Monday, June 28, 2010

Ethics Optional

What good is a public code of ethics ending in a provision saying:
From time to time, the firm may waive certain provisions of this Code.
Sounds pretty shady, right?  At a minimum such a provision seems odd--why even publish a code of ethics when you acknowledge that the code is non-binding?  Actually, these kind of cop-out statements are pretty common for companies who publish their code of ethics.  The above disclosure comes from Goldman Sachs and similar clauses can be found in codes of ethics of companies like Exxon Mobil.  The Motley Fool has a great article discussing these clauses.  Here is one paragraph I particularly enjoyed (referring to waivers of a firm's code of ethics):
Thanks for the heads-up. But can I ask the critical question: Why? What good are ethics codes that a company's top brass can subjectively ignore? As a 2003 lawyerly report on Sarbanes-Oxley put it, "Because a code of ethics expresses the company's fundamental values, few waivers of its provisions are likely to be justified." Exactly. So why even allow them? It's like adding a 28th amendment to the Constitution that says "The previous 27 amendments may be ignored from time to time." Such language pretty well discredits everything else said before it.
I would have to agree.  What is the point of a code of ethics if the code can be suspended whenever it becomes inconvenient?

No comments:

Post a Comment