Master Ngeblog

35 Denv. J. Int'l L. & Pol'y 509

Denver Journal of International Law and Policy
Summer/Fall 2007

General Articles

*509 THE EVOLUTION AND ENDPOINT OF RESPONSIBILITY: THE FCPA, SOX, SOCIALIST-ORIENTED GOVERNMENTS, GRATUITOUS PROMISES, AND A NOVEL CSR CODE


Aaron Einhorn [FNa1]

Copyright (c) 2007 Denver Journal of International Law and Policy, University of Denver (Colorado Seminary) College of Law; Aaron Einhorn

Multinational corporations (MNC) have emerged as engines of global development. Over the past fifty years, the number of multinational corporations, the value of multinationals' investments in foreign countries, and the amount of multinationals' wealth have increased dramatically. [FN1] MNCs in developed countries have taken advantage of well educated and inexpensive labor in developing countries, allowing them to cut costs and generate higher profit margins. [FN2] The end of the Cold War ushered previously closed economies across Eastern Europe, the former Soviet Union, and China into the global economy, opening untapped markets. [FN3] Trade liberalization, engineered by the World Trade Organization (WTO) and its member states, has fostered new business relationships and eased corporate access to markets, goods, and services. Foreign direct investment (FDI), defined as “a lasting interest by a resident entity in one economy. . . in an entity resident in an economy other than that of the investor,” has grown exponentially. [FN4] In 1989, global FDI stood just below $200 billion. [FN5] Seven *510 years later FDI doubled to just below $400 billion, and by the year 2000 reached $1.1 trillion. [FN6] While only ten countries' FDI totals surpassed $10 billion in 1985, corporations in thirty three countries invested over $10 billion abroad in the year 2000. [FN7]
The wealth corporations have enjoyed has not existed in isolation. Rather, greater corporate wealth has produced greater corporate power that corporations have exercised in both positive and negative manners.
Greater corporate power has cultivated unprecedented advances in health and education over the past forty years. [FN8] Corporations have developed new medicines, revolutionized transportation [FN9], provided employment to millions, and generally have assisted in raising the standard of living worldwide. [FN10] Corporations also have contributed to rapid technological development, particularly in the area of communications. Fiber optic systems and the internet have revolutionized the speed at which ideas and knowledge can flow within countries and across oceans, [FN11] forging a synergistic relationship between corporations and technology that has propagated new technologies and fed corporate power. [FN12]
At the same time, greater corporate power has been associated with a host of problems. The wealth multinationals have brought to some countries has bypassed many other countries. [FN13] In some cases, the activities of multinational corporations in developing countries have retarded economic growth. [FN14] Multinationals have been accused of committing various human rights violations, such as carrying out extra-judicial killings and employing child labor. [FN15] Corporate activities in *511 developing countries have been associated with environmental degradation, dangerous work conditions, and mistreatment of indigenous people. [FN16] However, in contrast to developed states, developing states have not successfully combated the harms that have flowed from increased corporate power. [FN17] A number of factors - including weak domestic and international legal institutions, non-responsive heads of state, the “race to the bottom,” [FN18] and developed countries' economic dominance - have prevented developing states from effectively addressing the negative economic and social impacts of corporate activities. [FN19]
The inability of many developing states to manage these problems has sparked calls for a code of social responsibility that is able to regulate multinational corporations. [FN20] Countries and corporations have responded to these cries. The United States and member States of the European Union (EU), the Organisation for Economic Co-operation and Development (OECD), the United *512 Nations (UN), and the International Labor Organization (ILO) have developed codes that place non-binding social responsibilities on corporations. [FN21] In addition, many corporations voluntarily have drafted and adopted their own codes of conduct, though, similar to measures drafted by intergovernmental organizations (IGO), these codes are not legally binding. [FN22]
Because existing codes of conduct have limited ability to prevent and redress corporate human rights abuses, the debate on whether to draft and how to structure a binding corporate social responsibility (CSR) code continues. This article enters that debate. It discusses events and circumstances occurring within the United States, other countries, and the international community which, when viewed in light of one another, suggest that states and corporations are moving towards creating an enforceable code of corporate social responsibility. After discussing these forces, this article offers an organizational framework for developing a CSR code.
The article's first section examines corruption and bribery. It discusses problems corruption creates in developed states and charts the evolution of U.S. and international measures to combat corruption; measures which have placed greater responsibilities upon corporations. The article's second section takes a similar approach, first discussing broad corporate governance concerns that surfaced over the past decade and then considering how the Sarbanes-Oxley Act (SOX), and similar measures in Europe, have addressed these concerns.
After charting how the United States and European Union have placed greater responsibilities upon corporations, the article analyzes a different force contributing to the development of a CSR code. The article's third section explains how the rise of socialist-oriented (SO) governments in Latin America will advance progress towards a code of corporate social responsibility. Next, the article's fourth section discusses human rights abuses and social harms that have accompanied the spread of MNCs through developing states. This section then analyses the various CSR measures the international community and multinational corporations have adopted to counter these harms. The paper's fifth section explains why the CSR measures that states, intergovernmental organizations, and multinationals have enacted cannot successfully regulate corporate activity and proposes a new and potentially useful framework for developing a CSR code. Last, the sixth and final section ties together the information presented in previous sections, summarizes how that information supports the article's thesis, and draws conclusions.

I. Corruption: Problems and Responses
While corruption is more pervasive in developing countries, it also produces serious problems in developed states. [FN23] When the magnitude of multinational *513 corporations' bribery of foreign officials came to light in the United States during the 1970s, Congress passed the Foreign Corrupt Practices Act (FCPA or the Act). In 1998, the U.S. adopted a second round of amendments to the FCPA, enlarging its jurisdiction and expanding its substance. By the turn of the century, states worldwide had joined the battle against bribery, ratifying several anti-corruption treaties. Analysis of how anti-corruption measures have evolved reveals that, over time, states have placed greater responsibilities on corporations and have cut more deeply into corporate power. This trend of imposing greater responsibilities on corporations, when viewed in light of other events such as enactment of the Sarbanes-Oxley Act, the rise of SO governments in Latin America, and the development of non-binding CSR codes, suggests a binding code of corporate social responsibility lies on the horizon.

A. Problems Caused by Corruption

Corruption breeds various problems. When multinational corporations bribe foreign officials to obtain contracts or secure more relaxed regulations, their venal activities undermine effective business practices. [FN24] Bribery “can damage a company's image, lead to costly lawsuits, cause the cancellation of contracts, and result in the appropriation of valuable assets overseas.” [FN25] Bribery also inflates operating expenses, creating new costs companies would not absorb if they obtained business legally, and wastes valuable resources. [FN26] Instead of devoting earnings to research and development, infrastructure, or shareholder dividends, companies that pay bribes direct profits into foreign officials' pockets. [FN27] As is common in other regulatory contexts, a “race to the bottom” ensues. [FN28] Officials demand greater and greater sums. Corporations, competing with one another for business, pay larger and larger bribes for access to markets and favorable treatment until the marginal benefit of new payments decreases to zero. [FN29] Such behavior is not good for business.
In 1976, more than four hundred U.S. companies admitted to paying over $300 million in bribes to foreign officials during the first half of the 1970s. [FN30] Gulf Oil Corporation admitted to paying bribes in various countries, including $4 *514 million to the governing political party in South Korea; General Tire & Rubber Company admitted to bribes in Algeria, Mexico and Venezuela; and Exxon Corporation disclosed bribes in fifteen countries, including $19 million in Italy alone. [FN31] Most dramatically, the SEC discovered that Lockheed Aircraft Corporation, at that time the largest defense contractor in the United States, had been bribing prime ministers, presidents, and other high-ranking political figures in several countries. [FN32] By the end of 1976, updated studies revealed four hundred and fifty U.S. companies had paid over $450 million in bribes since the decade began. [FN33]
This pervasive corruption sparked government action. In 1977, officially recognizing that “corporate bribery is bad business” and that it affects “the very stability of business overseas” as well as “our domestic competitive climate,” [FN34] the United States Congress passed the Foreign Corrupt Practices Act to reign in corruption. [FN35]

B. The U.S. Response to Corruption: The Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act consists of two general sections: one that establishes record keeping and internal controls regulations and another that prohibits bribery of foreign officials. While the FCPA was first passed in 1977, amendments in 1988 [FN36] and 1998 refined the Act and broadened its scope. Comparison of the 1977 and 1998 versions reveals the United States has placed greater and greater responsibilities on corporations.
1. The FCPA at the Time of its Passage
The first section of the FCPA creates record keeping and internal controls standards. Since the Act's inception, this section has required issuers with securities registered under the Securities and Exchange Acts to “make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly *515 reflect the transactions and dispositions of the assets of the issuer.” [FN37] The Act broadly defines records to include “accounts, correspondence, memorandums, tapes, disks, paper, books, and other documents or transcribed information of any type. . ..” [FN38] Both qualitative omissions, such as omission of a questionable payment to a foreign official, and qualitative omissions, such as mischaracterization of a payment, are proscribed under the record keeping provision. [FN39] Since 1977, the FCPA also has required issuers to “devise and maintain a system of internal accounting controls” in order to improve corporate accountability and allow corporate directors, officers, and shareholders to detect and prevent the unlawful use of an issuer's assets. [FN40] An issuer violates this provision if it knowingly circumvents or fails to implement a system of internal accounting controls. [FN41]
The accounting and control provisions, one of the first federal laws to mandate compliance with corporate governance standards, have allowed the SEC to detect, investigate, and prosecute bribery. [FN42] For example, in 1996 the SEC brought an action against Montedison, an Italian industrial conglomerate whose shares are traded domestically within the United States. [FN43] The SEC alleged Montedison violated the record keeping provision by disguising several hundred million dollars in bribes to Italian politicians. [FN44] Five years later Montedison settled with the SEC, agreeing to pay a $300,000 fine. [FN45] Similarly, in 1997 the SEC filed a complaint against Triton Indonesia, a subsidiary of Triton Energy Corporation, alleging it “failed to devise and maintain an adequate system of internal accounting controls.” [FN46] Triton agreed to a final judgment that enjoins it from violating the FCPA and exacts a $300,000 fine. [FN47] More recently, the SEC issued a cease-and-*516 desist order and levied a $100,000 fine against Chiquita Brands as a result of internal control violations by its Colombian subsidiary, Banadex. [FN48]
While the record keeping and internal controls measures have helped to combat bribery, the heart of the FCPA lies in its anti-bribery provisions. Since 1977, Congress has applied the FCPA's anti-bribery provisions to both “issuers” and “domestic concerns.” [FN49] An issuer is any entity that must register under Section 12 of the Securities and Exchange Act or that must file reports under Section 15(d) of that Act. [FN50] Domestic concerns include U.S. nationals; a juridical entity organized under U.S. law or with its principal place of business within the United States; and any officer, agent, employee, or stockholder of a domestic concern. [FN51] Under this definition, a domestic concern employed by a foreign entity or subsidiary is amenable to suit under the anti-bribery provisions while his or her principal or employer is not. [FN52]
Although Congress expanded the FCPA in 1998, since 1977 Congress has required the government to prove the same five, general elements to establish a violation of the Act. First, the entity making a payment must act corruptly. [FN53] While the Act does not define the term “corruptly”, the Eighth Circuit has stated that, for purposes of the FCPA, a corrupt act is “intended to induce the recipient to misuse his official position or to influence someone else to do so” or is “done voluntarily and intentionally, and with a bad purpose of accomplishing either an unlawful end or result, or a lawful end or result by some unlawful method or means.” [FN54]
Second, the entity must use the mail or any other means of interstate commerce in furtherance of an offer, payment, or promise to pay anything of value. [FN55] Cases not involving the FCPA have held that, under the federal mail fraud statute, a use of the mail that is merely “incident to an essential part of the scheme” constitutes use of the mail. [FN56] More directly, a United States citizen who traveled to Nigeria with six gold watches intended as bribes for Nigerian officials made use of interstate commerce. [FN57] These expansive definitions impose heightened responsibilities upon corporations.
The third element the government must establish is an offer, payment, or promise of value made to any foreign official, foreign political party, party official, *517 or foreign candidate for political office. [FN58] This element is satisfied if an issuer or domestic concern knows that a portion of an offer, payment, or promise of value, although not directly being used to bribe a foreign official, will be re-given or re-promised to a foreign official, foreign political party, foreign party official, or foreign candidate for political office. [FN59] Thus, this element imposes vicarious liability on issuers and domestic concerns, holding issuers and domestic concerns responsible for the acts of third parties who are not amenable to suit under the Act. For purposes of vicarious liability, knowledge exists if an issuer or domestic concern is aware a third party is committing bribery, firmly believes that bribery is substantially certain to occur, or perceives a high probability that bribery will occur. [FN60]
Vicarious liability demands greater corporate responsibility; compels more scrupulous oversight of a parent company's subsidiaries, agents, and affiliates; and holds multinationals accountable when they fail to discharge their obligations. For example, in 2004 the SEC lodged a complaint against Vetco Gray, Inc., a foreign corporation traded publicly in the U.S. [FN61] The complaint alleged Vecto Gray was vicariously liable for payments it made to its foreign subsidiaries because it knew the subsidiaries used the payments to secure oil contracts in Nigeria, Angola, and Kazakhstan through bribery. [FN62] Vecto Gray agreed to a $5.9 million settlement the day the SEC filed its complaint in Federal District Court. [FN63] Similarly, if an issuer or domestic concern makes a payment to a foreign sales agent while consciously disregarding information suggesting the agent will use that money to make an improper payment, the issuer or domestic concern likely has violated the Act's vicarious liability provision. [FN64]
Since 1977, the fourth element of the anti-bribery regulations has required payments to be made for the purpose of influencing an official act or decision; inducing the official to do any act in violation of his lawful duty; or inducing an official to use his power to affect a government act or decision. [FN65] The issuer or domestic concern need not offer payment for the purpose of influencing the foreign official's own government. Rather, pursuant to the Act's broad language, if an issuer or domestic concern pays a foreign official for the purpose of influencing the U.S. government or a private enterprise, and if all other elements are met, that payment would violate the Act. [FN66]
*518 Fifth, to establish a violation of the FCPA the government must prove the issuer or domestic concern, in offering a payment, sought to obtain or retain business for any person. [FN67] This sweeping language has made it easier to address “the concern of Congress with the immorality, inefficiency, and unethical character of bribery. . ..” [FN68] Two cases illustrate this point. First, in SEC v. Monsanto, the SEC concluded that Monsanto's authorization of $50,000 in illicit payments from an Indonesian consulting firm to a senior Indonesian official, in exchange for repeal of legislation that had adversely affected Monsanto's business, constituted a payment offered to assist in obtaining business. [FN69] Similarly, in United States v. Kay the Fifth Circuit stated that “Congress intended for the FCPA to apply broadly to payments intended to assist the payor, either directly or indirectly, in obtaining or retaining business for some person.” [FN70] The court held that bribes paid to customs officials in order to receive reduced customs and tax rates fall within the Act's proscription if “the bribery was intended to produce an effect-here, through tax savings-that would ‘assist in obtaining or retaining business.”’ [FN71]
2. The 1998 Amendments
In 1998, Congress amended the FCPA to conform to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention). [FN72] The 1998 amendments broadened the Act's jurisdiction and substance, permitting the government to investigate and prosecute more acts of corruption. This enlargement reflects acknowledgement that deeper, more extensive measures are necessary to regulate corporate activities, and comports with the United States' and international community's pattern of placing greater responsibilities upon multinational corporations.
The 1998 amendments made three important changes to the Foreign Corrupt Practices Act. First, the amendments greatly enlarged the Act's jurisdiction over U.S. nationals and foreign persons. With regard to U.S. nationals, the Act added a new subsection stating that:
“[i]t shall also be unlawful for any issuer organized under the laws of the United States. . . or for any United States person that is an officer, director, employee, or agent of such issuer or a stockholder thereof acting on behalf of such issuer, to corruptly do any act outside the United States in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to any of the persons or entities set forth in paragraphs (1), (2), and (3) of. . . subsection (a). . . for the purposes set forth therein, irrespective of *519 whether such issuer. . . officer, director, employee, agent, or stockholder makes use of the mails or any means or instrumentality of interstate commerce. . ..” [FN73] (emphasis added).
This subsection expands the FCPA's nationality jurisdiction. Now, the SEC can investigate and prosecute issuers and persons acting on behalf of issuers regardless of whether the mails or interstate commerce are used in any way. [FN74] Accordingly, if a corporate executive acting on behalf of an issuer, while in a foreign county, orally offered to fly a foreign official and his family to Spain for vacation in exchange for the foreign official's opposition to a new minimum wage law, the executive's offer would violate the Act even though he neither made the offer in the United States nor utilized the mail or interstate commerce. [FN75]
The 1998 amendments also broadened the Act's jurisdiction over foreign persons. Before 1998, foreign issuers organized under U.S. law were the only foreign entities over whom the United States could assert jurisdiction. [FN76] Since the amendments, the U.S. can exercise jurisdiction over any person who violates the Act while in U.S. territory. [FN77] This expansion strengthens the SEC's ability to combat corruption [FN78] and is consistent with the United States' and international community's trend of placing greater responsibilities on corporations.
A recent SEC action against an Indonesian national illustrates the Act's expanded jurisdiction. In 2001, the SEC and the Department of Justice filed a joint civil injunction in U.S. District Court against KPMG Siddharta Siddharta & Harsono (KPMG-SSH), an Indonesian accounting firm, and against Sonny Harsono, a partner in the firm. [FN79] The complaint alleged Mr. Harsono agreed to pay an Indonesian tax official $75,000 in order to reduce the official's tax assessment against one of KPMG-SSH's clients. [FN80] Soon after it initiated an action, the SEC entered an uncontested final judgment against the defendants. [FN81]
The 1998 amendments also broadened the Act's substance in two important ways. First, whereas the FCPA previously was limited to payments made for the purpose of “influencing” or “inducing” an “act or decision,” it now also proscribes payments made for the purpose of “securing any improper advantage.” [FN82] This language captures more conduct than the 1977 version and helps to prevent false claims that a corporation made payments for a legal purpose. For example, payments made to have the first bid on a government contract, or to arrange a *520 favorable location for a factory, likely would be made for the purpose of “securing any improper advantage” and violate the Act. [FN83]
Second, while the Act always has prohibited payments to foreign officials, the 1998 amendments expanded the definition of “foreign official” to include “any officer or employee. . . of a public international organization, or any person acting in an official capacity or on behalf of any such. . . public international organization.” [FN84] By defining “foreign official” to include representatives of international organizations, Congress has recognized that international organizations play a vital role and their officials are susceptible to bribery.

