Académique Documents
Professionnel Documents
Culture Documents
Volume 1, Number 1
In This Issue
A Word from the Chairman of the Board
On behalf of the Board of Trustees, I welcome you to Ethical
· A word from the Leadership, the new newsletter of the Council for Ethics in
Chairman of the Board Economics.
· Featured Article
I am delighted to have been associated with the Council for much of
Fighting Internal Fraud its quarter century plus of service. As many readers know, the
at Nationwide Council was formed in the late 1970s as a result of a stimulating
Insurance by LeRoy discussion initiated by Ross Laboratories’ contact with leaders in the
Johnston Central Ohio business, religious and academic communities. The
purpose of that discussion was to help Ross (now a division of Abbott) and its leaders
· From the Corner Office determine how to respond to the worldwide boycott of Ross’ competitor, Nestle, and
its infant formula product. The boycott was organized because many thought it
An Interview with inappropriate for Nestle to be marketing powdered infant formula in third world
Melissa Ingwersen, countries, where it was likely to be mixed with impure water. The invited participants
Central OH President, found the crossdisciplinary discussion so stimulating that they decided to form an
JPMorgan Chase Bank organization to sustain debate and dialogue about ethical issues. Thus, the Council
was born.
· Editorial
· Debating the Issues Over the years, the Council has continued to stimulate and sustain this dialogue. We
organized two international business ethics conferences that were convened in
Minimum wage vs. Columbus. We created and facilitated a two year project on Honesty in the
Living wage Workplace, which developed task forces in twelve different business, professional and
community sectors. We have hosted countless speakers, presentations and panels
· Ask Ethicus on ethics in business and professions over the years, in breakfast, luncheon and day
· Profile: Council long formats. Finally, we have been delighted to provide leadership and oversight to
a major initiative in Character Education for the State of Ohio, and to host an annual
Chairman of the Board
Laws of Life essay contest on character and leadership.
· Message from the
Executive Director This new newsletter is an important component of the Council’s mission, to
encourage dialogue and exchange about ethical issues. We hope you enjoy and are
· Meet the Council Staff engaged by this new format, and we look forward to receiving your ideas and
feedback.
· Highlights of recent
Lunchbreak Programs Roy J. Lewicki
Featured Article:
Fighting Internal Fraud at Nationwide Insurance
LeRoy Johnston‐Associate Vice President‐Office of Ethics and Business Practices
The Association of Certified Fraud Examiners, in its "2004 Report to the Nation,"
estimates that the typical U.S. organization loses six percent of its revenue to
Council for Ethics in Economics internal fraud. Internal fraud can take many forms, including embezzlement of
money and theft of confidential information.
Page 1 of 11
This finding suggests that organizations should devote more resources to
Executive Committee detecting and deterring internal fraud. In addition to boosting the bottom line
and holding down prices, an organization that systematically roots out internal
Dr. Roy J. Lewicki fraud sends a message to its associates that acting with honesty and integrity is a
Chairman of the Board core value.
Mr. Rich Mueller At Nationwide, we have created a sevenperson internal investigation unit,
Vice Chairman housed in the Office of Ethics and Business Practices, whose primary mission is to
detect and deter internal fraud. The unit is staffed with experienced, certified
fraud examiners. The members have backgrounds in law enforcement, military
Mr. Mike Distelhorst investigation, compliance and internal auditing. Key initiatives of the unit in 2006
President include:
Welcome Melissa. Can you tell us about JPMorgan Chase?
Can you tell us your background?
As President of the Central Ohio area for JPMorgan Chase Bank, I am responsible
for all of the bank’s corporate banking activities in Central Ohio and lead the
bank’s broader strategies in the market. I joined the predecessor company, Bank
One, in 1989. I began my banking career as a credit analyst with National City
Corporation and later served in various lending roles in Metropolitan Lending,
National Lending and Private Banking. I received a Bachelor of Science degree in
Communication Studies from Northwestern University in 1982.
I have served in many community leadership positions including cochair of the
2003 Operation Feed campaign and the 2004 State Board of Education task force
on “Quality High Schools”. I am trustee on the boards of The YWCA of Columbus,
Columbus Chamber of Commerce, Franklin University, and Ross Heart Hospital,
and I am also a member of the Columbus Partnership. I reside in Bexley with my
husband and two children. Continued on page 9.
