EDITION 7

WeeklySEpTEmbEr 7, 2012

Why Harvard Mishandled Its Cheating Scandal

The World Is Catching Up on Anticorruption Enforcement

Corporate Social Responsibility for Profit

Thalidomide: A Specter Still Haunts the World

Why harvardMishandled its Cheating sCandalrichard S. Levick, Esq.Originally Published on Forbes.com

It’s an unpleasant trait of the human per-

sonality that we instinctively want to think

the worst of those who have more money,

more power, more opportunity than we do.

When, for example, an institution like Har-

vard University announces that it is investi-

gating possible cheating by its students, it’s

not long before high-authority publications

are posting articles with titles like “Yes, they

cheat at Harvard, too.”

One week after Harvard’s announcement,

many of the stories still highly ranked on

Google news either discuss cheating itself as a

national problem that needs to be addressed,

or basically ignore the underlying issue in this

particular case. Happily, a few recent pieces do

eloquently define that underlying issue, argu-

ing that, in fact, a grave injustice is being done.

Yet responsibility for this injustice ultimately

rests neither with the media nor the public’s

collective schadenfreude. We design institu-

tional codes to assure the fairest possible pro-

cess when problems arise, and we have best

communications practices to protect institu-

tions and individuals from calumny.

Harvard failed its students on both scores.

The inquiry focuses on a take-home final exam

and the possibility—based on purported simi-

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larities in how exam answers were phrased—

that students may have copied answers. Around

125 students are involved; they were enrolled in

a course called Introduction to Congress taught

by Matthew Platt.

The students under suspicion will be sum-

moned to an Administrative Board hearing and

face sanctions ranging from one-year suspen-

sions to formal reprimands. As the events in

question happened last spring, students who

were supposed to graduate in 2011 remain in

limbo. They’re not the only ones whose lives

are on hold. Some who did graduate are cur-

rently unemployable. Others are loath to apply

for jobs under the assumption that they may

be disciplined and their standing with their

employers fatally compromised as a result.

Needless to say, the students at risk are not

likely performing at full capacity under

these conditions.

Now, I should not be telling you any of this

because no one should have told me. Univer-

sity policy demands total confidentiality. While

Harvard naturally declined to reveal names,

we should certainly not be reading that “Har-

vard officials called it the biggest such probe

in living memory.” We should not know how

many students are involved, nor how a teach-

ing assistant was disturbed by what he read

in the suspicious exams, nor what steps the

university will take to spread the gospel of

academic integrity—which assumes the as-yet

unproven point that those steps are at all nec-

essary in light of this inquiry.

It’s a very fair guess that, after a year of dutiful

silence, Harvard was contacted by the media

and decided to go proactive. Get ahead of the

story. Don’t wait for reporters to tell it for you.

Show how transparent you are. To be sure,

corporations and institutions are well-advised

to consider just such practices in the shadow of

an impending crisis.

But absent sound judgment regarding the

particulars of each situation, these bromides

are just that—bromides, ill-advised and rather

dangerous. Lawyers don’t typically comment

on pending litigation, and for good reason.

Boards don’t reveal the details of their inves-

tigations when CEOs are under fire, and for

good reason.

In compliance with Harvard’s own policy, a

brief statement, with only minimal confir-

mation (if any) that an investigation is being

speedily conducted, would have sufficed.

The need for a tight-lipped response was all

the greater because of that aforementioned

“underlying issue,” which could well exculpate

the majority of students involved. The Student

Handbook provided by the Administrative

Board prohibits students from discussing exam

questions or in any way collaborating on how

to interpret and answer those questions. But

there is a crucial exception.

According to the Handbook, “The amount of

collaboration with others that is permitted

in the completion of assignments can vary,

depending upon the policy set by the head of

the course. Students must assume that col-

laboration in the completion of assignments is

prohibited unless explicitly permitted by the

instructor…”

Instructors are thus allowed to waive the

restriction, which many students may reason-

ably have believed to be the case. After all, his

office and those of the class’ Teaching Fellows

—some of whom innocently provided specific

answers—were open at all times. Discussion of

the test questions was encouraged, so much so

that it may be fair to surmise that, if the exam

answers seemed familiar from student to stu-

dent, it’s because those students picked up the

phraseology from Platt and the Teaching Fel-

lows themselves. Students were also permitted

to share lecture notes, which would likewise

encourage similar-sounding answers. There

were no restrictions put on how the direct help

provided by the instructors could be shared.