C. International Anti-Corruption Measures

The international community has joined the fight against corruption. Over the past ten years, several IGOs have implemented anti-bribery conventions. The OECD, recognizing that “bribery. . . raises serious moral and political concerns, undermines. . . economic development, and distorts international competitive conditions,” drafted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions [FN85] Likewise, the Inter-American Convention Against Corruption (IA Convention), ratified by thirty three Latin American and Caribbean states, stresses that “fighting corruption strengthens democratic institutions and prevents distortions in the economy.” [FN86] The Council of Europe Criminal Law Convention on Corruption (CoE Convention), ratified by fifty two countries, [FN87] and the United Nations Convention Against Corruption (UN Convention), which one hundred forty countries have signed though only fifty one have ratified, express similar concerns. [FN88] Regulations in these conventions in some ways exceed regulations in the FCPA.
Each of these conventions requires signatories to cooperate in fighting corruption. The OECD Convention requires states to “provide prompt and effective legal assistance” to one another. [FN89] Signatories must cooperate with criminal investigations, non-criminal investigations, and other proceedings that fall within the scope of the Convention. [FN90] The UN Convention and the IA Convention incorporate similar duties. The UN Convention obliges states to furnish one another with as much legal assistance as their domestic laws allow. [FN91] Article XIV of the IA Convention requires Parties to provide “mutual technical cooperation”, *521 which includes sharing knowledge of how to fight corruption most effectively. [FN92] Collectively, these provisions demonstrate that countries worldwide are committed to closely regulating multinationals' activities within their borders.
Each of these conventions also requires signatories to establish systems for monitoring compliance. [FN93] OECD states must create “a programme of systematic follow-up to monitor and promote full implementation of the Convention.” [FN94] The UN Convention creates a “Conference of the States Parties to the Convention,” which must develop processes for reviewing compliance and exchanging ideas on how to further the Convention's goals. [FN95] The CoE Convention simply requires signatories to “monitor the implementation of th[e] Convention,” while the Follow-up on the Inter-American Convention Against Corruption and its Program for Cooperation require signatories to review compliance with the IA Convention periodically. [FN96] These monitoring systems, absent from the FCPA, illustrate the international community's commitment to fighting corruption and regulating MNCs more closely.

D. Conclusion

Corruption undermines efficient business practices and wastes valuable resources. Efforts to combat corruption have intensified gradually. The United States first outlawed corporate bribery of foreign officials in 1977 with passage of the FCPA. Since then, the U.S. has placed greater and greater anti-corruption responsibilities on corporations, broadening the Act's jurisdiction and expanding its substance. States worldwide have followed suit, adopting treaties which, in some areas, exceed the FCPA's exacting standards. When the evolution of anti-corruption measures is viewed in light of the development of heightened corporate governance standards, and in light of events such as the rise of socialist-oriented governments in Latin America and the passage of non-binding CSR measures, the creation of a corporate social responsibility code appears on the horizon.

II. Behind SOX: Reasons for Imposing Even More Corporate Responsibility
At the start of the 21st century, broad corporate governance problems captured the attention of the United States and the international community. Responses to these problems, such as the Sarbanes-Oxley Act and similar measures developed by the United Kingdom and the European Union, established new corporate governance and management systems, and placed greater responsibilities upon corporations. Analysis of these corporate governance regulations, when viewed in *522 light of the evolution of anti-corruption legislation, the rise of socialist-oriented governments in Latin America, and the development of non-binding CSR measures, reveals the international community is moving towards a binding CSR code.

A. Broad Corporate Governance Problems

Corporate governance problems at the beginning of the twenty-first century undermined democratic institutions and weakened confidence in the U.S. economy. [FN97] While these problems varied in character and severity, combined they contributed to investment losses, the closure of many businesses, and the weakening of the U.S. and global economies. [FN98]
The main corporate governance problem was deceitful accounting practices, such as those employed by Enron and other corporations. [FN99] While Enron grew tremendously during the 1990s and early part of the twenty-first century, it obtained much of its profits through fraudulently constructed transactions. [FN100] To improve its financial appearance to investors, Enron fabricated special purpose entities that operated as partnerships with outside interests, allowing Enron to treat them as independent entities, remove them from its consolidated balance sheet, and hide losses. [FN101] Arthur Anderson, Enron's auditors, approved these “creative compliance” techniques that were designed to impassion investors and deceive the public. [FN102] Shortly after Enron filed for bankruptcy, investigations revealed these entities were concealing $13.15 billion in debt and an additional $27 billion in liabilities. [FN103] Enron's collapse was not an isolated incident. In 2002, WorldCom admitted it had overstated its earnings by $11 billion and declared bankruptcy while claiming $110 billion in assets, the largest bankruptcy in American *523 history. [FN104] Similar events unfolded at Global Crossing, a company that invested in fiber optic cables and filed for bankruptcy in January, 2002 with billions of dollars in assets and liabilities. [FN105] Authorities also uncovered hidden transactions and veiled debts outside the balance sheet of Adelphia Inc., a prominent cable company. [FN106]
Another serious corporate governance problem for many corporations was their auditor selection processes. Before SOX, a company's chief financial officer (CFO) usually chose an outside accounting firm to audit the company. [FN107] However, most big accounting firms not only performed audits, but also earned significant revenue through consulting. By 1998, Wall Street's major accounting firms garnered only 38% of their revenue through audits. [FN108] This change practically transformed auditing firms into “consulting companies that did a little auditing on the side,” [FN109] in an arrangement that reposed considerable power in CFOs. Whereas CFOs previously hesitated to discharge auditors who did not approve certain corporate structures and transactions out of fear that discharge would prompt closer analysis of accounts, concern among investors, and market backlash, by the year 2000 CFOs could threaten to cut consulting business if auditors refused to approve questionable transactions. [FN110] As auditors grew reluctant to investigate suspect accounting practices, the balance of power shifted heavily towards CFOs and their corporations.
A final corporate governance problem that has drawn attention in recent years is vast increases in executive compensation. While CEOs of S&P 500 companies earned thirty times more than non-managerial workers in 1970, by 1996 those same CEOs were earning two hundred and ten times more than the average worker, with the gap widening further in recent years. [FN111] The significance of these figures does not lie in the sheer difference in pay. Rather, their importance also stems from the fact that, unlike professional athletes, actors, and others whose salaries also have grown considerably in recent years, CEOs “essentially set their own compensation.” [FN112]
*524 These practices prompted close scrutiny of corporate activities, undermined confidence in corporations, and hurt corporate earnings. As concerns grew, corporate ills damaged private citizens and the economy. [FN113] In July 2002, as the negative impacts of poor corporate governance were spreading across the United States, [FN114] Congress passed the Sarbanes-Oxley Act “to address the systemic and structural weaknesses affecting our capital markets which were revealed by repeated failures. . . in recent months and years,” and “[to] increase corporate responsibility.” [FN115]

B. The Sarbanes-Oxley Act: A New Code of Corporate Responsibility

The Sarbanes-Oxley Act has been heralded as “the most significant piece of securities legislation since the 1930s.” [FN116] It has redefined the rules for publicly traded companies, instituting sweeping changes in corporate governance and accounting practices. [FN117] More specifically, auditor controls, certification procedures, and internal controls requirements have placed greater responsibilities on corporations. [FN118]
One way SOX has tightened oversight of corporations is through stricter regulation of audit committees. Until recently, most audit committees convened *525 infrequently and merely rubber stamped the auditor's work. [FN119] Many audit committee members even appeared personally tied to their companies' CEOs. [FN120] Sarbanes-Oxley changed this relationship by requiring corporations to develop independent audit committees. [FN121] Now, under Section 301, audit committee members cannot hold any position within a company other than their position as a member of the audit committee. [FN122] Likewise, audit committee members may not “accept any consulting, advisory, or other compensatory fee from the issuer” nor “be an affiliated person of the issuer” or its subsidiaries. [FN123] Each audit committee has plenary responsibility for appointing, overseeing, and setting compensation for its corporation's public accounting firm. [FN124] Also, each audit committee must craft a procedure for funneling employees' complaints of questionable accounting practices to corporate officers. [FN125] Furthermore, each audit committee must have at least one “financial expert,” or explain its reasons for not doing so. [FN126]
In addition, Section 201 of SOX prohibits external auditors from providing additional, non-audit services, including bookkeeping, financial information systems design, appraisals, investment advice, and “any other service that the Board determines, by regulation, is impermissible.” [FN127] Collectively, Sections 201 and 301 create a new corporate governance framework and place new responsibilities on corporations.
The Sarbanes-Oxley Act's certification provision also tightens regulation of corporations. This provision requires each issuer's principal executive and principal financial officer(s) to certify that he or she has reviewed each annual or quarterly report and that, based on the officer's knowledge, all material facts in the report are true, no material facts are omitted, and all financial information is correct “in all material respects.” [FN128] By forcing corporate officers to certify their corporation's financial condition, this provision undercuts an executive's ability to claim ignorance of faulty financial statements and exacts greater corporate responsibility.
The Sarbanes-Oxley Act's internal controls provisions impose SOX's deepest, most comprehensive regulations. [FN129] Pursuant to Section 302, each *526 principal executive and principal financial officer must confirm that he or she has designed internal controls. [FN130] These controls must ensure the principal executives and principal officers know material financial information about the corporation and its subsidiaries. [FN131] Principal executives and principal officers also must confirm they have evaluated the effectiveness of these controls. [FN132] In addition, Section 302 requires each principal executive and principal officer to confirm that any significant cause for alarm over the adequacy of the controls has been disclosed. [FN133]
In addition, pursuant to Section 404, corporate management must: 1) state in their annual reports management's responsibility for “establishing and maintaining an adequate internal control structure;” 2) assess the effectiveness of the internal controls in their annual reports; and 3) have their public accounting firms “attest to, and report on” management's assessment. [FN134]
Comparison of the FCPA's and SOX's internal controls provisions reveals the trend towards placing greater responsibilities on corporations. The FCPA's internal controls provisions, initially drafted thirty years ago, simply declare that issuers must design and maintain internal controls, but does not require evaluation or analysis. [FN135] Conversely, sections 302 and 404 of SOX together require corporate executives to state their responsibility for designing internal controls, to create such controls, to assess and evaluate these controls, and to draw conclusions about their effectiveness. [FN136] While the FCPA places responsibility for internal controls upon the corporation in general, [FN137] SOX specifically charges executive officers with internal controls duties. [FN138] Thus, internal controls have been transformed from a recitation of general duties lodged upon the corporation as a whole to a statement of specific duties [FN139] imposed on corporate executives in particular.
Although the audit committee, certification, and internal controls provisions have placed the greatest responsibilities on corporations, other sections of SOX have had a similar effect. An ethics provision requires corporations to “disclose whether or not, and if not, the reason therefor,” they have “adopted a code of ethics *527 for senior financial officers.” [FN140] In addition, pursuant to section 402, corporations no longer may “extend or maintain credit. . . in the form of a personal loan to. . . any director or executive officer,” even if done indirectly through a subsidiary. [FN141] This proscription creates new corporate responsibilities. Finally, Section 806 of Sarbanes-Oxley prohibits corporations and their constituents from discharging, demoting, suspending, harassing, threatening, or otherwise discriminating against any employee who informs the government of corporate conduct that may violate an SEC regulation or a federal law involving fraud against shareholders. This section also provides civil remedies to employees who allege discrimination and subsequently are sued by their employer, [FN142] federalizing state statutes protecting whistle blowers. [FN143] Section 806 shifts power from the corporation to its constituents, a change that is consistent with calls for corporations to assume a new set of corporate social responsibilities to their employees, communities, and environments.

C. Corporate Governance Measures in Other Countries

Two years after enactment of SOX, the United Kingdom and the European Union passed new corporate governance measures. These regulations, consistent with U.S. regulations, impose greater responsibilities upon corporations.
The United Kingdom's Companies (Audit, Investigation, and Enterprise) Act of 2004 (the Companies Act) severs close ties between corporations and auditing firms. [FN144] Although it does not forbid auditors from performing non-audit services like section 201 of SOX, it does empower the Secretary of State to pass regulations requiring corporations to disclose auditors' non-audit services. [FN145] The Companies Act also gives auditors unfettered access to company accounts, and allows them to require corporate executives to provide them with any information needed to perform their duties [FN146] In addition, pursuant to the Companies Act's certification provision, each corporate director must state in his director's report that, “so far as [he] is aware, there is no relevant audit information of which the company's auditors are unaware.” The director also must certify he has taken all measures necessary for making himself “aware of any relevant audit information” and for establishing “that the company's auditors are aware of [such] information.” [FN147] Other provisions set criteria for recognizing supervisory audit bodies, permit the Secretary of State to make grants to entities that issue accounting standards or investigate departures from accounting standards, and, with approval by the *528 Secretary of State, empower individual investigators to compel the production of documents during investigations. [FN148]
The European Union also has adopted measures that place greater responsibilities on corporations. EU Council Directive 2006/43 (the Directive) includes several provisions affirming that auditors must operate independently of their employers. Member States must prohibit auditors from auditing companies with whom they have “any direct or indirect financial, business, employment or other relationship.” [FN149] Also, owners and shareholders may not intervene “in the execution of a statutory audit in any way which jeopardises the independence and objectivity of the statutory auditor.” [FN150] In addition, the Directive requires member states to “ensure that all statutory auditors and audit firms are subject to a system of quality assurance” that operates independent of the auditors and audit firms.
Section 101 of SOX establishes a non-profit organization, the Public Company Accounting Oversight Board, “to oversee audit of public companies. . . in order to protect the interests of investors. . ..” [FN151] The Directive mandates the creation of a similar body. It calls for “a system of public oversight for statutory auditors and audit firms,” which will “apply to all statutory auditors and audit firms” and “have ultimate responsibility for. . . the approval and registration of statutory auditors and audit firms, the adoption of standards on professional ethics. . . and. . . investigative and disciplinary systems.” [FN152] By adopting these measures, the EU has followed the lead of the United States in placing greater responsibilities upon corporations.

D. Conclusion: Continued Progressive Placement of Heightened Responsibilities upon Corporations

Congress passed the Sarbanes-Oxley Act in response to corporate governance problems that arose in the United States during recent years. SOX tightens corporate structures, strengthens corporate governance, and places greater responsibilities on corporations than does the FCPA. Thus, U.S. regulation of corporate activities has escalated gradually and a similar trend exists internationally. Although less prescriptive than SOX, the Companies Act and the Directive also create new corporate governance standards. This evolution of placing greater responsibilities on corporations, when viewed in light of events such as the rise of socialist- oriented governments in Latin America, corporate rights abuses, and the passage of non-binding CSR codes, suggests the international community will develop a binding CSR code to govern the social impacts of corporate activities.

