Ethics in business is the moral compass that guides a company’s public behavior, and protect the company’s brand and reputation. Ethics has both bottom-line and moral implications. Establishing customer trust and winning investor confidence are built on ethical foundations.
Government regulations define expected behavior of companies and their executives. For instance, the Bangko Sentral ng Pilipinas (BSP) requires all top executives and board members of banks and other financial institutions attend an annual seminar on corporate governance, including ethics. The Insurance Commission also requires the same for insurance and pre-need companies. Ditto for all publicly-listed companies as required by the Securities and Exchange Commission.
I used to work in an American-owned pharmaceutical company that meticulously adhered to established norms on ethics and conflict of interest. Every mid-year, all top executives, including our Managing Director, sales and purchasing staff, managers, and supervisors, are required to submit a document signed by them stating that they have not committed any ethical violation. As human resources head, I sent all copies of such statements, including mine, not to the home office but directly to the external auditors. We were checked yearly by auditors to ensure that everyone was compliant.
In an open forum, an aggressive sales person cited a theoretical situation. “Supposing one day, I was supposed to meet with a top executive of a client firm with whom I’m acquainted to close a sale worth P1 million. There was heavy traffic on my way to the appointment, so I cut corners until a cop stopped me. To be able to make my appointment, I gave P500 to the cop. Did I violate the rule on Ethics?” The auditor replied, “Absolutely.” “But it’s my own money,” the salesman protested. “I have no intention of getting a refund from the company, and if I can’t make my appointment, the company loses the opportunity of making a P1 million sale!” “I don’t care,” answered the auditor. “We’ll still fire you for violating our rules on Ethics.”
Sometimes, our rigid rules on ethics could hit us on a snag. At that time, our company was one of two major producers of intravenous (IV) fluids. At one point, we had only one week’s supply of dextrose. Our supply was tied up in the Customs bonded warehouse and we experienced difficulties having those goods released. We telexed home office about our Catch 22 situation. Here was the reply: ”We detest violating the rules on ethics. However, in a country where it is customary to come across with ‘facilitation money’, you are allowed to do so provided that the amount is reasonable, and it must be reported immediately to our External Auditors.”
From this, I learned that ethics must sometimes give way to what is practical and customary to be able to do business. Finally, I wish to relate a most shocking reality. A group of doctors organized a
pharmaceutical company, which was accused of conducting a pyramid scheme. Whistleblowers talked about expensive cars, watches, free plane tickets for trips abroad, and other incentives for doctors who prescribed their own medicines. While the organizing doctors denied offering such scheme, they admitted giving “incentives.”
Lost in the din of investigations in the legislature and regulating bodies was the unanswered question: Why were doctors allowed to organize their own pharmaceutical company when there was clearly a clear case of conflict of interest?
As observed by a columnist, “Having a business interest in a pharmaceutical company could color a doctor’s diagnosis. That is why doctors are prohibited from having a pecuniary interest in the drugs they prescribed.”
Why was this company allowed to operate when there was clearly a conflict of interest? It is the duty of the Professional Regulation Commission (PRC) to look beyond the licensing and registration of physicians. It is also responsible for determining when a physician’s professional conduct or ability to practice medicine warrants modification, suspension, or revocation of a license to practice medicine just as the Supreme Court takes a watchful on the professional conduct of lawyers under pain of suspension or disbarment. It must protect the public by disciplining physicians who engage in unprofessional, improper, or incompetent medical practice.
(The author is Vice President of the Employers Confederation of the Philippines.)