violation of law. Continue reading

The White House Scores A 2013 Jumbo Jumbo

There's no elephant. Do you see an elephant?

There’s no elephant. Do you see an elephant?

Just in time to make the 2013 cut-off, the White House achieved the Jumbo of the year, and simultaneously made me wonder if I am going to have to jettison all respect for my loyal Obama-supporting friends.

The Jumbo is an Ethics Alarms category lunched in 2013, designed to recognize individuals who engage in spectacular examples of unethical conduct I have always detested with a special passion: trying to wiggle out of a tight spot by stubbornly insisting that what is obviously the case isn’t really, a brazen exercise resting on the presumption that everyone else is either a dimwit or as corrupt as the speaker. The name derives from an iconic moment in Billy Rose’s 1936 Broadway musical extravaganza “Jumbo,” named after P.T. Barnum’s famous giant elephant, that starred Jimmy Durante. Caught red-handed as he tried to sneak his dying bankrupt circus’s major asset off the premises and away from creditors, the “Old Shnozzola” was confronted with a sheriff who belligerently inquired, “Just where do you think you’re going with that elephant?” Jimmy’s response, acting for all the world as if the massive pachyderm at the end of the rope he was holding didn’t exist: “Elephant? What elephant?” Another apocryphal equivalent is the old burlesque joke about the philandering husband caught by his wife as he frolics in their bed with a naked and luscious bimbo. The rake still denies anything untoward is going on, pleading, “Who are you going to believe, me, or your own eyes?” . In real life, the gold standard might be actress Lindsay Lohan’s insistence to police, when she was arrested for reckless driving and cocaine was found in her pocket, that she was wearing someone else’s pants.

The White House’s entry into the Jumbo Hall of Fame is pretty impressive, though. As figures showed that a million Americans had registered for Obamacare in December, bringing the total number to 2.1 million, well short of the 3 million goal, White House White House health care adviser Phil Schiliro told MSNBC yesterday that the frequently stated Administration goal of  7 million enrolled by the end of March, when the individual mandate (penalty, according to Democrats; tax, according to the U.S. Supreme Court) kicks in, was not really the goal after all. Continue reading

“The Ethicist” Gets Lost: Bad Advice, Worse Defense, In The Case Of The Self-Plagiarizing Student

Oh, Chuck, Chuck, Chuck...

Oh, Chuck, Chuck, Chuck…

Chuck Klosterman,The New York Times’ third “Ethicist,” ruffled ethics feathers last week when he decreed that submitting the same paper to multiple college courses was ethical. (You can read his advice to a guilty-feeling student here.) Essentially, his argument in the column came down to three rationalizations, The Compliance Dodge (No rules were broken!), the Trivial Trap (It’s no big deal, and nobody was hurt ) and my least favorite of all, The Comparative Virtue Excuse ( “You’re not betraying the public’s trust,” Klosterman says—in other words, “At least you didn’t kill someone.”),with nods to several more. On the first, which is a close relative of Marion Barry’s Excuse, so you know what I think of it, Klosterman essentially argues that following formal rules constitutes sufficient ethics, which is the hallmark of the unethical. On the second, he himself cheats: he says no one was harmed, yet he ignores the fact that the student intentionally kept the fact that he used one paper for two assignments from the professors involved. Why was that? The student didn’t tell the professors because he knew they wouldn’t approve. Thus the student withheld information that was material, that would have resulted in negative consequences, and that the professors making the assignment had a right to know. That’s a failure of candor and a breach of the duty of honesty in communications. That’s unethical. Continue reading

Ethics Hero: Lawyer/Blogger Scott Greenfield

No question: Justice Holmes would think Scott Greenfield is a good man.

No question: Justice Holmes would think Scott Greenfield is a good man.

Criminal defense lawyer and caustic, if trenchant, blogger Scott Greenfield stakes out a noble and correct stand on legal ethics and ethics generally in a superb post titled, “What Tastes Good To You?” Read the entire post, but his essay springs from a question that has been posed in various forums (including,  in slightly different form,the Jack Lemmon comedy “How To Murder Your Wife”), to wit:

If you could commit any crime and get away with it, what would it be? 

Greenfield’s answer, the ethically correct one, is “none” : “Just because we can get away with it isn’t a reason to do wrong.” Thus does he definitively separate himself from what Justice Oliver Wendell Holmes referred to as “the Bad Man” in his famous 1897 essay, “The Path of the Law.”  For Holmes’ “bad man” never breaks a law, but only because he abhors punishment.From this starting point, Greenfield considers a professional debate about whether the legal marketing tactic (as determined by the courts) of buying up another firm’s name as a web “key word” to lead customers to one’s competing firm is “unseemly,” which is to say, unethical, though not technically unethical under the professional rules of conduct. One of the defenders of the practice describes the division on the issue to a difference in “taste,” leading Greenfield to aim carefully and fire: Continue reading

Policies Don’t Fix Unethical Professors

“Here is your assignment, class: Vote for who I tell you to.”

I saw this story and decided it was too obvious to write about. A community college math professor distributes to her class a pledge to vote for Obama and the Democratic slate, and demands that the students sign it—come on! Is anyone going to defend that as ethical? Then a reader sent me several links to the item (thanks, Michael), and after reading them, I was moved to reconsider.