Page 2 of 11
Editorial Board Editorial
J. Michael Houlahan J. Michael Houlahan
Chairman Welcome to the inaugural issue of the Council for Ethics in Economics
Retired Foreign Service newsletter. Our intent is to inform our readership concerning ethical
issues in the workplace, while also offering varied and entertaining
Joseph Cook content. In this and future issues we hope to examine a range of ethical
Capital University questions and challenges that arise in today’s fastpaced corporate world.
Some of these questions may be complex and controversial.
Roy J. Lewicki
Ohio State University Sadly, corporate culture is increasingly regarded with suspicion and even
alarm by the public. In the last few years we have seen a parade of
LeRoy Johnston major corporations caught in unethical and sometimes felonious activities.
Nationwide These firms include some once thought to be among the most innovative
and successful in the business world. Leading firms in a range of fields,
Seth T. Becker including energy, banking, auditing and investment have been assessed
Oakstone Mortgage huge fines for unethical dealings. Executives have been jailed.
Lisa K. Mueller Publicity over golden parachutes, allegedly excessive executive pay
Council for Ethics in packages often unrelated to corporate performance, and interlocking
Economics
boards of directors, rubber stamping management excesses all add to
image problems.
Globalization has created its own set of concerns. A growing tendency for
profitable corporations to outsource overseas and downsize domestic
work forces has come under fire. Also generating controversy is the
practice of some already profitable corporations in dramatically cutting
pay scales to fatten the bottom line and please stock holders at the
expense of employees. Increasingly corporations default on seriously
underfunded pension plans, thereby unloading these pension
Contact Us responsibilities onto taxpayers.
ethical.leadership@yahoo.com
With the negative publicity resulting from this rash of corporate
misbehavior, it shouldn’t surprise us if the public increasingly views the
Gordon Gekko “greed is good” film stereotype as representative of
corporate ethics. (Gordon Gekko, played by Michael Douglas, was a
character in “Wall Street”, a 1987 film examining the decline of corporate
ethics.)
Contact Ethicus
Ask_Ethicus@yahoo.com Of course Gordon Gekko is a parody, and the vast majority of
corporations and individual executives are honest. However, the public
perception left by those who are caught in felonious or unethical behavior
is damaging to the interests of the entire business community. In future
newsletters, we hope to examine with you readers some of the issues
behind this growing perception of corporate greed and misbehavior. To
do this properly, we need written input. Some of the correspondence we
receive will be published in future issues.
This inaugural issue includes an article on Fighting Internal Fraud at
Nationwide Insurance; an interview with the Central Ohio President of J.P.
Morgan Chase; a profile of Council for Ethics in Economics Chairman Roy
Lewicki; a column soliciting your views on the minimum wage vs. living
wage controversy; and an ethics advice column by “Ethicus”.
Council for Ethics in Economics
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2006 Board of Trustees
Debating the Issues
Dr. Roy J. Lewicki Minimum Wage vs. Living Wage
The Ohio State University J. Michael Houlahan
Mr. Glenn Soden
In our next issue we hope to discuss the minimum wage vs. a “living wage”. At
Nationwide this writing, the state legislature has voted to increase Ohio’s minimum wage
from $4.25 an hour to the federal minimum wage of $5.15 an hour. A potential
Mr. Mike Distelhorst fall ballot initiative would move the rate to $6.85. (Prior to this legislation, only
Capital University Ohio and Kansas scales were lower than the federal minimum wage.)
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On the other hand, you did not agree to act as the store owner’s banker. You
Upcoming Programs bought and paid for the newspaper and took the change provided. Was it
incumbent upon you to count the change and return the excess? Did you have a
May 17, 2006 moral obligation to return something that was given to you beyond what was
anticipated, or was this just “caveat emptor” (buyer beware)? Does the amount
of the under/over payment matter? Are you morally obligated to return it?
Lunchbreak Series
In a practical sense the amount of the overpayment does matter. We are more
Gary Zeune of insistent to be repaid a large amount than a small amount. On the other hand,
TheProsandCons what is in question is not the amount, but it’s the taking that matters.
The World’s only speakers This is the heart of the matter. For it is not in the owner’s behavior that we find
bureau for white collar the answer. That is, we do not say “I will ask the owner and see what he thinks”
criminals (Perhaps, because we know his answer!). The more important observation is not
about the other, but about the self. Morality asks not how “the other” should
Join us for behave, but how I should behave. Returning the change to the owner is not
about whether it is important to the owner or not. That is a different question.
