A small bright spot in the murky world of corporate ethics

Laws tell us what we must not do and morals tell us what we ought not to do – whether illegal or not.

But ethics – when they exist – tell us what is the right and proper and desirable thing to do.

Far too many corporates seem to think that mere compliance with laws is sufficient as a code of ethics. Much trumpeted Corporate Social Responsibilities are primarily public relations and image building exercises with little relation to ethics. Token gestures of engaging in some social programme are assumed to be evidence of the existence of an ethical code but the reality is that most corporates have no ethics. They are content – like children – to let others tell them by law what is forbidden and then take the easy path provided by assuming that all behaviour which is not illegal is – by default – ethical.

As if it is not possible to be completely compliant and completely corrupt at the same time. British Aerospace and their utter lack of ethics being a case in point.

Retraction Watch carries the refreshing story of Wnt Research which shows that some bright spots still exist in the murky world of corporate ethics.

Two weeks ago, we covered the retraction of a PNAS paper on a potential breast cancer treatment, one that would make tumors that didn’t respond to tamoxifen respond to the drug. We learned earlier this week from a Retraction Watch commenter that Wnt Research, a company based on the breast cancer finding and other work, was about to go public.

In fact, their initial public offering (IPO) happened today, and you can follow the price of their stock — listed on the Stockholm Stock Exchange as WNT — here. But what we learned when we looked into the IPO was that it was originally scheduled for late November, and was delayed because of the retraction.

Tommy Andersson, one of the researchers on the now-retracted paper and Wnt Research’s chief scientific officer, told Retraction Watch that the company had initially planned on going public on November 26. They had written a memorandum describing the company’s work to date, and its plans, and the public was given a chance to invest before shares hit the Stockholm exchange. That memorandum included a mention of the PNAS paper, as follows (translated from Swedish):

The research group has even shown that combining Wnt-5a or Foxy-5 will increase the expression of estrogen receptors in estrogen-negative breast cancer cells. It turned out that human breast cancer cells exposed to Foxy-5 regained tamoxifen sensitivity, which is clear from the increased apoptosis and reduced cell growth as a response to the endocrine treatment. Likewise, the research group found that administration of Foxy-5 in the body brought back the expression of estrogen receptors in a mouse model. Apart from the therapeutic potential of these observations, there is a potential to use the outcome of estrogen receptors as a biological marker, which should advance research.

The deadline for investment was October 27, and a number of people responded, allowing the company to continue its work. But on November 11, Andersson and his colleagues realized there were serious errors in the paper, and that it would need to be retracted. When Andersson called Wnt Research’s CEO, Bert Junno, on the 12th:

He rapidly called upon an extra Board meeting on the 15th of November (the same day my email of retraction was sent to the PNAS office). At this meeting we decided to make a press release on this matter and this went out on the 16th of November.

We again had an extra Board meeting on the 19th of November to discuss what other things that we needed to do. We agreed that the short press release must be accompanied by an addition to the already published memorandum, the reason being that you cannot change in the original memorandum. The CEO wrote this addition together with the people at the office of the small Stockholm Exchange “Aktietorget” where the company was to be listed. We also decided to ask for legal advice in how to handle the public that had already paid for shares in the company.

The board held another meeting on the 22nd, during which they approved the addition to the memorandum saying that the PNAS paper had been retracted. They also did something that can only be described as the right thing: They decided to write all of the approximately 275 people who had invested in the company by the October 27 deadline and offer their money back:

The reason for this was that the lawyer advised us to act according to good morals rather than to what we were required to do by law. His belief was that this would pay off in the long run.

The memorandum addition was published on November 25. And some people did ask for their money back:

The offer to retract their investments in the company resulted in a net loss of investments, but we still obtained enough investments to continue our work.

All of that back and forth also meant that the IPO was delayed by three weeks, until today.

We find this story wonderfully refreshing. Imagine, a company bending over backward to let investors — and potential investors — know about problems with its data.

I can only agree that this little story proves that, unlike what Milton Friedman had to say, it is perfectly possible to be ethical in the corporate world.

Today I did my bit and bought some shares in Wnt Research. I know too little about cancer research to judge whether this was or will be a good buy. But I applaud their ethics and my share purchase is just to put my money where my mouth is.

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