Ikea’s decision
Ikea announced on June 23 it’s intention to halt further expansion in Russia, citing the difficulties in terms of business operations caused by practices relating to corruption within the current administrative environment (refer article).

According to the announcement, the Swedish home furnishings retailer intends to continue to operate its stores in existence within the country and also to complete work associated with stores already under construction. Beyond that however, the company intends to suspend all future investment.

No doubt the decision was primarily driven by business-case considerations rather than any desire to make a stand based on moral grounds.

Nevertheless, the company’s decision is worthy of public applause. The problem of corruption at administrative levels in Russia will only be dealt with when companies take a stand. Hopefully, the sheer embarrassment from announcements like these will help to further stimulate existing efforts on the part of the government to eliminate these types of filthy practices.

 
Where the bribes apparently occur
The problems to which the company refers relate not so much to the government itself but more to the practices at the administrative level, such as when dealing with authorities relating to fire, health and safety, electricity, tax, customs and other related authorities.

‘Diligent’ officials in these areas have been known to particularly effective at discovering ‘problems’ with company operations. Such ‘problems,’ which would otherwise take a considerable time period and involve a significant level of administrative effort on the part of the company concerned in order to be resolved, are, from my understanding, typically considered to have been ‘rectified,’ after the authorities concerned receive some form of payment.

In Ikea’s case, these problems have been known to occur most frequently immediately prior to the opening of new stores, when the company is most vulnerable to any form of delay.

Examples described in the article referred to above include: (a)authorities declining to connect electricity days before the opening of one store in Moscow; (b)the halting of the opening ceremony at another Moscow store due to the parking lot being ‘too close’ to a natural gas pipeline; and (c)an outlet in Nizhny Nogorod being closed for its opening holiday season on the basis of ‘fire code violations’.

 
What the company’s decision says
As stated above, the company’s decision makes two clear statements about the problem of corruption within the Russian administrative environment.

 
• Dirty practices still exist despite cleanup efforts.

According to the article, the national government in Moscow has made considerable efforts in order to create the perception that corruption related problems are being dealt with, such as prohibiting surprise inspections by health and fire authorities and requiring the income and assets of their spouses as well as their own (spouses, apparently, are a common conduit for bribery related activity).

Whilst these types of measures no doubt represent a step in the right direction, Ikea’s decision clearly highlights the fact that not a great deal has changed in practice. Significant levels of corruption within the administrative environment, it would appear, still represent the reality which confronts firms who operate within Russia.

 
• Corruption affects ordinary citizens, not just individual target companies.

The halting of the company’s expansion in Russia means that job creation opportunities for ordinary citizens have gone begging.

So too have opportunities for consumers in some areas to experience the benefits in terms of convenience and price competitiveness typically associated with having a local Ikea store operating within their area.

I cannot help but wonder how many other foreign companies have either avoided operating in the country altogether or limited the scope of operations there partly out of concern about the prevalence of corruption related practices.  I also cannot help but wonder how many opportunities for consumers, small businesses and workers have been lost as a result.

Bottom line – corruption affects real people in real communities, not just the immediate target companies.

Factories within the Kaesong Industrial Complex (image via Wikipedia)

It’s probably not all that usual for a business ethics blogger to argue against a significant wage increase for full time workers in poor countries whose monthly salary is a paltry seventy five American dollars per month.

But when the majority of the increase (which would take the monthly wage to $300) would flow not to the worker but to one of the most repressive governments on earth, this is certainly one increase which I would could certainly not support at all.

 
About the increase
The increase relates to workers at the Kaesong Industrial Complex (shown above), an industrial park in North Korea located approximately six kilometers north of the border between North Korea and South Korea. The park represents a specially designated area whereby South Korean companies are allowed to operate within North Korean territory, utilizing the plentiful supply of low-cost labor from the North.

On a tour a few weeks ago to the DMZ, a heavily fortified and controlled area representing the border between South Korea and North Korea, our tour guide was telling us that North Korean workers employed at the park currently earn the equivalent of USD$75 per month.

However, in a somewhat extreme measure, the North Korean government is now demanding a four hundred per cent increase in this amount, to take the monthly wage up to $300.

