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Ethics and the control of crime against business:

The Chernobyl disaster

by Simon Longstaff

An oblique reference

The explosion of the nuclear reactor at Chernobyl on 26 April 1986 brought about one of the world's worst industrial accidents.

It has been said that the plume of radioactive debris disgorged into the atmosphere was so great as to cause a general rise in the observable level of radiation at work within the planetary environment. There was, of course, an observable loss of life – especially in the case of those poor souls who were drafted into service to shovel the loose matter back into the slowly forming concrete sarcophagus. Whole communities were removed from their contaminated land – but that may have been the least of their problems.

Adults and children alike seem to have been affected by exposure to the high levels of radiation that surrounded them prior to the authorities ordering a belated evacuation. None can be sure that the effects of this exposure will be confined to the current generation. The sad truth is that the awful legacy of the accident at Chernobyl will be a burden borne by generations to come. Let me briefly summarise some of the facts that I have drawn upon when painting this horrific picture (Carter, 1996, p.1)(i):

• Fifty million curies of radioactive isotopes were spewed into the earth's atmosphere by the initial explosion, 200 times the radiation unleashed by the atomic bomb blasts in Hiroshima and Nagasaki combined. The release of radiation continued until 10 May when a makeshift covering was assembled over the burning hulk of reactor four.
• At least five million people within the former Soviet Union were exposed to dangerously high levels of radiation.
• More than 10,000 square miles in Ukraine, Belarus and Russia were contaminated by radioactive fallout, and 23% of Belarusian territory was seriously compromised.
• About 130,000 people were evacuated in the weeks immediately after the explosion; another 100,000 were relocated in the next four years. In 1996, about 270,000 people continued to live in dangerously contaminated areas of Belarus, Ukraine and Russia.
• The occurrence of significant birth defects in the contaminated regions of Belarus has doubled since 1986.
• The occurrence of thyroid cancer in children in Belarus has increased one-hundred-fold.
• The birth rate in Belarus is half what it was in 1986, and well below the current death rate.
• Deaths caused as a direct result of the catastrophe number between thirty-one (the official figure) and 150,000. The reality is probably somewhere in between.

Many people still believe that the explosion at the reactor, at Chernobyl, was primarily the result of sub-standard Soviet technology.

They are wrong. The technology may not have been the most advanced in the world. However, it was adequate to the task if operated in a safe and responsible manner. Which, as we now know, did not happen. Instead, a handful of operators decided to conduct an unauthorised procedure during which they effected a radical shut-down of the reactor. They did so in order to observe how long the blades of the turbine would continue to generate emergency power; spinning under their own momentum. They did so without approval and with a near total disregard for established rules of operation and safety procedures.

The execution of this plan did not merely require that the operators flick a few switches. Instead, they needed to override a number of computerised and manual safety systems that were specifically designed to prevent the reactor from exceeding safe operating parameters. Let nobody be in any doubt – the operators who put this plan in action were extremely clever and skilled technicians capable of re-programming computers and locking open valves critical to maintaining the overall integrity of the system.

Let me be quite clear. The explosion at Chernobyl was not an inevitable result of unforeseeable and uncontrollable events. The test was deliberate; the flouting of the safety standards was intentional. The only unplanned element was the result. Now I ask you, was this really an accident? Instead, doesn't the cold premeditated act of the operators and its tragic consequences have all of the hallmarks of a crime? If so, then what might have prevented this from occurring?

I imagine that some people will immediately be tempted to respond by pointing out that Chernobyl could have been prevented if only those in ultimate control of the facility had put in place better systems for control and surveillance. Surely a framework of checks and balances, enhanced by vigorous external monitoring, could have prevented the operators from acting as they did? Maybe yes, maybe no.

Let us be clear. It is not as if the authorities were indifferent to such matters. They certainly put in place systems that they thought to be adequate protection. Yet, these systems failed; because the operators were clever enough to have devised the means for over-riding or by-passing them.

That will be true of any system devised by or involving human beings. There is always a point at which human interaction will be critical. There is always a point at which the person 'monitoring the monitors' looks away or shows indifference. And that is when a Chernobyl, or one of its lesser cousins, emerges from the shadows of possibility into the full light of experience.