Secrets of the Master
ConsHow and Why So after all this, suppose your business, or your employer, receives too large a
refund from one of its vendors. Do you refund the overpayment? Or do you
Employees Do Wrong
wait for the other company to discover the overpayment for themselves? If this
overpayment allows you to receive a significant bonus, or keep your job, do you
Click here to view complete (still?) return the overpayment?
program information!
Please send me your comments and opinions at Ask_Ethicus@yahoo.com. The
most interesting outcome is for us to develop a dialogue so we can publish your
comments and observations.
See the top news stories of
the day related to corporate Let me know what you think. Until next time, hoping you always lead an
responsibility examined life.
CSRwire.com Corporate
Social Responsibility Do you have a situation you would like to discuss with Ethicus? Email us at
Newswire Ask_Ethicus@yahoo.com with your situations you would like to discuss. Just let us
know if you want to remain anonymous.
Council for Ethics in Economics Chairman Roy J. Lewicki also is Professor of
Management and Human Resources and Dean's Distinguished Teaching Professor
at the prestigious Max M. Fisher College of Business at The Ohio State University.
At Fisher, Roy is responsible for courses in organizational behavior and ethical
leadership. The course on ethical leadership is a relatively new offering, and is
part of the Fisher College’s increased emphasis on business ethics. Picking up on
the large number of ethics scandals in corporate America, the course focuses on
leadership and character, as well as ethical decision making.
Council for Ethics in Economics
Educated at Dartmouth College and Columbia University, Roy Lewicki served on
Page 5 of 11
the faculties of Yale University, Dartmouth College and Duke University prior to
Take the March Survey joining the OSU faculty in 1984. In addition to his faculty appointment at Ohio
State, Professor Lewicki also served as Associate Dean for Graduate Management
Is working on personal Programs (198491) and Academic Director of Executive Education (199192) at
business at work stealing? the Fisher College of Business.
March Survey Question
Roy also has research and teaching interests in the fields of negotiation and
dispute resolution. In addition to his regular teaching responsibilities in the MBA
and Ph.D. programs, he teaches numerous executive education and management
seminars for many Central Ohio companies.
Roy is an author or editor of thirtyone books, and numerous research articles. He
also has won more than a half dozen national and OSU awards for teaching
Interested in Joining the excellence.
Council?
Prof. Lewicki was an organizer of the Conflict Management Division of the
Academy of Management, and served as its first Chair in 1988. He held served on
Visit our website at numerous editorial positions, including serving as the Founding Editor of the
www.businessethics.org Academy of Management Learning and Education journal (20002004). He has
held several positions in the International Association of Conflict Management and
served as its President in 2000.
He has been active in the Council’s work for almost 20 years, and has served as
Trustee of the Council for the past six years. His spouse, Debbie, is pastor at
Groveport Presbyterian Church. Roy and Debbie have two married sons who live
in Boston and New York.
Contact the Council
Address:
191 W. Nationwide Blvd. Suite
300B A Message from the Executive Director
Columbus, OH 43215 2005 was a wonderful experience for me. I joined the Council in January
of last year to bring 2004 financials up to date, and never left. Over the
Phone: past year we have made great strides in regaining our footing in the
(614) 221‐8661 community as well as bringing our members back into the Council’s great
missions. Some of the highlights include launching the LunchBreak
Fax:
Speaker Series, improving our reservation process by joining an online
(614) 221‐8707 registration system, and reviving the Ethics and Compliance Officers
Email: Forum. We also enjoyed another very successful Laws of Life Essay
contest which we cosponsor with Ohio Partners in Character Education
Council_for_ethics_in_econo
mics@yahoo.com I am equally excited about 2006. This year will bring many more exciting
programs in the LunchBreak Speaker Series. In the upcoming months we
will welcome David Freel from the Ohio Ethics Commission, Stephen
Young from the Caux Roundtable and Gary Zeune of TheProsandCons. In
June, we will return to our original timeframe for the Annual meeting with
an evening of celebration at the Kelton House. Since you are reading this
message, you are already enjoying our redesigned email newsletter.
Look for it quarterly in your email mailbox. In addition, take time to
explore our new website. I hope the new features, navigation, and look
of the revised website provide you a valuable resource. Visit us
frequently for the top social responsibility news stories of the day as well
as features on member companies, interesting articles, and up to date
information on all of our upcoming programs
Many of us see 2005 as the year of rebirth for the Council. As for 2006,
we see it as our year to grow into an even stronger Council supporting
our surrounding community. Join us in this exciting effort!