*529 III. The Growth of Socialist-Oriented Governments in Latin America
Following a wave of democratization in Latin America during the 1980s, many countries in Latin America adopted neoliberal economic policies. [FN153] Neoliberal policies reduce a country's economic protections and open its economy to the international marketplace with minimal government interference. [FN154] Such policies were recommended for developing countries by the International Monetary Fund, World Bank, and other leading international economic institutions during the 1990s. [FN155] In many cases, these institutions conditioned loans and assistance on countries' willingness to adopt austere macroeconomic fiscal policies, rapidly privatize state-owned businesses, and quickly liberalize capital markets. [FN156] Many Latin American countries followed these neoliberal mandates, curtailing social services, [FN157] removing restraints from capital markets, [FN158] and privatizing huge, state-owned industries. [FN159]
These measures succeeded for several years and helped to produce economic growth throughout Latin America. [FN160] Corporations invested heavily in Latin America during the 1990s. In 1990, inward FDI to Latin American countries totaled just over $10 billion. [FN161] Ten years later, inward FDI had jumped to $114 billion. [FN162] This spread of foreign corporations was partly attributable to neoliberal reforms, particularly rapid privatization of many state-run industries. [FN163] In Brazil, for example, over one hundred state-owned companies with a value of $61.5 billion were privatized during the 1990s. [FN164] Similarly, one hundred companies with a value of approximately $23 billion were privatized in Argentina during the 1990s. [FN165]
*530 However, soon after neoliberal policies produced growth in Latin America, they began to fail. The neoliberal prescription of cutting social spending in order to maintain macroeconomic health destroyed the social service infrastructures of many countries. [FN166] By the end of the 1990s, sluggish and in many cases negative economic growth had spread throughout the area. [FN167] Neoliberal reforms and extensive FDI received some blame for this economic downturn, [FN168] enabling leaders who espoused socialist-oriented policies to assume power in Latin America. [FN169] This trend began with the election of Hugo Chavez in Venezuela in 1999, and since has spread to eight countries in Central and South America. [FN170] The degree to which these countries follow socialist policies and values differs greatly. [FN171] However, each has adopted SO policies that show their interest in countering perceived U.S. dominance in the region, protecting workers' rights, safeguarding national resources, and maintaining control over their economies. [FN172]
Venezuela elected Hugo Chavez as President in 1999. [FN173] Since taking office, Chavez has spent billions of dollars on education and health care, and has made “life increasingly miserable for foreign - above all American - companies.” [FN174] Most recently, Chavez announced plans to nationalize Venezuela's telecommunications and electricity industries, and to transform Venezuela into a socialist country. [FN175] Venezuela generally is considered the most SO country in *531 Latin America; Jorge Castañeda, the Foreign Minister of Mexico under President Vicente Fox and current professor at New York University, has called Chavez a populist leader who “does very little for the poor of his own country” [FN176] and who pursues “big-time spending, authoritarian governance and militant anti-Americanism.” [FN177] However, if Chavez moderates his stance and redirects his focus on protecting social and economic rights towards development of a CSR code, a change which seems more likely since Venezuelans rejected a referendum that would have given Chavez greater constitutional powers, he could wield tremendous influence in the region. Such pragmatism would advance efforts toward placing social responsibilities upon corporations.
Luiz Inàcio Lula da Silva was elected President of Brazil in 2002, the first left-wing Brazilian president since 1970. [FN178] Lula has developed socialist policies “without rejecting the precepts of capitalism.” [FN179] Local-level councils provide input that shape his party's national agenda, and his government supports the Landless Rural Worker's Movement, the world's largest movement of rural poor and a strong advocate of agrarian reform. Lula also has weakened ties with the United States and strengthened ties with other developing countries such as China, India, and South Africa, hoping to counter U.S. influence in the region. [FN180] Thus, although Brazil follows capitalist ideology, its government also is concerned with protecting its citizens' social rights and projecting its socialist perspective into the international community. [FN181] Because a CSR code would help Brazil's government achieve these goals, Lula's rise strengthens the likelihood that the international community will develop a code of corporate social responsibility.
Nestor Kirchner was elected President of Argentina in 2002, following the former president's resignation in 2001 and the country's economic collapse. [FN182] Kirchner initially challenged the IMF, stating that foreign investors would receive only a small portion of the debt Argentina owed them because he wanted to conserve funds for social programs. [FN183] Kirchner later changed his position, announcing Argentina would pay its debt early, and, in January 2006, made the *532 country's last payment. [FN184] Argentina's debt payment showed its willingness to work within the existing international economic system and pleased foreign investors. However, Argentina is wary of neoliberal dictates, opposes a free-trade agreement, and in some instances has aligned closely with Venezuela. [FN185] Thus, Argentina accepts that foreign investment is necessary for long-term economic growth, though it also questions and challenges the neoliberal agenda. The new President of Argentina, Cristina Kirchner, has continued many of the same policies that her husband developed. Because a CSR code could protect Argentines from the activities of MNCs and soften neoliberal policies, the election of Kirchner's government strengthens the likelihood that Argentina will endorse and the international community will develop a CSR code.
Bolivia recently elected Evo Morales as President. During his campaign, Morales promised to depart from twenty years of neoliberal reforms that failed to pull Bolivia from poverty, and to turn towards socialist-oriented policies. [FN186] Since taking office, Morales has nationalized Bolivia's oil and gas industry, ordering troops to occupy foreign-run fields. [FN187] Morales has indicated he may nationalize other sectors as well, such as the mining and forest industries. [FN188] An Amyara Indian and past leader of the coca union, Morales also has championed the rights of the poor and of indigenous people. He has declared that coca, widely used in Bolivia as a mild medicinal herb, should be treated as a legitimate product, rather than as an illicit drug. He also has fought multinationals' exploitation of Bolivia's natural resources. [FN189] Bolivia's ratification of a CSR code that governs the conduct of MNCs operating within its borders would further its socialist objectives while providing it with foreign investment. Accordingly, the election of Morales furthers the likelihood that developed states, developing states, and multinationals will adopt a CSR code.
Other countries in Central and South America also have elected SO leaders in recent years. Ecuador's recently elected president, Rafael Correa, has challenged foreign corporate interests and supported socialist-oriented policies. [FN190] For *533 example, a recent election for Ecuador's constituent assembly gave Correa “a clear mandate to write a new constitution reflecting ‘21st century socialism,” [FN191] and Correa opposes a free trade agreement with the United States. [FN192] In November, 2006, Nicaragua elected Daniel Ortega, an SO politician, leader of the communist Sandinista National Liberation Front during the 1980's, and former president of the county, as its new President. [FN193] Peru, Chile, and Uruguay also have elected centre-left leaders over the past few years. [FN194] The election of these governments should further efforts to develop a CSR code.
Leaders critical of neoliberal prescriptions and supportive of SO policies have come to power in Latin America over the past decade. To varying degrees, they have pursued policies that benefit lower classes and workers, have protected their domestic industries from the influence of foreign MNCs and, in some cases, have nationalized major sectors of their economies. Their efforts to combat the harms that have accompanied the growth of FDI and spread of MNCs in Latin America are consistent with the goals of a CSR code. Accordingly, the rise of SO governments in Latin America, when viewed in light of the trend towards placing greater responsibilities upon corporations, and in light of the adoption of non-binding CSR codes by IGOS and MNCs, should advance development of a code of corporate social responsibility.

IV. Corporate Abuses of Economic and Social Rights, the Failure of the Rule of Law, and Non-binding CSR Measures as Means of Protecting Economic and Social Rights
Multinational corporations have been accused of committing human rights abuses on various occasions and in various countries over the past decade. The international community has drafted several non-binding corporate human rights obligations to address these abuses. Likewise, MNCs voluntarily have drafted and adopted non-binding codes of social conduct. These measures demonstrate that states and corporations worldwide understand that the absence of an enforceable regulatory framework for MNCs has created problems. Even more importantly, these measures show states are willing to place social responsibilities on MNCs, and MNCs are willing to accept such obligations.

A. Concerns Over Rights Abuses and the Failure of the Rule of Law

Multinational corporations have been accused of violating civil and political rights; economic, social, and cultural rights; and environmental rights. For example, it was alleged that U.S. parent company Unocal and its French subsidiary *534 knew the Burmese government was using slave labor, raping women, confiscating property, and uprooting communities in order to assist Unocal's construction of a gas pipeline. [FN195] Local forces in Nigeria hired by Shell carried out large-scale, extra-judicial killings and destroyed villages in order to secure Shell's investment in the country. [FN196] In India, Dabhol Power Corporation (majority owned by Enron) hired police forces who arbitrarily detained non-violent protestors. [FN197] A subcontractor of the Gap in El Salvador employed workers in sweatshop conditions. [FN198] British Petroleum admitted to hiring Columbia's military to protect its oil operations in the country, with disregard for whether the military also would protect basic human rights. [FN199] Children worldwide are engaged in labor. [FN200] Most recently, Blackwater USA has been accused of opening fire without provocation while providing private security services in Iraq, killing 17 citizens. [FN201] Other violations include exposing workers to sulfur dioxide in Peru and dumping waste into the waters of Ecuador and Indonesia. [FN202] These are not isolated instances of misconduct, but rather samples drawn from a larger pool of human rights violations. However, at the present only states, and in a few instances individuals, are treated as having human rights obligations. [FN203]

B. Intergovernmental Organizations' Non-binding Corporate Social Responsibility Measures

Concern over human rights abuses associated with corporate activities has prompted states to develop non-binding CSR codes. The stakeholder governance style of European companies, under which corporations consider relationships with employees, consumers, and the environment when making decisions, has made Europe a natural leader in this process. [FN204] In 1999, the European Parliament adopted a “Code of conduct for European enterprises in developing countries” (the Code). [FN205] While the Code does not establish specific, binding corporate social responsibilities, it does erect the foundation for enforceable regulations. The Code *535 recommends the EU endorse “existing minimum applicable international standards” the ILO, UN, and OECD have set for regulating the social impacts of corporate activities, and calls on the EU to work with these organizations “to ensure more powerful and effective monitoring and enforcement mechanisms.” [FN206] Provisions also stress that an EU CSR code should protect the rights of indigenous peoples and create social labels for products. [FN207] A paper the Commission of European Communities issued in 2001 (the Green Paper) supplements the Code, declaring that “[c]orporate social responsibility should. . . not. . . substitute for social rights or environmental standards, including the development of new. . . legislation.” [FN208]
The United States also has adopted non-binding measures that place greater social responsibilities on corporations. It recently signed the Voluntary Principles on Security and Human Rights (the Voluntary Principles) with the United Kingdom. The Voluntary Principles establish high CSR standards for businesses in the extractive and energy sectors and tout the constructive role businesses can play in protecting social rights. [FN209] The Voluntary Principles ask businesses in the extractive and energy sectors to establish procedures for assessing the risk that the corporation, its agents, or its host country might commit a human rights violation; to ensure that public security forces the government provides for the corporation's benefit do not commit human rights violations; and to “record and report any credible allegations of human rights abuses by public security in their areas of operation to appropriate host government authorities.” [FN210]
More recently, in response to allegations that Blackwater USA opened fire without provocation while providing private security services in Iraq, killing 17 citizens, the U.S. State Department announced new policies that would ensure tighter control of the company. According to these measures, State Department monitors must accompany all Blackwater convoys in and around Baghdad, all Blackwater vehicles must be equipped with State Department video cameras, and recordings of all radio transmissions between Blackwater convoys and military and civilian agencies supervising those convoys in Iraq must be saved. [FN211]
Intergovernmental organizations also have begun to develop non-binding CSR codes. Every OECD country plus nine non-member countries have signed the OECD Guidelines for Multinational Corporations (the Guidelines). The Guidelines encourage corporations to voluntarily adopt certain standards. They suggest that “enterprises should. . . respect the human rights of those affected by their activities consistent with the host government's international obligations and *536 commitments.” [FN212] Enterprises also should “[r]espect” employees' freedom to join trade unions, “[c]ontribute” to the “abolition of child labor”, and end workplace discrimination. [FN213] Other terms enounce high environmental, corruption, and consumer protection standards that corporations should follow. [FN214]
In two separate documents, the Global Compact (the Compact) and the UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights (UN Norms), the United Nations also has announced CSR guidelines. The Compact “asks companies to embrace, support and enact within their sphere of influence” ten core human rights, labor, environmental, and anti-corruption values that are derived from international treaties. [FN215] While the Compact states lofty goals, its vagueness and lack of enforceability undermine its effectiveness. [FN216] These weaknesses, common to CSR codes that IGOs and corporations develop, have strengthened calls for “holding companies accountable through legal rules for the human rights and environmental impact of their policies,” an idea echoed in the UN Norms. [FN217] The UN Norms assert that, although “[s]tates have the primary responsibility. . . to protect human rights, transnational corporations and other business entities, as organs of society” under the Universal Declaration of Human Rights, must also secure human rights “[w]ithin their respective spheres of activity and influence. . ..” [FN218] Using legally binding language, the Norms declare that corporations “shall” ensure non-discriminatory treatment, security of persons, workers' rights, respect for human rights and national sovereignty, and environmental protections. [FN219] However, states have not yet adopted the Norms, and they are not in force. [FN220]
*537 Finally, while the ILO always has protected worker's rights, [FN221] in recent years it has imposed more corporate social responsibilities directly on employers. For example, the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy establishes a comprehensive framework of employment promotion, training, wage, workplace safety and security, and collective bargaining standards for MNCs in developing countries to follow, with the goal of “encourag[ing] the positive contributions which multinational enterprises can make to economic and social progress. . ..” [FN222] More recently adopted, the ILO Declaration on Fundamental Principles and Rights at Work “[d]eclares that all Members. . . have an obligation. . . to respect, to promote and to realize, in good faith the principles concerning the fundamental rights of ILO Conventions. [FN223] These rights include “freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of child labour; and the elimination of discrimination in respect of employment and occupation.” [FN224]
The 1995 Mines Convention requires employers to “eliminate risks” and to “ensure that the mine. . . provide[s] conditions for safe operation and a healthy working environment. [FN225] Recognizing that undeveloped laws in host countries may not protect employees, the Mines Convention also provides that, “where appropriate,” employers must supplement national standards with “technical standards, guidelines or codes of practice.” [FN226] Likewise, under the 2001 Agriculture Convention, employers must “ensure the safety and health of workers in every aspect related to work.”

C. Voluntary Corporate Codes of Conduct

Finally, many corporations have drafted and implemented voluntary, self-imposed codes of conduct. The Sullivan Principles, one of the first CSR codes *538 MNCs voluntarily adopted, was developed to help promote ethical corporate behavior in South Africa during apartheid. [FN227] Since formation of the Sullivan Principles, many MNCs have written and passed their own CSR codes. [FN228] These codes vary greatly. While some merely describe good practices to which the corporation should aspire, others state specific human rights principles.
Royal Dutch Shell's CSR code states broad principles, emphasizing the importance of “be[ing] good neighbors” to local communities, “respect[ing] the human rights of [its] employees”, and “conduct[ing] business as responsible corporate members of society.” [FN229] Similarly, YUM! Brands Inc, owner of Pizza Hut, Taco Bell, and Kentucky Fried Chicken, has a loosely worded Supplier Code of Conduct stating that suppliers “are expected to ensure that their workers have safe and healthy working conditions” and “should not use workers under the legal age for employment for the type of work being performed.” [FN230] Conversely, The Gap's Vendor Code of Conduct contains eight articles that set specific standards for its vendors and factories. Its code outlaws discrimination based on “race, color, gender, nationality, religion, age, maternity, or marital status” in a manner that largely comports with articles 2 and 23 of the Universal Declaration of Human Rights, and prohibits “involuntary labor of any kind” in a manner that largely comports with article 8 of the International Covenant on Civil and Political Rights. [FN231] Although less detailed than The Gap's Code of Vendor Conduct, Adidas' Workplace Standards specifically state that “[b]usiness partners must not employ children who are less than 15 years old” and that “[w]ages must equal or exceed the minimum wage required by law or the prevailing industry wage, whichever is higher.” [FN232]

D. Conclusion

Attention on human rights abuses associated with the activities of multinational corporations has increased over the past decade. Corporations have been censured for participation in and failure to prevent extra-judicial killings, environmental degradation, labor rights violations, and other human rights abuses. *539 In response, IGOs and MNCs have accepted that corporations should be held accountable to citizens of developing countries for their actions and have adopted non-binding CSR measures. The process of developing and analyzing these measures has furthered dialogue on the form a CSR code should take. When viewed in light of the trend towards placing greater responsibilities on corporations, beginning with the FCPA and extending to SOX, and in light of the rise of SO governments in Latin America, the adoption of CSR codes by intergovernmental organizations and MNCs suggests the international community is moving towards developing a binding code of corporate social responsibility.

V. The Final Frontier: A Code of Corporate Social Responsibility
Although the international community is moving toward creating a binding CSR code, designing such a code will be difficult. Various hurdles complicate and block its development. These hurdles include MNCs' ambiguous responsibilities under international law, [FN233] disagreement over the degree to which corporations may pursue goals other than maximizing profit, [FN234] corporate resistance to costly CSR regulations, [FN235] developed states' reluctance to impose CSR regulations on their multinationals, [FN236] many developing states' resistance to measures that might hurt their competitiveness as a destination for FDI vis a vis other states, [FN237] and still other obstacles as well. As countries, IGOs, and scholars debate whether a binding CSR code is both palatable and possible, and disagree over the structure such a code should take, they must balance the competing interests that complicate development a CSR code.
Below, I propose a framework for an enforceable CSR code. This framework does not analyze and resolve every problem countries, corporations, and civil society organizations will encounter as they construct a binding CSR code. However, this framework does present a novel, potentially useful structure for developing and implementing an enforceable code of corporate social responsibility.

A. Weaknesses of Existing Corporate Social Responsibility Measures

The social responsibility measures countries and corporations have adopted in recent years are praiseworthy. They recognize that corporations not only have a responsibility to maximize profits, but also to protect their workers, communities, and surrounding environments. Nonetheless, various weaknesses limit the effectiveness of existing CSR measures.
The voluntary guidelines that states and IGOs have enacted are unenforceable. [FN238] Countries and corporations that sign these measures do not *540 accept binding obligations. Thus, countries and corporations can sign to curry political capital, and then choose the degree to which they will abide by their gratuitous promises. Furthermore, these codes are universal, applying identical standards to all countries regardless of each country's particular culture, needs, and resources. [FN239] This approach eschews reality in favor of utopian, largely western measures that corporations in many states cannot fulfill.
For example, it is naive to believe that foreign subsidiaries of U.S. firms operating in Saudi Arabia could comply with western employment discrimination standards, or that a CSR code could eradicate child labor in Africa and Asia. If employment discrimination were outlawed universally and discrimination against women in Saudi Arabia occurred, the code's enforcement body would face two unappealing choices: it could prosecute the transgressing MNC, offending Saudi sovereignty and values, or it could exculpate the MNC, undermining the enforcement body's authority and legitimacy. [FN240] Furthermore, universal compliance could cause more harm than good. “In the poorest nations an abrupt halt to child labor is likely to cause children to suffer acute poverty and hunger,” and may push children into black market labor and prostitution. [FN241] Placing stringent, western environmental standards on developing countries, standards many developed states have begun to follow only during the last ten years, would protect the environment while retarding economic growth. [FN242]
Corporations' CSR codes pose even greater enforcement difficulties. These guidelines not only are self-drafted and self-adopted, but also self-enforced, leaving corporations to implement, monitor, and enforce them in a perverse concentration of power. [FN243] Moreover, voluntary corporate codes apply only to the small percentage of MNCs that create them, offer a moral platform for egregious rights abuses, [FN244] and either may not reach foreign subsidiaries or only reach foreign subsidiaries. [FN245]

*541 B. Proposed Framework for a Creating a Binding Code of Corporate Social Responsibility

