Wednesday, September 29, 2010

Professions, Profits and Public Morality

Speech delivered by Olu Akanmu as Keynote Address
at the 13th Annual Conference of the
Nigeria Association of Industrial Pharmacists

This conference is happening as the echoes of our democratic transition and election gets louder and louder. It is happening in a particular period of serious economic challenge for our businesses defined by weak demand and low consumer purchasing power, poor utilization of capacities in our factories, and constrained access to credit for the real sector. It is happening in this period of the emasculation of many small businesses, with slowed or stagnant inventory turn-over in our retail shops. It is happening in this period of decayed public infrastructure which increases the cost of doing business while reducing the competitiveness of our meager manufactured exports. It is a tough time for business in Nigeria. It is a tough time for the manufacturing sector in particular for which the pharmaceutical industry is one. The loud echoes of our democratic transition cannot obscure the cries of our business for economic survival.

In seasons like this, where markets have shrunk significantly thereby increasing competitive pressures, where industries are witnessing signs of premature aging occasioned by the contraction of customer demand, with bankers on the back of business owners to pay down previously availed loans, the challenges are tough and there is a tendency to be desperate, to find short-cuts to survival, to seek NOT to play by fair and legitimate rules in the quest for survival or success. At the employee levels, wages have been rationalized and the social and dependant burden on wages have significantly increased. These social and survival pressures on employees may even drive tendencies to seek short-cut to survival and even cheat.

Yet evidence abound that not playing by fair and legitimate rules while it may lead to success in the short term or even for some time, cannot guarantee and sustain success for individuals and organizations. The lessons of the banking industry in the recent times teach us that the only way to guarantee sustainable and enduring success for business is to compete fairly and succeed ethically, to build organizations that have the cultures , controls and governance that guarantee transparency and executive accountability to their board, the shareholders and the larger public. If however, the cost of not playing by the rules, the cost of unethical conduct is limited only to the organization that so practices such and so competes, perhaps the society could have walked away easily with a sense that the guilty has been punished. It is however not so. The cost of not playing by the rules is not limited to the organizations that practice such. These organizations infringe enormous cost on society as a result of their actions. We see in the in the financial service industry, globally and in Nigeria, huge costs to tax -payers in the bailing out of banks and other financial institutions such as the insurance companies that insure the risks of the financial system. In the petroleum and chemical industries, we see huge cost of environmental pollution to society when those organizations elect to succeed at all cost and sacrifice societal interest on the altar of their corporate success. In the pharmaceutical industry, we see the cost of un-fair or unethical play manifested in the social cost of fake or adulterated medicines, with increased health care cost when sub-standard doses of drugs such as antibiotics are administered leading to resistance of infectious diseases.

Given recent events in the industries earlier described, it is pertinent to ask, what is legitimate profit? And when is the making of profit legitimate? We must also ask an even more critical question whether all legitimate profits are ethical. Or essentially, when is profit unethical even when it is legitimate? While it is easy to look at the law and answer the question of legitimacy of profit as that which is made without violating the governing law of society, it is more difficult to answer the question of whether there could conflict between legitimacy and social ethic, whether a legitimate profit could be unethical. The fact is that there are instances where the law lags behind the ethical standards that society requires. We see this clearly in the behavior of leading global financial institutions like Goldman Sachs and the role they played in the global financial crisis, where Goldman for example sold mortgage financial derivatives to its clients and at the same time created counter-product to bet against the financial product it sold, that it would fail. When the financial derivate product it sold failed, Goldman clients lost huge money, some of them even went bankrupt but Goldman Sachs made billions of dollars on the basis of its successful bet. Goldman in the US congress hearing, when it was accused of profiting from the financial misfortune of society, claimed that it did not break the law. It did not matter. Its actions and corporate behavior were unethical. This is similarly illustrated in the tobacco industry that claims to provide employment of for thousands of Nigeria through its factory and agriculture extension program. It does its business within the law. The social cost of tobacco to the larger society in cancer and other pulmonary diseases however raises fundamental question about the ethic of the tobacco industry beyond whether it does its business within the governing laws of society.

What then is an ethical business or an ethical way of doing business? I will define an ethical business as that which fulfills a defined social purpose in improving societal or community well-being, does not externalize the cost of its success in social cost to society, competes fairly and transparently on the merits of its organization assets and will not provide incentives to its external stakeholders that perverts their fair and objective judgment of its services relative to alternatives available. An ethical company will also be transparent to its employees, its shareholders and its critical external stakeholders. Using this definition, we can begin to examine and query the ethical depth of our organizations and the particular role we play within it. When we forget the larger reason for being of our organization and our profession, and we seek to win contract or prescription commitment at all cost, including providing incentives or inducement that compromises the objective examination of our products by customers, we are not practicing ethically. When we do not disclose fully the side effects of medicines to aid their objective choice by prescribers, we are not practicing ethically. Ethical breaches by professionals are very serious because they enjoy sacred and privileged trust from society that they will discharge their service at a minimum standard far above what can be received from anyone else. That is why we call them professionals while pretenders to the profession who cannot deliver the minimum standard expected by society are known as quacks. It therefore beholds on us as pharmacists, that the encounter of a patient with us must be clearly different from that of a non-professional. We owe this as an obligation to society flowing out of its privileged trust to us as professionals. When therefore, we fall short of professional standards, when the quality and standard of service delivery between a pharmacist and a non-professional are similar, when we do such, we breach society’s sacred trust and compromise the ethical foundation of our relationship with the larger society.

