The ethical issues in both business information and conflict of interest involve a delicate balancing of the rights and

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The Ethical Issues In Both Business Information And Conflict Of Interest Involve A Delicate Balancing Of The Rights And 1 (295.31 KiB) Viewed 16 times

The Ethical Issues In Both Business Information And Conflict Of Interest Involve A Delicate Balancing Of The Rights And 2 (106.09 KiB) Viewed 16 times

The ethical issues in both business information and conflict of interest involve a delicate balancing of the rights and interests of employers and employees, as well as the public at large. Especially in the case of confidential and proprie- tary information, we see how different kinds of arguments about duties, rights, and fairness-underlie the law in this area and support our views about what is morally right. For the most part, the language of duties and rights has dominated the discussion, although harms and benefits are also important factors. Conflict of interest also involves the concept of duty, specifically the duty of agents, fiduciaries, and the like to serve the interest of others and the personal interests that interfere in the ability of people with this duty to act accordingly. End-of-Chapter Case Studies This chapter concludes with three case studies. In "The Aggressive Ad Agency" and "Procter & Gamble Goes Dumpster Diving," corporate executives consider how to handle offers of other companies' confidential or proprietary information that may be "too hot to handle." In both cases, the executives recognize the inappropriateness of accepting the information, but difficulties remain for each one in deciding how to refuse the offered information ethically. The "conflict- laden deal" handled by Goldman Sachs, for which the invest- ment giant was heavily criticized at the time, is a useful illustration of how multiple conflicts may be incurred by the dif- ferent parties in complex transactions and why policies on conflict of interest are so difficult to design and enforce. Case: The Aggressive Ad Agency Rob Lebow was used to aggressive advertising agencies. As director of corporate communications for Microsoft Corporation, the giant computer software producer located in Redmond, Washington, Lebow helped to administer the company's $10 million advertising budget. So when it was announced in the fall of 1987 that Microsoft was conduct- ing an agency review, putting its business up for grabs, he was prepared for a flood of calls and letters. One particular piece of mail that caught his eye was a specially prepared flier from a small agency in Boston named Rossin Green- berg Seronick & Hill (RGS&H). Under the leadership of its president, Neal Hill, this five-year-old advertising agency had accounts totaling $26 million and a growth rate of 65 percent for the past year. Although its business was concentrated in New England, RGS&H was attempting to become a national force by going after high-tech industries. As part of this strategy, the agency recruited two talented people who had worked on an account for the Lotus Corporation at another firm. Jamie Mambro and Jay Williams, who were creative supervisors at Leonard Monahan Saabye in Providence, Rhode Island, joined RGS&H on November 2. A few days later, Neal Hill read a news story in a trade publication about the agency review by the Lotus rival. Because Microsoft's new spreadsheet program, Excel, was competing directly against Lotus 1-2-3, the industry leader, this seemed to be an ideal opportunity for RGS&H. The flier was sent by Neal Hill on November 20, after two previous letters and several telephone calls elicited no response from Microsoft. Included in the flier was a round- trip airline ticket from Seattle to Boston and an invitation that read in part: You probably haven't thought about talking to an agency in Boston.... But, since we know your competition's plans, isn't it worth taking a flier?... You see, the reason we know so much about Lotus is that some of our newest employees just spent the past year and a half working on the Lotus business at another agency. So they are intimately acquainted with Lotus' thoughts about Microsoft-and their plans to deal with the introduction of Excel. In order to do an effective job for a client, advertising agencies must be provided with a certain amount of confi- dential information that would be of value to competitors. Many companies include a confidentiality clause in their contracts with advertising agencies, and Lotus had such an agreement with its agency, Leonard Monahan Saabye. Even in the absence of a confidentiality clause, however, adver- tising agencies generally recognize an obligation to pre- serve the confidentiality of sensitive information. On the other hand, offering the experience of employ- ees who have handled similar accounts is an accepted practice in the advertising industry. As the president of one firm observed, "There's a thin line between experi- ence and firsthand recent knowledge." But, he continued, "I can't imagine a new-business presentation in which the agency didn't introduce people who worked on the pros- pect's kind of business."40 Rob Lebow was left to wonder: Was Neal Hill at RGS&H offering Microsoft the experience of two employ- ees who had worked on the Lotus account, or was he
offering to sell confidential information? In either event, what should Lebow do? If the new employees at RGS&H had information about Lotus's advertising strategy for countering the introduction of Excel, this could be of considerable value to Microsoft. Anticipating the moves of rivals is often critical to the suc- cess of a campaign. However, moving even a part of Micro- soft's business to another agency-especially to a small, untested agency like RGS&H-would surely attract the attention of Lotus. In the rumor-filled world of advertising, the presence of two employees who had formerly worked on a Lotus account would not go unnoticed. Therefore, any information that RGS&H had might be "too hot to touch." Rob Lebow recognized that he could decline the offer in different ways. He could merely ignore the flier, or he could return it with the reply "Thanks but no thanks." Another possibility was to forward the flier to Lotus. Even the rumor that Microsoft had communicated with RGS&H could be damaging to the company, and so being open with Lotus would provide some protection. However, Lotus has a reputation within the industry of being quick to sue, and considerable harm could be done to RGS&H-and to the two new employees, Jamie Mambro and Jay Williams, who might be unaware of the offer made in the flier. Thus, any decision that Rob Lebow made was bound to have significant ethical, legal, and practical implications.
