Ben Heineman was GE’s Senior Vice President-General Counsel from 1987-2003 and then GE’s Senior Vice President for Law and Public Affairs from 2004 until his retirement at the end of 2005. In this exclusive excerpt from his new book, he considers the challenges of conflict between a company’s global ethical policy and national laws.
A fundamental principle for multi-national companies is compliance with the law of all nations where they do business. But a recurrent dilemma is what to do when a corporation’s global ethical standards (‘oppose censorship’ for a global media company) collides with national law (China’s extensive state censorship). As companies globalize and nations regulate ever more, this vexatious problem is not esoteric, but recurring. Most companies make voluntary decisions to adopt ethical standards beyond what formal legal and financial rules mandate. A decision that a company’s global ethical standards conflict with national law raises a range of options: obey the law; be civilly disobedient (a very uncomfortable, often untenable, position for global companies dedicated to rule of law); try to change the law; or stop doing business in that nation.
In thinking through this dramatic issue, there are two limiting cases. At one end, is the ethical obtuseness, even complicity, of American companies in Nazi Germany in the 1930s. Although the detailed history is complicated, many US and UK multinationals – for example; IBM, Kodak, GE, DuPont, GM, and Ford – had either wholly owned or majority interest subsidiaries operating in Germany from Hitler’s assumption of power in 1933 to the outbreak of war in 1939 (and some thereafter). These subsidiaries continued to operate in Germany despite increasing discrimination in law, and the subsequent enforcement of those laws against religious groups, ethnic groups, political opponents, and other minorities. The American subsidiaries stood by as harassment, violence and imprisonment occurred. Moreover, a number directly or indirectly aided the Nazis, either in developing weapons of war or in the horrific acts against oppressed peoples. There were many reasons American companies were so obtuse, inert or complicit. Ranging from a desire for profits, support for Germany in the face of a Communist threat from the Soviet Union, their own weak ethical standards in that period, as well as unawareness or indifference (more likely) in pre-War America to the growth of Hitler’s dictatorial powers and the inhumane principles and practices of the Third Reich.