Analysis of the problems with existing CSR measures reveals that, while a CSR code must be legally binding to regulate corporations effectively, a code also must remain flexible to prevent self-implosion. Below, I propose a two-level framework, an implementation process, and an enforcement mechanism that can be used to construct a CSR code that is binding, pliant, and effective at holding MNCs legally accountable for the social impacts of their activities.
1. Level One: Non-Binding, Universal Human Rights Standards
The first level of a CSR code should state baseline, non-binding human rights standards. These standards should be phrased as aspirations that MNCs should strive to follow and states should promote. Level one standards could be modeled after the Global Compact, though should include more details than the Compact's ten general principles. [FN246] Level one should avoid the specific terms and binding language the UN Norms employ. [FN247] Provisions should define common political and bodily (e.g. slavery, rape, extrajudicial killings), labor (e.g. wages, child labor, occupational safety), social (e.g. indigenous people) and environmental (e.g. water and air pollution, damming) human rights standards. Articulating baseline standards will further dialogue and agreement on MNCs' human rights duties and provide structure for developing state-tailored, enforceable responsibilities in the second level of the proposed framework. [FN248]
2. Level Two: Binding, State Specific Codes
Level two should contain the code's substantive, binding terms. Because OECD countries produce a large majority of the world's multinational corporations and FDI, I suggest matching one representative from an OECD country with one representative from each non-OECD, ratifying host state (host state). [FN249] Together, through input from MNCs and civil society, these teams of two should adopt legally binding CSR duties based on level one's standards. These duties should regulate the activities of MNCs operating in each host state and should be tailored to each host state's unique needs, culture, and resources. This level must use enforceable, binding language (“MNCs shall. . .”), clearly informing states and MNCs that noncompliance will result in penalties.
By tailoring binding measures to each country's dynamics, the code would account for different conceptions of an adequate standard of living, discrimination, and bribery. If child labor is needed in a given country to help feed and shelter families, that country's team of two may permit it under certain conditions that *542 perhaps demand parental permission, prohibit overtime, and require MNCs to hire independent managers who monitor the treatment of children. [FN250] Countries plagued by corruption can enact stringent bribery laws while permitting generic occupational safety standards because their governments already address that issue. Thus, industry specific standards are not needed. Instead, country specific standards would provide flexibility while, at the same time, mandatory language would make adherence to these standards legally binding.
Some may contend flexibility will provide a platform for countries to set weak standards. However, a realistic approach tailored to each state's unique history, resources, cultures, and needs is vital; compliance with modest but realizable standards is better than disregard for unattainable ideals. [FN251] Moreover, the code can prevent the watering down of human rights duties by pairing together OECD and host state representatives whose countries have few investment connections, and thus little interest in collusion. Every few years the teams of two should evaluate the customized duties. If tighter child labor laws are needed, the government can enact such measures; if the cost of living has increased, the teams can raise minimum wages.
Others may contend host states competing for FDI would not ratify a code that regulates MNCs more closely and, in turn, hurts their competitiveness vìs a vìs other countries. [FN252] However, a code can encourage ratification through an investment freeze that prohibits ratifying states from making new investments in non-ratifying countries. An investment freeze would goad states that have not ratified the treaty to ratify it through fear of stagnant foreign investment. As more states ratify, non-ratifying states would become increasingly isolated. Faced with either isolation or integration, many states would choose integration and ratify the code knowing their sovereignty, cultures, economy, and needs would not be jeopardized. Still, the details of an investment freeze would need refinement to prevent ratifying states from losing investment opportunities. Perhaps the freeze should be implemented after fifty states have ratified the code, or limited to certain sectors of each non-ratifying state's economy.
3. The Code Committee
An executive body should oversee the code's procedural niceties, implementation, monitoring, and enforcement. I suggest creating a code committee to handle these tasks. The committee could consist of 11 members representing the four major stakeholder groups - corporations, developed countries, developing countries, and civil society - and could be elected by ratifying states every few years, with one vote per state. Four members should hail from OECD states, three from developing states, and two each from MNCs and *543 NGOs. This arrangement would balance power within the committee and prevent an individual stakeholder group from assuming control.
The committee could be charged with various tasks. It could approve all OECD and host state “teams of two” in order to combat collusion between OECD countries and host states and ensure representatives are disinterested. The committee also could field complaints about countries' level two codes, such as allegations that a code is watered down or ignored, and either resolve the issue amicably or refer it to a tribunal. Amendments to procedural matters, such as the process for selecting country representatives, committee members, and tribunal members, and amendments to substantive matters, such as increases in level one's baseline standards, could be approved by a majority vote of the committee. As the code is drafted and implemented, additional responsibilities would be conferred upon the committee.
4. Enforcement
States' level two human rights obligations must be legally binding and enforceable. Unenforceable obligations lack capacity to punish violations and foment change; perhaps galvanizing MNCs around shared norms, but failing to ensure that practice follows speech. [FN253] Empowering a tribunal with enforcement authority will deter violations, promote responsible corporate activity, and compensate the injured. Moreover, consistent and fair enforcement will increase the code's legitimacy, preventing the emasculation and loss of authority that plague many international treaties.
Any entity, including individuals, NGOs, businesses, and states, should be allowed to bring a complaint alleging a corporation violated its level two corporate social responsibilities. The code should require complaints to be brought initially before the representative of the host state where the supposed violation occurred and that representative's OECD counterpart. Because MNCs often do not intend to violate human rights and, especially when violations are committed by contractors or licensees, MNCs may not be aware that violations are occurring, the team of two should discuss the situation with the MNC and attempt to resolve it amicably. [FN254] If the MNC accepts responsibility and works with the team of two in creating and implementing a solution, referral to a tribunal would not be necessary. [FN255] This initial, non-confrontational process is fashioned after the OECD's national contact points system. [FN256] It would be an efficient, cost-effective, and fair method of settling many complaints, especially baseless claims, minor infractions, and violations corporations are willing to address. The country *544 representatives should report to the committee every six months on the corporation's compliance with remedial measures.
In some cases, however, human rights violations may be especially egregious, the corporation may deny responsibility, or the team of two may disagree on an appropriate resolution. An informal enforcement process would not be adequate in such instances. Instead, the complaint should be referred to a tribunal that adjudicates alleged code violations. Each ratifying country could nominate one judge who, after receiving the committee's approval, would be available to serve on tribunals. Seven judges could decide each case by majority vote; perhaps two nominated by the host state, two by the home state, two by the complainant, and one by the MNC, to ensure fair representation. All MNCs incorporated as businesses in ratifying states would be subject to the court's jurisdiction, allowing the court to collect money judgments from MNCs and grant injunctive relief.
Beyond these details, the committee would need to fine tune the judicial process and resolve difficult questions. May the committee or a tribunal override the OECD and host state representatives' enforcement decisions, either placing a claim on the tribunal's docket or releasing a case from tribunal back to the representatives? On how many tribunals may a single judge serve? How should tribunal proceedings be drafted? Would appeals be possible? What types of damages would be available? May tribunals enforce creative remedies, such as requiring a MNC to provide education for child laborers? May tribunals issue advisory opinions?

C. Conclusion

Existing CSR codes have weaknesses, such as a lack of enforceability and a universal application, that limit their effectiveness. These weaknesses require a new framework for structuring a CSR code. The dual level approach presented in this section provides such a framework, placing legally binding duties on corporations while tailoring those duties to each country's individual culture, needs, and resources. The code committee and enforcement mechanisms strengthen the proposed framework's ability to regulate the social effects of corporate activities. Admittedly, this framework is not a panacea and leaves many questions unanswered. However, this section's goal is not to propose a final solution for structuring a CSR code. Rather, it is to contribute to the discussion on how to place corporate social responsibilities on multinational corporations.

VI. Summary and Conclusion
Over the past thirty years, as corporations have amassed wealth and power, the United States and the international community slowly have responded by placing greater responsibilities on corporations. First, a pandemic of corporate bribery prompted the United States to pass the Foreign Corrupt Practices Act in 1977, and to expand the act's jurisdiction and substance in 1998, placing various anti-bribery responsibilities on corporations. The international community followed suit, drafting similar measures. Soon after the U.S. and international community developed anti-corruption measures, corporate governance problems in the United States led to passage of the Sarbanes-Oxley Act. Sarbanes-Oxley places new duties on corporations, tightens regulations, and demands even greater *545 corporate responsibility. The U.K. and the EU also have grown concerned with corporate governance problems, and have adopted measures similar to SOX to solve these problems.
While states worldwide have been placing heightened responsibilities on corporations, governments throughout Latin America have adopted socialist-oriented policies. Their efforts to protect their workers and economies from harms that have accompanied the spread of multinationals in Latin America are consistent with interest in greater corporate social responsibility and a CSR code. At the same time, the international community and multinational corporations have drafted various non-binding measures that are rooted in the FCPA's and SOX's trend towards placing greater responsibilities on corporations, though these measures impose a new type of responsibility on MNCs - social responsibility for employees, communities, the environment, and society.
Although existing CSR measures are commendable, they also are unenforceable. If states, the international community, MNCs, and civil society truly wish to regulate the social problems that have accompanied corporations into developing countries, these stakeholders must work together to overcome weaknesses in existing measures and to develop a binding CSR code. This article offers a dual level framework for constructing such a code that hopefully can contribute to the dialogue on how to ensure that, as corporate power grows, corporate responsibility for workers, communities, and the environment will grow as well.
[FNa1]. Managing Editor, 2006-2007, Denver Journal of International Law and Policy.

[FN1]. See Earl H. Fry, North American Economic Integration: Policy Options, 9 Policy Papers on the Americas 8, 2 (2003) (estimating also that, in 2002, approximately 65,000 multinationals operated 850,000 subsidiaries around the world); Beth Stephens, The Amorality of Profit: Transnational Corporations and Human Rights, 20 Berkeley J. Int'l L. 45, 57 (2002) (highlighting that, while nineteen countries had revenues greater than General Motors and only three corporations were among the world's twenty-eight largest economic entities in 1991, in 2000 only seven countries had revenues greater than General Motors and fifteen corporations were among the world's twenty-eight largest economic entities); Inward FDI Flows by Host Region and Economy (1970-2005), in United Nations Conference on Trade and Development, World Investment Report 2005: Transnational Corporations and the Internationalization of R&D (2005) (reporting that in 1970 FDI worldwide totaled $13.4 billion whereas in 1985 it totaled $58.0 billion and in 2005 totaled $945 billion, down from a high of $ 1.4 trillion in 2000); see also Paul Hirst & Grahame Thompson, Globalization in Question (Polity Press 2d ed. 1999) (discussing how, between 1945 and the present, the world economy has become more closely integrated).

[FN2]. Peter Dicken, Global Shift: Reshaping the Global Economic Map in the 21st Century 26-51 (4th ed. 2003).

[FN3]. See Joseph E. Stiglitz, Globalization and its Discontents 180-94 (2003) (discussing how a transition to market economies has had positive and negative effects on the economies of former communist states); Peter Wilkin, Revising the Democratic Revolution - Into the Americas, 24 Third World Q. 655, 656 (2003). One hundred and thirteen countries joined the World Trade Organization at its inception in 1995. One-hundred fifty states are now members.

[FN4]. Org. Econ. Cooperation & Dev., OECD Benchmark Definition of Foreign Direct Investment 7 (3d ed. 1996), available at http:// www.oecd.org/dataoecd/10/16/2090148.pdf

[FN5]. Inward FDI Flows by Host Region and Economy (1970-2005), supra note 1.

[FN6]. Id.

[FN7]. Dicken, supra note 2, at 56.

[FN8]. Stiglitz, supra note 3, at 248.

[FN9]. Dicken, supra note 2, at 91-93 (discussing how rapid modernization of transportation systems has contributed to economic globalization).

[FN10]. Stiglitz, supra note 3, at 248.

[FN11]. Dicken, supra note 2, at 95.

[FN12]. Id.

[FN13]. While this paper is concerned with the overall growth of FDI as that growth informs corporate power, rather than with an analysis of whether and to what extent FDI is evenly distributed and contributes to or hinders growth in certain countries, it is important to note that FDI flows to developing countries are not even and that growth stemming from the internationalization of corporations has bypassed many countries. While countries such as Thailand, Singapore, and Peru have enjoyed large amounts of capital inflows and impressive growth, countries throughout Africa, Central America, South America, Central Asia, Southeast Asia, the Middle East, and the Pacific Rim have seen relatively stagnant and even decreasing FDI totals, and have not shared in the economic growth and poverty reduction that many other countries have enjoyed. See Inward FDI Flows by Host Region and Economy (1970-2005), supra note 1.

[FN14]. See, e.g., Ronaldo Munck, Neoliberalism, Necessitarianism and Alternatives in Latin America: there is no alternative (TINA)?, 24 Third World Q. 495, 501-03 (2003) (discussing how the collapse of Argentina's economy in 2001 is largely attributable to the neoliberal prescriptions and the rapid influx of multinational corporations through privatization of the economy).

[FN15]. See e.g, James Glanz & Sabrina Tavernise, Security Firm Faces Criminal Charges in Iraq, N.Y. Times, Sept. 23, 2007.

[FN16]. See Sarah M. Hall, Mulitnational Corporations' Post-UNOCAL Liabilities for Violations of International Law, 34 Geo. Wash. Int'l L. Rev. 401, 416-17 (2002); Douglass Cassel, International Security in the Post-Cold War Era: Can International Law Truly Effect Global Political and Economic Stability? Corporate Initiatives: A Second Human Rights Revolution, 19 Fordham Int'l L. J. 1963, 1964-66 (1996); Amartya Sen, Development as Freedom 128 (Anchor Books 1999) (stating that the rationale of the market mechanism, by which corporations operate, is geared to private goods, like clothes and food, rather than public goods, like the environment).

[FN17]. In the United States, for example, from 1897 to 1934 the United States Supreme Court struck down numerous state laws regulating working conditions under the due process clauses of the Fifth and Fourteenth Amendments to the U.S. Constitution. The Supreme Court's rulings held that the states cannot use their police powers to enact legislation that interferes with employers' and employees' rights to contract. As examples, the Supreme Court invalidated a New York statute forbidding employment in bakeries for more than 60 hours a week, struck down labor legislation forbidding discrimination by employers for union activity and prohibiting employers from requiring employees to sign “yellow dog” contracts, and ruled that a federal statute prescribing minimum wages for women violated due process. Many of the issues that the courts refused to address - unhealthy working conditions, discrimination, and wages - are problems plaguing developing countries. In 1937, however, the Court reversed fifty years of precedence. After its landmark opinion in West Coast Hotel Co. v. Parrish, the Supreme Court began upholding as constitutional legislation that protected workers' rights and consumers' rights and that interfered with the previously unfettered rights of business. Statutes that set a state minimum wage for women, prohibited the shipment in interstate commerce of “filled milk”, fixed maximum fees for employment agencies, and regulated opticians were now held to be constitutional. Since 1937, the judiciary and legislators have established huge bodies of law that protect workers and consumers and that regulate corporate power. See Jesse H. Choper et al, Constitutional Law 274-304 (9th ed. West Publishing, 2001).

[FN18]. Andrew T. Guzman, Why LDCs Sign Treaties That Hurt Them: Explaining the Popularity of Bilateral Investment Treaties, 38 Va. J. Int'l L. 639, 671-74 (1998). Discussions on bilateral investment treaties often refer to a “race to the bottom.” Competition over foreign direct investment (FDI) can be fierce. This competition prompts countries to offer increasingly attractive incentives to corporations in order to receive FDI. Thus, country A may allow company XYZ to repatriate profits. Country B may then allow company XYZ to repatriate profits and may lower taxation of profits to 2%. In turn, country A lowers taxation to 1% and frees company XYZ from pollution controls. This competition for FDI via added concessions will continue until the costs of such concessions exceeds their benefits.

[FN19]. See generally Steven R. Ratner, Corporations and Human Rights: A Theory of Legal Responsibility, 111 Yale L.J. 443 (2001).

[FN20]. Id. at 448.

[FN21]. See infra notes 205, 212, 215, 218.

[FN22]. See infra notes 229, 230, 231, 232.

[FN23]. In developing states, corruption's effects are more varied and acute than in developed states. Corruption undermines effective business practices and corrodes political institutions, leading to tainted judiciaries, vote buying, venal police more concerned with collecting bribes than pursuing criminals, and weak rule of law. In-depth discussion of the effects of corruption in developing states is beyond the scope of this paper. For a detailed analysis, see Tim Harford, Why Poor Countries are Poor, 37 Reason 32, 36 (2006); Robert Zuzowski, Corruption in Post-Communist Europe: Immorality Breeds Poverty, 30 J. of Soc. Pol. and Econ. Stud. 9, 12-15 (2005).

[FN24]. See H.R. Rep. No. 95-640, at 4-5 (1977).

[FN25]. Id. at 5.

[FN26]. Steven R. Salbu, Information Technology in the War Against International Bribery and Corruption: The Next Frontier of Institutional Reform, 28 Harv. J. on Legis. 67, 70-71 (2001).

[FN27]. Id. at 70-71.

[FN28]. Cf. Sol Picciotto, Linkages in International Investment Regulation: The Antinomies of the Draft Multilateral Agreement on Investment, 19 U. Pa. J. Int'l Econ. L. 731, 751 (1998) (stating that smaller countries with weaker economies often feel pressured to offer incentives that they cannot afford).

[FN29]. Cf. Guzman, supra note 18, at 671-74. Although Guzman discusses the race to the bottom in the context of bilateral treaties, the concept applies to the spiraling effects of corruption.

[FN30]. H.R. Rep. No. 95-640, at 4

[FN31]. Donald R. Cruver, Complying with the Foreign Corrupt Practices Act: A Guide for U.S. Firms Doing Business in the International Marketplace 4 (2d ed. 1999).

[FN32]. Id. at 4-5; Peter W. Schroth, The United States and the International Bribery Conventions, 50 Am. J. Comp. L. 593, 595-96 (2002).

[FN33]. Cruver, supra note 31, at 3.

[FN34]. Foreign Corrupt Practices and Domestic and Foreign Investment Improved Disclosure Acts of 1977, Report of the Committee on Banking, Housing, and Urban Affairs, S. Rep. No. 95-114, at 4, available at http:// www.usdoj.gov/criminal/fraud/fcpa/1977sen.htm [hereinafter S. Rep. No. 95-114].

[FN35]. Pub L. No. 95-213, 91 Stat. 1494; 15 U.S.C. §§ 78m, 78dd-1, 78dd-2.

[FN36]. Daniel Pines, Amending the Foreign Corrupt Practices Act to Include a Private Right of Action, 82 Cal. L. Rev. 185, 189-92 (1994). The 1988 amendments made several changes to the Act. Some changes moderated the FCPA's anti-bribery restrictions, such as inclusion of an affirmative defense allowing a corporation to avoid prosecution if its payments to a foreign official are allowed under the written laws of that foreign official's country. Other amendments made the Act more punitive, such as a significant fine increase. While these amendments are notable, this paper does not discuss the 1988 amendments. Rather, this paper is concerned with the 1998 amendments, as those amendments not only expanded the FCPA's scope more significantly, but also are the most recent amendments and, as such, inform the trend towards imposing greater responsibilities upon corporations.

[FN37]. 15 U.S.C. §78m(b)(2)(A); see also15 U.S.C. §78m(b)(7) (defining “reasonable detail” as “such level of detail... as would satisfy prudent officials in the conduct of their own affairs.”).

[FN38]. 15 U.S.C. §78c(a)(37).

[FN39]. Cruver, supra note 31, at 26-27.

[FN40]. 15 U.S.C. §78m(b)(2)(B). The Act specifically states that issuers must “provide reasonable assurances that: (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles ...; and (iii) access to assets is permitted only in accordance with management's general or specific authorization ....”

[FN41]. 15 U.S.C. §78m(b)(5).

[FN42]. Schroth, supra note 32, at 599-601 (noting that these are the first laws requiring corporate compliance with corporate governance standards, and giving the SEC the ability to regulate the internal management of domestic corporations); see also H. Lowell Brown, Parent-Subsidiary Liability Under the Foreign Corrupt Practices Act, 50 Baylor L. Rev. 1, 7, 9-16 (1998) (dubbing the FCPA “a significant expansion of the SEC's regulatory authority over the internal management of public corporations subject to the Commission's jurisdiction.”).