The shroud over these students is all the more

lamentable since there is a fundamental peda-

gogical issue here—the role of “collaboration”

versus enforced individual effort—hat merits

open and lively discussion. Instead, we get it

buried under a disciplinary probe.

One can fairly assume a few extraneous forces

influencing Harvard in this matter. The Eliza-

beth Warren plagiarism controversy may have

played a hand in light of the savage depictions

of Harvard’s response by the conservative

media. Equally savage, there are the inevitable

academic politics, including support from

some faculty for a formal honor code. (Like

most American universities, Harvard has

never had one.) The “scandal” plays right into

that agenda.

“ The Elizabeth Warren plagiarism controversy may have played a hand in light of the savage depictions of Harvard’s response by the conservative media. Equally savage, there are the inevitable academic politics, including support from some faculty for a formal honor code. (Like most American universities, Harvard has never had one.) The “scandal” plays right into that agenda.”

Anyone who’s ever experienced on-campus

politics anywhere can well imagine these 125

students caught in such a power struggle even

as the institution itself indulges a dubious stab

at reputation management. One shudders at

the possibility of FOIA requests down the line,

of careers damaged in ways we’ll never know

about. In all matters involving communications,

proactive or not, the Hippocratic imperative,

“First, do no harm,” is a guiding principle.

Fortunately, I am quite sure that Harvard has

the institutional integrity to seize on any honor-

able way out of this situation. There is one.

Since the whole issue of “collaboration” has

come to the fore (albeit as a result of disclosures

that should not have been made), Harvard can

now focus on it as a positive take-away. If

the problem can be defined as lack of clarity

about where collaboration ends and cheating

begins, the solution lies with open, university-

wide dialogue to define and stabilize the

middle ground.

It’s a much more practicable and equitable

solution than preaching academic integrity

to students and instructors. You might just be

preaching to the choir.

Richard S. Levick, Esq., President and CEO of LEVICK,

represents countries and companies in the highest-stakes

global communications matters—from the Wall Street

crisis and the Gulf oil spill to Guantanamo Bay and the

Catholic Church.

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the World is CatChing Up on

antiCorrUption enforCeMent

For the last several years, corporate direc-

tors in the U.S. have been wrestling with cor-

ruption issues with greater frequency than

ever before. Aggressive enforcement of For-

eign Corrupt Practices Act (FCPA) strictures

and new game-changing whistleblower laws

have introduced a number of new liabilities

that include record-setting fines, jail time

for executives, high-profile securities litiga-

tion, and the reputational challenges that

accompany each. As a result, compliance is

taking on added significance in many board-

rooms as directors seek to ensure that a

commitment to ethical behavior permeates

their companies from top to bottom.

That’s a good thing—because the U.S. in no

longer among only a handful of countries that

are intensifying their anticorruption efforts.

Today, the world is catching up and introduc-

ing a new universe of liability for companies

that do cross-border business.

Consider the six new cases that have been

filed under the UK Bribery Act 2010, which has

been called the toughest enforcement stan-

dard in the world and, for the first time, made

failure to prevent bribery a criminal offense

(even the FCPA doesn’t go that far). Consider

the 34 bribery cases under investigation in

John LovalloOriginally Published on LEVICK Daily

Canada—a figure that ranks the country with

Australia and Austria as Transparency Interna-

tional’s most-improved enforcers. Even China is

getting in on the act, as it has promised to stiffen

anticorruption controls after a series of embar-

rassing episodes—including the 2011 ouster of

Railway Minister Liu Zhijun from the Commu-

nist Party for allegedly accepting bribes.

With intensified enforcement and new anti-

corruption regimes springing up all over the

world—and even in the most unexpected of

regions—boards of directors need to carefully

examine what their companies are doing

to articulate compliance both internally

and externally.

Within the company, the board needs to ensure

that all employees know the rules of the road

that govern their dealings overseas and the

consequences for operating outside acceptable

boundaries. That means the C-Suite needs to set

a strong “tone at the top” with messages that

emphasize a culture of compliance. It means

routine training for foreign agents and even

contractors and other business partners.