Council for Ethics in Economics
Lisa K. Mueller
Page 6 of 11
Meet the Council Staff
The Council Staff consists of the President, Mike Distelhorst, Executive
Director, Lisa Mueller, and Ohio Partners in Character Education Director
Lucy Frontera (sitting). Mike Distelhorst is a Law Professor at Capital
University and has been involved with the Council
for many years. Lucy Frontera joined the Council
in 1999 when we began working with a grant
supporting character education. She organizes all
of our programs in conjunction with the Ohio
Department of education. Lisa Mueller joined the
Council in 2005 as the Executive Director. She
basically manages every aspect of the Council
operations. She also teaches accounting courses
at Franklin University.
Page 7 of 11
Featured Article continued from page 1
These steps include:
Ø Delivering training to internal business units on fraud indicators
and what to do if fraud is suspected
Ø Placing our contact information on internal business unit web sites
Ø Placing stories in company publications about our mission and
outcomes of our investigations
· Enlisting customers, vendors and third parties as tippers.
Because customers, vendors and other third parties may have valuable
information to contribute, we are reaching out to them through our public web
site, which will also have a reporting link. In the case of vendors, we ask for
their help in a pamphlet delivered to them as part of the contracting process.
· Providing a confidential reporting mechanism.
Studies show that tipping is facilitated by a confidential reporting mechanism,
so we are publishing the existing Office of Ethics help line number as the one
number to use for internal fraud reporting. In addition to being confidential,
no caller ID is used so that callers may choose to remain anonymous.
· Improving internal controls.
The most effective way to deal with fraud is to prevent it. Every fraud
uncovered is a potential learning opportunity to improve internal controls. To
ensure these opportunities are not lost, we meet every month with Internal
Audits to review cases. We also regularly generate "lessons learned" memos
to other business units based on cases we have worked.
· Doing proactive fraud searches via internal data mining.
We recently staffed an analyst position to mine the company's internal
databases for patterns that might indicate fraud. In the first month of
operation, the analyst uncovered a $60,000 fraud. The analyst works closely
with the investigators to develop system queries that have the highest
probability of correlating to fraud.
· Partnering with other investigative business units.
In an organization as large as Nationwide's, other business units may have
valuable information on possible internal fraud. These include such units as
Corporate Security, Human Resources, and Compliance, to name a few. In
addition to meeting with these units to share information, we are building a
common database of investigation subjects to ensure relevant information is
shared.
It has been our experience that most fraudsters are firsttimers because the
company's recruiting procedures weed out persons with prior criminal records or
serious credit issues. In most cases, associates who have committed an internal
fraud had one or more of the following personal characteristics:
Recent divorce or separation
Financial problems (bankruptcy, medical, etc.)
Life style didn't match income
Drug, alcohol or gambling problem
Took short or no vacations
Council for Ethics in Economics Stayed late or arrived early
Showed interest in other department functions
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Refused help
Had conflicts with other associates
Frequently complained about job/pay
Felt passed over for promotion, or otherwise entitled
Habits have changed
A substantiated case of internal fraud will result in termination of the associate's
employment and referral of the case to law enforcement for prosecution.
Unfortunately, due to public resource limitations, few cases are prosecuted. And
without a criminal record, the fraudster may be successful at seeking employment
at another organization where the fraud may be repeated.
In those cases that are prosecuted, we seek restitution orders. We also have
asked associates to sign promissory notes and in some cases have filed civil
actions to seek recovery of losses. Unfortunately, most fraudsters are not able
to pay back the amounts taken, and civil litigation is seldom costbeneficial. The
company's fidelity bond provides protection against very large fraud losses, but
most losses fall within the deductible. This lack of good recovery options makes it
all the more important to prevent fraud from happening in the first place.
It is difficult to estimate how much is being lost through internal fraud. Fraud
examiners have a saying: "If you don't look for it, you don't have it; if you look a
little, you have a little; if you look a lot, you have lot." Our average internal
fraud involves a scheme that has been active for three years and results in a loss
of $20,000, although some losses have been much larger.
At Nationwide, we believe the vast majority of our associates are ethical and
honest, and we won't tolerate those who aren't. Our goal is to eliminate internal
fraud because it's the right thing to dofor both our customers and our
associates.
Interview continued from page 2
How is the topic of business ethics discussed within JPMorgan Chase?
First, let me first say that in my view, “business ethics” is a bit of a misnomer.
