ROME — The Economist newspaper called 2003 “another scandalous year” of business behavior.

Like the preceding two years, it was one stricken by corporate scandals. Only this time, unlike with the scandals that engulfed U.S.-based corporations Enron and WorldCom, it was Europe's turn to steal the headlines — with allegations of large-scale fraud surrounding December's collapse of Parmalat, a Italian food- and milk-products conglomerate headed by Calisto Tanzi, a Catholic noted for his generous financial support of the Church.

Most of the blame for such fiascos has been directed at lax laws and poor corporate governance, but Catholic business experts are focusing their attention on the question of business ethics, both individual and corporate.

That's a key reason why the Pontifical Council for Justice and Peace decided more than a year ago to co-sponsor an international conference with the theme “Business Executives, Social Responsibility and Globalization.”

The conference, scheduled for March 5-6 in conjunction with the International Christian Union of Business Executives, will examine such issues as the ethics and social purpose of corporate profits, the cultural impact of advertising and marketing, and the social responsibility of executives in combating poverty.

The Bottom Line

David Vaira, a bank executive in Maryland and member of a local Catholic business association, agrees about the urgency for a higher profile of ethics in business practice.

“[Ethics] should come first, but once a person in a business reaches a certain level of responsibility, he's going to have to answer to shareholders,” he said. “Ethics are generally not the bottom line.”

His views are echoed by Dr. Philip Thompson, an investment banker in London, Europe's leading financial center.

“Typically, one finds a preoccupation with the value of money and not a great deal of regard for other matters,” he said. “I don't think the underlying human nature is different in the city to anywhere else, just the scale on which some individuals wield power.”

Father Robert Sirico, president of the Michigan-based Acton Institute for the Study of Religion and Liberty, suggests the root problem is a corporate culture that undermines personal integrity.

“There's a seduction going on that tends to socialize and collectivize responsibility, which leaves the individual not culpable for the decisions they take,” he explained. “People who are close to the center of a business might suspect malpractice going on, but they don't feel it's their responsibility to stop it because it's not their job.”

But the idea of “business ethics” has become a catchword since the fall of corporate giants Enron and WorldCom. Is that not a step in the right direction?

Father Sirico is unconvinced. “[Business ethics] have become something of a fad to the point at which people are beginning to think that there is something innately disordered in business,” he said. “We need to avoid thinking that somehow corporate ethics is different from personal ethics.”

He believes placing emphasis on personal ethics would help create an environment that minimizes the chances of corporate crimes occurring.

“We are all weak and susceptible to temptation, but usually we don't take a path toward evil because of the context we find ourselves in,” Father Sirico said. “We need to encourage excellence in the virtues so that a person exercised in virtue will continue to respond by doing what he has always done when faced with great temptation. It's not a case of being especially heroic, just taking little daily decisions that foster virtue.”

Indeed, it is in the field of forming personal moral conscience, or so-called “virtue ethics,” where many believe the Church must show the way for business.

“None of [these scandals] comes as any surprise when the educational system today is without ethics,” said Abbot Christopher Jamison, a Benedictine monk who co-founded a course in ethics for the financial-services sector. “People simply don't know what ethics is. They think it's a question of rules or the Ten Commandments. But ethics is more than that — it's a skill because it's about training in virtue and integrity.”

According to Abbot Jamison, who until recently was headmaster of Worth Abbey School in England, part of the problem is the utilitarian nature of contemporary education, which teaches children to be “oven-ready economic units” rather than “rounded, properly educated human beings.”

He believes cases such as Enron and Parmalat are a consequence.

“As children grow up, they develop some kind of moral conscience,” Abbot Jamison said. “We believe the financial-services industry is still in the child stage — there is a need for exercise in the development of conscience.”

Father Sirico agrees, citing business leaders who have sought his counsel.

“I find with all of these cases, their Catholicism stopped being formed at confirmation — if they get that far,” he said. “Just because they have succeeded in their profession doesn't mean their moral consciences have done likewise.”

Virtue Pays

Abbot Jamison believes business leaders need to be made aware that education in “virtue ethics” is in their best interests.

“It is very interesting to note that when business leaders are asked what is the biggest risk to their business, loss of reputation tops the list,” he said. “Government regulation, intervention or economic downturn come second or third.”

Plenty of guidance can be found in the Catechism of the Catholic Church and Pope John Paul II's 1991 encyclical Centesimus Annus (The Hundredth Year), which was released on the centennial of Pope Leo's renowned encyclical Rerum Novarum (On the Condition of Workers). The Church documents stress the importance of corporate responsibility and warn against inordinate profiteering.

The Catechism states, “A theory that makes profit the exclusive norm and ultimate end of economic activity is morally unacceptable” (No. 2424).

It adds, “Those responsible for business enterprises are responsible to society for the economic and ecological effects of their operations. They have an obligation to consider the good of persons and not only the increase of profits” (No. 2432).

If financial leaders choose to reject those teachings in favor of unrestrained greed, Abbot Jamison predicts dire consequences.

“The prosperity of the entire global order is at stake,” he warned. “If the financial-services sector doesn't show integrity, the whole financial system will collapse.”

Edward Pentin writes from Rome.