Business learns to deal with ethical dilemmas. (Economic Outlook).

Peter Browning, 60, is dean of the School of Business at Queens University in Charlotte. Browning, who earned a bachelor's in history in 1963 from Colgate University and an MBA in 1976 from the University of Chicago, is a former president, chairman and CEO of Charlotte-based National Gypsum. He retired in July 2000 as president and CEO of Hartsville, S.C.-based Sonoco Products and became a Queens dean in March 2002. He discussed corporate ethics as an educator and a former CEO.

One North Carolina company under scrutiny is Duke Energy, which has admitted that one of its energy traders made bogus trades. Should CEO Rick Priory be held accountable?

Duke has been very candid and forthright, and you've got just a few trades being looked at. (Duke fired the trader and his supervisor in August.] And I have the highest regard for Priory and the management team. I trust them. Duke happens to be an energy company. And any energy company is being overcriticized in the wake of Enron. The market is overly punishing them. I thought the stock had been pushed down so far I bought it a couple of weeks ago.

Otherwise, no Tar Heel companies have been challenged. Why not?

It may be the mix of businesses we have. We don't have many companies in the telecom business. But it also may be the character of the individuals in our businesses. But really, the bulk of corporate America wasn't engaged in these misdeeds. What we're looking at is exceptions. I really think we've got fundamentally ethical individuals running the businesses in North Carolina who are trying to do the right thing in a very difficult, global economy.

Is it fair to hold a CEO accountable for a company's financial statements?

The bigger the organization, the tougher it is to know everything. But the CEO is the ship's captain. The CEO sets the tone by how he values employees and how he does business. He can't know everything, but he's responsible for letting everybody know how you do business. And he has to instill responsibility all along the chain of command.

So the new corporate-accountability law makes sense?

I need to better understand what the audit committees will be asked to do. I suspect that will be the most significant part of the reform. CEOs and CEOs are already signing the financial reports. They're going to be looking to everyone who passes it up the line to take responsibility.

Is this law substantive, or is it just a feel-good measure?

When people will go to jail, that's substantive. What everyone was after was trying to instill confidence in the economy.

Weren't people going to jail under the old law?

Not for the same reason. People were going to jail for fraud, but this is completely different. Now you're signing financial statements certifying that they are accurate. That's completely different than hauling off the Rigas family at Adeiphia for robbing the till. Audit committees are taking this much more seriously. If the new law had been in place, no one would be debating whether Bernie Ebbers would be indicted.

Companies restating their earnings aren't necessarily admitting wrongdoing.

A lot depends on the circumstance. World-Coin had to restate, and it's obvious that what was going on there happened with a lot of premeditation. But no one wants to have to restate, that's for sure, It affects earnings and worries investors.

Is the late '90s stock-market bubble to blame for what has happened?

To some extent. You had all-time highs in both of the major exchanges. People were prophesizing that the Dow was going to 30,000. The front page of every business publication featured some new instant millionaire. And everyone wanted to know why your earnings weren't growing 10% to 15% a year. But we've lately seen the stock market coming back to more-reasonable valuations. When something is in a bubble, you take for granted extraordinary valuations. When you get back to more realistic valuations, if you didn't cash in, it was evanescent, It was a mirage.

How does Queens teach ethics?

We've integrated ethics into several classes in our curriculum. And we have a weekend retreat on the topic. The bottom line is, it should be very much a part of any graduate business program to have classes that incorporate discussions and case studies on moral dilemmas. They don't just happen in business. Everyone is faced with them. But it's pretty obvious that what Bernie Ebbers at World Coin and Ken Lay at Enron did was wrong. There isn't any debate.

Since those cases are clear, where is the debate?

You discuss real ethical dilemmas. Like you've just moved into a country. Your company s policy is, pay no money to facilitate anything for the business. But everyone else is doing it. So what do you do? Those are the useful kinds of issues that people will encounter and that are worth talking about anytime.

And what would you do?

You don't do it. You can't. You may decide not to do business in that country or to work harder to accomplish what you're after. But you just can't make the payoffs.

MORAL MAJORITY

MBA candidates in North Carolina are required to get an ethics tuneup at
several Tar Heel schools.

             Ethics course  Extent of
               required?    offerings

UNC               Yes       One course
Duke              No        One course
Wake Forest       Yes       One course
Queens            Yes       One course

Source: Schools