Why should we categorize ethics into specialties? It seems to me that we should
consider ethical behavior in all activities in society, so for example we ought to be
discussing ethics and the application of ethical behavior in our schools, in our
homes, and in our professions.
I think one of the examples of the application of “business ethics” within
JPMorgan Chase has been in the area of client selection. We need to consider the
type of clients we want to do business with. We should not place our bankers in
the awkward position of having to deal with companies of questionable
reputation. The reputation of many businesses today especially financial
institutions is often linked to the types of customers we do business with. The
financial services industry can be very influential in helping to eliminate activities
that harm society as evidenced by the recent announcement by several large
financial institutions, including ours, to join in efforts to deny money transfer
services to child pornographers or child pornography rings.
What formal training occurs for employees on the topic of ethics?
We have a detailed code of ethics and every employee receives instructions on
the code and its application. I also think another important aspect of our
organization is recognizing the value of dialogue and the notion that it’s o.k to
raise and debate issues. If people feel less afraid to raise issues and concerns,
the organization has a much better chance of identifying and eliminating conduct
Council for Ethics in Economics or actions that can cause problems.
Page 9 of 11
Many people point to Enron and believe that the greed of top management in
that company was a prime reason for the collapse. But we should remember that
a many people in that organization, who were not making a lot of money, saw or
did things of questionable practice. I think the pressure to produce profits or
make the next quarter’s earnings target sometimes pushes people to make
certain excuses for their behavior. People need to feel that they can question the
transaction or the proposed action and ask the right questions about the deal.
How is the code of ethics reinforced within the organization?
We require an annual reaffirmation by each employee that they are in compliance
with our code of ethics and that is a condition of continued employment. But we
also recognize that the point of many decisions in our company is at the individual
level. So we need to reinforce the values in the code in our daily interaction with
our employees. We often discuss examples of positive outcomes or decisions
made in recognition of the values of our company, and we also discuss incidents
that may have had undesirable or unintended consequences so that we can learn
together. We do not have per se “ethics” discussions but we hope to instill an
atmosphere of trust, honesty and respect for each other in our conversations and
actions.
Practicing a code of ethics or values has to be much more than holding a two day
retreat, drafting a values or mission statement, and then passing out the
statement to employees with no more discussion. Those types of statements
tend to go into the desk or on the shelf without further notice. Employees need
to see that the values of an organization are being applied and followed in actual
practice.
What challenges arise in interpreting provisions of the code of ethics?
A code of ethics can never address all of the “gray” areas that arise in business.
These are the areas or issues that require more discussion within the
organization. Many of these situations raise questions such as who you are as a
person, or how do you feel about taking a certain action? In our company, we
often discuss potential transactions as a team and, for example, consider whether
we have inadvertently or morally committed to a deal before completing all the
required steps, or whether the customer may somehow be under the wrong
impression about the conditions yet to be fulfilled. The only thing you really have
is your professional reputation. People need to hear that so they can think
through situations with that perspective.
What is your view on the relevance of business ethics today?
I think the past corporate scandals such as Enron, Worldcom, Adephia, and others
have brought the practice of business ethics to the attention of the public. I think
the fact that this topic has been raised and that more people are looking to see
how business and business management operate is good for our society.
What changes have occurred in the delivery of financial services today as a result
of business ethics issues?
A number of regulatory and legislative initiatives have substantially changed how
our industry operates. The Patriot Act, for example, has placed increased
responsibility on “know your customer” procedures and understanding who we are
doing business with. There is also heightened awareness in identifying and
alleviating potential conflicts of interest among multiple parties that may be
involved in transactions. There is certainly much more emphasis on full
disclosures and transparency of financial information. The Sarbanes Oxley
legislation has also affected all public companies particularly in areas of corporate
governance, and the reporting of financial information to the public.
Do see the need for further development of business ethics issues in the area of
Council for Ethics in Economics financial services products or your industry? If so, in what areas?
First, I don’t think that more laws or regulations are the best approach regarding
Page 10 of 11
business ethics issues. What is effective for ethical conduct in any organization is
leadership and the willingness to engage in conversations with all employees
about the values the organization believes in. I also think that it is well intended
for business schools to offer courses on business ethics but we should also be
expanding the teaching of ethics in general to other programs such as liberal arts
colleges, computer technology courses, accounting and other disciplines. We
need to introduce the study of ethics and the application of ethics in many other
sectors of our society.
Thank you Melissa for taking time to share your views with us.
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