It is time to raise our standards, to the lofty heights of the dreams of our founding fathers, compromised not by the current economic and infrastructure challenges that we face but exalted by our checkered history as one of the oldest organized professional bodies in Nigeria. Let us publicly sanction those who practice below the standards society expects us, with the full arm of the law on their back, including suspension and expulsion from practice depending on the gravity of breach of professional trust. Let our regulators and the government agencies responsible for the importation, inspection and control of drug quality, co-ordinate and co-operate better. Let them raise their standards, which seem to have fallen in recent times according to the Pharmaceutical Society to ensure that never again would we ever see a Nigeria child die because of fake or sub-standard drug; as we recall the killer Paracetamol incidence of 2008. Let our criminal justice system and particularly our courts also dispense justice and punish those found guilty of these heinous crimes, and do so on time for justice delayed is justice denied. It is important that ethical infractions be sanctioned by professional bodies and the institutions of the larger society; for when there are no sanctions, ethical conduct becomes a mere sermonizing that we can elect to comply with only when it is convenient for us. Sanctions on ethical breaches are therefore critical to raising ethical standards among professionals who are privileged to enjoy society’s scared trust. We must also ensure that regulations and the laws concerning drug handling and distribution are enforced. That only those who are qualified and trained as pharmacists should be drug inspectors and that they must be led also by those who are trained in the chemistry, production and pharmacology of drugs. This is the law of the Nigeria state, and even the Nigeria state must comply with its own laws. For when we implement the law below the standards set by the law itself, we set aside the intent of the law, the reason for its legislation; we open a breach in execution of statutes, which would be exploited by those who seek to do business unethically.

The debased nature of ethics in business in our nation is manifested by the pervasive corruption in the public and private sector. Corruption compromises the efficient functioning of markets in its critical role of allocating resources to where they would be best utilized. With corruption, resources are allocated wrongly and sub-optimally, leading to very low social returns on investments. You only need to see the decayed nature of our public infrastructure despite previous years of massive investments to realize the cost of corruption to our society. Corruption essentially holds the market hostage, removes its freedom and hand-cuffs its un-seen hand as famously described by Adam Smith. Now that the Halliburton case is court, we expect that the case would be tried and brought to conclusion soonest. We expect the same of the Siemens case and other high profile cases. The way these cases are prosecuted will tell the international community and indeed ourselves as a nation, the level of our commitment to ethics in governance and morality in public affairs. Our national politics, the conduct of our elected politicians, the standards of morality and ethics by which we hold them significantly influence the conduct of other actors in the public and economic space. You will recall that when “settlement” became a lingo of our politics, it sooner became a lingo of our business. We must therefore demand higher standards of public morality and ethical conduct from our elected officials. We must ensure that we strengthen our democratic institutions such particularly our electoral process to ensure that our votes count and that every vote will be counted. This will make our elected officials accountable to the electorate, as we can truly vote them out, when they do not deliver conduct themselves below our consensus and standard of public morality. We must also strengthen our political parties to ensure internal democracy while ensuring that our people have alternative oppositions that are as equally strong as parties in government, to make our elections less predictable, to put incumbents on their toes and the opposition on their heels. We must strengthen our judicial institutions to ensure their independence to dispense justice without fair or favour while ensuring that only those who know the sacred nature of the duty and society’s trust of the bench, sit in judgment in our courts. The signals in the electoral process suggest that we are beginning to make progress. Let us therefore all register to vote, and vote this time around knowing that our votes will count and that the elections will reflect the true will of our people. When we reform our politics, and force higher standards of public morality on our elected officials, the multiplier effect on society in the acceptable level of ethical and moral conduct will be very significant.

We must also promote more open and transparent societies in both the public and private sectors. Ethics and public morality standards correlate strongly with the level of institutional and societal transparency. We therefore call on the national assembly to pass the Freedom of Information Bill to guarantee unfettered access of Nigerians to information concerning their state, the expenditure of state resources and the conduct of public officials. Because governments at its three tiers are the biggest spenders on pharmaceuticals in Nigeria, we must put in place higher levels of transparency in our public contract and procurement system. Contracts and procurement intentions and information must be widely available, advertised in the newspapers where possible, standards of prequalification of suppliers must be transparent as the prequalification itself. Tenders must be competitive, open and transparent. There must be separation of authority to pre-qualify suppliers, authority to award contracts and the authority to receive contracts and authority to pay for contract delivered. Then the procurement system must be regularly subjected to transparent third-party audits to ensure that what we wanted to buy is what we bought and that we paid fair prices for what we bought.