At the same time, every employee also has to

be well aware of the internal mechanisms by

which they can report perceived violations.

When companies encourage employees to

speak up, they keep potential whistleblowers

within the fold while also providing them-

selves the opportunity to self-report (a strategy

that often diminishes the penalties at play).

When it comes to external communications,

companies are sometimes reticent to publi-

cally discuss compliance issues for fear of

creating an issue where none exists. But when

they do so, they not only provide themselves

an advantage in markets that are emphasizing

ethics like never before, even as they condi-

tion the marketplace, investors, and regulators

to give them the benefit of the doubt should

trouble arise.

The U.S. is no longer the only sheriff in town.

And with more watchdogs come more oppor-

tunities to attract their attention. That means

boards must not only ensure that compliance

is a priority; they also need to ensure that the

company’s dedication to ethics is articulated

far and wide.

John Lovallo is a Senior Vice President, Chair Corporate

Reputation Practice at LEVICK. He is also a contributing

author to LEVICK Daily.

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“ When it comes to external communications, companies are sometimes reticent to publically discuss compliance issues for fear of creating an issue where none exists.

COrpOraTE SOCIaL rESpONSIbILITy

FOr prOFITrichard S. Levick, Esq.Originally Published on Forbes.com

There’s an ongoing transformation in the very way companies define their Corporate Social Responsibility (CSR) programs. The messages are different, the goals are different, and, to be sure, the strategies are different.

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Consider two recent studies.

One report by the Havas Media Lab under-

scores this transformation with a list based

on a survey of 50,000 consumers worldwide

who identified the companies they feel have

the most “meaningful” CSR. The 10 top names

included Unilever and Bimbo, Ikea and Leroy

Merlin, as well as consumer technology compa-

nies like Samsung and Sony. As the Lab’s direc-

tor Umair Haque quips, they’re not “necessar-

ily the do-gooding corporate entities you

might expect.”

In lieu of such “do-gooding,” Haque talks about

CSR as a way to connect to the personal well-

being of customers. Nike+ is a prime example.

“Instead of putting up another campaign of

billboards with celebrities saying, ‘Buy our

shoes’…Nike+ actually helps makes you a bet-

ter runner,” he says.

In other instances, companies underscore

their commitment by taking substantive risks.

Early last year, for example, Unilever CEO Paul

Polman really spoke the language of CSR as

value—not just donations—when he made an

ambitious sustainability and anti-hunger plan

an investment prerequisite. “If you don’t buy

into this [program], I respect you as a human

being, but don’t put your money in our com-

pany, he said.

It’s easy for consumers to read this resolve as a

personal message to them: that we as a com-

pany are guided by the same determination to

produce beneficial impacts for you—not just

the direct beneficiaries of our CSR largesse—

even at the cost of a few big shareholders.

Many of the highly ranked CSR programs on

the Havas list predictably feature green initia-

tives, often, as with Leroy Merlin, highlighting

how the company’s own employees person-

ally volunteer in repair and recycling efforts

around the world. Here too, with this volun-

teerism, we’re a long way from the passive

check-writing that defined the old CSR.

The message to consumers is, again, personal.

Since these Leroy Merlin people commit

themselves, their own time and sweat, to these

responsibility programs, it’s no reach to infer

that they do the same when they manufacture

the home improvement products that have a

direct impact on our lives.

In another report, Pike Research found that

“the closer the company’s business is related to

consumer electronics, the higher its CSR score.”

Companies like IBM, HP, and Texas Instru-

ments topped the charts for transparency and

reported results. For starters, their sustainabil-

ity initiatives have impressed consumers, the

report suggests.

These sector-leading companies have pushed

hard to highlight their greater focus on en-

hanced sustainable design, manufacturing,

distribution, use, and end-of-use management.

The message is, our products are socially re-

sponsible across a broad spectrum of consum-

er needs, beginning with the benign impact

they have on the world in which they’re used.

In turn, that message rivets consumer attention

on the products themselves and encourages the

compelling supposition that responsibly manu-

factured products are simply better products.

In the new CSR lexicon, “impact” is invoked

as the crucial factor—the impact of a phone

or a computer on the daily lives of their users.

The key is to build a better mousetrap, not just

provide lavish demonstrations of goodwill.