If any value can be salvaged from this disaster, it must be in terms of a very general lesson:

... in a world of high complexity the use of specific rules, regulations and systems will almost certainly fail to protect us from the malice or folly of avoidable human error.

I have spent quite a bit of time on the lessons from Chernobyl for what, I hope, to be an obvious reason. A purely technical response to the risks posed by crime will eventually fail. Some might argue that they will work well enough – that the margin for failure is, according to some actuarial table, acceptable as one of the costs of doing business. However, I want to go beyond the obvious point of saying that all systems can be made to fail, to suggest that an over-reliance on the techniques of control and surveillance will actually increase the likelihood of this kind of failure.

My reasons for making this claim are as follows:

1. People rarely set out deliberately to harm the interests of those that they know, admire and respect or love.
2. Having said that, people may still cause harm because of an inability to make an accurate assessment of their proposed course of action. That is, they may have a false belief about the context within which they act or the quality of their deeds.
3. The law (or any form of rule or regulation) is always, at most, the source of a prima facie obligation. The force of the law is weakest where: the authority (or legitimacy) of its source has been undermined, and/or it is widely perceived to be serving only the interest of a few and/or where it is 'self-serving'. Where the force of the law is weak, people are more inclined to allow calculations of self-interest or individual conscience to prevail.
4. A weak law may be obeyed if the style and substance of its enforcement is strict enough and supported by deterrent penalties. However, to the extent that enforcement replaces consent, so the weaknesses listed in 1, 2 and 3 will be magnified.

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Two brief scenarios

I would ask you to test my argument, if only at an intuitive level, by considering two scenarios.

1. The first involves a company of about 100 people who feel individually valued and work as a team. All employees share information about how the company is performing and each feels that he or she has a real stake in the future of the firm. As such, the employees are openly proud of the fact that they work for the company and are good ambassadors to the community at large. Indeed, the company has a real sense of being a part of the community.
2. And this sense of belonging is reciprocated. The community welcomes the company in its midst. It likes the attitude of the company and its employees, it likes the evident concern for the social and physical environment. All in all the people who have direct contact with the company feel that its presence makes them all better off.
3. The second scenario involves – company of about one hundred people in which people feel isolated and used simply as a means to some other person's end. Employees know nothing about the wider context of the company's performance and feel that the only thing going for the company is that it offers relatively secure employment. The community welcomes the employment too. However, there is a lurking suspicion that the company has little or no commitment to the community, that it could be located anywhere and that it does the bare minimum to act as a good corporate citizen according to the strict letter of the law.

Now, I ask an obvious and leading question: all things being equal, which company is most likely to suffer the perpetration of crime against it?

The answer, I hope, will be equally obvious. It would seem nothing more than common sense that the first company will attract less criminal behaviour – if for no other reason than that it stands high in the good opinion of those with whom it has regular contact. It follows that there will be relatively few people inclined to harm the interests of the company. However, life is not so simple.

While it is desirable, it is not enough that people be well-disposed towards you. The world is full of incidences where well-intentioned people have caused harm to the interests of those that they respect and admire. One does not need criminal intent or a guilty mind to engage in activity that is injurious of the interests of an individual or corporation.

For example, there are many employees who make improper use of company property without any sense that they are (or could be) doing something that is wrong – let alone illegal. When apprehended and challenged they respond by saying, in all sincerity, that they thought their actions to be allowed because, “everybody does it” or “that's just the way things are done around here”. In hindsight, they recognise that what they have done is wrong. They may even come to acknowledge that they would not have been happy to do the relevant deeds in “the full light of day”. However, until caught they “never thought about it that way”.

The law may take a dim view of such a response. However, it reveals the shape of the first great enemy of ethics; unthinking custom and practice. The last thing that a company can take any comfort in is a group of people who mindlessly and automatically apply a framework of conventional custom and practice. This remains so – even if the conventions seem, superficially, to represent the kind of practices that the company would most like to see observed: honesty, diligence, and so on.

I would argue that most of the serious mischief that we might encounter is not, primarily, to be found in the outward forms of behaviour. Rather, it is located in an unreflective approach to life. In these circumstances it is merely a lucky accident if people develop and maintain a proper approach to work or anything else.