[FN43]. SEC v. Montedison, Litigation Release No. 16948, Accounting and Auditing Enforcement Release No. 1380 (March 30, 2001) available at http:// www.sec.gov/litigation/litreleases/lr16948.htm.

[FN44]. Id.

[FN45]. Id.

[FN46]. SEC v. Triton Energy Corp., Litiation Release No. 15266, Accounting and Auditing Enforcement Release No. 890 (Feb. 27, 1997) available at http://www.sec.gov/litigation/litreleases/lr15266.txt.

[FN47]. Id.

[FN48]. In re Chiquita Brands International, Inc., FCPA Civil Enforcement Actions by the Securities and Exchange Commission at 3, available at http:// www.usdoj.gov/criminal/fraud/fcpa/append/ix/appendixb.pdf.

[FN49]. Stuart H. Deming, The Foreign Corrupt Practices Act and the New International Norms 7 (ABA Publishing, 2005).

[FN50]. 15 U.S.C. §78dd-1(a).

[FN51]. Deming, supra note 49, at 8-9.

[FN52]. Id. at 9.

[FN53]. 15 U.S.C. §§ 78dd-1(a), 78dd-2(a).

[FN54]. United States v. Liebo, 923 F.2d 1308, 1312 (8th Cir. 1991).

[FN55]. 15 U.S.C. §§ 78dd-1(a), 78dd-2(a).

[FN56]. Schmuck v. United States, 489 U.S. 705, 710-11 (1989).

[FN57]. Alder v. Federal Republic of Nigeria, 1998 U.S. Dist. LEXIS 23419 (S.D. Cal. 1998), affirmed 219 F.3d 869, 878 (9th Cir. 2000).

[FN58]. 15 U.S.C. §§ 78dd-1(a)(1)(2), 78dd-2(a)(1)(2).

[FN59]. 15 U.S.C. §§ 78dd-1(a)(3), 78dd-2(a)(3).

[FN60]. 15 U.S.C. §§ 78dd-1(h)(3), 78dd-2(h)(3).

[FN61]. SEC v. ABB Ltd, Complaint at 2, July 6, 2004, available at http:// sec.gov/litigation/complaints/comp18775.pdf.

[FN62]. Id.

[FN63]. SEC Sues ABB Ltd. in Foreign Bribery Case, Litigation Release No. 18775, July 6, 2004, available at http:// sec.gov/litigation/litreleases/lr18775.htm.

[FN64]. Deming, supra note 49, at 33.

[FN65]. 15 U.S.C. §§ 78dd-1(a), 78dd-2(a).

[FN66]. Deming, supra note 49, at 14.

[FN67]. 15 U.S.C. §§ 78dd-1(a),

Selengkapnya...... Posted under | NO COMMENTS

77 Fordham L. Rev. 1269

Fordham Law Review
March, 2009

Symposium: The Lawyer's Role in a Contemporary Democracy
Promoting the Rule of Law

*1269 THE CORPORATE LAWYER'S ROLE IN A CONTEMPORARY DEMOCRACY


Colin Marks [FNa1]
Nancy B. Rapoport [FNaa1]

Copyright (c) 2009 Fordham Law Review; Colin Marks; Nancy B. Rapoport

Introduction
The study of the effect that corporations have on society, including the sometimes negative impact of certain corporate activities, is not novel. As early as the 1930s, Adolph Berle and Edwin Merrick Dodd debated the idea that a business might wish to aspire to a higher goal than simply to turn a profit. Berle took the position that a corporation owes only a duty to the shareholders to maximize wealth, and Dodd suggested that the corporation should serve a social purpose as well. [FN1] Dodd's side of this debate has evolved into a concept known as Corporate Social Responsibility (CSR). Sometimes, when people refer to CSR, they are speaking of a broad responsibility that a corporation may have to give back to society--to be a good corporate citizen.
At first blush, the lawyer's role in CSR may seem to be a simple one: to ensure that the business client complies with the law. But such a blunt statement oversimplifies the lawyer's role in the corporate client's decision-making process.
*1270 To illustrate this complexity, consider the recent corporate buyout of Anheuser-Busch Companies (AB) by InBev, SA (InBev). In June of 2008, InBev tendered an offer to AB to buy shares at $65 per share. [FN2] This amount was not only well above what AB was trading for at the time (thirty percent higher than the stock traded in mid-May of 2008), [FN3] but also was more than the price at which AB had ever been traded. [FN4] Despite the high bid, however, AB's board refused to accept the offer. [FN5] AB's articulated reason was that the offer undervalued AB's stock. [FN6] It is also possible that AB may have refused in part over concerns about the effect that such a buyout might have on AB's corporate culture and nonshareholder stakeholders. [FN7]
The local community in St. Louis, Missouri, AB's corporate headquarters, was deeply concerned over the effect that a buyout by InBev might have. [FN8] According to Fortune magazine, AB is one of the most admired companies in the United States, ranking number one in the beverage industry in all of the considered categories, including people management, social responsibility, and quality of management. [FN9] InBev, however, is known as a company that is good at cutting expenses to strengthen the bottom line, which many feared might mean lost jobs and benefits. [FN10] AB also is a very large sponsor of numerous athletic events and *1271 leagues, spending $218 million on sports advertising in 2007 (over $100 million more than its next competitor, Coors). [FN11] Though such expenses could be justified in terms of marketing and public relations, such a large budget would be a likely candidate for reduction by InBev. [FN12]
The refusal by AB's board to accept the offer led to a firestorm of legal activity. InBev quickly took actions to begin a hostile takeover, moving to remove the current AB board and replace it with a board that was more favorable to an InBev buyout. [FN13] AB instituted its own legal maneuvers, accusing InBev of making materially misleading statements about how the deal would be financed and seeking to block the buyout attempt under federal law, claiming that InBev's interests in Cuba prohibited it from owning and operating AB in the United States. [FN14]
Obviously, AB's decision to turn down the offer had legal implications that surely required the involvement of legal counsel, both before and after the rejection of InBev's offer. [FN15] Furthermore, AB announced that it was going to undertake a series of actions, including offering early retirement to a number of employees, to help strengthen its own bottom line as a defense to the buyout [FN16]--actions that also likely required the assistance of counsel. Ultimately, InBev returned with an offer of $70 per share, an offer that proved too good to refuse. AB announced, on July 14, 2008, that it was accepting the offer. [FN17] Legal obstacles may remain, as the buyout could still face antitrust obstacles in both the United States and Europe, although this seems unlikely. [FN18]
Whether AB's initial refusal was based upon a pure desire to drive up the offer from InBev, or whether stakeholder and corporate culture concerns *1272 played a role as well, is difficult to discern. Regardless, this real-life example raises the question of how inextricably intertwined businesses are with their legal counsel. If we assume that some businesses do consider nonshareholder stakeholders in their decision-making processes, then attorneys should also play a role in how those interests are considered.
This essay tackles the overlap between CSR and a lawyer's ethical obligations in a democracy. First, we attempt to describe the various conceptualizations of CSR--a term that is often nebulous and that has been assigned multiple meanings by different people. After describing the various approaches to CSR, we move forward with a tripartite approach, suggesting that CSR actually entails three different responsibilities: an economic responsibility, a legal responsibility, and an ethical responsibility. We then conclude by discussing the lawyer's role in a business's corporate ethical responsibility and how that intersects with the other two responsibilities, advocating for a more robust and substantial role by the corporate attorney in steering the corporation away from unethical conduct that ultimately is not in the corporation's long-term financial interests.

I. An Overview of CSR
Before we discuss CSR and its relationship to the attorney's role in a democracy, we should clarify what we mean by CSR. In our own research, we've discovered that CSR means different things to different people. [FN19] For instance, economists, business management academics, legal academics, and entities in the European community all have assigned varying meanings to CSR. CSR has thus been the topic of vigorous debates regarding what responsibilities, if any, a corporation has to society. Some hold the view that the only responsibility corporate directors have is to make a profit for their shareholders. Milton Friedman is one of the most famous proponents of this view, having explained that, in a free economy, “there is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud.” [FN20] An extreme, anti-Friedman *1273 approach, then, would argue that corporations, which owe their very existence, including such identifying characteristics as limited liability, to society, must therefore also owe a reciprocal duty to nonshareholders. [FN21]

A. Business Management Literature and CSR

Business management literature provides a good starting point for developing a useful definition of CSR, because the subject has been explored extensively in a number of articles. [FN22] Generally speaking, the business management literature defines CSR as a business's responsibility to the wider societal good beyond, but in addition to, the business's economic performance. [FN23] Professor Archie Carroll provides an oft-cited conceptualization of CSR in business management literature. [FN24] He categorizes CSR into four social responsibilities that businesses have to society: economic responsibilities, legal responsibilities, ethical responsibilities, and discretionary (sometimes called philanthropic) responsibilities. [FN25] The first category, economic responsibility, represents the basic responsibility of a business to be profitable. [FN26] The second category, legal responsibility, represents the responsibility of a business to operate within the “framework of legal requirements.” [FN27] As Carroll explains, “[j]ust as society has sanctioned the economic system by permitting business to assume the productive role, as a partial fulfillment of the ‘social contract,’ it has also laid down the ground rules--the laws and regulations--under which business is expected to operate.” [FN28] The third *1274 category, ethical responsibility, represents the “responsibility to do what is right, just, and fair.” [FN29] Though ethical norms are embodied in both the economic and legal responsibilities, the ethical responsibility category is meant to embody society's “expectations of business over and above [any] legal requirements.” [FN30] The final, and perhaps most controversial, category, discretionary or philanthropic responsibility, represents society's expectation that a business should assume social roles above and beyond its economic, legal, and ethical responsibilities. [FN31] Examples of fulfilling a philanthropic responsibility could include making contributions to “various kinds of social, educational, recreational, or cultural purposes.” [FN32] Carroll describes activities in this category as including “making philanthropic contributions, conducting in-house programs for drug abusers, training the hardcore unemployed, or providing day-care centers for working mothers.” [FN33] Because all of these examples are activities that would not be unethical per se if a business did not engage in them, they are thus discretionary. [FN34]
Under Carroll's conceptualization, these categories are not mutually exclusive and are ordered by their “fundamental role in the evolution of importance.” [FN35] One way to visualize this construct is as a pyramid, with economic responsibilities at the bottom, topped by legal responsibilities, then by ethical responsibilities, and finally, by discretionary responsibilities at the very top. [FN36] Other conceptual models have arranged these categories into other constructs, such as intersecting circles, where the categories overlap to some degree, or concentric circles, with economic responsibilities as the core (center) value circle and the other responsibilities--legal, ethical, and philanthropic--moving out to ever-wider circles wrapping around [FN37] the core of economic responsibilities. [FN38]
Of all of the categories, the philanthropic responsibility is often one of the most debated among scholars. [FN39] As Carroll acknowledges, it is somewhat inaccurate to label something both as discretionary and as a responsibility. [FN40] Carroll maintains this category as a part of CSR, however, because he views society as expecting businesses to engage in such discretionary activities. [FN41] Other commentators disagree on the discretionary nature of philanthropic activities and instead place them under the economic and ethical responsibilities or as an integral part, rather than a discretionary *1275 part, of CSR. [FN42] Thus, the debate appears to center on whether CSR only includes, as its essential parts, the economic, legal, and ethical responsibilities, or whether CSR should also include philanthropic activities. [FN43] The first view seems consistent with the Friedman view that the responsibility of business is to make money, within the limits of the law and ethical custom. [FN44]
Friedman himself seems to reject the concept of philanthropic/discretionary giving as essentially undemocratic. [FN45] He argues that when a corporate executive chooses to spend corporate funds on charity, that executive is spending someone else's money--the shareholders' money, via their interest in the corporation--for a general social interest. [FN46] By spending the shareholders' money, that executive essentially imposes a tax either on the customers, through higher prices, or on its own employees in the form of lower wages. [FN47] According to Friedman, this imposition of taxes and expenditure of proceeds is a government function that should be left to the legislature to impose. [FN48] Carroll's hierarchy does not take this position but simply leaves philanthropy as a discretionary, rather than essential, part of CSR.
This optional view of philanthropic giving contrasts with the second view of CSR, which is embodied in a growing trend suggesting that businesses have a responsibility beyond their legal and ethical responsibilities. [FN49] As one commentator notes, “[p]hilanthropy, which is usually understood as exceeding this minimum, appears to serve as the distinguishing point between the neoclassical economic position and the new widely accepted notion of corporate citizenship, which highlights the importance of corporate giving.” [FN50] Thus, this newer line of thinking appears to embrace discretionary giving as an essential part of CSR that may possibly be subsumed under the other responsibilities. [FN51]

*1276 B. The EU's CSR Framework

The European Union (EU) has likewise struggled with the concept of CSR. However, the EU provided a starting point for the discussion when the European Commission [FN52] issued a “Green Paper” regarding the promotion of a European framework for corporate social responsibility in 2001. [FN53] Beginning in the early 1990s, the European Commission started to take an active interest in CSR. [FN54] In March of 2000, the EU's Council of Ministers, meeting in Lisbon, made a renewed appeal for businesses to adopt a more sustainable approach to CSR. [FN55] The subsequent “Green Paper,” which was released in 2001, was the product of the European Commission and is officially titled Promoting a European Framework for Corporate Social Responsibility. [FN56] The purpose of the Green Paper was to stimulate debate within the European community on how the EU “could promote [CSR] at both the European and international level.” [FN57] To accomplish this objective, the Commission provided a definition of CSR and then asked various stakeholders to answer several key questions. [FN58]
The Green Paper defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis,” and further clarifies that “[b]eing socially responsible means not only fulfilling legal expectations, but also going beyond compliance and investing ‘more’ into human capital, the environment and the relations with stakeholders.” [FN59] The *1277 Green Paper then goes on to outline the various ways in which a business can practice CSR, such as acting responsibly toward its own employees, [FN60] managing its environmental impact and how it uses natural resources, [FN61] and recognizing international human rights. [FN62] The Green Paper then describes ways in which companies can implement and report CSR. [FN63] The Green Paper also asks how the EU could promote the development of CSR at the European and international levels and what the best means are “to develop, evaluate and ensure the effectiveness and reliability of corporate social responsibility instruments such as codes of conduct, social reporting and auditing, social and eco-labels, [and] socially responsible investing.” [FN64] The Commission received over 250 responses to the 2001 Green Paper from business entities, trade unions, civil society organizations, and others, with approximately half of the responses coming from the businesses themselves. [FN65]
Of particular interest to our discussion is the definition provided by the Green Paper, which seems to confine CSR to only voluntary activities. Thus, if we were to reference Carroll's four categories, the Green Paper definition would seem to exclude the economic and legal categories from CSR as being required and would only consider the ethical and philanthropic/discretionary categories as involving CSR. The responses *1278 received to the Green Paper seem to reinforce this perception of what CSR entails--as the Commission described in a follow-up communication regarding the Green Paper:
Despite the wide spectrum of approaches to CSR, there is large consensus on its main features:
• CSR is behaviour by businesses over and above legal requirements, voluntarily adopted because businesses deem it to be in their long-term interest;
• CSR is intrinsically linked to the concept of sustainable development: businesses need to integrate the economic, social and environmental impact in their operations;
• CSR is not an optional “add-on” to business core activities--but about the way in which businesses are managed. [FN66]
This “consensus” provides a somewhat schizophrenic view of CSR. On the one hand, it reinforces the concept of CSR as being voluntary in nature, which would contrast with the Carroll conceptualization of CSR as encompassing legal responsibilities. But the consensus view also emphasizes the need for companies to use CSR to create an economically sustainable operation, which would seem to be consistent with Carroll's view that economic responsibilities are a part of CSR. It may be, therefore, that the EU community views legal requirements as a “given,” but that it views CSR as integrating and balancing the remaining responsibilities--economic, ethical, and philanthropic--on a voluntary, but in the long-term essential, basis. [FN67]
Rather than debating the precise definition of CSR, however, the debate within the EU CSR arena has instead focused on voluntary versus mandatory CSR. Overwhelmingly, corporations and business entities favor making CSR activities and reporting voluntary, but many other stakeholders, such as NGOs and trade unions, desire a more regulated framework. [FN68] The European Commission has since released two follow-up documents to the 2001 Green Paper: one in 2002 [FN69] and another in 2006. [FN70] Each follow-up expressed a desire to increase communication between *1279 corporations and stakeholders, as well as to increase transparency in CSR initiatives, but neither has adopted a regulatory framework. [FN71] The Commission, however, has encouraged establishing codes of conduct and adherence by companies to standards such as the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises. [FN72]

C. Legal Scholarship and CSR

Legal scholars have similarly struggled with defining CSR. Underlying these discussions of CSR is a basic debate over how one should approach corporate law, which is framed by two opposing views. [FN73] On the one end of the spectrum is the camp that would appear to have a Friedmanesque approach to CSR, i.e., that the corporation is in itself a social good and that the corporation does good by making money for its shareholders. [FN74] This first approach, sometimes referred to as a shareholder primacy norm, is consistent with the property or contract model of the corporation, in which the corporation is viewed as the property of the shareholders, and the purpose of the corporation is predominantly to increase the shareholders' wealth. [FN75] Though proponents of this view rarely define the view as a form of CSR, reflecting back upon Carroll's categories, the shareholder primacy norm would seem to be consistent with the economic and legal categories *1280 of CSR--with one caveat: some scholars, such as Frank H. Easterbrook, assert that even the legal responsibility is tempered by economic concerns. Indeed, in a 1982 article by Easterbrook and Daniel R. Fischel, they urge in a footnote that
managers do not have an ethical duty to obey economic regulatory laws just because the laws exist. They must determine the importance of these laws. The penalties Congress names for disobedience are a measure of how much it wants firms to sacrifice in order to adhere to the rules; the idea of optimal sanctions is based on the supposition that managers not only may but also should violate the rules when it is profitable to do so. [FN76]
Although not all proponents of this first approach would agree with Easterbrook and Fischel's statement about obeying only important laws, that statement nonetheless highlights the importance of the shareholders' interests within the shareholder primacy norm.
The second view is of the corporation as a social institution “tinged with a public purpose.” [FN77] This approach is concerned with not just the shareholders but also the nonshareholder stakeholders--a broad stakeholder model. [FN78] In the stakeholder model, corporations don't have an obligation to maximize societal wealth, [FN79] but they do have a duty to be good corporate citizens. [FN80] This more “progressive view” of corporate law is sometimes used interchangeably among legal scholars with the term “CSR.” [FN81] Returning to Carroll's categories, the stakeholder model would seem to embrace the ethical and, perhaps, the philanthropic categories of CSR as its hallmarks, but like the Green Paper's definition, the model seems also to assume legal compliance without contemplating that compliance as a category of CSR.