Such an approach to CSR comes quite naturally

to consumer electronics leaders like Steve Jobs

whose ingenuity, more than their philanthropy,

won the hearts and minds of consumers in the

first place.

To be sure, the green movement has played a

key role for many industries in the transforma-

tion of CSR because it’s all about being systemic

in approach. You’re expected to not pollute

the river—Haque would call that the “table

stakes”—but, beyond that, what “impact” on

the environment do all your business opera-

tions have, including how much water the

plumbing in your corporate office saves on a

yearly basis?

Mr. Haque’s new book, Betterness: Economics

for Humans, provides a useful context in which

these varied issues can be understood as part

of the transformation from impersonal cor-

porate giving to the “impact” of products and

services on consumers’ lives—and, of course,

the profits generated in the process.

There is ample data to confirm this profit-gen-

erating potential. More than half the consumers

surveyed by Havas want to reward responsible

companies by buying their products. 53% would

even pay a 10% premium for those products.

But the benefits don’t stop at the check-out

line. They extend to stock value as well, as

suggested by Harvard Business School data

confirming that this new species of socially

responsible company gets more favorable rat-

ings from securities analysts.

The Harvard report specifically underscores

the difference between yesterday’s CSR, which

was largely based on gratuity, versus today’s

model based on impact. The study notes that

the former were often perceived by the mar-

kets as “value-destructing” while the latter is

now seen to be “value-creating.” Today’s ana-

lysts know that high-impact products generate

revenue simply because they work better even

as they provide the tools with which society

can improve itself.

It doesn’t matter what you sell. People are

looking hard at how you do business and the

companies that do it best win the CSR race,

ahead of those for whom “corporate giving” is

the only index of corporate responsibility.

Richard S. Levick, Esq., President and CEO of LEVICK,

represents countries and companies in the highest-stakes

global communications matters—from the Wall Street

crisis and the Gulf oil spill to Guantanamo Bay and the

Catholic Church.

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thalidoMide:a speCter still haUnts the World

richard S. Levick, Esq.Originally Published on Forbes.com

William Faulkner said it. “The past is never

dead. It’s not even past.” Those are caution-

ary words in an age when digital coverage

of today’s global disaster seems to imme-

diately erase the memory of yesterday’s

global disaster.

So there it was over the Labor Day weekend,

topping the Google News charts for most of

one day. The Grünenthal Group, German

manufacturer of the drug thalidomide, issued

its first apology to the victims a full 50 years

after agreeing to recall the infamous drug.

Thalidomide, which was given to pregnant

women to relieve morning sickness, was

recalled in 1961 in the aftermath of a wave of

birth defects in Europe, Australia, Canada, and

Japan. The drug was also found to cause pro-

found damage to the eyes, ears, heart, genitals,

and internal organs of developing babies. It

was never approved in the United States.

Grünenthal settled a lawsuit in Germany in

1972 and expressed regrets. But the company

has not admitted liability, claiming all required

clinical trials were dutifully conducted.

News reports about the apology were haunting

on at least four levels.

Personally, it was a reminder to me of the

forces and events that have shaped my own

sensibilities, political and otherwise. In fact, I’d

group thalidomide with the Vietnam War and

the civil rights movement as formative impacts

in my life. I’m particularly haunted by the me-

dium through which those impacts were made.

Dead soldiers and civilian babies, hoses turned

savagely on peaceful protesters, limbless chil-

dren held fast by agonized parents…Then as

now, visual images mold our perceptions and

transform our lives.

Morally, it was a reminder that no one can es-

cape the shadow of the past; that, somehow in

some way, we eventually confront the demons

of our own actions, individual or corporate.

They call it karma, from which there’s no

escape by simply writing a settlement check to

remit ancient sins or recent misdeeds.

Historically, it was a reminder of how the tha-

lidomide nightmare helped shape the current

environment in specific practical ways. Class

actions and plaintiffs’ lawyers cast as moral

avengers; aggressive regulation on all business

fronts (nowhere more so than with food and

drugs); lobbyists enlisted to ease the burden

on manufacturers and NGOs deployed in the

opposing cause—the thalidomide litigation and

public furor were indeed eloquent precursors

to our current mélange.

Professionally, it was a reminder that, for all

that companies may be learning in terms of

crisis communications, there are still situa-

tions that sorely test those evolving skills. In

that context, the Grünenthal Group’s current

ordeal merits a closer look.

