Graduation address given by Irene Moss AO

Irene Moss AO gave the following occasional address at the Faculty of Economics and Business graduation ceremony held at 11.30am on 5 June 2009. Ms Moss is a Fellow of Senate elected by and from the graduates of the University.

The photo of Ms Moss is copyright, Memento Photography.

Irene Moss AO

Graduation address

Ethics as a Practical Leadership Strategy in this Age of Transparency

Deputy Chancellor Alan Cameron, Dean Wolnizer, Members of the University, Distinguished Guests, Ladies and Gentlemen – and most especially, Graduands . . .

Thank you for this great honour. It is a most singular honour to be back at my alma mater and be reminded again of the integral part this university played in the development of my intellectual life. And since I met my husband Allan over a photocopier at Fisher Library I must express my gratitude to its contribution to my emotional life as well.

As I look out at your young faces I can still recall how I felt over 35 years ago as a graduand in this Great Hall. I know you’ll be feeling proud - and rightly so - of your achievement. You’ll be feeling excited - and a little nervous - about what lies ahead. And you’ll probably be feeling immensely relieved that it’s all over.

Congratulations to your teachers and to your parents. And congratulations to you all. I wish you well in your future careers.

The University of Sydney has given you - as it gave me - the skills to exploit the many opportunities the world holds. You graduate at a difficult time. A time of lost confidence, flawed systems, complex challenges. But each generation brings new wisdom.

As you establish yourselves in business and in the professions – and some of you will go on to lead your organisations – I suspect the wisdom your generation will uncover is that ethical behaviour is not simply about moral imperatives, about acting with good conscience, doing the right thing.

I suspect what you’ll discover is that good ethics is a practical business and professional strategy.

I have spent most of my career in social justice - in human rights, race discrimination, procedural fairness and corruption. It’s a career that has allowed me to think deeply about ethics.

One observation I would make is that the kind of behaviour people thought they could get away with in years gone by is no longer acceptable.

Let me give you a few examples. In 1994, Brian Burke became the first head of any government in Australia to go to prison. He was jailed for seven months for rorting his travel expenses. About a decade later he surfaced again. This time a group of ministers who thought they could rely on non disclosure were forced to resign. They’d breached cabinet confidentiality by telling Burke, who was now working as a political lobbyist, what the cabinet was doing.

Of course Western Australia was not the only state to suffer from leaders who failed the ethics test.

Back in the 1980s, one Australian journalist quipped - not entirely in jest - that Sydney was one of the most corrupt cities in the Western world.

What had led to this sorry indictment? Well, one of the seven judges on Australia’s highest court had gone through several inconclusive inquiries and trials on corruption charges.

The chief magistrate for New South Wales had gone to jail for perverting the course of justice.

The minister for prisons ended up in one after he was convicted of receiving bribes to release prisoners.

Two other ministers had been the subject of allegations and speculation. A former Police Commissioner and Deputy Commissioner were charged.

Indeed in the 1980s corruption was such a prominent feature of New South Wales life that in 1989 the Independent Commission Against Corruption was set up to investigate and prevent it.

I had the privilege of leading that organisation for five years, from 1999 to 2004.

In that role I saw human nature at its worst - and in some cases its most bizarre. In one case we took on, we were trying to detect the theft of specimens from the national nature museum. We mounted cameras in the premises (including one in a stuffed bear) and eventually caught the janitor, who had been taking exhibits to stock his own collection.

In another case where we mounted covert surveillance on local planning authorities, we discovered suspects using code to talk about the money changing hands. One suit represented $1,000, so 70 suits stood for $70,000. One of the tapped suspects was overheard telling his collaborator: “You are doing such a lousy job, you’ll be lucky to get a pair of shorts out of this!”

In yet another we discovered, again by phone taps, that “eat pizza” meant getting a bullet in the head. We were a little worried when we worked that one out!

Human nature being what it is, I don’t think we’ll ever entirely rid organisations and institutions of corruption. But there is no doubt that tolerance for unethical behaviour has changed.

I say this for a number of reasons.