 
Problem is, it’s all going to government coffers
Under normal circumstances, I would fully support wage increases for those who are poorly paid.

Those workers who perform an honest day’s work should be entitled to receive a fair and equitable level of financial reward for their effort. I have absolutely no idea what would be considered a good level of income by North Korean standards, but even if the workers got to keep the majority of their earnings, I could not imagine that earnings of $75 per month would represent a fair level of compensation compared to the value of the services which the workers provide.

Just one problem – little, or any of the increase will actually go to the workers.

Of the seventy-five American dollars per month that workers at the complex earn now, our tour guide informed us that the North Korean government takes seventy dollars, leaving just five dollars – yes, that’s right, just five American dollars per month, to be kept by the worker.

The workers keep only a tiny portion of what they earn now and it is highly unlikely that they will keep much of the benefit from any ‘wage increase.’

Instead, the vast majority of this increase, if it does indeed occur, will flow through to the coffers of the North Korean government - helping to finance a regime which appears to be hell-bent on the development of weapons of mass destruction and whose human rights record is not a great deal better than Sudan, Zimbabwe or Myanmar.

This cannot be supported under any circumstances. Wage rises which flow through into genuine benefits for workers and their families in poor countries can easily be supported on social grounds. But not ‘wage rises’ which merely mean more money for bomb making oppressive governments, and I certainly hope that the North does not receive its demands in this regard.

(Refer article for further information on this topic)

In brief, the two journalists concerned, Laura Ling and Euna Lee are said to have been working on a documentary relating to the trafficking of North Korean women across the border between North Korea and China when they were arrested by North Korean guards. They were sentenced on June 08 to twelve years of hard labor (read more about the case here)

It is indeed possible that the actions of the two did indeed represent a breach of North Korean law (there is some dispute about the facts of the case). But if that is indeed the case, this is because of the oppressive nature of North Korean law, not because of any lack of personal ethics on the part of either journalist.

Furthermore, in my view, the case illustrates the point that there may be an extremely limited range of circumstances whereby actions on the part of companies or their staff do not indeed represent a form of unethical conduct even if they result in a breach of regulations to which the organization concerned is subject.

 
Generally, companies and their staff must respect the law ..
In the vast majority of cases, the situation is clear-cut, and ethical considerations dictate full compliance with all applicable laws and regulations in every jurisdiction in which the company concerned operates.

Moreover, ethical considerations aside, I certainly would have thought that in the vast majority of circumstances, business case considerations dictate that companies observe complete respect for and full compliance with all relevant legal requirements. This is not only due to the desire to avoid any adverse reputational impact of run-ins with the law (not to mention fines and penalties), but also because of the ability of government officials at all levels to make life difficult for those who get on their wrong side.

 
.. but there are exceptions
But are there exceptions?

I would think so - especially concerning firms which operate in countries whose practices are repressive from a human rights perspective.

I could think of at least three examples:

 
• Media coverage.

The plight of those who suffer from war, famine, poverty or oppression should never be hidden from the broader global community, and I feel that media organizations do have a fundamental duty to raise worldwide awareness in cases where such conditions do indeed occur.

Such a duty extends to parts of the world where the law attempts to place unreasonable restrictions upon the activities of local and/or foreign media, whereby media organizations and journalists would be more than justified, in my viewpoint, in undertaking whatever forms of action which are reasonably necessary to report on the plight of the people, even if this necessitates a breach of some forms of legal restrictions in the country concerned.

(Naturally, media correspondents who enter countries illegally should do so only where absolutely necessary and should observe appropriate regard for their own personal safety at all times)

 
• Protection of individual privacy.

Firms which are required to sensitive information (such as contact details or information pertaining to patterns of online activity) with regard to individuals such as political activists or opponents, prominent religious leaders or prominent academics would, under certain circumstances, be more than justified in withholding such information this may constitute a breach of legal requirements.

This is particularly the case where there is a reasonable likelihood that the provision of such information will either: (a) place the safety of the individual concerned in unwarranted jeopardy; or (b) assist in any form of government attempt to crack down on any form of expression of political or religious freedom.

 
• Organization of labor unions.