*1281 II. CSR: The Lawyer's Role and Corporate Ethical Responsibility
As we see from the above discussion, CSR is not easy to define. For the purposes of this essay, however, we've chosen to adopt a framework similar to Carroll's categorical approach to CSR, but with some important distinctions. First, we've chosen to avoid using the term “category,” as that term indicates a separation of components, as though each category could exist on its own. That view is inconsistent with our own view of CSR. Also, though we define CSR as including legal, economic, and ethical responsibilities, we exclude any separate philanthropic responsibility. [FN82] Finally, rather than a pyramid structure in which certain categories are seen as more important than others, we conceptualize each responsibility as components that interact with each other in order to create a profitable and sustainable business.

A. A Tripartite Approach to CSR

The first responsibility that we discuss--economic responsibility--stems from the recognition that businesses are essentially good for society, placing goods and services into the market for consumers at competitive prices. [FN83] It also stems from the recognition that, unless a business is profitable, it is not sustainable and thus is incapable of helping society by providing further goods or services, by providing jobs to a community, or through other methods such as charitable donations. [FN84] We don't mean to say, however, that a business's economic responsibility eclipses its other responsibilities. As we discuss below, when long-term viability is sacrificed for short-term profits, the result is self-destructive and in fact counter to the corporation's actual economic responsibility. One way of checking to make sure that long-term economic responsibility is being satisfied, then, is to balance it with legal and ethical responsibilities.
The legal responsibility recognizes that society expects corporations, as “people” in the legal sense, to be just as bound to the rules as are natural people. [FN85] As Carroll has summarized, businesses exist because society has sanctioned their existence, and thus part of this “social contract” is that businesses in turn have an obligation to operate within the legal framework *1282 that society has created. [FN86] Taking a formalistic view of the purposes of a corporation, one could say that because the broadest statement of corporate purpose that can be claimed is to conduct “any lawful business,” to conduct illegal activity would be ultra vires. [FN87] Considering the bad press, legal fees, fines, and loss of stock value that can accompany a corporate scandal, legal responsibility is a corporate responsibility if for no other reason than that the failure to attend to legal responsibilities can adversely affect the corporation's economic responsibilities. But the legal responsibility is much more nuanced than mere legal compliance, as it also entails the possible avoidance of litigation (which also clearly overlaps with the economic and ethical responsibilities) as well as shaping the law through lobbying efforts. [FN88]
Finally, the ethical responsibility component recognizes that corporations, just like natural people, should act above bare legal obligations. [FN89] This concept is often embodied within “norms [that] have been accepted by the organization, the industry, the profession, or society as necessary for the proper functioning of business.” [FN90] The ethical responsibility also recognizes that corporations should act morally, as judged by how society views their actions and with a concern for nonshareholder stakeholders. [FN91] A caveat here: we are not adopting a full-fledged stakeholder norm by including an overarching, specific ethical responsibility within this definition of CSR. We can't: neither of us is convinced, for reasons that we discuss below, that there is any way of defining an appropriate “ethical” responsibility that would fit all corporations. Economic, legal, and ethical responsibilities all interact with one another; indeed, any one of these responsibilities, taken alone and to the extreme, could demonstrate poor CSR. [FN92]
*1283 We tried to come up with a diagram to illustrate our view that CSR must balance these three equally weighted components, and (after rejecting pie charts, triangles, and other easy-to-draw diagrams) we came up with the image on the following page (the CSR “circle”), with each component a necessary part of the whole. [FN93]
Here's how that three-part interaction might work. Take, for example, the corporation that is so obsessed with creating shareholder wealth that it breaks the law and stretches loopholes beyond any intended legitimate use, just for the purpose of increasing short-term profits. If such behavior reminds you of Enron (or any one of a dozen or more corporate scandals), we're not surprised. That's exactly what Enron did, by--among other things--successfully lobbying the SEC to approve mark-to-market accounting for Enron's use and then contorting and manipulating that normally legitimate method of accounting in ways that ultimately misled its investors. [FN94]
The trick, of course, lies in balancing the ethical responsibilities of CSR with the legal and economic responsibilities. Taken to the extreme, a corporate director or manager could--while flying the flag of CSR--improperly use corporate monies to simply help his or her own pet charities, *1284 with little to no benefit to the economic welfare of the business. [FN95] The larger the business, of course, the more owners there are who could be adversely affected. [FN96]
TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE
So where does the corporation's lawyer come in? Certainly, the chief legal officer can, should, and will influence the corporation's legal decisions. [FN97] We believe, though, that lawyers should take on more responsibility in terms of influencing the corporation's ethical decisions--a move that we'd like to encourage. [FN98]

B. CER: Corporate Ethical Responsibility and the Bare Minimum

Let's rule out the idea that CSR includes the requirement that corporations must reach certain sky-high ethical standards. For one thing, no one could ever agree on what lofty ethical aspirations a given corporation should achieve. [FN99] Should it apply the principles espoused by *1285 the CEO? By the board of directors? By a majority shareholder? [FN100] (And don't get us started on other types of business organizations--our thoughts about ethical compliance apply to them, too.) Even if a corporation could agree on a particular set of ethical principles during a specific period, what would happen when the composition of the officers, directors, or majority shareholders changed?
Perhaps, instead of staking out the high ground of ethical aspirations, we should settle for staking out the floor of permissible corporate behavior. Even though we can't agree on how the “perfectly ethical” corporation might behave, we certainly know how the minimally ethical corporation should behave. It shouldn't bend the interpretation of laws past the breaking point of believability. It shouldn't create Rube-Goldberg-esque deals of impenetrable complexity in order to obfuscate a transaction's true purpose, especially if that purpose borders on the illegal. In other words, it shouldn't try to stay so close to the line between legal and illegal that its shadow falls completely on the illegal side of the line.
The profession has tried setting floors and ceilings before, in other circumstances. The American Bar Association's (ABA) Model Code of Professional Responsibility devised Canons (general guiding principles), Ethical Considerations (aspirational goals), and Disciplinary Rules (floors of acceptable conduct). [FN101] Of these three layers of guidance, only the Disciplinary Rules were actually enforceable. [FN102]
Admittedly, the ABA moved on to the Model Rules of Professional Conduct, [FN103] in part because the tripartite formula of Canons, Ethical Considerations, and Disciplinary Rules was clunky and somewhat confusing. [FN104] The Model Rules, unlike the Model Code, have a single set of principles, which make them easier to understand and enforce. The comments to the Rules interpret the Rules and also provide some aspirational guidelines as well. [FN105]
*1286 What if we were to enact a Model Code of Ethics for Corporations? Individual corporations don't have a problem enacting codes of conduct for their employees, [FN106] although some of them have a devil of a time actually following their own codes of conduct. [FN107] We'll leave a Model Code of Ethics for another day (and another article), but even if a corporation adopted such a code, the Chief Legal Officer inside the corporation would still have to find a way to enforce that code--and there's the rub. Everything still comes down to a concept with which lawyers have been struggling for eons: what, exactly, are the limits of a lawyer's duty to the client?
In the post-Enron et al. world of corporate scandals, it's clear that many of the lawyers involved in those scandals believed that their jobs were to be the corporations' hired guns. [FN108] The businesses wanted to push the envelope (or rip the envelope wide open), and the lawyers did their best to facilitate what the clients wanted. [FN109] Many of the deals were legal but bad for business in the long run. And some of the deals didn't even pass the blush test of being legal, at least in retrospect.
These lawyers--all of whom are very smart people--were bright enough that they could have understood, as an intellectual matter, when they were coming close to the ethical line (or crossing over it) at a client's behest. [FN110] Lawyers now facilitate deals to the point that complicated deals require lawyer involvement. [FN111] We abandoned the concept of lawyer independence *1287 (the professional separation of lawyer from client) a long time ago, moving instead to “lawyer interdependence,” [FN112] as Richard Painter so aptly describes the modern practice of corporate law. Modern deals need a lawyer's touch. [FN113]
We think that the move from independence to interdependence has been triggered in part by competition and fear. Over the past several decades, the cost of running large law firms has increased exponentially. At these types of firms, associate salaries have skyrocketed, [FN114] nonperforming partners have been eased out or even thrown out, [FN115] and some business, including some legal research work, has been outsourced to other countries, where the work can be performed much less expensively. [FN116] The largest firms are virtually indistinguishable from each other in terms of pedigree of lawyers, quality of work product, and multiplicity of office locations. Therefore, one way in which they can compete is by their willingness to yield to their clients' demands. In other words, if “Law Firm A” refuses to issue an opinion letter or structure a deal the way that BigCorp wants it, “Law Firm B” will be happy to steal BigCorp away by finding a way to do what BigCorp “needs.” This increased competition for clients, in a market with some (not yet reached) upper limit on hourly rates, will tempt lawyers to talk themselves into compromising their boundaries. [FN117] As William Butler Yeats has said, “[t]he centre cannot hold.” [FN118]
*1288 Inside counsel face their own particular pressures. Depending on to whom an inside lawyer reports, he or she is likely to face substantial push back from the management in the business unit for any naysaying of potential business deals. Many within the corporation believe that it's not the lawyer's job to tell them “no,” but to help them make a deal happen, no matter how questionable the deal may be. [FN119] Unlike outside counsel, who have the chance to diversify their client base, inside counsel have but one client. Therefore, strong push back and alienation from the client means, at best, a miserable work environment and, at worst, withdrawal (or firing) and unemployment. [FN120]
To make matters worse, inside and outside counsel are humans (all lawyer jokes aside); as such, they're subject to various cognitive errors that allow them to talk themselves into making bad decisions. Not only are lawyers subject to cognitive dissonance errors (which make them more susceptible to subconsciously persuading themselves that it's “right” for them to do something that they know is wrong), [FN121] but they are also subject to errors based on social pressure (which makes them more susceptible to going along with an obviously incorrect decision if the rest of the group also chooses the incorrect decision) [FN122] and errors based on the idea that “someone else” will take care of ferreting out any bad acts (the “bystander effect”). [FN123] Therefore, as pressure ramps up for lawyers to get deals done, *1289 or get the stock price up, or meet analysts' expectations, this set of cognitive errors will bear on the lawyers' facilitation of any questionable ethical decisions that the corporations may want to make.

C. How Lawyers Could Set the Tone for Better Corporate Ethical Decision Making

1. Improving the Reporting Structure to Safeguard Corporate Ethical Responsibility
We don't want to sound too pessimistic about the idea that corporations could make better ethical decisions--or about the idea that lawyers could play a significant role in such decision making. Both of us believe that lawyers could be one source of safeguarding the corporate “conscience.” (We don't, however, want to let the board of directors off the hook for safeguarding that conscience.) But if lawyers are to assist in safeguarding the corporate conscience, they must become more central to the corporate “core” for decision-making purposes. In that regard, we've found one approach useful in thinking about how to make lawyers more central.
In their book Reframing Organizations: Artistry, Choice, and Leadership, [FN124] Lee Bolman and Terry Deal suggest that thorny problems are best examined from four different “frames”: the structural frame, the human resources frame, the political frame, and the symbolic frame. Think of the structural frame as the “organizational chart” frame--who reports to whom. [FN125] The human resources frame involves relationships: how people feel about where they work and what they're doing. [FN126] The political frame involves knowing the people who know what make things tick (and where the bodies are buried). [FN127] The symbolic frame is the story of the organization: its myths and culture. [FN128]
Using the Bolman-Deal frames, then, we can get a feel for what types of access a lawyer would need in order to have some real input into a *1290 corporation's decisions. [FN129] Structurally, she would have to report to people with power--but she would have to have enough power of her own to be able to stand up to the business side of the corporation when the business side wanted to step over the line, legally or ethically. [FN130] (Our guess is that the Chief Legal Officer would need to have direct access to the board of directors, and the board would have to be able to do a good job of supervising the company's actions--an issue which is increasingly in doubt. [FN131]) From a human resources frame and from a symbolic frame, the Chief Legal Officer would have to be able to set a tone where the business people know that the corporation doesn't want them even to come “close to the line.” And from a political frame, the Chief Legal Officer would need to have the ear (and the support) of the key players in order to make sure that her opinion as to the merits of proposed decisions carried significant weight.
Without paying attention to each of these four frames, a lawyer's advice could easily get lost in the shuffle of everyday corporate life. Reporting structures need to solidify a lawyer's ability to give advice. Without giving a lawyer the power structure to make sure her advice gets real consideration, the miscreant corporation (and the corporation focused only on short-term gains) will be able to marginalize the lawyer's advice. Even a good corporation with well-meaning officers and directors will push back on legal advice from time to time. The question is not whether officers and directors will push back. The question is what the lawyer can do about the anticipated push back. How can the lawyer help the corporation stay on the right side of the law?
There are always line-drawing problems when it comes to giving legal advice. For one thing, a client may want to “test” the line or urge that the line be moved in some way. [FN132] For another thing, the line may not be well-*1291 defined at all when the client wants to take a particular action. And, of course, some clients (and some lawyers) couldn't even locate the line between right and wrong with a map and a divining rod. For this last group (those who couldn't find the line if it were directly in front of them and labeled “LINE IS HERE”), we propose a bright-line test for legal advice: if the advice uses the word “technically” in order to be accurate, then that advice is far too close to the line for comfort. So, for example, if an opinion letter suggests that a transaction will comply with the relevant regulations only if the words are read out of context and counter to the purpose of the regulations, that opinion letter likely will have some variant of the word “technically” in it, and it is too close to the line.
Bob Gordon, during this Symposium, pointed out that lawyers' training pushes them in the direction of softening any lines that might exist, either by construing the “line” to allow the desired behavior or by lobbying for (or assisting the lobby in) changing the line to permit the desired behavior. [FN133] After all, the downside risk of the client getting caught for misbehavior is not particularly large, and the upside risk is that the client gets what it wants. [FN134]
2. Fine-Tuning the Incentives for Corporate Ethical Responsibility
Even without the Bolman-Deal frames analysis, one important factor in shaping behavior is the use of incentives. Organizations reinforce decisions by rewarding certain kinds of decisions and punishing others. Some of those incentives will lead to appropriate--and even innovative--behavior; others, unfortunately, will lead to dysfunctional behavior. For example, Enron rewarded the decisions of electricity traders to ship power out of California, only to import power in at higher prices later, by giving the traders large bonuses and significant power during the semi-annual performance reviews (known around Enron as “rank and yank.”) [FN135] Jeff Skilling's appeal to the U.S. Court of Appeals for the Fifth Circuit hinged in part on his argument that his decisions at Enron were tailored to fit Enron's *1292 goals and not to steal from Enron in any way. [FN136] The old saying of “garbage in, garbage out” works as well for corporate behavior as it does for computer programming.
If we could get the “garbage” out of corporate decision making, perhaps we could come up with a reasonable code of conduct--one that sets forth minimally acceptable ethical behavior. Assuming that the Chief Legal Officer had the status and power to enforce that code, [FN137] what would such a code look like? For one thing, the code would stress that no one, from the highest-ranking employee on down, would come even close to the line (ethically or legally). [FN138] For another, the corporation would enforce the code consistently: no exceptions for key players (or anyone else). [FN139] And the enforcement would be public, so that all of the employees would understand what happened when someone played too close to the line. Just as important, employees who made ethically good choices would receive public rewards. An organization's culture is formed by both positive and negative reinforcement.
Few corporations, though, could achieve this ideal world. The less-than-ideal world--the one in which we live--poses the classic problem: How do we draw the line between “normal” aggressive and creative lawyering that benefits the corporation from lawyering that facilitates unethical behavior by the corporation? How do we keep the corporation from justifying virtually any behavior by arguing that the behavior is necessary to increase shareholder value? Given current corporate law, how do we convince a board of directors that valuing stakeholder interests is consistent with shareholder value?

Conclusion
It's possible that no viable structure and no fine-tuned incentives could help corporations or their lawyers locate the line between right and wrong. After all, lawyers are as human as anyone else, and humans have an *1293 uncanny ability to talk themselves into thinking that “wrong” is “right.” On the other hand, to the extent that any type of structure or incentives could help the well-meaning lawyer do the right thing, an expanded role of the corporation's duties might clarify some questionable issues for a corporation's lawyer. If the purpose of a corporation is not only to provide short-term financial benefits to the shareholders but is also to improve the corporation's long-term health by adding issues of legal propriety and ethical norms to the corporation's economic interests, then perhaps caselaw will develop over time that supports decision making that takes these other interests into account.
Short-term thinking was part of what caused Enron and other corporate scandals of its time, as well as the current financial free fall. [FN140] The decisions that corporations make--including the decisions to change the law or break the law for financial gain--have ripple effects that go beyond the business world. Those consumers today whose houses are worth less than the amount they owe on their mortgages, or who have been laid off because their companies' financial prospects are failing, or who have seen the value of their retirement funds vanish almost overnight--all of these people--suffer from the ripple effects of bad corporate decision making. In turn, we all suffer when Congress makes ill-calibrated, knee-jerk reactions to these corporate scandals. Not only are the “causes” of problems not fixed, but the “fixes” cause yet more problems. Perhaps, just perhaps, lawyers could help prevent the next round of corporate scandals by being willing to say no to bad ideas and bad decisions. Perhaps lawyers could become not just the guardians of corporate legal responsibility, but of corporate ethical responsibility as well.
[FNa1]. Assistant Professor of Law, St. Mary's University School of Law; J.D., University of Houston Law Center; B.S., University of Missouri-Columbia. I would like to thank and acknowledge the hard work and assistance of my research assistants, Rusty Hoermann and Sarah Minter, in writing this essay as well as to thank my co-author, Nancy Rapoport, for inviting me to take part in this essay and to thank her and Fordham Law for inviting me to take part in this Symposium. It was a true honor to take part in this dialogue. I would also like to thank my wife Jill, daughter Savannah, and son George for their love and support.

[FNaa1]. Gordon Silver Professor of Law, William S. Boyd School of Law, University of Nevada, Las Vegas; J.D., Stanford Law School; B.A., Rice University. I want to thank my colleagues Rachel Anderson, Jennifer Gross, Colin Marks, Nettie Mann, and Jeanne Price; my research assistants Emelia Allen, Gabrielle Angle, and Nicole Cannizzaro; and my two favorite editors, Morris Rapoport and Jeff Van Niel. I also want to thank the organizers of, and the participants in, this Symposium. I can't remember the last time I had as much fun--or learned as much--at such a gathering of respected scholars.

