So wrote Wittgenstein about his work as a philosopher. Enron and the stream of cases that have followed in its wake have certain common elements that .confront business ethicists with Wittgenstein's bedrock. Our spade is turned. It is much clearer than it was a year ago what it is that we do.

Enron, to cite the leading example, made much of its sensitivity to sustainable development issues. The company impressed socially responsible investors with its investment in alternatives to fossil fuels. Its wind energy investment was believed to be a forward-looking effort in this regard. Was wind energy one of the many Enron enterprises promoted by the company's special purpose entities? If it was, we know that "sustainable development" was a flag of convenience for Enron management's real agenda -- distorting earnings, hiding losses, and having ready cash available for personal use.

Enron was also lionized as a model corporate citizen. The company's substantial beneficence to Texas institutions such as the M.D. Anderson Cancer Center and the University of Texas Law School offer eloquent testimony to Enron's public spiritedness.

In the field of Corporate Governance [another one of business ethics' many tributaries] the company had a widely admired board consisting of non business members whose broad experience and expansive vision afforded the public assurance that its interests would always be part of Enron's deliberations. In a stirring address to a 1999 Houston Conference on Corporate Governance, Enron's CEO Ken Lay said that "the most important thing we expect from board members . . . [is] to ensure legal and ethical conduct by the company and everyone in the company." Of course, two Enron directors were the President and Dean respectively of the aforementioned Anderson Cancer Center and the University of Texas Law School. Evidently, Ken Lay's awareness of one of business ethics' most rudimentary concepts -- conflict of interest -- was seriously defective. The same could be said for the directors who accepted contributions to their institutions.

Conflict of interest is not something that you learn in church or on your parents' knees. It is a real concept with some complicated and perhaps even counter-intuitive applications. The same could be said for moral hazard -circumstances that make it difficult for an individual to distinguish between personal and public good. Boards and CEOs failed to recognize the potential for moral hazard in options compensation. And the accounting, law, banking, and brokerage firms whose role it is to insist that their clients avoid conflict of interest and moral hazard situations failed to do so. The result was conflict-ridden boards that readily acceded to managed earnings.

An understanding by boards and CEOs of the need for full transparency and a demand for it from accountants, lawyers, bankers, and security analysts would have resulted in smaller profit claims and more long-term confidence in financial markets. Only an ethically challenged person would fail to recognize that this is not just a fair -- it is an essential one.

Indeed, commenting on what went wrong in the 90s, George Soros has written that "we can identify two specific elements: a decline in professional standards and a dramatic rise in conflict of interest." In Soros' view, lawyers, accountants, auditors, security analysts, corporate officers and bankers allowed the pursuit of profit to trump long-standing professional values. The social principles of which these "values" are an expression are, as Soros puts it, the "anchor" of financial markets.

The third ethics concept -- company developed business conduct standards -- is a much newer phenomenon, but it is essential in global markets that depend significantly on a company's capacity for self-regulation. No laws can successfully deter wrongful conduct without an effective compliance response from business institutions. And no compliance response that does not insist on an extra measure of prudence in company affairs beyond mere legal compliance will be entirely successful.

Since there ought to be widespread agreement on these points, one would think that business ethics would now be accorded new respect as an essential element in business education and practice. Of course, you and I know that this is not so. Enron and related cases have been used to argue that you can't teach business ethics. In all honesty, I must admit in this regard that Jeffrey Skilling would be a severe challenge to whatever pedagogical skills I may have. Recently, business ethics has been derided as little more than a hugely profitable public relations gambit to assure an anxious public and those few board members who care that all is well.

In brief, the argument is that you can't teach people to be ethical -- only parents and religious institutions can do that. Indeed, you cannot even cultivate a capability to be morally articulate. If anything, more effort needs to go into the teaching of "business law" -- which is a real thing.

These attacks ignore both the need to remedy deficiencies in the understanding of conflict of interest and moral hazard and the signal achievement of business ethics -- the compliance system. US compliance systems began as part of the Defense Industry Initiative. Following the adoption of the US Organizational Sentencing Guidelines, they were instituted by firms outside the defense industry. As US companies became increasingly active in global markets, they found that the compliance model was useful in helping to achieve common standards of business conduct in global operations. With the approval of the OECD Anti-Bribery Convention by 35 countries in 1997, the compliance model attracted interest from non-US companies. Compliance systems are simple in structure and regardless of the company or the culture in which they are used, they rely on four key elements: [ 1 ] top management commitment; [2] code of conduct; [3] implementation through discussion and training; and [4] ommunication systems for reporting and documenting questionable practices.

Despite this uncomplicated model, the compliance system has been widely criticized as unworkable outside the US because of its rule-based approach and its reliance on "whistleblowing" --- a practice that critics believe for some reason to be odious everywhere but the United States where it is thought to be widely admired.

This is not the place to go into these objections. In my work on The World Bank project on East Asian Private Sector Initiatives, I have seen many companies in that region adopt compliance systems. Rather than being excessively rule based, the training programs that are part of the best compliance systems have used discussion of situations that the company has actually confronted to develop a principle-based approach to difficult issues.

But the most important thing to be said about compliance programs is that they work for the limited purpose for which they are intended. No "rogue employee" in a large company with an effective compliance system has destroyed that company -- or, quite likely, caused it serious harm. The one recent example of an employee who bankrupted a company was Nicholas Leeson of Barings. A few years ago I saw a television interview with Leeson. In so many words and with a tone of regret, he said that he could not believe that his activities had gone unnoticed. If Barings had a compliance program, perhaps the bank would still be in business and Leeson might have been spared an extended stay in a Singapore jail.

There is little evidence that Enron, to cite just one example, had a compliance system worthy of the name. Although, as I said earlier, compliance systems have the limited purpose of preventing or limiting the damage that a rogue employee can inflict on the company or stakeholders, I don't know of a company with a highly regarded compliance system that is in trouble.

We have yet to devise compliance programs that exercise truly effective oversight of senior executive and director conduct, but we have the next best thing. Directors and CEOs that are truly committed to their companies' compliance systems are a fairly safe bet to stay out of jail.

At the heart of this director-CEO support is an understanding that ethics and compliance systems constitute a company's recognition that regulation and enforcement are not just the job of legislators, prosecutors and judges. It is the company's duty as well. Recognition of that fact is the single most important act of corporate citizenship. Without such an understanding, a company would not have a governance system worthy of the name. And it would lack the necessary capability for recognizing those market failure situations where the exercise of moral restraint is essential for sustainable companies.

Finally, it is worth noting that all the companies that have failed so catastrophically had the best legal advice. I am not here to deride the importance of law but it has its limitations. People go to lawyers to find out what the rules are and whether the act that they are contemplating runs afoul of the rules. These are the individuals who think that our courses afford them instruction on how far they can go before they can get into trouble. They aren't interested in the underlying principles to which the law gives imperfect expression. The people who are now on their way to jail do not find themselves in this situation because of poor legal advice. Their problem is a lack of moral curiosity for which a better understanding of ethics is the only cure.

This brief survey of conflict of interest and moral hazard failures balanced in part by compliance system success is but one personal testament to how the current crisis of confidence in business institutions has been immensely helpful in finding the business ethics bedrock. Doubtless, each of us has his or her own story to tell. We owe considerable gratitude to the cavalcade of scoundrels who have helped us, in Wittgenstein's phrase, to reach the point where the "spade is turned" and we are now inclined to say "this is simply what I do."