This is one issue which relates more to the workers that businesses employ rather than businesses themselves. Nevertheless, since employees represent such a critical group of stakeholders (it’s hard to imagine businesses running without them), I feel that the formation of unions in countries where labor organizations are not legal is well worth a mention in this discussion.

The right of workers to organize themselves into unions is specifically recognized under the Universal Declaration of Human Rights as a basic form of human right. In countries where the abuse of employee rights represents a common practice, I would be more than supportive of any attempt by workers to organize some form of labor union, even in (and especially in) countries where labor organizations are prohibited.

 
Over to you
Can you think of any other cases whereby you think firms may be justified in refusing to act according to the law?

Indeed, no matter how messy the approach adopted in the Clean Energy and Security Act may appear to be, the fact that it seems to finally represent some action on the part of the American government towards responding to the challenges associated with global warming is certainly pleasing.

Surely, any form of action at all was always going to beat the ‘zero meaningful action’ policy approach adopted under Bush.

 
How carbon permits should have been allocated
That said, the approach adopted under the bill toward the allocation of permits for carbon emissions under the proposed cap and trade system appears not only be unnecessarily complicated but also somewhat unfair and lacking in transparency.

As I understand it, one of the key features of the bill is the adoption of a new cap and trade system with respect to carbon emissions, which is envisaged to operate in a manner which is somewhat similar to that currently in place in Europe.

The fairest (and most logical) approach toward the allocation of permits for carbon emissions under this system would be for the government to sell a given number of permits, either each year or otherwise on a periodic basis, via an auction process. Companies would submit bids for a sufficient number of permits to cover their anticipated volume of emissions.

As well as being beneficial for government coffers, since sales of the permits would raise much needed revenue, such an approach would be completely transparent and fair, allowing all firms across all sectors the equal opportunity to secure the required level of permits to cover their anticipated level of emissions, regardless of any political influence or otherwise which is commanded by the industry in which they operate.

 
But this approach is strange
But instead, under the current bill, the vast majority of the permits issued (approximately eighty-five per cent) will simply be handed out for free, leaving just fifteen per cent to be allocated through a transparent auction process (refer article).

Not only does the idea of doling out free permits to the worst polluters seem to be somewhat strange and contradictory to what the scheme is trying to achieve, but the process of deciding exactly who is to receive such handouts is inevitably political, with some industries being able to secure a better deal than others based on their political power and influence.  

Even if it were free of political influence, the process of deciding who gets such permits would appear to be horribly complex, not to mention the lack of transparency from an accountability viewpoint.

Instead, the whole lot should have been auctioned through a straightforward auction process, which would have represented a simpler, fairer, more transparent and better approach.

 
America must lead, not wait for others
But messy action is surely better than no action, and it is pleasing to see that America finally appears to be on the move with respect to action on global warming.

Kudos to Europe for it efforts to date, but climate change is a global problem in need of a global solution. Any form of effective response to the challenges which it poses requires the support of all major players within the global landscape, not just those of one continent.

In addition, given its status as the single most influential leading nation with respect to many aspects of global society, any lack of action on the part of the emerging or developing world does not provide any form of justification whatsoever for inaction on the part of America. (Equally, inaction on the part of America does not provide any justification for inaction on the part of my home country of Australia)

Leadership is about action. Leaders step out and act first – they don’t sit back and wait for others.

This concept applies not just to individuals, but to nations as well, and given its unique leadership position, America must not wait for countries like China and India to come on board.

Instead, it must step out and join Europe in taking the lead in responding to the world’s global warming challenges, and no matter how awkward its approach, it’s pleasing to see that the American government finally seems to be getting serious in this regard.

Only once the leaders move, will others do likewise.

Image by Chris Solnordal via Wikipedia

(This discussion represents the second part of my contribution to Robert Hruzek’s group writing project, “What I learned from .. a mountain-top experience.”)

I have always believed in the concept of climbing to great heights in terms of ones business or career direction - that one should ’shoot for the top,’ so as to speak.

In addition, my family, in particular, my mother, have always been supportive of my endeavors.

That is, when we are talking about figurative heights. But the situation is somewhat different when the ‘heights’ we are talking about actually refer in a literal sense to the process of seeking employment at a ski resort which is situated on top of a mountain almost two kilometers above sea level.