Grünenthal’s chief executive Harald Stock not

only apologized for the suffering of thalido-

mide victims, he apologized for not apologiz-

ing. “We ask that you regard our long silence

as a sign of the shock that your fate caused in

us,” said Stock, speaking in the city of Stolberg,

where Grünenthal is based. The occasion was

the unveiling of a bronze statue of a child born

without limbs—again, a reminder that power-

ful visual images drive events.

According to Stock, the need for a public apol-

ogy was impressed on the company during

recent talks with victims. Yet it’s hard to imag-

ine that Grünenthal could have expected many

of those victims or their families to respond

warmly to its pronouncements. Predictably, vic-

tims like Freddie Astbury—born armless and

legless 52 years ago and now a thalidomide vic-

tim’s advocate—were instead contemptuously

dismissive. “It’s a disgrace that it’s taken them

50 years to apologize,” said Astbury. “For years

[the company] insisted they never did anything

wrong and refused to talk to us.”

In the art of the Public Apology, there is a

central precept: in order to be credible, there

must be some sort of remediation, a penitential

act that will serve those who’ve been injured

and provide the public with sufficient reason to

believe that you’re taking steps to ensure that

similar tragedies won’t happen in the future.

Instead, Stock maintained that “the suffering

that occurred…50 years ago happened in a

world that is completely different from today.”

In many countries, victims are still waiting for

compensation from Grünenthal. So we have

only a stunningly belated apology that offers

no solution for anyone to anything. Instead,

the company has only underscored the tardi-

ness of the apology (it was in “shock” for 50

years) and encouraged perceptions that its cur-

rent tears are but crocodile tears.

The apology is additionally puzzling in light of

ongoing class action litigation that Grünenthal

has refused to settle. (Grünenthal’s British dis-

tributor did settle in July.) From a strictly

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business standpoint, Stock’s apology won’t like-

ly serve the company’s interests in that lawsuit;

it may only remind the fact-finders of what the

plaintiff’s lawyer in the case calls “a calculated

corporate strategy to avoid the moral, legal

and financial consequences of its reckless and

negligent actions…”

What then could have possibly driven Grü-

nenthal to ensnare itself in this cul-de-sac?

One explanation is that, when the idea for the

memorial was proposed, the city government

stipulated that Grünenthal be involved. Pre-

sumably, the company felt it had no choice.

How could it refuse? But once it said yes, what

was Stock supposed to say?

It was a no-win situation. If Grünenthal had

simply declined to participate, it would have

seemed heartless and indifferent. On the other

hand, in a hard-ball approach, the company

could have cited ongoing litigation as reason to

bow out. The adverse reaction might have been

less stinging than the response to its messy

apology for not apologizing, while the city of

Stolberg might have shared the blame for set-

ting an impossible condition to the memorial

going forward.

Once Grünenthal decided to participate, the

error in judgment was in saying too much.

Some few careful, compassionate words would

have sufficed and, for the rest of the occasion, a

dignified non-committal silence.

Yet there was an alternative solution to which

we have already hinted. Without admitting

past liability or infuriating victims with is

apology, Grünenthal might have used the oc-

casion to propose any number of initiatives

underscoring the company’s good citizenship.

Grünenthal did take a step in that direction in

2009 when it pledged 50 million euros to help

victims, although bitter complaints still abound

as victims say Grünenthal’s settlements and

benefactions are woefully inadequate to sup-

port their day-to-day needs.

A more practicable strategy may lie with the

drug itself. After all, thalidomide is still used

as a treatment for multiple myeloma (a plasma

cell cancer) and leprosy. Research is also being

conducted to determine if thalidomide is useful

in the treatment of AIDS and arthritis as well

as other cancers.

It would seem that here, if anywhere, is an

opportunity for the company to make what-

ever atonements it feels in its soul should be

made. Direct support for that research, as well

as a public information campaign to spotlight

its potential, might be apology enough for 50

years of guarded silence. It’s never too late to

save somebody’s life.

Richard S. Levick, Esq., President and CEO of LEVICK,

represents countries and companies in the highest-stakes

global communications matters—from the Wall Street

crisis and the Gulf oil spill to Guantanamo Bay and the

Catholic Church.

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the UrgenCyof noW.