home territory. take an example from my own country, in the form of the bank of scotland ’ s proposed joint venture in telephone banking with the american evangelist dr pat robertson. this was designed to enable the bank to expand abroad with the help of new technology and to attract us $ 3 billion in deposits. on the face of it this appears to be a reasonable business decision, so where does the ethical dimension arise? the problem, as you may be aware, is that dr robertson is not simply a religious leader, he is also a right wing politician with controversial views on a variety of issues, including gay rights. news of the bank of scotland ’ s proposed business link with such a person did not go down very well with gay activists or trade unionists in scotland or indeed with shareholders and the public generally. matters were not helped when dr robertson was highly critical of moral values in scotland. the bank was forced to pull out of the deal, to pay compensation to dr robertson and to issue a public apology in which it stressed its “ long - standing commitment to ethical values ”. despite the apology, the whole episode was widely regarded as a public relations disaster. what lessons can be learned from this episode? the first, i suppose, is that banks need to be careful about business relationships with controversial politicians, whether of the right or left wing variety. the second is the increasing power of the media and social pressure groups to throw the spotlight on what they regard as “ unethical ” business activities. in the case of banks, such activities might include financing the arms trade or industries that damage the environment. the third is the way in which ethical values change and how they can differ between societies : anti - gay attitudes are no doubt acceptable in the mid - west of the united states, but they were clearly felt to violate modern notions of fairness, equality and non - discrimination in modern - day scotland. the final point is how small the global market place has become and how events in one country can impinge on others. the chairman of the bank commented that they had not foreseen how the controversy surrounding dr robertson would cross the atlantic to scotland where he has no political constituency or business. this provoked the comment that the bank did not appreciate how new technology has shrunk the world. the moral of the story is that banks need to consider how their actions – anywhere in the world – will affect their customers or be perceived by them. but customers are not the only people the banks have to worry

mr carse discusses the importance of ethics in banking speech given by mr david carse, deputy chief executive of the hong kong monetary authority, at the banking conference on business ethics in hong kong on 15 september 1999. * * * ladies and gentlemen, i am pleased to have the opportunity to speak today at this important conference on business ethics. this is an area that is becoming a growth industry, and it is one that it is particularly relevant to banks given the position of trust that they occupy. indeed, this is one of the daunting things about giving a speech about the importance of ethics in banking. it all seems too obvious. after all, what do we mean by ethics in business? it means, i would suggest, trying to be a good corporate citizen ; trying as an organisation to adhere to certain ethical values ; and trying to do the right thing by all the various stakeholders – customers, employees, suppliers and shareholders – that any business organisation has. it means, as one writer has put it, “ choosing the good over the bad, the right over the wrong, the fair over the unfair ”. put this way, is there any respectable bank that would claim not to attach high importance to core ethical values such as honesty, integrity, fairness, responsible citizenship and accountability? is there any bank that would claim that it was right to accept bribes in return for loans, to lend to connected parties and to cheat customers? unfortunately, it is not as simple as this. if it were the case that business ethics simply represented values which everyone accepted and put into practice, this conference and my speech would both be superfluous. however, there is sometimes a gap between what banks claim and what they do. as the asian crisis has demonstrated, ethical values are still not firmly entrenched and followed in many banks in the region. bribery and corruption have been one of the root causes of the banking problems, and the bank bali scandal has shown that the process of reform still has a long way to go. however, leaving aside such blatant examples of unethical behaviour, even the most well meaning of banks are going to confront moral dilemmas in the course of business. these dilemmas are more complex than the simple : “ should i lie, cheat or steal variety? ” they pose difficult choices that have the potential to damage reputation and lead to financial losses. the problem is that in an increasingly complex business environment the choice is not always the simple one between what is right and