This is why the seemingly idyllic scenario, plotted in the first instance, remains incomplete. What it lacks is a self-evident commitment to the development and maintenance of an ethical environment in which people question the basis for what they do. That is, it falls short of an ideal in which people, in the company can say, with understanding and conviction; “this is who we are and what we stand for; and this is how our corporate values and principles shape our choices, decisions and behaviour”.

The creation of such a culture should be one of the principal challenges of any management that is serious about adopting the most efficient and effective mechanism for combating crime against business. The basic ingredients for doing so are well known. You need:

• commitment from the top
• system and policy alignment
• open communication
• delegated authority
• a preparedness to use the language of values and principles
• a preparedness to take a long-term view

In relation to each, the following might be noted:

Commitment from the top

There is little point in hoping to develop a culture of consistent ethical behaviour of the leadership of the organisation is either unwilling to support the basic steps that must be taken in support of this goal. The Board and senior management of the organisation need to make available the means needed to develop and monitor the ethical dimension of the culture. Otherwise, the result will be a matter of accident rather than design and management.

Where indifference from the leadership is unfortunate, a patent disregard for the espoused values and principles of the organisation is a disaster.

For example, there are some who believe that a Code of Ethics need only apply to employees outside the ranks of senior management. But what of the Board? What of key executives? Where the leadership of an organisation applies a different set of standards from that which is espoused for the organisation as a whole, then it gives rise to a perception of hypocrisy and stimulates the growth of cynicism. These conditions are the worst possible for those who would develop a culture of ethical commitment.

System and policy alignment

The communication of an organisation's ethos is frequently judged in terms of the explicit messages developed within the organisation. For example, the use of safety bulletins, safety meetings, large displays showing the time since the last injury, and so on all work to reinforce a sense of safety being an important 'top of the mind' issue for companies.

Yet, for all the sophistication of their design, these explicit messages can be contradicted by what is implicit. For example, there are some organisations where safety statistics are gathered on a routine basis but have little (if any) real consequences when assessing matters like performance and remuneration.

The old maxim saying 'What get measured gets made' is a little crude. However, it does point to an important matter. If an organisation says that it is really concerned about safety but only rewards production, then people are likely to be confused about what really matters. Modern organisations have a vast number of policies, systems and the like. Many of them molder on from year-to-year without being addressed. Left in this state, there is a risk that they can give rise to both affective and cognitive dissonance. This is a risk that can and should be managed.

Open communication

I am sure that many people here have encountered situations where very serious fraud has been committed against a company and where a number of employees knew that this was happening but, for a number of reasons, chose to remain silent. That this should be so is a significant indictment of management for, in many cases, the silence of employees is a direct product of their general belief that to raise issues of concern is against their interests.

Managers need to create an environment in which people freely express their concerns as part of a normal pattern of open communication. Some managers will feel threatened by this, preferring instead to operate in an environment in which their instructions are uncritically obeyed. It is unlikely that their comfort is worth the price of having important information withheld from the company. Having said this, managers who are in this position should be helped to make the transition – rather than having the 'crutch' simply kicked away from beneath them.

No organisation (including my own) can expect to be perfectly consistent in the eyes of all that have contact with it. However, every organisation can aim for this result. To achieve this objective is nigh impossible unless people are actively encouraged to identify and comment on matters that they believe to indicate inconsistency (or worse). The general form of comment is this: “We say we believe this, so why do we do that?”.

It is of course likely that in a number of cases people will be concerned by 'phantoms'. That is, further investigation may reveal that the underlying facts are very different or that there is a perfectly reasonable explanation for what is happening. In these circumstances, the persons involved will all end up feeling that the matter has been resolved in a satisfactory manner. However, there will be other times when a 'cautionary cry' will bring to light a genuine problem that had better be addressed.

It is not uncommon for managers to turn a 'deaf ear' to such cries. Most managers find life difficult enough without having to encourage others to find additional 'problems'. Yet, many an organisation would have been saved considerable difficulties if only it had listened to its own internal early-warning signals. There will always be some who use an environment of open communications to push their own limited agenda. Yet, the abuses of the few are not reason enough to curtail the opportunity of the many to express sincere concerns.

