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Wednesday, March 16, 2011

An Ethical Meltdown in Japan: On the Toxicity of Tepco's Nuclear Power

According to The Wall Street Journal, Japan’s largest power provider, Tokyo Electric Power Co. (Tepco), faced the biggest challenge of its 50-year-history in "recovering from the damage done to its nuclear facilities and power systems by a devastating earthquake and tsunami." The New York Times reported on March 17, 2011, that "foreign nuclear experts, the Japanese press and an increasingly angry and rattled Japanese public are frustrated by government and power company officials’ failure to communicate clearly and promptly about the nuclear crisis. Pointing to conflicting reports, ambiguous language and a constant refusal to confirm the most basic facts, they suspect officials of withholding or fudging crucial information about the risks posed by the ravaged Daiichi plant."

According to The Wall Street Journal, when Tepco said early in the morning of March 16th "that a fire had broken out at the Daiichi plant’s No. 4 reactor, a reporter naturally asked how the fire had begun, given that just the day before the company had reported putting out a fire at that same reactor. The executive’s answer: ‘We’ll check. . . . We don’t have information here,’ he explained. After about two hours, the Tepco representative had the information: Turned out the smoke was coming not from reactor No. 4, but from reactor No. 3. If Tepco’s information had been delayed and vague, the reporters’ response was quick and direct. ‘You guys have been saying something different each time!’ one shouted. ‘Don’t tell us things from your impression or thoughts, just tell us what’s going on. Your unclear answers are really confusing!’"



                Tepco executives leave one of the many press conferences held during the disaster in 2011

The Wall Street Journal reported that "the fire confusion followed Tepco’s failure to confirm that the water level in at least one of its fuel-rod storage pools had plummeted, which the media had started reporting citing government sources. Only after several hours, by which point it had started pumping in new water, did the company finally confirm that the level was low. . . . (W)hen the company changed its explanation of conditions at the reactor, one frustrated reporter said, ‘You guys think we’re ignorant [about nuclear operations] so you can make your explanation very vague, but we are not!’ The government may not be any more satisfied than the press is with Tepco’s disclosure practices. Local media reports say the prime minister scolded the company’s executives for not calling him after an explosion at the plant. He had to learn about it from the TV.” On March 20th, The New York Times reported that questions had arisen on whether Tepco executives had "waited too long before pumping seawater into the plant, a measure that would ruin a valuable investment."
 
Analysis:

Tepco evinces an ethical meltdown, which is to say, a toxic lack of credibility caused by a series of unethical actions long enough to be viewed as a pattern indicative of a sordid psychology. Secondarily, the company illustrates the dangers to Japan in the incestuous nature of Japanese business and government relations, otherwise known as amakudari, wherein regulators retire to better-paid jobs in the very industries they once policed. This system operates in private advantage at the expense of the Japanese people, whose fortitude and self-restraint in the wake of the earthquake and tsunami provide the world with an enduring model. Any residual resentment among descendants of the allies in World War II against the Japanese people must surely have melted away in the early spring of 2011 along with the last remaining dirty snow from the arduous albeit non-nuclear winter. In other words, the Japanese have the respect and admiration of the world, even if we are critical of the Japanese officials in business and government who have repeatedly forsaken the public good for their own private advantage. According to what Susum Hirakawa, a professor of psychology at Taisho University, told The New York Times on March 17th that the Japanese people were just as skeptical: “The mistrust of the government and Tepco was already there before the crisis, and people are even angrier now because of the inaccurate information they’re getting.” In other words, an ethical meltdown had occurred--its toxic radiation infecting the polite, patient people just when the situation at the Daiichi plant was most dire.
 
The New York Times remarked on the Ides of March that “the confusion is emblematic of days of often contradictory reports about what is happening at the plant.” Tepco “cannot know for sure what is happening in many cases because it is too dangerous for workers to get close to some reactors.” With 750 workers evacuated, a skeleton crew of a mere 50 workers were stuggling “to keep hundreds of gallons of seawater a minute flowing through temporary fire pumps into the three stricken reactors, Nos. 1, 2 and 3, where overheated fuel rods continued to boil away the water at a brisk pace.” As the small crew of technicians braved radiation and fire, they “became the only people remaining at the Fukushima Daiichi Nuclear Power Station on [March 14th] — “and perhaps Japan’s last chance of preventing a broader nuclear catastrophe.” They could hardly be blamed for not being at the world’s beck and call for information; they were literally putting their lives at risk “to prevent full meltdowns that could throw thousands of tons of radioactive dust high into the air and imperil millions of their compatriots.” That is, they were tasked with diverting a catastrophe and thus saving Japan (and perhaps even the American republics downwind). At the same time, were their bosses at a safe distance intentionally manipulating the data and delaying the use of seawater to save money and minimize blame, the verdict would be different in spite of their workload and stress at the time, especially given Tepco’s mixed track record when it comes to self-aggrandizing behavior (e.g., lying).
 