First, we live in a global village.

Technology and the speed of communication have broken down trade, financial and social barriers.

We came from village societies. They were social constructs that promoted strong incentives to behave in a way that was acceptable to the community. This encouraged transparency.

When we moved from our villages to our cities, we no longer played for the home crowd. Less transparency resulted in fewer incentives to behave in a “community spirited” way.

But the global village spawned in this internet age means that people who have positions of responsibility are once again highly visible - and accountable. Information is available on anyone, anywhere - at no cost.

So business leaders can never rely on non disclosure. They must assume transparency and accept accountability. Those who don’t can suffer severe consequences. AWB’s oil-for-food debacle is one example, HIH is another. On the global stage, Enron is a third.

A second argument for adopting ethics as a practical leadership strategy is the changed community attitude to public corporations. There is a sense that listed public companies are custodians of community assets. As such they’re being held to standards of accountability that in past times only applied to governments - if at all.

This is borne out by a study just released by the St James Ethics Centre. Less than one per cent of those surveyed believed that business has no ethical obligations. Ninety three per cent believed organisations have an obligation to act ethically - even if it occasionally harms their profits.

There is no doubt that people’s perceptions of unethical behaviour will lead to a loss of credibility and authority and ultimately a loss of efficacy. People may not be across the detail. In fact, they may know little more than what’s in the headlines. But the association between the organisation and corruption has the capacity to reduce its standing and moral authority.

We saw how the unethical behaviour of a small group of options traders cost the CEO of NAB his job and severely embarrassed the Board, and how the alleged improprieties of a senior manager caused embarrassment for Coles Myer.

The losses produced in these cases were not large relative to the size of the organisations. If losses of a similar size had been incurred through a bad loan or overspend of expenses during normal operations they would have had far less impact.

My advice to you as future leaders is to think carefully about the interests of your stakeholders. Don’t, like many before you, forget to ask the fundamental question: who are our stakeholders?

A good test in answering that is to ask: Who is actually affected by the organisation?

Unethical behaviour by corporations often has far-reaching consequences. When Enron fell, the corrupt behaviour of its leadership not only affected its immediate stakeholders - its employees, shareholders and creditors. It affected public confidence in the entire financial system and the business community.

These issues have become more stark and pressing with the Global Financial Crisis which has highlighted the short-termism of many corporations in the pursuit of profit over careful risk management.

Our society may be strong enough to handle a few Madoffs and Enrons without a loss of confidence in the system. But if unethical behaviour becomes pervasive it can completely undermine incentives to do the right thing because honest people feel there is no point in trying.

Many analysts believe that this is a key issue in Africa right now. That corruption is affecting the economic growth of tens of millions of people. In response the World Bank is making ethical standards a key factor in lending money.

So if in the future you find yourselves in positions of responsibility, remember that leaders set the tone for the organisations they lead. Remember that ethical leadership goes beyond ticking boxes, following processes or considering conflicts of interests.

It means a genuine regard for issues of independence, responsibility and due diligence. It means an awareness of all stakeholders. It means building an organisational and management culture that emphasises and promotes ethics. It means embedding these in structures and processes so that people come across them in their day-to day work. Your stakeholders will expect nothing less.

I commend to you the work being done by the Business and Professional Ethics Group at this university. It is promoting and developing ethics-focused research in teaching and in activities within the university, in business and in the wider community.
I congratulate the staff of the Economics and Business faculty for so enthusiastically embracing the formation of this group and for their efforts to expand it and encourage students to participate. I also recognize the strong support of Professor Peter Wolnizer and congratulate Associate Professor Dr Nonna Martinov-Bennie on her superb leadership and commitment. As a participant in its regular meetings I can vouch for the lively debate and growing interest in this vital area.

As you leave here today, my hope for you is that you put your gift of education to good use, that you act with integrity and take responsibility for your own actions, that you listen to all voices and make informed choices, that you don’t judge success only on professional accomplishment but on your ability to use your talent and energy for something larger than yourself so that Australian business and our professional organisations are something we can always be proud of.

Thank you and good luck.