Delegated authority

Some companies seek to protect themselves by retaining an iron grip over their operations. They believe that risk can be minimised by retaining tight control in only a few 'trusted' hands. In a world of rapid and fundamental change it is counterproductive to manage risk by seeking to control every decision from a central point. Apparent certainty is only bought at the cost of losing flexibility and opportunity.

However, a failure to delegate authority can give rise to even deeper problems. The absence of any opportunity to make bad decisions is also an absence of any opportunity to make good decisions. The absence of any opportunity to choose what is wrong is also an absence of any opportunity to choose to do what is right!

The key point to be made here is that people need to practice making ethically sound decisions, they need to practice taking responsibility for the choices they make. Otherwise the capacity to do so will atrophy and people will be paralysed by indecision. In addition to this, delegated authority is the indispensable ingredient needed in the fabrication of trust – which is more valuable than even the most refined system of external control.

Using the language of values and principles

There is little point in trying to develop an ethical culture without ever stating, explicitly, the values and principles on which that culture is founded. Nor is there much point in making decisions according to those values and principles if, having done so, the explanation for the decision is couched in purely functional terms.

It will be obvious, from all of the above, that there can be little progress in the field of organisational ethics if people feel unable (for whatever reasons) to use the kind of language that best suits discussion of the relevant issues. As Bird and Waters described, in 1989(ii), many managers are reluctant to admit that they use (or consider) ethical criteria when making decisions. The researchers concluded that “it is impossible to foster greater moral responsibility by business people and organisations without also facilitating more open and direct conversations about these issues by managers.”

Taking a longer term view

The temptation to achieve immediate results can, on occasions, seem to be almost overwhelming. Indeed, it is the pressure to achieve short-term performance that can most easily be identified as the reason why people set aside their commitment to ethical principles.

This remains so in the face of compelling evidence demonstrating that the longer term performance of business is largely determined by the extent to which companies consistently practice what they preach in the field of ethics.

There is a growing wave of evidence to suggest this, with one of the most influential studies being that of Collins and Porras, as reported in their book Built to Last (iii). Their conclusions are various. However, one of the overarching messages to be noted is that the key characteristic to distinguish the 'best of the best' (the companies that had out-performed all competition in their markets) from the rest was a behaviourally evident commitment to a set of core values.

Of course, it is often directors of companies that need the most convincing on this point. Thus, the importance of reminding boards and senior managers of the principal formal duty that they must discharge. It was, perhaps, best stated by Sir John Dunlop (1965, p.7) who observed(iv) :

I put it to you that the directors are responsible to the shareholders for profit in perpetuity; and that this general expression of a principle permits, indeed requires, directors to pay full regard to their employees, to labour relations generally, to the community, to the country, in all their decisions for and on behalf of shareholders.

All of this may seem to be suggesting that a commitment to ethical behaviour can be generated by quoting the misleading nostrum that “good ethics is good business”.

While the evidence suggests that good ethics is good for business, it would be misleading to suggest that narrow self-interest can generate a stable commitment to ethical behaviour. Instead, the values and principles that count most are those that will attract support - even if there is a cost. People should be ethical because this is the right thing to do. The fact that this may be a profitable course of action should be regarded as a collateral benefit. Returning to Collins and Porras(v) core values are those which must not be “compromised for financial gain or short-term expediency”.

There is a constant temptation to cater to the most immediate of concerns. This tendency can be found at work in those circumstances where business seeks to protect itself against crime. The quick solution is to employ increasingly sophisticated techniques of control and surveillance. They can work to protect companies, for a time. However, as noted above, those who place too much reliance on this approach risk undermining their attempts to create an environment that is genuinely hostile to those who would commit crime. To summarise, this approach:

• reduces the capacity and skills of people to act according to a code of personal responsibility
• lessens a sense of trust in the workplace,
• risks alienating stakeholders and in doing so, may open to question the legitimacy of those who make the rules.

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Maintaining legitimacy

This last point may be especially important when trying to make a balanced assessment of the means employed in the fight against crime against business. For example, citizens are likely to accept the electronic tagging of merchandise as a defence against shop-lifting. The reason for this is that tagging only becomes 'operational' when somebody commits an offence; otherwise it is 'inert'. As such, people are free to go about their business unobserved until such time as they stray beyond known boundaries.

