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Council for Ethical Business Practices: Strengthening International Guidelines Through Teamwork

Twenty-five years ago, then U.S. President Jimmy Carter signed the landmark U.S. Foreign Corrupt Practices Act into law, making it illegal for American companies to bribe or pay excessive "fees" to conduct business in another country. Today, the Emory University-affiliated Carter Center continues his work through its Council for Ethical Business Practices. The council's mission is to promote the adoption of codes of conduct with an emphasis on integrity in business transactions.

Established in 1999, the Council includes representatives from some of Atlanta's biggest companies, including UPS, Coca-Cola, Delta Air Lines, and Home Depot. Council members meet at least quarterly to discuss a wide range of concerns related to ethics policies at their companies.

While the media may convey the impression that few companies have ethical concerns, council members say that ethical challenges are a constant challenge and concern. In fact, most companies face ethical challenges all the time, says one council member.

"If you have [a business of] any size, and if you're dealing especially in international transactions, you've got issues, whether you know it or not," explains José Creamer, vice president for UPS Supply Chain Solutions.

"Our people at every level in the organization, are faced with ethical decisions every single day. Do I take that gift from the supplier? Do I offer a gift to my best customer, and if so, what kind of gift? We're trying to get an agent into [a company in] some Latin American country, but the company just happens to be owned by the brother of the president. Is that a problem?" Creamer says. "It just goes on and on and on."

The costs of corruption are not incidental. Worldwide about one-third of all firms report spending between one to 12 percent of their revenue on "unofficial payments" to government officials, according to a 2001 study by Transparency International, a global anticorruption group.

The Council's discussions tend to focus on creating strong rules and effective enforcement of those rules, according to Creamer. "How do you monitor them? How do you evaluate them? How do you keep them fresh? How do you train employees--all of those gut issues," he explains.

All of the Council's member companies are Atlanta-based, except for the recently relocated Lockheed Martin. Laura Neuman, the executive secretary of the Council and senior program associate of the Carter Center's Americas Program, says she believes the emphasis on local membership has helped give the group a sense of focus.

But an interest in ethics and the same hometown is where the similarities end. Ethics council members represent a variety of industries, from airlines to telecom and beverages to aerospace, along with a few law firms. Creamer says such variety is useful, as it helps the members create and, with advice from the law firms, write better codes of conduct.

This variety and openness among members also helps bring new issues to light. This can be especially sobering, since most companies have already spent significant time developing a code of conduct.

Creamer explains: "You sit in one of these council meetings and you hear from say Lockheed Martin-– who is in a different industry--and they start talking about an issue that you didn't even think of. Coming at it from all kinds of different angles really helps."

Beyond talking amongst themselves, the group sponsors conferences on international business ethics. For example, the ethicists sponsored a one-day conference on the realities of doing business internationally that drew attendance from more than 100 companies. One of the Council's key aims is sharing knowledge not just with its members but with other companies that have spent less time and money creating codes of conduct and compliance units. Codes of conduct and compliance programs are time-consuming and expensive for a company to create, and the members believed that by sharing their knowledge they can help guide companies with less developed ethics programs to create a stronger set of ethical practices. "It makes international business transactions transparent and everybody gets to compete fairly," Creamer says.

The Council also occasionally promotes the importance of ethical business practices to visiting foreign dignitaries, according to Neuman. This past year, for example, the Council met with president of Guyana and the vice president of Bolivia and offered its advice on fostering better conditions for these South American countries to attract more foreign capital.

The Council grew out of a 1998 meeting of the Center's Presidents and Prime Ministers of the Americas, a group of 35 current and former heads of state in the Americas, notes Neuman. The leaders, who meet at the Center every 18 months, said corruption is one of the key factors affecting economic growth in the Western Hemisphere.

After the 1998 meeting, representatives of locally headquartered multinationals came to the Center with the idea of the ethics council. The idea, Neuman says, was that most previous work to reduce corruption focused on the demand side of the equation, by increasing the risk to government officials who take bribes, this group would focus on the supply side, by trying to decrease the use of bribery as a way to gain government favors.

While the recent corporate scandals might have had an impact on the compliance group, Neuman says she believes September 11 made a much more profound difference.

"It was interesting to see some of the companies' leadership recognizing the need to further reinforce their work on ethics and fighting corruption internationally, as a response to what happened," she says.

Despite the recent round of scandals among U.S. companies, the Council president says he is optimistic that global business ethics are gradually improving. It's not changing quickly, but it is changing, says Troy Hatch, senior operations counsel for BellSouth International.

Hatch, whose responsibilities include compliance, likens the work The Carter Center and others are doing to the cultural change that has led people toward greater awareness of environmental costs over the past 40 years. Whereas years ago, people thought of the cost of changing oil as just four quarts of oil and a filter, he says, now they understand that disposal is a cost that someone eventually pays for--either the person changing the oil if its done properly, or everyone, if improper disposal leads to soil contamination.

This article is courtesy of Knowledge@Emory, the online publication of Emory University's Goizueta Business School. 

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