Misconduct by some of the nation's largest companies has sparked a crisis in confidence in American business. Now business executives and others say it's time to recommit to the principles of ethical business. For guidance, it turns out Minnesota is a good place to start.

	Bill George, retired CEO of Medtronic, says business leaders must set the tone for ethical practices to restore faith in corporate America. MPR's Cathy Wurzer spoke with George about the recent corporate scandals. Listen to the interview.

The spate of corporate scandals has touched Minnesota, if for now only lightly.

Last week, the National Association of Securities Dealers fined US Bancorp Piper Jaffray $300,000, because a senior investment banker threatened to drop coverage of a company that had refused to do business with Piper.

Piper hasn't admitted any wrongdoing, nor will it say what's become of the accused employee.

Eden Prairie-based food company SuperValu recently announced an employee had underestimated expenses by about $20 million. Supervalu's stock dropped 21 percent the day the company made its problems public.

Supervalu CEO Jeff Noddle says Supervalu's problems differ from those of WorldCom's or Global Crossing, where he says upper management had to know employees were fudging numbers.

"I don't know what the dictionary definition of a scandal is," Noddle says, "but that's not what occurred to us. We had a misstatement, someone hid it from us; management would never condone such a thing. But in order for these other companies to have such a high level of misstatements, is a true scandal."

The problems at US Bancorp Piper Jaffray and Supervalu are miniscule compared to WorldCom's and Global Crossing's multi-billion-dollar scandals.

Nevertheless, they came at a time when trust in corporate America was plummeting day after day.

Supervalu's Noddle agrees corporate America has lost credibility. He says it'll take time to rebuild it.

"I know that trust has been weakened. And I'm angry about it just like everyone else. But I am convinced that most companies have the proper kind of leadership, and the proper kind of integrity. And those will emerge once we clean out those that aren't," Noddle says.

"We affirm the legitimacy and centrality of moral values in economic decision making. Because without them, stable business relationships and a sustainable world community are impossible." - The Minnesota Principles for Corporate Responsibility

Observers say the problem is that, with each new scandal, more people are believing that corporate America - even corporate Minnesota - is rife with impropriety.

"I don't believe any longer it's just one rotten apple," says Norman Bowie, who holds the Elmer Andersen Chair in Corporate Responsibility at the University of Minnesota's Carlson School of Management.

Bowie says the pressure to lie about profits grew through the '90s, when investors increasingly pushed for substantial returns.

"Our expectations about growth keep spinning higher and higher," Bowie says. "And the pressure on the companies spins higher and higher. And it gets into a cycle. I think we saw that cycle in the late '90s, and the bubble's burst."

Former Medtronic CEO Bill George says as the so-called "shareholder revolution" progressed, CEOs increasingly bowed to the whims of investors. He says strong, ethical leaders must resist the pressure.

"Organizations have to build on a solid base of values, and those values have to be practiced every day. And it's the leadership that has to set the example," says George. "And if the leaders don't set the example of integrity, of quality, of serving customers, and if they're only focused on the bottom line, then inevitably a company's going to get into trouble. People are going to cut corners, they're going to go to extremes to bring in sales orders, they're going to try to get to profit numbers that are unrealistic."

George says in general, Minnesota businesses are unique in their broad adherence to ethical principles.

He says the tradition stretches back at least 35 years, when Dayton Hudson CEO Ken Dayton implemented a series of business principles that companies across the state adopted.

Then, in the early 1990s, a group of local business leaders drafted a series of guidelines for ethical business. These are the so-called "Minnesota Principles."

"We affirm the legitimacy and centrality of moral values in economic decision making," the principles state. "Because without them, stable business relationships and a sustainable world community are impossible."

The Minnesota Principles became the basis for the Caux Round Table Principles, which companies around the world have adopted.

Ron James, president of the Center for Ethical Business Cultures at the University of St. Thomas, says it's no accident that these ethical principles came out of Minnesota.

"I think Minnesota business leaders demonstrated a lot of foresight, recognizing that businesses are a part of community - as are government, as are churches, as are schools, etc.," James says. "Business recognized that it played a key role through the creation of jobs, creating value for shareholders, in the fabric of life in this broader community."

He says a recommitment to those ethical principles will help rebuild trust in corporations.

And, as trust is the basis of most business transactions, James and others say ethical business is good business.

Caux Round Table Principles for Business