[FN1]. Larry Catá Backer, Multinational Corporations, Transactional Law: The United Nations' Norms on the Responsibilities of Transnational Corporations as a Harbinger of Corporate Social Responsibility in International Law, 37 Colum. Hum. Rts. L. Rev. 287, 298-99 (2006).

[FN2]. Tim Jones, Trouble Is Brewing in St. Louis; Belgian Firm's Bid for Anheuser-Busch Taps Deep Hostility in a City Where Beer--Make that Bud--Runs Through the Veins, Chi. Trib., June 27, 2008, § 1, at 1.

[FN3]. Id.

[FN4]. Muralikumar Anantharaman, Anheuser Investors Say $65/Share Would Be Fair Bid, Reuters UK, June 5, 2008, http:// uk.reuters.com/article/innovationNews/idUKN0530735120080605 (noting that after speculation of a buyout at $65 per share circulated, AB stock rose to “an all-time high of $58.56 on June 2”).

[FN5]. Anheuser-Busch to Cut Jobs, Raise Prices in Battle, Chi. Trib., June 28, 2008, § 2, at 3 [hereinafter Anheuser-Busch]; Jones, supra note 2.

[FN6]. Anheuser-Busch, supra note 5; Tom Bawden, Anheuser Takes Legal Action over InBev's Bid, Times (London), July 9, 2008, at 43.

[FN7]. Some also speculated that the refusal was based upon considerations of the Busch family legacy and the company's history of independence. InBev Asks Judge for Speedier Judgment in Lawsuit Against Anheuser-Bush, S.F. Bus. Times, July 9, 2008, http:// eastbay.bizjournals.com/eastbay/stories/2008/07/07/daily48.html.

[FN8]. Jones, supra note 2; see also Emily C. Dooley, Will Brewer's Philanthropy Go Flat?: Williamsburg-Area Groups Hope InBev Retains Busch Spirit, Rich. Times Dispatch (Va.), July 20, 2008, at D1 (noting concerns over the effect of a buyout in Virginia communities).

[FN9]. Fortune, America's Most Admired Companies 2008: Anheuser-Busch, http://money.cnn.com/magazines/fortune/mostadmired/2008/snapshots/35.html (last visited Feb. 21, 2009). The full list of categories includes: innovation; people management; use of corporate assets; social responsibility; quality of management; financial soundness; long-term investment; and quality of products/services. Anheuser-Busch ranked number one in all of these categories not only in 2008, but also in 2007 and 2006. See Fortune, America's Most Admired Companies 2007: Anheuser-Busch, http:// money.cnn.com/magazines/fortune/mostadmired/2007/snapshots/35.html (last visited Feb. 21, 2009); Fortune, America's Most Admired Companies 2006: Anheuser-Busch, http:// money.cnn.com/magazines/fortune/mostadmired/2006/snapshots/109.html (last visited Feb. 21, 2009).

[FN10]. Jeremiah McWilliams, Making Bud a Global Brand Holds Key, St. Louis Post-Dispatch, July 15, 2008, at A1 (noting that AB would become leaner once InBev applied “its trademark cost-cutting”); William Spain, Will Sports Lose One of Its Biggest Boosters? InBev Takeover Spotlights Anheuser-Busch's Big Ad Budget, MarketWatch, July 18, 2008, http:// www.marketwatch.com/news/story/sportswatch-inbev-takeover-spotlights-anheuser-buschs/story.aspx?guid=%7B627AFDF4-E32B-460F-8CE8-195A5CC2D7BC% 7D&dist=hplatest (stating that an InBev buyout would lead to certain cost-cutting measures).

[FN11]. Spain, supra note 10.

[FN12]. Angus Lind, Anheuser-Busch Sale Leaves Sour Taste, Beer Drinkers Say, Times-Picayune (New Orleans), July 21, 2008, http:// blog.nola.com/anguslind/2008/07/anheuserbusch_sale_leaves_sour.html.

[FN13]. Jones, supra note 2.

[FN14]. Bawden, supra note 6; Gregory J. Corcoran, A Beer Brawl Goes to Court, Wall St. J., July 9, 2008, at C3.

[FN15]. See Richard W. Painter, The Moral Interdependence of Corporate Lawyers and Their Clients, 67 S. Cal. L. Rev. 507, 512, 543 (1994) (describing the various roles attorneys play in corporate takeovers and other corporate transactions). For a nice overview of the so-called “Revlon duty” when takeovers are possible, see Daniel Vinish, Comment, The Demise of Clarity in Corporate Takeover Jurisprudence: The Omnicare v. NCS Healthcare Anomaly, 21 St. John's J. Legal Comment. 311, 328-32 (2006).

[FN16]. Anheuser-Busch, supra note 5.

[FN17]. Mike Hughlett, This Bud's for Who? Belgians; Iconic American Brewery Acquired for $52 Billion, Chi. Trib., July 14, 2008, § 1, at 1; Dirk Johnson, Anger and Dismay at the Sale of a City Treasure, N.Y. Times, July 16, 2008, at A12; Roger Vincent, Budweiser Gets a New Nationality; InBev of Belgium Acquires the Owner of ‘The King of Beers' for $52 Billion, L.A. Times, July 15, 2008, at C1.

[FN18]. Jeremiah McWilliams, Companies Working Out the Details, St. Louis Post-Dispatch, Aug. 19, 2008, at D1.

[FN19]. Colin P. Marks, Jiminy Cricket for the Corporation: Understanding the Corporate “Conscience,” 42 Val. U. L. Rev. 1129, 1149 (2008); Dirk Matten & Jeremy Moon, “Implicit” and “Explicit” CSR: A Conceptual Framework for a Comparative Understanding of Corporate Social Responsibility, 33 Acad. Mgmt. Rev. 404, 405 (2008) (noting that “defining CSR is not easy”); Veronica Besmer, Note, The Legal Character of Private Codes of Conduct: More Than Just a Pseudo-Formal Gloss on Corporate Social Responsibility, 2 Hastings Bus. L.J. 279, 280 (2006) (noting that CSR means different things to different people).

[FN20]. Milton Friedman, Capitalism and Freedom 133 (2d ed. 1982); see also Milton Friedman, The Social Responsibility of Business, in The Essence of Friedman 36, 36-38 (Kurt R. Leube ed., 1987) [hereinafter Friedman, Social Responsibility]. As Archie Carroll points out, this representation of Milton Friedman is a little skewed, as Friedman conceded that the responsibility to make a profit was tempered by a duty to “‘conform[] to the basic rules of [the] society, both those embodied in ... law and those embodied in ethical custom [].”’ Archie B. Carroll, The Four Faces of Corporate Citizenship, Bus. & Soc'y Rev., Sept. 1998, at 1, 2 (first alteration in original) (quoting Milton Friedman, A Friedman Doctrine--The Social Responsibility of Business Is to Increase Its Profits, N.Y. Times, Sept. 13, 1970, § 6 (Magazine), at 33).

[FN21]. William T. Allen, Our Schizophrenic Conception of the Business Corporation, 14 Cardozo L. Rev. 261, 264-65 (1992) (describing two characterizations of the corporation: the first view, whereby the corporation is viewed as the property of the shareholders and the second view, in which the corporation is a social institution “tinged with a public purpose”); see also Jill E. Fisch, The “Bad Man” Goes to Washington: The Effect of Political Influence on Corporate Duty, 75 Fordham L. Rev. 1593, 1601-02 (2006).

[FN22]. As Cynthia Williams has noted, “Legal academics have struggled to produce useful definitions of CSR, and in that effort may be well advised to look to the management literature.” Cynthia A. Williams, A Tale of Two Trajectories, 75 Fordham L. Rev. 1629, 1647 n.54 (2006).

[FN23]. Archie B. Carroll, A Three-Dimensional Conceptual Model of Corporate Performance, 4 Acad. Mgmt. Rev. 497, 497-98 (1979); Matten & Moon, supra note 19, at 405.

[FN24]. See Aviva Geva, Three Models of Corporate Social Responsibility: Interrelationships Between Theory, Research, and Practice, Bus. & Soc'y Rev., Spring 2008, at 1, 2 (referring to Carroll's 1979 article on CSR, supra note 23, as a “foundational article on social performance”); Dirk Matten & Andrew Crane, Corporate Citizenship: Toward an Extended Theoretical Conceptualization, 30 Acad. Mgmt. Rev. 166, 167 (2005) (noting that Carroll's 1979 model of CSR is widely cited).

[FN25]. Carroll, supra note 23, at 499; Carroll, supra note 20, at 1-2; Geva, supra note 24, at 5-7; Matten & Crane, supra note 24, at 167.

[FN26]. Carroll, supra note 23, at 500; Matten & Crane, supra note 24, at 167.

[FN27]. Carroll, supra note 23, at 500.

[FN28]. Id.

[FN29]. Matten & Crane, supra note 24, at 167.

[FN30]. Carroll, supra note 23, at 500.

[FN31]. Id.

[FN32]. Matten & Crane, supra note 24, at 167.

[FN33]. Carroll, supra note 23, at 500.

[FN34]. Id.

[FN35]. Id. at 499-500.

[FN36]. Geva, supra note 24, at 5 fig.1(a).

[FN37]. Id.

[FN38]. Id. at 5-6 (summarizing conceptual models).

[FN39]. Id. at 9.

[FN40]. Carroll, supra note 23, at 500.

[FN41]. Id.

[FN42]. See Geva, supra note 24, at 6 tbl.1 (explaining how the intersecting and concentric circle models differ from Carroll's pyramid model).

[FN43]. This concept is sometimes referred to in the business management literature as “corporate citizenship” (CC). Matten & Crane, supra note 24, at 168. However, there exist various views as to what CC entails, with some commentators finding that CC is nothing more than a strategic attempt to ensure a stable environment, which in turn will ensure a profitable business. Id. Others, such as Carroll, have equated CC with CSR. Id. at 168-69.

[FN44]. Friedman, Social Responsibility, supra note 20, at 36-38; Geva, supra note 24, at 9.

[FN45]. Friedman, Social Responsibility, supra note 20, at 38-39.

[FN46]. Id. at 38.

[FN47]. Id.

[FN48]. Id. at 38-39. Friedman also appears to take the view that CSR is a very narrow category of giving that does not benefit the corporation. Friedman recognizes that a corporation may engage in charitable giving when it provides an advantageous tax deduction and garners good public relations. He is not critical of such practices but notes that it may be hypocritical to term such giving “socially responsible.” Id. at 41. Thus, giving that falls within one of the other responsibilities of economic, legal, or ethical appears to be acceptable corporate behavior in Friedman's view.

[FN49]. Geva, supra note 24, at 9.

[FN50]. Id.

[FN51]. Id. at 6-9.

[FN52]. The European Commission is the executive branch of the European Union (EU). It drafts proposals for new European laws, implements the EU's policies, runs its programs, and spends its funds. See The European Commission, http://europa.eu/institutions/inst/comm/index_en.htm (last visited Feb. 21, 2009).

[FN53]. Jan Wouters & Leen Chanet, Corporate Human Rights Responsibility: A European Perspective, 6 Nw. J. Int'l Hum. Rts. 262, 273 (2008) (“[T]he real starting point for the EU's CSR policy was the issuing of the European Commission's... Green Paper on the promotion of a European framework for corporate social responsibility....”).

[FN54]. Sorcha MacLeod, Corporate Social Responsibility Within the European Union Framework, 23 Wis. Int'l L.J. 541, 543-44 (2005).

[FN55]. Comm'n of European Union Cmtys., Commission Green Paper on Promoting a European Framework for Corporate Social Responsibility, COM (2001) 366 final (July 18, 2001) [hereinafter Green Paper I], available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2001:0366:FIN:EN:PDF; MacLeod, supra note 54, at 543-44.

[FN56]. Green Paper I, supra note 55; MacLeod, supra note 54, at 543-44; Marisa Anne Pagnattaro & Ellen R. Peirce, Between a Rock and a Hard Place: The Conflict Between U.S. Corporate Codes of Conduct and European Privacy and Work Laws, 28 Berkeley J. Emp. & Lab. L. 375, 406 (2007).

[FN57]. Green Paper I, supra note 55, at 3; see also MacLeod, supra note 54, at 544.

[FN58]. Green Paper I, supra note 55, at 6-8, 22-23; see also MacLeod, supra note 54, at 544.

[FN59]. Green Paper I, supra note 55, at 6. This concern for the stakeholder rather than merely the shareholders is consistent with the common European perception that a corporation has duties that go beyond its own well-being. See Cynthia A. Williams & John M. Conley, An Emerging Third Way? The Erosion of the Anglo-American Shareholder Value Construct, 38 Cornell Int'l L.J. 493, 494 (2005) (citing Ruth V. Aguilera & Gregory Jackson, The Cross-National Diversity of Corporate Governance: Dimensions and Determinants, 28 Acad. Mgmt. Rev. 447 (2003)); Stakeholder Capitalism: Unhappy Families, Economist, Feb. 10, 1996, at 23 (discussing how public companies in Japan and in continental European countries generally have a broader vision of the duty of their corporate managers, as one that encompasses the interests of other stakeholders, such as employees, suppliers, and the communities in which they operate).

[FN60]. Green Paper I, supra note 55, at 8-9.

[FN61]. Id. at 10-11.

[FN62]. Id. at 13-15.

[FN63]. Id. at 16-21.

[FN64]. Id. at 23. The Green Paper also posed to companies the following questions:
• What are the driving forces for companies to assume their social responsibility? What are the expectations behind such engagements? On which areas do these engagements focus? What is the benefit for companies?
....
• What are the most important best practice ways to implement and manage corporate social responsibility? What best practice exists for [small and medium enterprises]?
• How best can we take forward the invitation to business in the Commission's proposal for a sustainable development strategy to publish a “triple bottom line” in their annual reports to shareholders that measures their performance against economic, environmental and social criteria?
• What are the best ways to build links between the social and environmental dimensions of corporate social responsibility?
• What are the best means to promote further knowledge about the business case for corporate social responsibility and its value-added?
Id. at 22.
[FN65]. Comm'n of European Union Cmtys., Communication from the Commission Concerning Corporate Social Responsibility: A Business Contribution to Sustainable Development, at 3, COM (2002) 347 final (July 2, 2002) [hereinafter Green Paper II], available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2002:0347:FIN:EN:PDF.

[FN66]. Id. at 5.

[FN67]. Comm'n of the European Cmtys., Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee: Implementing the Partnership for Growth and Jobs: Making Europe a Pole of Excellence on Corporate Social Responsibility, at 5, COM (2006) 136 final (Mar. 22, 2006) [hereinafter Green Paper III], available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2006:0136:FIN:EN:PDF (“A common European understanding of what CSR means has emerged on the basis of the Commission definition of CSR as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”).

[FN68]. Green Paper II, supra note 65, at 4; MacLeod, supra note 54, at 545 (citing Green Paper II, supra note 65, at 4).

[FN69]. Green Paper II, supra note 65.

[FN70]. Green Paper III, supra note 67.

[FN71]. Id. at 6 (promoting a European Alliance for CSR, but noting that that the Alliance is not a legal instrument); Green Paper II, supra note 65, at 7 (noting that CSR is “clearly a matter for enterprises themselves”); MacLeod, supra note 54, at 546-47 (noting that the Green Paper II “refers to frameworks, promotion, assistance, awareness, support, and good practice, but there is no indication that formal regulation is a possibility” (citing Green Paper II, supra note 65, at 7)).

[FN72]. Green Paper III, supra note 67, at 6-8; see also Org. for Econ. Co-operation & Dev., The OECD Guidelines for Multinational Enterprises: Revision 2000 (2000), available at http://www.oecd.org/dataoecd/56/36/1922428.pdf. The Organization for Economic Co-operation of Development's (OECD) website summarizes the guidelines as follows:
The Guidelines constitute a set of voluntary recommendations to multinational enterprises in all the major areas of business ethics, including employment and industrial relations, human rights, environment, information disclosure, combating bribery, consumer interests, science and technology, competition, and taxation.
OECD, Guidelines for Multinational Enterprises: About, http:// www.oecd.org/about/0,3347,en_2649_34889_1_1_1_1_1,00.html (last visited Feb. 21, 2009).
[FN73]. Jill E. Fisch, Measuring Efficiency in Corporate Law: The Role of Shareholder Primacy, 31 J. Corp. L. 637, 638 (2006).

[FN74]. Allen, supra note 21, at 265; Keith Michael Hearit, Corporate Deception and Fraud: The Case for an Ethical Apologia, in The Debate over Corporate Social Responsibility 167, 167-68 (Steve May et al. eds., 2007); Antonio Vives, Corporate Social Responsibility: The Role of Law and Markets and the Case of Developing Countries, 83 Chi.-Kent L. Rev. 199, 207 (2008).

[FN75]. Allen, supra note 21, at 264-65; Fisch, supra note 21, at 1601-04 (contrasting the analogy of the corporation as the Holmesian bad man, which relies extensively upon a cost-benefit analysis in its decision making, to the more progressive view of the corporation as having obligations to nonshareholder stakeholders); Kent Greenfield, Proposition: Saving the World with Corporate Law, 57 Emory L.J. 948, 962, 966 (2008); Hearit, supra note 74, at 167-68; Vives, supra note 74, at 207-08.

[FN76]. Frank H. Easterbrook & Daniel R. Fischel, Antitrust Suits by Targets of Tender Offers, 80 Mich. L. Rev. 1155, 1177 n.57 (1982) (citing Frank H. Easterbrook & Daniel R. Fischel, The Proper Role of a Target's Management in Responding to a Tender Offer, 94 Harv. L. Rev. 1161, 1192-94 (1981); David L. Engel, An Approach to Corporate Social Responsibility, 32 Stan. L. Rev. 1 (1979)). As Cynthia Williams has observed, this view was rejected in an initial draft of the American Law Institute's Principles of Corporate Governance as “‘premised on a false view of the citizen's duty in a democratic state.”’ Cynthia A. Williams, Corporate Compliance with the Law in the Era of Efficiency, 76 N.C. L. Rev. 1265, 1271-72 (1998) (quoting Principles of Corporate Governance and Structure: Restatement and Recommendations § 2.01 cmt. f (Tentative Draft No. 1, 1982)).

[FN77]. Allen, supra note 21, at 265.