Contributing to the frustration were undoubtedly memories of Tepco’s checkered past with regard to being truthful with the public regarding safety precautions and even when the company had been culpable. For example, The New York Times reports that in the summer of 2003, Tepco “was forced to close all 17 of its nuclear plants temporarily after admitting that it had faked safety reports for more than a decade.” Back in August of 2002, according to The Japan Times, MITI had “found evidence of falsified records from the late 1980s to early 1990s regarding cracks at Tepco's Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture, and the No. 1 and No. 2 Fukushima nuclear plants in Fukushima Prefecture.” The Economy, Trade and Industry minister Takeo Hiranuma reacted to the news by telling reporters that “Tepco should take seriously the fact that it betrayed the people's confidence in nuclear power. . . . It is absolutely abominable that this incident caused the people's confidence to be largely lost in nuclear energy, which is a pillar of the nation's energy policy." More than being a pillar, nuclear energy is inherently so dangerous that that industry ought to be the last to tolerate fabrication—particularly on safety! In any industry, nothing undercuts credibility more than a series of lies, for the latter points to the involvement of sordid personalities that are tenaciously and notoriously intractable. For such a personality to be invested with power in the nuclear power industry is something the human race can ill afford. To the extent that the Japanese government has not pressured Tepco's board to replace upper management, and has even enabled Tepco by keeping accidents from the public, the government officials (and parties) should be held accountable. In short, the rest of the world was justified in holding the Japanese government, and ultimately the people, responsible for Tepco being allowed to continue in its furtive ways.
 
"Everything is a secret," said Kei Sugaoka, a former Tepco nuclear power plant engineer in Japan who has since moved to California. "There's not enough transparency in the industry." CBS News also reports that in 1989 Sugaoka had "received an order that horrified him: edit out footage showing cracks in plant steam pipes in video being submitted to regulators. Sugaoka alerted his superiors in the Tokyo Electric Power Co., but nothing happened -- for years. He decided to go public in 2000. Three Tepco executives lost their jobs." Even in spite of this belated (and all too rare) societally-induced accountability, company executives refused to allow the International Atomic Energy Association (IAEA) to conduct inspections after a 6.8 earthquake hit the nuclear plant at Nigata in July of 2007. Such a defensive stance could be expected from persons who lie to cut corners. It took the prefecture, or county, to insist that the inspection be done despite Tepco’s objection.
 
Actually, according to The Japan Times, “The government was initially reluctant to let the IAEA inspect the plant but changed its stance after receiving petitions from local officials eager for a third-party assessment to ease public concern over the safety of Japan's nuclear plants.” According to CBS News, the nuclear power industry in Japan has been "in a comfy relationship with government regulators often willing to overlook safety lapses." This is why the firing of the three top executives had undoubtedly been societally rather than governmentally induced. Had Tepco not gotten away with lying about its safety reports for years, the local officials urging the IAEA inspection (probably themselves pressured by worried citizens) might not have been so adamant that the prefecture intervene even if officials at that level were too cozy with Tepco.
 
Therefore, the Japanese media and people had more than sufficient reason in the wake of the tsunami in March of 2011 to suspect that the dearth or confused nature of information from the plant nearing meltdown might have been more than confusion or unobtainability. The New York Times reported on March 17th that government officials were "almost completely reliant" on Tepco for information on the Daiichi plant. If the government officials need not have been reliant, they may have been guilty of mistaken, and perhaps even negligent complicity, or at least naivete, given Tepco's track-record in distorting and falsifying information submitted to the government. Tepco’s reputational capital had suffered such a meltdown by 2011 that even the mere possibility of subterfuge naturally claimed the high ground in the public’s eye; the record of lies had deprived the company of the benefit of the doubt, even as its employers were risking their very lives heroically to save Japan. Such is the severity of the toxicity of an ethical meltdown—even diverting a natural catastrophe and saving millions of people is not enough to undo it. Once credibility has been lost, it is extremely difficult to build it back up. Even if expedient strategic choices seem convenient in the short term, they can be very costly in the long term.
 