Case: Plugging Leaks at HP Hewlett-Packard, a leading manufacturer of computers, printers, and peripherals, takes privacy very seriously. The company proclaims that it has set the bar high when it comes to privacy" and asserts, "We make privacy protection integral to our business operations."98 This high regard for privacy was apparently cast aside in 2006 when HP's chairwoman Patricia C. Dunn sought to discover the source of leaks to the press from the company's own board of directors.⁹⁹ In January and February of 2005, when the board was considering the future of then-CEO Carleton S. Fiorina, who was eventually ousted from her position, articles in the Wall Street Journal and the New York Times reported extensive details of confidential board deliberations. These unauthorized disclosures exacerbated the existing tensions among board members and led some directors to pressure chairwoman Dunn to find the source of the leaks. Later, in January 2006, a news article on the web-based CNET Net- works on the strategic plan of HP under its new CEO, Mark V. Hurd, suggested that leaks were still coming from one or more board members. In Ms. Dunn's view the leaks were doing great harm to the company and had to be stopped. Because she was a possible subject of suspicion, Ms. Dunn felt that she could not direct an investigation, and so she contracted with a Massachusetts-based firm named Security Outsourcing Solutions, which, in turn, hired a subcontractor, Action Research Group, based in Florida, to do much of the detective work. However, Ms. Dunn was kept apprised of some of the contractors' opera- tions. The investigators managed to obtain telephone records of several board members and journalists for the Wall Street Journal, New York Times, and CNET by posing as the individuals in question and requesting copies of their telephone bills, which contained lists of all calls made. This practice is known as "pretexting" because a pretext- a misrepresentation of the identity and purpose of the
requester-is employed to obtain information. In all, the outside contractors analyzed 33 months of telephone calls involving 24 people under investigation and 590 of the people they contacted, 100 In addition, some board members and journalists were put under active surveillance, and videos were examined for signs of meetings between directors and journalists. In at least one instance, an investigator, posing as an anony- mous tipster, sent an e-mail message to a CNET reporter with a piece of Trojan software that was intended to send back information about any addresses to which the mes- sage was forwarded.101 This ruse apparently failed to work, though. HP also conducted a feasibility study for planting undercover agents in the San Francisco news bureaus of the Wall Street Journal and CNET in the guise of clerical workers or cleaning staff. 102 There is no evidence, however, that the plan was ever implemented. The investigation succeeded in identifying the leaker. It was George A. Keyworth II, the longest-sitting HP board member, who had also served as director of the White House Office of Science and Technology Policy from 1981 to 1986 during the Reagan administration. When con- fronted in a board meeting on May 18, 2006, Mr. Keyworth was reported to have said, "I would have told you all about this. Why didn't you just ask?"103 In his defense, he explained that he was "frequently asked by HP corporate communications officials to speak with reporters both on the record and on background."104 He said he often met with reporters to promote the company and denied ever divulging any confidential or damaging information. Dur- ing the meeting, Keyworth was asked by a majority of the other directors to resign. He refused but later left voluntar- ily when Ms. Dunn agreed to step down as chair. Another director, Thomas J. Perkins, resigned to protest the way that Ms. Dunn had handled the matter. It was Mr. Perkin's insistence that the reasons for his resignation be explained publicly that led to the disclosure of the investigation. In the ensuing uproar, the Securities and Exchange Commission and the U.S. House of Representatives requested information in order to determine whether any laws had been broken or any new regulations were needed. The California state attorney general launched a criminal inquiry in the belief that pretexting violated existing law. Although HP had obtained a legal opinion that pretexting was legal, the opinion of lawyers was divided. To date, Congress has not passed any legislation that explicitly out- laws the practice. Although the California legislature passed and the governor has signed a bill to forbid pretex- ting, the law did not take effect until January 1, 2007, after the HP investigation. To the end, Ms. Dunn refused to take responsibility for the investigation or admit that she had done anything wrong. Before a congressional House committee, she declared, "I do not accept personal responsibility for what happened."105 Although she admitted that the investiga- tion "wasn't implemented well" and that "it looks like there was sloppy work along the way," she still called it a "noble cause" and said that she had "no choice" but to respond to the leaks. 106 In contrast, Mark Hurd, the CEO, stated, "I am taking action to ensure that inappropriate investigative techniques will not be employed again. They have no place at HP." 107 SHARED WRITING: PLUGGING LEAKS AT HP Which of the methods employed by Dunn's hired investigators involved the most serious violation of individuals' privacy? Which demonstrated the greatest failure to respect the privacy of the individuals under investigation? Why might some think that the investigation would have been more acceptable if it was focused on a company (as when seeking competitor intelligence) rather than individuals? Review and comment on at least two classmates' responses. A minimum number of characters is required. to post and earn points. After posting, your response can be viewed by your class and instructor, and you can participate in the class discussion. Post 0 characters | 140 minimum Case: Information Handling at ChoicePoint As the chief executive officer and chairman of ChoicePoint, Derek V.Smith believed that the company's business of col- lecting information on virtually every American and pro- viding it to customers was a great public service. He asserted that "ChoicePoint is built on the premise that the responsible use of information will reduce risk and make the world safer and more secure."108 However, some critics think that ChoicePoint and the information collection industry as a whole pose great hazards. ChoicePoint's Business Based in Alpharetta, Georgia, a suburb of Atlanta, Choice- Point was formed in 1997 as a spin-off from Equifax, the giant credit reporting company. Under Mr. Smith's leader- ship, ChoicePoint bought more than 70 information- gathering companies over the next seven years to amass billions of pieces of data on individual Americans. This information included motor vehicle records, credit histories, insurance claims, birth and death certificates, marriage and divorce decrees, criminal actions, civil judgments, and real estate transactions. Among the customers for ChoicePoint's services were banks, insurance companies, debt collectors, landlords, private investigators, law enforcement agencies, and the federal Department of Homeland Security. By 2004,