This was indeed the case for me in late 2004, when I applied for a job as a Finance Assistant with the Mount Hotham Alpine Resort Management Board. The office in which I would have been working was situated in a ski resort village at the top of Mount Hotham, a famous mountain in the North Eastern part of my home state of Victoria (South East Australia), which at it’s highest peak reaches a height of 1,861m (6,105 feet) above sea level.

At the time, I regarded the position concerned as a wonderful opportunity not only to further my career by taking on a challenging role in an area which was different to those to which I was accustomed.

But my mother expressed a great deal of anxiety, especially due to safety concerns relating to the daily commuting process. Having never actually been to the mountain before, I regarded such concerns as being coming from a loving heart but being somewhat over-cautious.

 
The day of the interview 
That was, until the day of the interview, and it wasn’t until I actually started the thirty kilometer ascent up the mountain that I started to realize that my mother had a valid point. The narrow, windy road had been virtually carved out of a cliff face, with gigantic drops out to the left leaving little doubt about one’s fate in the event of the vehicle slipping off the side of the road.

Even on that clear, late spring day, the ascent represented a downright frightening experience. I could only imagine what it would be like in the middle of winter, with the likelihood of thick snow and fog adding the daunting prospect of virtually zero vision or road grip to the already treacherous enough as it is commuting process. 

Ten kilometers into the climb, I reach the first opportunity for a turning point, and seriously rethink my options - should I just turn around and forget the whole thing? Kudos, I thought, to those who do actually manage to perform this commute on a daily basis.

Upon reaching the village resort, I had a mountaintop experience which was somewhat different in nature to the kind of emotional euphoria to which people usually refer when talking about such an experience. This was literally a mountain-top experience – i.e. an experience, literally speaking, at the top of a mountain, and any sense of positive emotion which I felt was tempered by concerns as to whether indeed this commute was one which I was prepared to undertake on a daily basis.

Yes, one should strive to climb to great heights in terms of one’s business or career. But this is a figure of speech, and the principle does not necessarily apply in a literal sense to the performance of daily commutes up perilous mountain roads.

In the event, I was not the successful candidate and was not offered the position. Nevertheless, I must say that the process involved was quite an experience and I am certainly glad that I went for the job an application even though my application was not successful.

 
Lessons Learned
• Messages in self-help books about climbing the highest mountain and reaching great peaks in one’s business or career do not necessarily apply in a literal sense.

  
• One should look far and wide for opportunities.

In my profession of accounting, often the best opportunities are considered to be in large office towers in the city, either working for a large accounting firm or within the finance department of a large corporation.

These more conventional types of opportunities certainly have a great deal of potential. But what I personally found was that expanding my horizons to include positions which were outside the sphere of more conventional environments not only provided for an interesting and rewarding experience in itself, but also resulted in a much broader range of opportunities being available to me.

Image via Wikipedia

It perhaps may appear to be somewhat of an irony that a person could be two meters tall (six foot six and a half) and still suffer from a fear of heights.

But that is indeed the case with yours truly, and the experience of going up the Eiffel Tower in Paris in 2002 was one which I personally found to be downright frightening, even when using the glass elevator.

This discussion represents the first part of my contribution toward Robert Hruzek’s group writing project, entitled “What I learned from .. a mountain top experience.” If I have a chance, I will describe a second experience in tomorrow’s discussion.

In actual fact, when asking for participants to describe their mountain-top experiences, Robert is referring to an emotional experience more than an experience of a physical nature. What he is talking about is an experience of a feeling of elation, that being on top of the world from an emotional viewpoint more so than a physical viewpoint.

Nevertheless, the experience of going up the tower did involve a fair degree of emotion for me (fear and anxiety at the bottom, elation and euphoria at the top), so I feel that it is appropriate for me to relate this experience as the first part of my contribution to Robert’s project.

