For years the mark of success of a business was when they reached the point of "going public". Today we often see a reverse trend with a spate of firms being bought for the express purpose of taking the public firm private. The latest and biggest in Canadian history- potentially valued at over 30 billion dollars is the ongoing negotiations for the privatization of BCE Inc.
While the choice as whether to remain public or become a private firm is ethically neutral the corporate structure is one that has numerous potential ethical pitfalls. Corporations are no more than legal fictions, impersonal and devoid of feeling. Liberties we would not take when dealings with individuals one often feels no compunction when doing so in dealings with a corporation. This reflects itself in the often obscene (there are few other words for it) salaries executives often make. After all it is just corporate money. It can be seen in attitude towards expenses, perks and risk taking. There are not too many private firms that would engage in the type of risk taking that had the Bank of Montreal announce trading losses of up to 450 million dollars in the second quarter. Even when big gambles are taken there is usually much more oversight and risk awareness. Since the loss is to some impersonal unknown shareholder we often let our ethical guard down.
It is this same attitude that is often displayed toward the largest and most impersonal corporation of them all, namely the government. I write these words on April 30
th as millions of Canadians are getting around to filing their income tax returns. It is acknowledged by all that cheating on one's tax return is widespread. If all would pay what they should it is likely that billions would be available for spending initiatives with billions left over for tax reductions and debt repayment. The problem is so great that a government spokesperson was quoted this week as saying the problem is so large they can't even quantify it. Yet close to 100% of these people would not even think of stealing something as meaningless as a chocolate bar form a candy store.
When we attach a face to a victim we feel a sense of compassion and remorse enabling us to act honestly. In truth Jewish law sees the former as a much greater wrong. One can always repay an individual and show sincere remorse to their victim. Neither is possible with theft from the public purse and ironically rare is the perpetrator who even thinks of "repenting" form their terrible sin. While being held up at gunpoint is a much more frightening experience, from an ethical perspective the white collar criminal is no less guilty. In fact the white collar criminal has to pay a double what was stolen whereas the blue collar criminal is obligated to pay back the principal stolen and no more.
A further related problem of corporations is the passing the buck syndrome that is all too common. Ultimately it is those impersonal shareholders who own the business and hence should be held accountable for its corporate policies or lack thereof. However the day to day running of the business is done by hired mangers who generally act independently, with often little direct shareholder involvement. Not only can each blame the other for the lack of ethical clarity - as they are wont to do especially in a court of law - their interests often conflict. Such can be the case with a buyout where the CEO may be in line for huge payout, one which may come at the expense of the shareholders.