NewsNotables – Issue 46

Companies Face Ethical Issues Over Tamiflu

The Wall Street Journal, January 16, 2006
Last year, Proctor & Gamble Co. asked its company doctors whether it should try to secure a private stash of the avian-influenza drug Tamiflu for its staff of 25,000 in Asia. They’re still debating the question. “How ethical would it be if we were holding supplies that the general public didn’t have access to but badly needed?” asks Shivanand Priolkar, the company’s medical leader for Southern Asia. He is also concerned that people could come to know you have a life-saving medicine and you could make yourself a target.

Companies are grappling with a host of thorny issues as they prepare plans to keep their businesses operating if employees fall ill during the bird-flu pandemic that could strike at any time. China and Turkey have had deaths from the flu.

Emotional and ethical issues are coming up as well, especially given the difficulty in obtaining the antiviral Tamiflu. Roche Holding AG, of Switzerland, agreed last year to license the drug’s manufacture to various partners, and it has been ramping up production. But with Tamiflu still in short supply, managers who socked some away last year are struggling with how to distribute it equitably in the event of a pandemic.

Comment: Equitable distribution sounds familiar to the flu-shot shortage in the United States last winter. Procter & Gamble and Roch don’t know all the answers to this ethical dilemma, but I give them credit for searching and examining the issue before it strikes.

Pensions Up for Another Squeeze

Associated Press, January 17, 2006
It may sound arcane, but a planned overhaul of the way companies keep their books on pensions and retiree health care plans could come at a very real cost to workers counting on those benefits. The changes, likely to begin by year’s end, come as a growing number of companies freeze pensions and cut retiree health benefits, shifting risks and costs to workers.

Recently, IBM Corp. and Verizon Communications Inc. have joined the list of those announcing they will freeze their pension plans. Some experts say that new regulations requiring companies to more accurately calculate and show the cost of their retirement promises could speed up the move by employers away from guaranteed pension and other benefits.

Comment: Rules now in place give many companies cover if they seek to underfund. Many companies have made expensive retirement promises without putting aside all the money needed to meet them.

Lay-Skilling Enron Trial is Really About Lying

Associated Press, January 23, 2006
At its heart, the biggest criminal case to emerge from the largest corporate scandal of recent years comes down to whether Enron’s top two former executives lied. Kenneth Lay and Jeffrey Skilling are on trial as alleged purveyors of deceit more than four years after the company became synonymous with corporate greed and wrong-doing.

Before the 2001 fall, Enron ranked seventh on the Fortune 500, posting billions in revenue and oozing prestige, money and swagger. Lay and Skilling were the embodiment of it all. But when relentless investigations exposed inflated profits billions in debt hidden in off-the-books financial structures, investors fled and the company crumbled.

The question for a dozen jurors to answer is whether Lay and Skilling knew of Enron’s rot when they repeatedly declared publicly that all was well or would improve.

Comment: Despite new and expensive laws and regulations that were adopted to tighten corporate oversight after the wave of scandals earlier in the decade, serious accounting problems continue to trouble publicly owned companies. In the last year, a record number have been forced to correct erroneous earnings statements, which often led to sharp stock declines. The Public Company Accounting Oversight Board, the agency created by Congress three years ago to oversee the accounting profession after the collapse of Arthur Anderson for its role with Enron, has yet to bring a significant enforcement action.

Google Protects Users’ Data

USA Today, January 27, 2006
Cyberspace unconfidential — just how much does Google know about everyone?

That question has been on the minds of Internet users since reports that the federal government is demanding data from Google and other companies. The truth is that Google knows more than you’d probably like. It keeps data on searches, though it would take extra steps to identify you. Query the word “car” from your home computer and Google captures it, along with the date, time and your Internet provider (IP) address.

That said, when the Justice Department starts snooping into the online habits of millions, it’s worrisome. You should know just how un-private your Internet searches are and how easy it might be for the government to access them.

Several major search providers — Yahoo, MSN and AOL — have cooperated and turned over data. Google fought back in court, which is the only reason the public even knows about the demand. While the data Justice is seeking do not identify individuals, Google routinely keeps data that could. It’s not too tough to work back from that address to an individual. The recording industry did it to sue thousands of people for illegally downloading music. The government could easily do the same.

Comment: It’s worth remembering that nothing in cyberspace is really confidential. Internet searches are not covered by federal privacy law. Perhaps they should be.

By Roger Eigsti
Board President,
Institute for Business, Technology, and Ethics