(Unfortunately, I do not have a personal photograph of this experience to share, I had not been introduced to the world of digital cameras at that point and do not have a picture of the experience in digital form)

 
The fear factor
Sensing the extent of my trepidation, my brother, who had already made the trip on a previous occasion, assured me at the bottom that we did not have to actually go to the top if I did not want to. But fearful though I was, I knew that it was not likely that I would have the opportunity to visit Paris again for a very long time, that this was more than likely my one and only opportunity, and that I would most certainly regret it if I held back.

Getting up the first two floors was difficult enough, particularly as the curved structure at the base of the building mandates a somewhat angled ascent as far as the first floor. But the final leg of the journey was downright frightening.

My sunglasses certainly came in handy, not only by enabling me to hide my facial expressions to some extent, and therefore the extent of my trepidation, but also by enabling me to close my eyes without anyone noticing, thereby making the ascention process somewhat bearable.

What did not help, on the other hand, was the commentary of the gentleman beside me, whose running description of how high we were was not what the doctor ordered as far as I was concerned.

Somewhat more helpful was my brother, who, knowing that my eyes were closed, assured me that we were not much more than ten meters from the top. Whilst the reality at the time was that there was more than fifty meters to go, the thought of being almost there (no matter how false) did help me to hang on.

Making it safely to the top, and there I opened my eyes to a splendid view across the city of Paris – a view which I would say would be second to none in terms of views across any city, or at least those which I have come across anyway.

 
Lessons Learned
Non serious:

• don’t forget to pack a pair of sunglasses if you think that you will need to hide a facial expression of some kind (fear, embarrassment, etc);
• whenever you are a short way off great heights, you can bet your bottom dollar that there will be someone to describe how far you have to fall; and
• you can always be sure to have some well meaning family member indicate that you are indeed closer to your goals than what you indeed actually are.

Serious:
• When you’ve only got one shot, take it – don’t hold back. If you do, you’ll be glad that you did for the rest of the life. If you don’t, you may harbor regrets for years to come.

I would like to highlight two things about the month of May.

Firstly, the month of May saw the 100th discussion posted on this blog. I hadn’t actually realized it at the time, but the discussion entitled “Why do real estate and used car sales attract crooks?” represented post number 100.

I have thoroughly enjoyed the first hundred discussions on this post here and depending on how things turn out, I would love to engage in several hundred more.

Whilst the writing process is thoroughly enjoyable in itself, the most rewarding aspect of these discussions from my point of view has been the degree of interaction with you, the readers, and on this topic, I was very happy many of you continue to put forward an interesting range of viewpoints in response to the discussions on this blog during the month of May.

Accordingly, I would like to recognize and thank the following May contributors (alphabetical order):

Alik
Ana
Bill
Brad
Cath
Fred
Gennaro
Giovanna
Jackie
Jake
Karen
Lillie
Luke
Mark
Meryl
Meg
Mikael
Rachael
Robert
Salwa
Tom

My thoughts – overall, I would not be surprised if many companies seek to pare back their level of CSR related effort, particularly as firms are, as The Economist puts it:

“.. a long hard look at the resources they devote to everything from supporting charities to making their activities carbon neutral.”  (refer article)

However, CSR encompasses a very broad range of activities, and I would think that the impact of the challenges associated with the current economic environment will vary according to the nature of each particular activity.

 
Observations about the impact of the downturn from a CSR perspective
A thorough examination of the likely impact of the downturn with respect to each type of CSR related activity is well beyond the scope of this discussion.

Nevertheless, I would like to make a few observations:

 
• Corporate philanthropy.

Probably one of the hardest hit areas, not least because this form of CSR: (a) involves the direct outlay of scarce financial resources, as well as benefits which can be difficult to quantify and are often expected to accrue over a lengthy time period; (b) expenditure in this area can be curtailed without a great degree of direct or immediate impact upon a firm’s business operations.

Regardless of how moved one may be by Ford’s assertions that it remains ‘committed to the concept of giving,’ the fact that the automaker expects it’s corporate donations to be down forty per-cent next year (refer article linked to above) speaks a great deal about the prospects of any areas of corporate philanthropy which are not very closely related to an organization’s operations or direct branding strategy. 

 
• Community Business Partnerships.

Interesting area.

Commitments to these types of partnerships, which typically involve social or environmental partnerships between companies and NPOs or community groups are generally of a fairly long term nature.

