Torture, kidnapping bad business strategy

In the spirit of the Fourth of July and Bastille Day, I'd like to suggest that corporate ethics policies include warnings against getting involved in kidnapping, unlawful imprisonment and torture.

Surely, you're probably thinking, such warnings aren't necessary and in most cases you'd be right. But ethics policies are driven by transgressions, as The Boeing Co. has demonstrated.

The American Civil Liberties Union sued a Boeing subsidiary a couple of months ago on behalf of three men who were allegedly detained as terrorism suspects, turned over to CIA operatives and secretly flown to prisons in Morocco, Afghanistan and Egypt as part of the U.S. "extraordinary rendition" program. The three were held for months in those prisons and interrogated under torture, the suit charges.

The role played by the Boeing unit, Jeppesen International Trip Planning, was as "the CIA's travel agent," according to a story in The New Yorker magazine that triggered the ACLU suit. Jeppesen arranged flight plans, clearances, ground crews and crewmember accommodation for two CIA planes used in the renditions, the report said.

"We do all of the extraordinary rendition flights--you know, the torture flights. Let's face it, some of these flights end up that way," a top Jeppesen executive said at a company meeting, according to an unnamed former Jeppesen employee quoted in the story. The same executive also said that the business "certainly pays well," according to the story.

Most corporate ethics policies deal with the mundane moral hazards, like hiding billions of dollars of debt from investors (Enron), anticompetitive behavior (Marsh & McLennan), insider trading (Joseph Nacchio of Qwest Communications) and conflicts of interest (um, Boeing).

Boeing has had more than its share of ethical lapses. Last year, it agreed to pay $615 million to end a federal investigation into two scandals: its alleged theft of proprietary documents from Lockheed Martin Corp. that Boeing used to compete for rocket contracts; and its offer to hire a Pentagon procurement official while the official was negotiating a multibillion dollar leasing deal with Boeing. As part of the settlement, Boeing agreed to tighten its ethics and compliance program.

So where in that program do you look for guidance on whether to steer clear of the U.S. government's secret detention and torture of terrorism suspects?

Well, Boeing's ethics manual requires that employees will "without exception...comply with all applicable laws, rules and regulations." (The ACLU suit charges Jeppesen with participating in violations of several United Nations and international conventions against "forced disappearances" and torture.)

Then there are the questions that the Boeing manual advises employees to ask themselves in the course of their work: "Would I be uncomfortable describing my decision at an all-hands meeting? How will I feel about myself afterwards? How would it look if it made the headlines? Will I be able to sleep soundly?"

Most of the manual, though, is aimed at employee relations with suppliers, customers, fellow workers and competitors; only very general provisions could apply to situations like extraordinary rendition. Apparently, then, Boeing needs something more specific, like, say, "Employees without exception will refrain from violating the International Convention on Civil and Political Rights."

The last item in the Boeing manual's list of corporate values is "enhancing shareholder value."

It isn't clear whether the profits from Jeppesen's CIA business proved irresistible, or whether the company was pressured by the U.S. government, a major customer, or whether it had some other reason.

Whatever the reason, nothing in Boeing's improved ethics manual put a stop to it.

The case goes beyond the normal kind of reputational risk that risk managers confront. No one really needs to ask, "How would it look if it made the headlines?"

It looks bad. It is bad.