Monday, March 18

The challenge of improving ethics


THE Oxford Dictionary defines ethics as “moral principles that govern a person’s behaviour or the conducting of an activity”. In the business and public sectors, it is companies and institutions, composed of and led by people, that behave and conduct themselves according to moral, immoral or perhaps amoral principles.  In the business sector it covers the promotion of corporate governance, social responsibility and fiduciary duties, and the battling of bribery, discrimination and insider trading. Portrayals in fiction (albeit based on reality) can also highlight the pernicious effect of weak ethics: the series ‘Billions’ or movie ‘Wolf of Wall Street’ come to mind.

Similar principles should apply in the public sector too, when we talk about the services that government ministries are supposed to provide from public money: from renewing your passport to educating your children.

More than that, government institutions in a democracy owe accountability to citizens, expressed through mechanisms such as rule of law and free and fair elections, moderated by check and balances. All of this is regulated by the Federal Constitution: the highest law of the land that itself emerged out of agreement between government and citizens.

That is the theory anyway. In Malaysia today, the realisation of ethics in business and the public sector is mixed at best.

Like all independent directors of public listed companies, I’ve attended numerous trainings provided by the likes of Bursa Malaysia, Bank Negara, the Securities Commission, apart from in-house sessions. Repeatedly it is made clear that we must obey numerous laws (especially the amended Companies Act), follow defined industry standards, and strive to achieve excellence across various metrics. This might make you think that Malaysia possesses the epitome of ethical business environments.

However, a common perception is that not all companies are subject to the same level of scrutiny, especially if they are linked with government or political parties.

The appointments of chief executives and directors are seen to be made in exchange for past favours or promises to not disclose certain information. Of course, perceptions can be based on falsehoods and rumours, but confidence in the corporate sector relies on transparency and competence.

Within government proper, the perception is worse still. The fiduciary duty of a Member of Parliament is to their constituents but how many citizens feel that this is the case? Policy announcements can be blatantly targeted at specific sections of the population on a discriminatory basis, and may be in contravention of previous policy pronouncements, manifesto pledges or worst of all, the Federal Constitution. When Parliament is unable or unwilling to scrutinise policy, another opportunity to uphold ethics is lost. Other national institutions are also sullied by a proximity to politics, particularly when the appointment of senior officers is also determined by personal or political objectives rather than those stated by law.

This situation erodes not just our politics and economy, for if national institutions cannot be trusted, we move towards a society which is characterised by deceit and cynicism. The latter generates amusing WhatsApp memes, but we cannot mask our frustration with laughter forever.

But how do we move towards a more ethical scenario?

We have seen that where political incentives are absent, demanding high ethical standards is possible. So one strategy is to depoliticise the business environment.  Business and politics must not mix, said our first Prime Minister Tunku Abdul Rahman: he understood the dangers of concentrating too much power in a single place. (He was not simultaneously Finance Minister.)

Some might say the only way to achieve this is through political change, but too many so-called reformers have ended up inheriting the bad habits of the people they replaced.

Rather, there needs to be a multi-pronged approach led by civil society: to engage with policymakers and bureaucrats in the hope of improving legislation; to convince the wider public through open forums; but ultimately in educating especially younger citizens of the importance of ethical principles.

Admittedly in a world of social media, where approval among peers is paramount, it may be a challenge to argue that it is better to be among the few if that means maintaining a higher standard of morality, rather than jumping on the bandwagon of corruption.

Thus, another part of the approach is to lead by example. If we can show that business ethics leads to fairer and freer capitalism that delivers better goods and services for everyone; if we can show that public sector ethics leads to more accountable and responsive democracy that enables more citizen participation; then the argument becomes easier to make.

It will be a slow incremental process, but that doesn’t mean we shouldn’t try.

This is an extract of the writer’s recent speech for the Business Ethics Institute of Malaysia.

Tunku Zain Al-‘Abidin is founding president of IDEAS.