With respect to existing projects, I doubt there will be many cases where firms reneg on commitments which they have already made. Compared to straightforward philanthropy, I would have thought that these kinds of projects would generally tend to be more closely aligned with both operational requirements and branding strategy, reducing the likelihood to which they would be subject to curtailment. Moreover, corporations would find it difficult to pull out of their commitment to such projects without suffering considerable damage from a reputational viewpoint.

That said, I would not imagine that firms would be particularly keen right now to enter into new commitments in this area. With short term survival proving enough of a challenge for some firms, I cannot imagine that investment in new social partnerships would exactly be a top priority.

 
• Investment in energy efficiency and environmental improvements.

Probably the most risilient form of CSR at the moment, particularly given the extent to which energy efficiency helps improve not just the environment but the bottom line through cost reductions as well as government enthusiasm to direct stimulus related funding toward any areas with a ‘green’ label attached to them.

That said, I would have thought that investment in some of the more capital intensive projects may be subject to some degree of curtailment, particularly in cases whereby large portions of the anticipated cost reductions are not anticipated to be realized until the project concerned has been operating for several years.

 
Genearal comment – back to core business
Overall, whilst I would certainly have thought that some areas of CSR related effort may be subject to curtailment, I do not imagine that firms will abandon the concept altogether.

Instead, what is more likely is a refocusing of CSR effort toward projects which: (a) are more closely tied to branding strategies or business operations; (b) are anticipated to produce business benefits of a more obvious and (ideally) quantifiable nature; and (c) do not involve large outlays or long term commitments of financial resources.

Any forms of CSR efforts which do not fit the above criteria, I would imagine, will be the subject of an increasing level of scrutiny among corporate boards.

 
Over to you
What do you think the near term future holds for CSR related effort?

But no doubt there were some who did not share in the joy, especially parents concerned about any influence the controversial rap artist might have upon children.

And with the release of his new album, I feel that now is an opportune time to talk about whether hate rappers like Eminem represent a legitimate part of the music industry or an aspect of the entertainment business which society would be better off without.

 
About Eminem and Hate Rappers
(Warning: Videos referened in this section contain course language and disturbing images)

‘Hate rappers’ is the term which I will use, for want of a better term, to describe those rap artists whose songs are full of lyrics which may encourage violence, alcohol or drug abuse, or other forms of criminal or anti-social behavior, or which promote such behavior  as ‘cool’ in any way.

Eminem represents a prime example. For the benefit of those who are not familiar with his lyrics, some of his earlier works featured:

• a man who is encouraged to shoot his wife and the man with whom his wife was caught cheating (refer Guilty Conscience);
• a psychotic fan who ties his pregnant girlfriend to the back seat of his car whilst driving the vehicle off a freeway bridge (refer Stan);
• the rapper himself stating that he wished his own mother would ‘burn in h***’ (refer Cleaning out my closet
• a song which portrays drug use not only as ‘cool,’ but as an experience which is second to none (refer Purple Pills).

 
Two sides to the story
From a business perspective, the reasons behind the popularity of Eminem and other hate rappers are not difficult to understand.

In addition to the natural appeal which results from their rebellious image, their lyrics stir up a considerable degree of controversy (not to mention that which is generated in their lives outside of their music), which serves to generate not only a great deal of publicity, but also a great deal of interest in their music.

What is more debatable is the question of whether or not this form of art is desirable from a social standpoint – whether their music represents merely a form of harmless entertainment or a negative influence which society could do without.

Personally, I can empathize with both points of view, and I do not really have a strong viewpoint either way on this issue.

On one hand, many people enjoy this type of music, and feel that they can relate to the feelings which are expressed in these songs. In addition, some of these artists do demonstrate a considerable degree of talent, and even though their output may be controversial at times, I personally find it somewhat pleasing to see them apply their talent toward the process of creative expression.

Moreover, the majority of young people today experience a wide range of media related input across a wide variety of mediums, and for all but the most die-hard of fans, the music of hate rappers would represent only a small percentage of their total media intake. As a result, I would have thought that any impact which these artists would have in terms of shaping attitudes and behavior would probably not be that great in the context of the broader influence of the overall media landscape.