The professor, Sharon Sweet, was put on unpaid leave pending an investigation; I can’t fault Brevard Community College (in Florida) for not firing her yet. What troubles me is the college’s statements that her conduct is just a breach of policy. BCC Spokesman John Glisch told the press that “The college takes this policy [prohibiting employees from soliciting support for a political candidate during working hours or on college property] extremely seriously. It is very important that all of our faculty and staff act in that manner at work and while they’re on campus.” So college provosts are reminding employees about the policy.

Let’s be clear. Associate Professor Sweet’s conduct was an abuse of power and position, an insult to the autonomy of the students and an attempt to take away their rights as citizens, disrespectful to them and the values of the nation, and an attempt to circumvent election laws and to subvert democracy. It was also, quite possibly, illegal. If a college needs to have a policy to stop teachers from behaving like that, it is hiring the wrong kinds of teachers—individuals whose ethics are those of totalitarian states, and whose respect for individual rights are nil. This was an ethical breach of major proportions, not a policy misunderstanding. No teacher should require a policy to tell her that this conduct is indefensible and wrong. Continue reading

Dan Ariely: Without Ethics, We Are Governed By Psychological Enablers of Cheating and Worse

And it’s nothing to be proud of.

Duke behavioral scientist (or, as he likes to call himself, “behavioral economist”) Dan Ariely, has a new book out. This is a boon for my ethics classes, since I’m sure they are getting a little sick of me quoting the last one, “Predictably Irrational.” His new best seller is “The Honest Truth About Dishonesty,” and Ariely has been making the rounds of NPR and various publications promoting it. Like Malcolm Gladwell (“The Tipping Point”), Ariely writes provocative and easily digested books that seemed to be designed to make you skip the movie on airplane flights; they are not deep, but they are helpful, at promoting self-understanding if nothing else.

I’ve been saving my copy of “The Honest Truth About Dishonesty” for my next trip, but the most valuable thing about it from my perspective is that it validates the importance of developing the skills of ethical analysis. As the author explained in a recent interview, when most human beings ( Ariely pegs the percentage at a depressing 98%—and one of the two missing percentage points are people who cheat no matter what! ) human beings let their gut determine whether they are going to cheat or not, they will make their choice according to a potpourri of rationalizions and quirky psychological factors that have little to do with right and wrong.

Among the useful observations he made in his recent interview with journalist Gary Belsky: Continue reading

Comment of the Day: “Ethical If We Want It To Be: NBA Flopping and Fooling the Ref”

This is a wonderful comment by Dwayne N. Zechman, which goes to the heart of what makes sports ethics so perplexing. Let me leave it to Dwayne now, and I’ll have some comments at the end. Here is his Comment of the Day on the post Ethical If We Want It To Be: NBA Flopping and Fooling the Ref:

“I admit I’m having a little trouble with this one.

“If I understand correctly, your premise is that each sport has its rulebook, and what’s ethical or not is mostly determined by what’s in that rulebook. The outside margins of “mostly” come from long-standing traditions, and de facto rules related to safety or practicality. The game isn’t life–it’s a distinct “closed system” if you will, and the rules about life might not apply. Or perhaps it’s better to say that we can choose to declare (in the rulebook or through tradition) that certain rules of life do not apply within the game and that’s okay. Doing so diminishes neither the ethical rule nor the game itself.

“So the beginning of my trouble is that this smacks a little of a combination of “Everybody does it”, “If it isn’t illegal, it’s ethical”, and The Compliance Dodge. Okay, I can accept that, though, because we’ve already stipulated that specific ethical principles can be exempted from a game/sport.

“Next comes my own dissonance in trying to reconcile this article with other recent articles here on Ethics Alarms about pro football, where the same exemption of ethical principles is applied, but somehow shouldn’t be. Okay, I can accept this, too. There is a distinction in that an ethical principle shouldn’t be exempted from the game when there are clear, demonstrable consequences to the player that persist after the game is over and the player’s real life resumes. In a situation such as that, it’s impossible to exempt an ethical principle JUST for the game because the exemption itself renders the game no longer a “closed system”. Continue reading

Unethical Ethics: How Business and Government Encourage Unethical Thinking In Their Ethics Training

Show us the way, O Wise and Ethical One!

Jack Abramoff, the corrupt lobbyist turned federal prisoner, then author and now ethics expert, will be giving a lecture on government and personal ethics at The University of Texas at Austin’s business school on May 2. This is not as unusual as it seems. My biggest competitors are felons and disbarred lawyers—they literally step right out of professional disgrace, and sometimes jail, into the lecture circuit. They are draws, and in a field like ethics, which is often prescribed as substitute for barbiturates, this is irresistible to professional development programmers and conference organizers. It also attracts the participants that most need real ethics training, but who seek what these fake ethics presenter usually have to offer:  real life-based advice on what you can’t get away with. This lesson has about as much to do with ethics as it does with Parcheesi, but unfortunately, that’s what is generally regarded as practical ethics.

Characters like Abramoff don’t have ethics alarms; they have survival alarms.  Business schools, politicians and the media still believe that aiming reforms at those alarms, in the form of tougher rules and enforcement, will make business and government more ethical. Think about it: the cultures will still be unethical; the people in them will be just as unethical, but because proven scofflaws and ethics corrupters like  Jack Abramoff will explain where they went wrong, all these people with dead ethics alarms, further deadened by absorbing  the wisdom of the most corrupt of a corrupt breed, will stop behaving unethically.

Good plan. Continue reading