Lest business practitioners around the world looking back at Tepco’s trajectory feel secure in complacency, knowing that their respective companies could not suffer a similar ethical meltdown because they have instituted codes of ethical conduct and ethical procedures, it should be pointed out that Tepco had instituted a rather sophisticated system in 2002. One might remember, moreover, the delegates’ discussion in the U.S. Constitutional Convention regarding the feebleness of mere parchment in holding power back when it is not checked against itself in a separation of power as interest pitted against interest. The mere existence of a corporate code of ethics and an “ethics line” in a company with a squalid corporate culture is no check on unethical conduct. In fact, the PR use of such an apparatus can actually enable sordid, narcissistic managers to be even more unethical because the window-dressing can absorb the slack. For a time, the public's perception of a company's commitment to "corporate citizenship" can act as a default having its own momentum in blocking recognition of the onslaught of unethical conduct. Unfortunately, unsavory executives know all too well how to take advantage of this sociological phenomenon of group-think. In the cas of Tepco, lies over decades had depleted any such PR from the company's organizational ethical-infrastructure. Accordingly, it made no difference to the frustrated people in Japan (and around the world) who instinctively doubted the executives’ willingness to deliver information rather than self-serving propaganda even in the face of a catastrophic nuclear meltdown. What kind of a person is that self-absorbed in such a context? Can a corporate code of ethics stand up to such a psychology?
 
Even if not intended as mere window-dressing, corporate ethical statements, procedures and organizational design are enervated or even impotent relative to a corporate culture formed by people all too comfortable taking the road easiest travelled when the travelling gets bumpy. According to TEPCO’s web-site, “In September 2002, TEPCO implemented countermeasures to guard against a reoccurrence of incidents with regard to inspection and maintenance operations at our nuclear power stations. At the same time, the Company announced four commitments in the interest of creating a ‘Corporate system and climate of individual responsibility and initiative.’ The actualization of the four commitments has been adopted as our social mission, and the entire Company is deeply involved in the effort.” This includes the following imperative, according to the company: “Disclose information on the management and operation of our nuclear power stations, so the public is able to confirm that our plants are being operated safely” and “Creating systems to ensure the observance of ethics.”

                                                     From Tepco’s web-site announcing the company's ethical system in 2002.

Tellingly, Tepco’s corporate ethical system, although organizational in design and formal extent, was to be geared to individual responsibility—meaning that individual employees should take responsibility for their actions; nothing is said about corporate responsibility—executives and the company spokespersons taking responsibility for corporate mistakes. Moreover, as the company’s record attests, simply having a formal ethical code and a “social mission,” and even a formal intent to disclose even inconvenient information, does not necessarily have any actual bearing or impact in flesh and blood terms where motives at the moment are in line with power. That is to say, the tendency to hide bad information from the public out of fear is real because it is felt, whereas the existence of something written down on plaque or in an organizational structure chart is mere parchment. The challenge is to deal with the way top executives individually and as a group deal with fear and discomfort when the company itself screws up or performs badly, financially or otherwise, because they typically have the power to act in moments of crisis as they will. In the end, it may come down to the type of people that are hired (ultimately by the board of directors). It is unlikely that a company with a bad habit of ethical slights can change without a wholesale change in management, at least at the top and middle levels, and in the people who have done the hiring for those levels.

Punctum saliens, it should not be presumed that the systemic risk of an ethical meltdown is only catastrophic in the case of nuclear energy. The additional examples of BP executives lying about safety and Lehman managers using Repo 105 to understate the bank’s debt and cost-based real estate valuations to essentially overstate the value of of the bank's real estate-based assets even after the real estate market had tanked strongly suggests that mankind entered a new era in the twenty-first century. Specifically, the wherewithal or puissance of big business to cause large-scale or systemic devastation from ethical meltdowns had arrived. Ultimately, beyond even the question of whether regulatory agencies have been captured by industries too big to fail, the human race is perhaps ready to confront the possibility that we have allowed private capital to reach such immense concentrations that its organizations can sport such inherently large and systemically-dangerous tasks as holding highly radioactive bars on the shore, drilling deep water wells going far beyond human reach, and inventing sophisticated toxic derivatives of unknown depth--the collapse of which possibly giving rise to the end of the global financial system “by Monday.” Has the human mind yet adjusted to, let alone comprehend, what catostrophic damage its elongated artificial arms can produce even without being fueled by the hydraulic fluid of ambition and greed? The sheer scale of mankind's modern ventures warrants much greater trepidation and humility than is the case, especially given the lessons that humanity is capable of learning from looking systemically at what occurred during September of 2008, April of 2010, and March of 2011. Lest we have faith in our written parchments to prevent ethical meltdowns as in such cases, we have only to look at the presumptuousness inherent in human nature to motivate us as a species to redouble our efforts to protect ourselves from ourselves by restraining our appetite for more, bigger, and larger. Plus haut, plus loin, plus fort! Sans fin? Vraiment? Si oui, quel dommage pour nous . . . notre petite humanité. Parfois, moins est plus.