In any case, the influence of hate rappers is probably not a great deal worse than that many violent action or horror films.

That said, I would have thought that hate rappers would have some degree of social influence, and I would not imagine that any influence which they do exert would be of a particularly positive nature. I would certainly have a considerable degree of empathy for arguments which suggest that no form of negative influence, including that of hate rappers, should be welcomed or encouraged within the modern media landscape.

 
A personal note
On a personal note, when Eminem first came out about ten years ago, I felt disgusted by his lyrics, and felt that he was an unwelcome participant in the music industry.

But over time, I became de-sensitized to his music and started to enjoy a number of his songs. I have even learnt to sing (not very well) one of his tunes at Korean singing rooms.

 
Over to you
Do you think that hate rappers represent legitimate participants within the entertainment industry, or do you think that society would be better off without them?

Slot machines in the Trump Taj Mahal (India) (Image via Wikipedia)

I have a considerable degree of empathy for those who suffer from a gambling addiction, especially in these challenging economic times.

But the idea of gamblers being able to sue casinos for losses which they incur as a result of their gambling activities is simply a load of rubbish, and I certainly hope that current attempts by an Australian high flyer who is trying to do just that get the treatment they deserve within the judicial system.

 
The case in brief
Full details of the case can be seen here. In short, it involves a high flying property developer, by the name of Harry Kakavas who is attempting to sue Crown Casino, a Melbourne (Australia) based casino, for losses incurred as a result of his gambling activities over a sixteen month period in 2005 and 2006.

Mr. Kakavas, who lost roughly 30 million Australian dollars (roughly $USD 23 million)  over a sixteen month period (including, at one stage, 2 million Australian dollars in the space of forty-three minutes), claims that Crown mad extensive efforts to facilitate and encourage his gambling behavior despite knowing that he suffered from a pathological gambling addition.

 
You can’t be serious
Difficult to believe though it is, apparently this is no joke, and neither Mr. Kakavas or his lawyers are mucking around.

That said, I find it somewhat difficult to take his arguments seriously.

Compulsive gambler or not, surely the idea that a gambler should be able to just sue the casino after choosing to blow all their money on a few bad bets is beyond any form of comprehension whatsoever.

Punters take the bet – they keep all their winnings and accept responsibility for their losses.

It’s simple and fair, and those unwilling to accept their losses should simply not bet.

 
Yes, gambling is addictive ..
Don’t get me wrong, I have a considerable degree of empathy for those who suffer from a gambling addiction. Like alcohol, gambling can be addictive, and the development of problems relation to compulsive behavior in this regard can happen to the best of us.

Because of this, it is right that casinos and other forms of gaming venues are subject to an especially high level of scrutiny with respect to their conduct, and under no circumstances whatsoever should they attempt to promote or encourage compulsive or irresponsible behavior in any way, shape or form whatsoever.

If indeed Crown did take steps specific steps to encourage the behavior of Mr. Kakavas (as is alleged by Mr. Kakavas but denied by Crown), then yes, such behavior was somewhat irresponsible and should not be condoned in any way.

 
.. but consumers have responsibilities as well
But businesses, in this case casinos, are not the only ones who face obligations with respect to the need for responsible conduct.

Consumers also have a responsibility, and at some point, I believe that each and every person must take personal responsibility for his or her own consumption related behavior.

In the case of gambling, consumers are not forced to frequent the premises of gambling related venues. Nor are they forced to place bets or to keep betting after sustaining a certain amount of losses.

No – these are consumer choices, and individual consumers must assume responsibility for the outcomes of their behavior.

Not only would forcing casinos to compensate punters for their own mistakes place the business operations of the casino concerned in undue jeopardy, it would also be entirely unfair.

 
Sending the wrong message
As a final point, allowing consumers to sue casinos for losses incurred whilst gambling sends completely the wrong message with respect to the need for responsible consumer behavior.

It would send the message that consumers do not need to take responsibility for their own actions, that it’s Ok to not to consume products or services which are on offer and that someone else (the manufacturer or service provider) can be blamed whenever you run into trouble.

This is not a positive message. Instead the message should read:

“You are responsible for your own consumer choices. You bet – you lose – your problem.”