Again from Marianne M. Jennings’ The Seven Signs of Ethical Collapse: How to Spot Moral Meltdowns in Companies… Before It’s Too Late:

Some years ago a former dean asked me to look into a new way of teaching students business ethics. He wanted to stop sending our students over to the philosophy department for their ethics training. His reasoning was that “they go over there, find out capitalism is a tool of the devil, and then switch majors.” His theory had one more part to it. Those who did not switch majors and returned to study business came back with a guilt complex. They assumed, based on the views of their philosophy professors, that they had already sold their souls to the devil, so what possible difference could a little cooking of the books mean in their eternal damnation? So, those who remained became comfortable with crossing ethical lines.

Ethics instruction during the era in which the crop of officer felons was trained was not virtue ethics. Rather, these students were given a heavy dose of social responsibility and little or no discussion of the ethical issues in financial reporting. Their ethics instruction focused on these distinct areas:

  • Environmentalism
  • Diversity
  • Human rights
  • Philanthropy
  • Giving back to the community

The ethics books and curriculum of this generation of business leaders (and regretfully, still today) define doing the right thing in these areas as ethics writ large. Moral relativists are hesitant to establish bright lines between right and wrong, except in areas they deem appropriate. These topics and guidelines for business ethics come directly from the AACSB accrediting body for business schools, which mandates the following content in the business-school curriculum if the school desires AACSB accreditation for its programs:

  • Ethical and global issues
  • The influence of political, social, legal and regulatory, environmental and technological issues
  • The impact of demographic diversity on organizations

Those trained under this pedagogical philosophy will order, “No sweat shops,” but could never bring themselves to say, “Always be honest.” They can condemn lumber companies for destroying the rain forests, but they would never suggest that corporate executives should control their conduct in their personal lives. To students trained in this era of business-ethics instruction, a demented sort of logic and attitude has resulted. As long as the company had a good record on community development and contribution, a little fraud was fine. They were not trained to ask the question “Does social conscience in some areas atone for the lack of moral conscience in finances and financial reporting?” Fannie Mae was named number one by Business Ethics magazine in its annual list of the most ethical companies in America in the same month that Fannie Mae’s multibillion-dollar accounting deception was unfolding. The CEO was forced out by his board because of questions about the firm’s financial reports even as the same group that created the parameters of ethical behavior in such a facile and arbitrary manner was honoring the company. True, few organizations have done more to help individuals get affordable housing than Fannie Mae. But recognition for a job well done does not justify misrepresentation in the marketplace.