[FN78]. Fisch, supra note 21, at 1601; Marks, supra note 19, at 1148; Vives, supra note 74, at 207.

[FN79]. Greenfield, supra note 75, at 963.

[FN80]. Fisch, supra note 21, at 1601; Hearit, supra note 74, at 168 (“In effect, [CSR] ... consists of organizational decisional processes that take into account the values of the wider community.” (citations omitted)); Vives, supra note 74, at 207.

[FN81]. Engel, supra note 76, at 5-6 (noting that the term CSR “is most useful if taken to denote the obligations and inclinations, if any, of corporations organized for profit, voluntarily to pursue social ends that conflict with the presumptive shareholder desire to maximize profit”); Fisch, supra note 21, at 1601; Amiram Gill, Corporate Governance as Social Responsibility: A Research Agenda, 26 Berkeley J. Int'l L. 452, 459-60 (2008).

[FN82]. This approach is actually an adoption of a more recent incarnation of Carroll's conceptual model that he himself proposed in a co-authored 2003 article. See Mark S. Schwartz & Archie B. Carroll, Corporate Social Responsibility: A Three-Domain Approach, 13 Bus. Ethics Q. 503, 508 (2003).

[FN83]. Carroll, supra note 23, at 500.

[FN84]. Archie B. Carroll, The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, Bus. Horizons, July-Aug. 1991, at 39, 41 (noting that if the economic responsibility is not met, the other considerations become moot).

[FN85]. Over in Europe, the Code of Conduct for European Lawyers was adopted by the Council of Bars and Law Societies of Europe (CCBE) in 1988. It requires lawyers to have a duty not just to their clients, but also to the public and the courts. See CCBE Code of Conduct for European Lawyers R. 1.1 (2006), available at http://www.ccbe.eu/fileadmin/user_upload/NTCdocument/2006_code_ enpdf1_1228293527.pdf.

[FN86]. Carroll, supra note 23, at 500.

[FN87]. Franklin A. Gevurtz, Corporation Law 315 (2000).

[FN88]. The ability of corporations to influence legislatures through lobbying presents a rather large ethical question for attorneys representing corporate clients: if some conduct is prohibited by law, should the corporation simply lobby to change the law? Jill Fisch has suggested that the lawyer's role in representing a politically active corporation requires scrutiny of the motives of the corporate directors as well as an analysis of the short- and long-term affects of such lobbying efforts. Fisch, supra note 21, at 1612-13. Fisch also suggests that such lawyers “should facilitate the corporation's evaluation of the effects of its political role by increasing transparency and accountability both within and without the corporate structure.” Id. at 1613.

[FN89]. Carroll, supra note 23, at 500.

[FN90]. Schwartz & Carroll, supra note 82, at 512. Friedman also noted a responsibility to operate with legal and ethical norms. Friedman, Social Responsibility, supra note 20, at 37.

[FN91]. Carroll, supra note 84, at 41. In other words, we believe that, because corporations have no single internal voice to view what is moral, they must act in socially acceptable ways.

[FN92]. Cf. John Llewellyn, Regulation: Government, Business, and the Self in the United States, in The Debate over Corporate Social Responsibility, supra note 74, at 177, 179 (“To prosper, organizations need to have success on three distinct performance dimensions: the legal, the responsible, and the profitable.”). There is also support for this approach in the Delaware caselaw, at least in the context of a corporate takeover. In Unocal Corp. v. Mesa Petroleum Co., Unocal's board of directors rejected a tender offer that it viewed as grossly inadequate and instead chose to make an exchange offer for its own stock. 493 A.2d 946, 949-51 (Del. 1985). In upholding the board's decision, the Delaware Supreme Court stated,
A further aspect [of the business judgment rule] is the element of balance. If a defensive measure is to come within the ambit of the business judgment rule, it must be reasonable in relation to the threat posed. This entails an analysis by the directors of the nature of the takeover bid and its effect on the corporate enterprise. Examples of such concerns may include: inadequacy of the price offered, nature and timing of the offer, questions of illegality, the impact on “constituencies” other than shareholders (i.e., creditors, customers, employees, and perhaps even the community generally), the risk of nonconsummation, and the quality of securities being offered in the exchange.
Id. at 955 (citation omitted). However, while the Delaware Supreme Court seemed to recognize that other constituencies could be taken into account, in a decision later that year, the court clarified its statement in Unocal, stating, “A board may have regard for various constituencies in discharging its responsibilities, provided there are rationally related benefits accruing to the stockholders.” Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 182, 185 (Del. 1986) (citing Unocal, 493 A.2d at 955) (concluding that, because the corporation was not protecting itself from a hostile takeover, but rather choosing between two outside bidders, the rationale for considering outside constituencies was inapplicable). Thus, taken together, these opinions could be viewed to support the notion that other stakeholders' interests may be considered, so long as they are balanced with, and not counter to, the economic benefit of the shareholders. See Gevurtz, supra note 87, at 310 (“In other words, we are evidently back to the notion that one must rationalize looking out for other constituents as ultimately benefitting the shareholders.”).
[FN93]. One of NBR's colleagues, Rachel Anderson, had a lovely analogy about the three components of CSR. Her analogy sees the corporation through a CSR lens as a sort of locomotive, driven by the directors and officers, fuelled by the corporation's economic responsibilities, riding on the railroad track of the corporation's ethical responsibilities, with the corporation's legal responsibilities keeping the corporation riding on the track instead of derailing. Interview with Rachel Anderson, Assistant Professor of Law, William S. Boyd Sch. of Law, Univ. of Nev., Las Vegas, in Las Vegas, Nev. (Nov. 24, 2008).

[FN94]. Marks, supra note 19, at 1155.

[FN95]. Id. at 1145. Such decisions would also normally be protected by the business judgment rule, so long as a business justification could be made in good faith, such as increased publicity and good will for the product. See id. at 1138-39, 1145-47.

[FN96]. When a business has many shareholders who will be affected, that situation will differ significantly from when there's a sole proprietorship where the decision maker is also the owner.

[FN97]. Of course, a chief legal officer's ability to influence the conduct of the organization will depend on, for example, her ability to have access to the people who have real power within that organization. Cf., e.g., Deborah A. DeMott, The Discrete Roles of General Counsel, 74 Fordham L. Rev. 955 (2005); Sung Hui Kim, The Banality of Fraud: Re-Situating the Inside Counsel as Gatekeeper, 74 Fordham L. Rev. 983 (2005).

[FN98]. Nothing in any state's ethics rules would prevent a lawyer from giving extralegal--i.e., ethical--advice. See, e.g., Model Rules of Prof'l Conduct R. 2.1 (2007) (“In representing a client, a lawyer shall exercise independent professional judgment and render candid advice. In rendering advice, a lawyer may refer not only to law but to other considerations such as moral, economic, social and political factors, that may be relevant to the client's situation.”).

[FN99]. As Rachel Anderson has pointed out,
What if we view the corporation as an agent of its shareholders? Then, if we believe that agents have fiduciary duties to their principals, why would we not believe that corporations have ethical duties to their shareholders? Going even further and taking into consideration the historical development of the modern corporation, we might even argue that corporations are, albeit perhaps indirectly, agents of society whereby either the state granting the charter of incorporation or the society as a whole would be the principal, in which case, corporations would arguably have ethical duties to nonshareholder stakeholders as principals via the state.
Comment from Rachel Anderson to authors on an earlier draft of this essay (Nov. 29, 2008) (on file with authors).
[FN100]. See Fisch, supra note 21, at 1603 (“The corporation cannot readily adopt the moral perspective of its individual constituents.... [V]arious corporate stakeholders may have differing moral perspectives.”); Marks, supra note 19, at 1149 (“[I]t may not be the case that what one corporate manager chooses to do is based on the same ‘moral sense’ as other decisionmakers within the company.” (citing Fisch, supra note 21, at 1603)).

[FN101]. See Model Rules of Prof'l Conduct Table of Contents (2007).

[FN102]. See Model Code of Prof'l Responsibility Preliminary Statement (1983), available at http://www.law.cornell.edu/ethics/aba/mcpr/MCPR.HTM.

[FN103]. See Model Rules of Prof'l Conduct Table of Contents (2007).

[FN104]. See Model Rules of Prof'l Conduct Preface (2007).

[FN105]. See id.

[FN106]. See, e.g., Google, Inc., Code of Conduct (2008), available at http://investor.google.com/conduct.html; Nike, Inc., Code of Conduct (2007), available at http://www.nike.com/nikebiz/nikeresponsibility/tools/Nike_Code_of_ Conduct.pdf.

[FN107]. Recall the recent corporate scandals at Enron, WorldCom, Tyco, Global Crossing, etc. See Enron and Other Corporate Fiascos: The Corporate Scandal Reader (Nancy B. Rapoport, Jeffrey D. Van Niel & Bala G. Dharan eds., 2d ed. 2009) [hereinafter Enron and Other Corporate Fiascos] (discussing how lawyers were involved in these various scandals). In what can only be called the apex of irony, Enron's own corporate code of ethics embraced “Respect,” “Integrity,” “Communication,” and “Excellence.” See Enron Corp., Code of Ethics 5 (2000), available at http:// www.thesmokinggun.com/graphics/packageart/enron/enron.pdf. Of course, Enron's actual behavior was nothing like the behavior described in its code of ethics.

[FN108]. In fact, a lawyer is not supposed to be anyone's hired gun. See, e.g., In re Aston-Nevada Ltd. P'ship, 391 B.R. 84, 103 (Bankr. D. Nev. 2006) (stating that a lawyer should not “succumb to the so-called ‘butler-style’ of representation, under which the sequaciously servile lawyer does whatever the client wants and then cites that client's command as a shield to the improper actions”). Sadly, a lot of lawyers are in prison because they didn't understand these concepts. See, e.g., Michael Kunzelman, Former HMO Executives Get Prison Terms in Fraud Case, Law.com, Nov. 14, 2008, http:// www.law.com/jsp/article.jsp?id=1202426014056; Lawyer for Broadcom Co-Founder Enters Guilty Plea in Backdating Probe, Law.com, Nov. 11, 2008, http:// www.law.com/jsp/article.jsp?id=1202425928530.

[FN109]. See, e.g., Final Report of Neal Batson, Court-Appointed Examiner at 48-55, In re Enron Corp., 370 B.R. 583 (Bankr. S.D.N.Y. 2007) (No. 01-16034), available at http://141.150.158.82/media/Final_Report_Neal_Batson.pdf.

[FN110]. Sung Hui Kim does a superb job of discussing the various pressures brought to bear on a lawyer's inclination to do the right thing. Kim, supra note 97; see also Andrew M. Perlman, Unethical Obedience by Subordinate Attorneys: Lessons from Social Psychology, 36 Hofstra L. Rev. 451 (2007).

[FN111]. See Painter, supra note 15, passim.

[FN112]. See id.

[FN113]. See id. at 538-53.

[FN114]. See, e.g., Debra Cassens Weiss, Wal-Mart Refuses Law Firm Fee Hikes, Cites High Associate Salaries, A.B.A. J., Nov. 5, 2007, http:// abajournal.com/news/wal_mart_refuses_law_firm_fee_hikes_cites_high_associate_ salaries/.

[FN115]. See, e.g., Debra Cassens Weiss, Jenner & Block Asks About 10 Partners to Leave, A.B.A. J., Oct. 21, 2008, http://abajournal.com/news/jenner_ block_asks_about_10_partners_to_leave.

[FN116]. See, e.g., Arin Greenwood, Manhattan Work at Mumbai Prices, A.B.A. J., Oct. 2007, at 36.

[FN117]. Smart lawyers are led astray all the time. See, e.g., Milton C. Regan, Jr., Eat What You Kill: The Fall of a Wall Street Lawyer (2004); David B. Wilkins, Making Context Count: Regulating Lawyers After Kaye, Scholer, 66 S. Cal. L. Rev. 1145 (1993).

[FN118]. Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?
William Butler Yeats, The Second Coming, in The Collected Poems of W.B. Yeats 187, 187 (Richard J. Finneran ed., 1996). We also like this quote: “A truth that's told with bad intent / Beats all the Lies you can invent.” William Blake, Auguries of Innocence, in The Complete Writings of William Blake 431, 432 (Geoffrey Keynes ed., 1966).
[FN119]. See supra note 97; text accompanying infra notes 121-23.

[FN120]. At least one of us (NBR), though, has observed that inside counsel usually are more risk averse than outside counsel when it comes to ethically risky behavior. At the April 2008 ABA Business Law Section's meeting in Dallas, Texas, NBR spoke with several high-level inside counsel, and each one of them expressed the view that they would prefer that members of their companies stayed as far away as possible from taking ethical risks. As one of them said during a presentation at that conference, “I would rather [my company's] employees took our Code of Ethics seriously enough that ethics issues never even needed to go up to my level. I want them to do the right thing without having to think about it.” Statement of anonymous participant at American Bar Association Section of Business Law Spring Meeting, Dallas, Texas (Apr. 10-12, 2008).

[FN121]. See, e.g., Kim, supra note 97, at 992-1024.

[FN122]. See id. Cynthia Williams has suggested that when law students, professors, and attorneys accept the “premise that social welfare will be increased by individuals simply pursuing their own self-interest,” a view that she associates with the law and economics movement, that belief will encourage ethical lapses by lawyers. Williams, supra note 22, at 1649.

[FN123]. In the famous story of Kitty Genovese,
For more than half an hour 38 respectable, law-abiding citizens in Queens watched a killer stalk and stab a woman in three separate attacks in Kew Gardens.
Twice the sound of their voices and the sudden glow of their bedroom lights interrupted him and frightened him off. Each time he returned, sought her out and stabbed her again. Not one person telephoned the police during the assault; one witness called after the woman was dead.
Martin Gansberg, 37 Who Saw Murder Didn't Call the Police, N.Y. Times, Mar. 27, 1964, at 1. Some posit that the witnesses didn't call the police because they each assumed that someone else would do so. See, e.g., Robert J. Rhee, Corporate Ethics, Agency, and the Theory of the Firm, 3 J. Bus. & Tech. L. 309, 326 & n.116 (2008) (discussing the social science research on the Genovese case).
[FN124]. Lee G. Bolman & Terrence E. Deal, Reframing Organizations: Artistry, Choice, and Leadership (4th ed. 2008).

[FN125]. Id. at 45-116.

[FN126]. Id. at 117-64.

[FN127]. Id. at 191-246.

[FN128]. Id. at 247-78.

[FN129]. As Rachel Anderson points out, it's the difference between “whether the lawyer is functioning as a scribe (servant) or an advisor (counselor).” Comment from Rachel Anderson to authors, supra note 99.

[FN130]. See, e.g., 15 U.S.C. § 7245 (2006). Standing up to one's organization can be a career-limiting move, cf. Fred C. Zacharias, Coercing Clients: Can Lawyer Gatekeeper Rules Work?, 47 B.C. L. Rev. 455, 466 (2006) ( “Threatening disclosure, for example, may enhance a lawyer's immediate position or power in an organization, but in the long run may cause the organization to confide in, and depend on, the lawyer less frequently or to a lesser extent.”), but standing up to the client is part of the lawyer's job. The hard part is overriding the lawyer's temptation to persuade herself that she doesn't need to stand up to the client--in other words, overriding the lawyer's tendency to talk herself into believing that what the client wants to do is the right thing to do, see supra notes 119-23 and accompanying text.

[FN131]. Jonathan Macey makes a persuasive argument that boards of directors aren't particularly good at ensuring good corporate governance. See generally Jonathan R. Macey, Corporate Governance: Promises Kept, Promises Broken (2008). If that is true, and we think that it is, then having access to the board of directors, in and of itself, won't do much to improve a corporation's ethical responsibility.

[FN132]. Lawyers are entitled to argue for a good faith change in the law. See Model Rules of Prof'l Conduct R. 3.1 (2007) (“A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law.”).

[FN133]. See, e.g., Ronald Chen & Jon Hanson, The Illusion of Law: The Legitimating Schemas of Modern Policy and Corporate Law, 103 Mich. L. Rev. 1, 146 (2004) (“In other words, Friedman, given his view of markets, ultimately concedes that managers have no choice but to maximize profits. A manager is not ‘free to choose’ social responsibility, or at least not more than once. The situation of markets eliminates that freedom.”).

[FN134]. Or, to be more precise, the officer or director of the corporate client gets what he wants, such as excessive compensation or bonuses that don't relate to performance. The officer or director has “IBG, YBG” (“I'll be gone, you'll be gone”) in the back of his mind, especially given the frequency of job-hopping among executives. For example, Robert Nardelli fled to Chrysler after eviscerating Home Depot. See, e.g., Nick Bunkley & Micheline Maynard, Chrysler Looks Outside to Turn Its Fortunes Around, Int'l Herald Trib., Aug. 7, 2007, at 1.

[FN135]. Cf. Tom Fowler, Enron's Implosion Was Anything but Sudden, Hous. Chron., Dec. 20, 2005, http:// www.chron.com/disp/story.mpl/special/enron/2655409.html.

[FN136]. See Kristen Hays, Focus on ‘Honest Services': Pros, Cons of Argument Take Center Stage in Skilling's Appeal, Hous. Chron., Apr. 3, 2008, at 1, available at http://www.chron.com/disp/story.mpl/special/enron/5670281.html.

[FN137]. We know, we know: it's like “assum[ing] a can opener.” In an earlier article, one of us explained that reference this way:
Here's the version that I know: A mathematician, an engineer, and an economist are stranded on a desert island with only one can of food and no can opener. The mathematician writes all sorts of complex formulas in the sand in an attempt to discover one that will open the can, but none of the formulas leads to anything. The engineer tries to build a can-opening machine out of the stones and grass on the island, but the machine isn't strong enough to open the can. In despair, the mathematician and the engineer turn to the economist, who's grinning proudly. “No problem,” says the economist. “We can open the can easily. Just assume a can-opener.”
Nancy B. Rapoport, Our House, Our Rules: The Need for a Uniform Code of Bankruptcy Ethics, 6 Am. Bankr. Inst. L. Rev. 45, 96 n.242 (1998).
[FN138]. But see text accompanying supra note 132.

[FN139]. Thanks to Rachel Anderson for pointing out this “no exceptions” concept.

[FN140]. See generally Enron and Other Corporate Fiascos, supra note 107.




77 FDMLR 1269

END OF DOCUMENT

© 2009 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.

Selengkapnya...... Posted under | NO COMMENTS