At the August 2008 Chicago regional networking meeting , Frank Vogl provided his thoughts on transparency and business ethics in a global environment. Frank was the first international member of the Arthur W. Page Society when he was the head of communications at The World Bank. A summary of his remarks follows.

He began by asking how do you get PR people involved in strengthening business ethics globally?

Globalization and the internet have combined to change the landscape for multi-national organizations. One of the challenges is that global companies have to not only think about maintaining a reputation of excellence at home, but also in scores of countries around the globe.

Enron has made this even more difficult as the US business model is viewed with greater skepticism around the globe. If there was seriously damaging publicity and propaganda about the role of multi-national companies before Enron, it has certainly increased since then. If there were people who were having an impact on corporate governance around the world and using the US model as a standard, then suddenly that model was being challenged as never before. Instead of being constructively proactive, you found that America's leading lights in this field were forced to being very defensive.

Enron also happened at a time when NGOs were becoming more effective and active in taking on corporations. While there are many NGOs which have exposed insidious relationships between governments and mineral companies around the world, many of these groups also have a decidedly anti-business bias.

Founding Transparency International

In the late 1990s several friends and I sat around a table and we said that it was a terrible tragedy that so much foreign aid was ending up in Swiss bank accounts and there was no organization dealing with corruption. We set up Transparency International to deal with corruption. We were able to find like- minded people in more than 90 countries. Today we have a headquarters in Germany and many alliances with business and NGOs around the world. The speed and growth of this organization could not have happened without the internet. We don't have an anti-business bias.

However, for some business is constantly a villain. The global corporation is constantly being monitored. It has nowhere to hide. You cannot adjust your standards of behavior from country to country. There is no way in which global companies can assess local cultural standards and say we will do business on those terms. The standards have to be elevated around the world.

As a founder of Transparency International, I am astonished at the number of calls I get from the press whenever the slightest scandal hits anywhere in the world. I can assure you that many in NGOs around the world are also getting these calls. And, they are more than willing to blast corporations, despite having very little substance. They can give good quotes and the media are only too willing to run with those quotes.

When a crisis hits

What happens time and time again when a crisis hits, is the lawyers in the corporation get involved. Or others in the company get involved to say that the media or the NGOs are overreacting. Or it's really an insignificant problem. All the while time is lost. And, during that time the NGOs are doing enormous damage to corporate reputations.

As companies have nowhere to hide, they also have nowhere to minimize the problems they have. Problems are not just confined to a local market anymore. When a company like Siemens is found to have paid $2 billion in bribes around the world, several things happen.

1. Their reputation is damaged.
2. NGOs immediately begin looking at governments in their countries to see if they have relations with Siemens
3. Siemens now has enormous battles to fight in every country where they do business
4. Public prosecutors get involved. There are now 89 companies in Germany under investigation for international bribery - payments to foreign government officials.

This is unprecedented. For many years the United States was the only government with a foreign corrupt business practices act which meant it was a crime to pay a bribe to a foreign government official. German companies could actually get tax deductions for their bribes.

Today it is different. Companies are being monitored and this poses an enormous challenge. Big business is widely distrusted throughout the world.

The facts are that there has been enormous progress in the area of corporate social responsibility. Today, there are hundreds of companies publishing very serious corporate social responsibility reports out. However, business has not done very well at convincing the public that there has been progress in this area.

Putting Profits Above All Else

The problem is that the perceptions of so many industries around the world are perceptions of companies that have preyed at the altar of profit maximization. Each of these scandals only helps to accentuate the problem.

We work with the world's largest banks - which lost no less than $450 billion in the last few months. Those CEOs whom we worked with are in many cases no longer there. However, they got severance packages that were so massive that people had to ask what kind of ethics are pervasive at these companies?

How do we deal with this?

1. Practice good ethics
2. Communicate values
3. Be proactive in integrity leadership

It is easy to say "Don't pay bribes." But, US law says that companies may pay facilitating fees - defined as grease payments to overcome petty extortion fees. These facilitating payments are bribes. Can you imagine a senior official of another country coming to the United States and bribing customs officials to get his goods through customs? Yet, our law says it is fine to make these payments around the world. Companies that pay them are paying bribes. Most companies use them and their lawyers justify them. They are living in a fantasy world thinking they can claim to not pay bribes, only facilitating payments. But, they are being monitored by NGOs and others. And the rest of the world sees these payments for what they are.

Companies need to stick to true values. Don't do just what is in compliance, but go beyond that to do what is right. Doing what is right not only in the eyes of the justice department, but also in the eyes of people overseas. This is easy to say, but it is a constant battle.

A few years ago Jim Sinclair, a remarkable visionary, asked me to help him build a mining company in Tanzania. Everyone told us you will have to pay bribes to be successful. We went to phenomenal lengths to demonstrate to the government that they should trust us, that we were long term investors and we would do everything in a transparent way. Gradually, we built a reputation where we were trusted. We did not pay bribes. If we had to wait in line for a permit, we waited in line. We opened the first successful mining company there. There are now 60 companies. Our company was eventually sold and the successor company has invested hundreds of millions of dollars in the country. The investments are making a difference. The man we worked with in the mining ministry in the early 90s is today the president of that country. When he became president, he fired half of the cabinet for taking bribes.

There are ways companies can follow the Sinclair example and operate without paying bribes. And in those instances where it is not possible, companies should quit and walk away.

Communicating Values

On communicating values, George Fisher, the former CEO of Eastman Kodak, said that without values you don't have a company. The older we get the more important values are. A company is only as good as its values system.

In 2002 Jack Welch devoted almost all of his shareholder letter to values. In an age where it is no longer possible to have great pyramidic structures , you need to have everyone in the company to buy into integrity. He had come to understand the business value of that. He also understood that it demands constant internal communication of the corporate values in order to get it right.

We have seen a neglect of that in quite a few institutions. Where you have an emphasis on business generation irrespective of good business principles, disaster is the result.

Very few companies work so hard year in and year out to reinforce the corporate credo as Johnson & Johnson. It is not simply talk, but is reinforced in every annual report, every meeting and in every decision they make. The credo puts the mothers, doctors, nurses and customers they serve as most important. Profits are a byproduct of serving these key constituencies well.

Milton Friedman believed the role of corporations is to maximize profit. With all due respect, if that becomes the only goal, the company is setting itself up for failure.

Look at BP. The company had two major crises back to back. In Texas 14 people lost their lives in an accident. An investigation by an independent third party, led by former Secretary of State James Baker, found this was not just an accident. It was the result of tremendous corporate neglect. This, in a company that declared it was a leader in corporate social responsibility.

If you just have the rhetoric and not the management systems behind it, the NGOs will find you.

Arthur Page himself would likely be stressing globalization and integrity as a core theme today. It is absolutely central and core to the role of corporate communications.

It's time for CEOs to understand that they have to turn to corporate communicators consistently. Corporate communicators are the only people who have the ability to really understand the NGO movement around the world, to understand what is shaping perceptions of corporations around the globe and to understand the trust issues.