We must apply similar standards to contracts and procurements in the private sector. We must promote higher levels of transparency in the private sector to drive up ethical standards, and ensure internal and external stakeholder trust. We must build organizations with transparent internal processes where employees as internal stakeholders, can engage and question their management with candour on the business of the organization. When organizations are transparent internally, their transparent culture would be such that they will not have a problem in being transparent to their external stakeholders particularly their shareholders. These are the ethics and public morality lessons from Enron and the global financial institutions on the ethical breach of trust which they suffered in recent past. We must ensure higher standards of transparency and disclosure in our corporate financial reports. Corporate financial reports must reflect the true state and financial health of our corporations so that our shareholders and investing public, take their investment and risk decisions based on facts they can trust and not from flawed information. Managerial and executive “conflict of interest” must also be fully disclosed to ensure that managers and executives can truly perform their duties as true agents of their shareholders and keep the trust of the owners of the business.

We must also rediscover the real purpose of business which is to make enduring contribution to societal well-being, where business makes profit only as by-product of fulfilling this larger purpose. When we pursue profit and loose sight of the real and larger purpose of business, we sacrifice the greater good of society on the selfish altar of business interest. We compromise ourselves ethically and lower our standards of public morality. We must re-educate ourselves that the most successful business is not the one that made the biggest profit, but that which achieved good profits with an enduring contribution to societal well-being. We need to reform the character and content of management education in our business schools to increase the ethical content of its curriculum, to produce managers who know finance as well as fidelity, managers who know strategy as well as character. The recent global financial crisis where we witnessed some of the most irresponsible behavior by managers on Wall Street, who are largely Harvard, Wharton and Stanford graduates have thought us that there is fundamental gap of ethics and character in management education.

A discourse on public morality and ethics cannot be complete without discussing the role of religion. Religion is a foundation subject of ethics and public morality. Religion teaches us about good and evil, virtue and vice; and right and wrong. Religion teaches us about the ultimate triumph of good. It influences society significantly in its consensus on standards of ethics and public morality. We are a religious nation that actively seek divine intervention and help even when it may not be justified. You only need to see the Super Eagles on the pitch praying before their matches even when they have not adequately prepared to appreciate our national religious passion. Given societal decay and our falling moral standards, religion must play a more active role in re-shaping our values and public morality standards. We need to hear the voice of morality and ethical conduct much more loudly from our pulpits and minarets. The voice of morality, ethics and virtue must not be drowned by the voice of prosperity, success and breakthrough. Religion must teach, unlike the popular axiom, that the end does not always justify the means, that the end does not always justify the means. That, how we succeed as managers and business people, is no less important than our success itself. That virtue and success are not mutually exclusive, that profits and morality are not mutually incompatible. That if anything, virtue is a guarantee of enduring success, that morality and good business ethic is a guarantee of enduring profit. Was it not the Holy Book that says that “A false balance is an abomination to the LORD but a just weight is HIS delight” and that “wealth gotten by vanity shall be diminished but he that gathereth by labour shall increase”.

We need to change society, change our nation to a higher level of social ethics and moral standards. We do not have the singular illusion that it is would be easy. It is tough to be honest when falsehood is a norm. It is tough to be virtuous when vices are normal. It is tough to be straight when crookedness is celebrated. Yet, we must hold firmly to the WORD that says that the crooked path shall be made straight. Like Elijah or Elias in the Holy Books, it could sometimes feel lonely to do business ethically. We could feel like Elijah, tired and worn out, that everyone, except us, has sold out and bowed to Baal. Yet Elijah was wrong. He did not know until he was told that there were others like him, seven thousand others, who have not bowed to Baal. For everyone, man or woman, that does his or her business ethically, please know that there are seven thousand others like you. To change our society, these seven thousand and one people must find themselves. They must build ethical networks and alliance for change. If the good ones among us network together and form this alliance for change, we can make change happen and conquer the Ahabs and the Jezebels of our nation.

We see a new nation, a city on a hill, where the bright light of righteousness shines like the Sun. A city where prosperity flowers, where merit thrives and excellence flows like an unending river. And her beautiful children singing the forgotten stanza of its national anthem, that “in love and honesty to grow, and living just and true, great lofty heights attain, to build a nation where peace and justice shall reign”.

GOD bless our Nation. GOD bless Nigeria.

Thank you.

Olu Akanmu delivered this Speech as keynote address at the 13th Annual Conference of the Nigeria Association of Industrial Pharmacists on September 22nd, 2010