On the other hand, general video surveillance indiscriminately observes the actions of people; irrespective of whether they stay within prescribed boundaries. 'Active' surveillance, of this kind, tends to offend people who may feel that their integrity is assumed by the company to be open to question. Telling people that they have nothing to fear if they are honest hardly answers the implied insult.

Corporations also need to be wary of the fact that they are often judged to act with an unrestricted concern for their own interests. This may be a judgement that is false, harsh and unfair. Yet, it is remarkably persistent. To the extent that it prevails, ordinary people are liable to be relatively unsympathetic when forming a view about the measures business might legitimately take to protect itself from crime.

For example, some people think shoplifting to be only a minor indiscretion. Why? Because of the widespread belief that business is rich and powerful enough to look after itself. In some respects, it is analogous to the attitude shown by people when looking for creative ways to minimise their tax. Put simply, for many people business (like the tax man) is taken to be ‘fair game’. The fact that it is the community that ultimately pays in the form of higher prices is lost in the illusion that this type of theft merely strips out the 'fat' in corporate profits.

How might one combat this attitude? One response would be to develop a reputation as a good corporate citizen and in doing so, attract the sympathy of the community. It stands to reason that a business that is known, trusted and liked will have greater latitude when arguing the case that it should be allowed to take effective measures to protect its interests.

There is one other strategic benefit that flows from having a strong reputation as a good corporate citizen – the host community will be an inherently hostile environment for any criminal wishing to harm the company. It can be argued that this, in itself, will help to reduce crime against business.

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The valid exceptions

For all this, there are individuals and organisations that are self-consciously dedicated to the commission of crime against business. This may be in the form of: industrial espionage, corruption, theft or extortion, to name but a few of the felonies that might be committed.

Furthermore, those with a capacity to cause serious harm to business are more likely than not to be sophisticated operators with access to the latest technology and able to operate across borders. In such cases, local community sentiment will have little or no affect on the level of crime against business.

The existence of such groups presents a particular challenge for business. On the one hand, criminal activity, at this level, requires an equally sophisticated response from business and law enforcement agencies. On the other hand, the widespread use of techniques used to combat the more extreme criminal types is unlikely to find favour if routinely applied to the population as a whole. Does this mean that business is a sitting target; exposed to criminal action that operates in the space left between what is technically possible and practically acceptable?

To some extent this is a risk. However it is considerably lessened to the extent that business can foster an operating environment in which people associated with the company have such a positive opinion of it as to make indifference to, or collusion with, crime largely unthinkable.

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Conclusion

The balance of argument in this paper has been weighted very much in favour of developing a culture in which people choose freely to act ethically rather than out of fear of the consequences should they be caught not doing so. In relation to this, there are two concluding points that I would like to make.

The first is that none of this means that I am opposed (in principle or practice) to the prudent application of rules, regulations and systems of surveillance and control.

My purpose today has been to highlight the dangers of an over-reliance on these techniques. My aim is to encourage an informed debate about the options – and, in doing so, balance the temptation to embrace the short-term, functional appeal of a technical ‘quick fix’.

The second point is to appeal to people to resist any suggestion that fraud prevention and ethics programs be combined (or even directly linked). I can understand the temptation to do so – to see the potential savings as a justification for funding programs of change that many would consider to be a little ‘soft’ or 'esoteric'. The trouble is that this kind of linkage immediately sends a signal that the organisation thinks that the function of ethics is to make potentially bad people do what is ‘right’. As should be clear from all that has been said, this is not what ethics is about. Rather, it is about equipping good people with the ability to make sound decisions in a world of rapid and profound change.

Crime against business can be in no person's interest – perhaps not even the criminal's. At its worst it causes not just economic loss but damage to life and limb unto death. The building that collapses because poor quality construction materials were substituted for those specified can kill. The cost of insurance rising to cover losses in areas with high levels of crime tend to fall hardest on those least able to pay. The termination of a supply chain brought about by criminal dishonesty can lead to innocent people losing their jobs.

Such consequences are terribly serious – as were those flowing from the explosion at Chernobyl. In the end, there is just one thing that could have prevented that tragedy. It is not a system, it is not a technique, it is not a method of surveillance. The best prevention of all would have been a group of operators with the practical, ethical sense not the have conducted that unauthorised experiment in the first place.

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