TechWeb

Fall Conference: Ethical Dilemmas

Sep 23, 2002 (08:09 PM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=6503246


Imagine that after years of hard work, toil, and dedication, you've finally been promoted to director of computer operations at your company. The job's great, you've met a key career goal, and the extra salary will mean you finally have the funds to send your five kids to college.

One day, the CFO asks you into his office and gives you a new task. Handing over a long list of financial data and details--all sales over the last 18 months, dealing with a particular company--he asks you to search out all the related records on the network and delete them. Visions of Enron and Arthur Andersen dance through your head, but at the same time, you're not eager to make waves and argue with a higher-up. So what do you do?

That was the question posed to panelists Monday at the InformationWeek Fall Conference, during a session entitled "Business Ethics: CIOs and Accountability in the Financial Reporting Process." CIOs, IT managers, and business leaders wrestled with the timely issue of what role technology managers should play in assuring businesses act ethically.

The panelists posed a variety of ways to handle the ethical dilemma. "Destroying documents isn't something that I could do," said David Guzman, senior VP and CIO at Owens and Minor Inc. Instead, he'd first explain his position to the CFO, trying to find another resolution. If that failed and the CFO still insisted, Guzman said he'd go to the CEO with the problem and failing that, to the board of directors. He'd also likely start looking for another job where he wouldn't find himself in the same spot. "I can't see myself working in a company where that kind of backdrop exists," Guzman said. "I'm going to be looking for my headhunter buddies, because that just isn't the environment for me."

Not all the panelists agreed that such a direct approach would work. "In the real world, a CFO will just stare you down," said William Lerach, a partner in the law firm of Milberg Weiss Bershad Hynes & Lerach, who has been involved in a number of high-profile securities class-action suits against companies, including Enron, Dynegy, and WorldCom. "If you tattle, there will be repercussions, so you must divert it without hurting your career." Lerach suggests bringing up an ethics scandal, like those at Enron or Arthur Andersen and telling the CFO the two of you should meet with the company's general counsel, just to be safe. A corporate lawyer will likely forbid the deletion of financial records, Lerach reasoned, and even if he doesn't, you've helped to cover yourself by checking on the matter.

Panelists also discussed ways a company can set up institutional mechanisms to deal with ethical crises. According to Lerach, in several of his shareholder lawsuits, plaintiffs have demanded the creation of "corporate ombudsmen," officers with direct access to the board of directors who can be contacted anonymously about ethical dilemmas. This takes some effort to set up within a company, he said, "but it's worth the investment ... the price of a catastrophic ethical failure cannot be underestimated."