Americanas: A Series of Disloyalties

“LOYALTY IS THE MOST SACRED GOOD OF THE HUMAN HEART.” Seneca

News brought by the CPI (Parliamentary Commission of Inquiry) on the Americanas stores imbroglio states that the current president of the company publicly admitted the existence of accounting fraud and that the estimated R$ 25 billion loss was deliberately hidden in the financial statements over several years. It also states that the former directors are solely responsible for the accounting fraud and that they hid the information from the company's board of directors. In the market, the version of misalignment of information between management and the board of directors sounds strange, as it is said that the controllers have always been very active and that, not infrequently, they were directly involved in hiring the most senior executives from whom absolute loyalty was demanded. With a sense of betrayal, a counterattack by the former directors is now expected, which will lead to a bloody battle over who is guilty of the fraud.

The scandal began with a public complaint made by the company's former president, after only 10 days in office, which took everyone by surprise. To this day, questions remain as to whether this surprise complaint was made in his own interest, thus betraying the company, and leading it to the brink of bankruptcy and thousands of people to unemployment.

The focal point of the legal discussion points to the analysis of accountability for conduct, but from a philosophical point of view, loyalty will be under debate. In this case, it is worth analyzing the entire chain of breaches of loyalty involved in the episode. The Board of Directors appears disloyal to the Executive Board, which, in turn, appears to have acted disloyally to the market. The former president who filed the complaint appears to have acted disloyally to the company, and the auditing firms were simply incompetent. This raises some questions. Is loyalty a virtue? Are there limits to loyalty? To whom should one be loyal?

In general, it is considered a virtue. For Josiah Royce, American philosopher and author of "The Philosophy of Loyalty," published in 1908, loyalty is the primary virtue, "the center of all virtues and the central duty of all duties." He presents loyalty as the basic moral principle from which all others derive. However, we often find ourselves at crossroads that conflict with whom we should be loyal to. It is an ethical and moral concept. In much more complex societies such as today's, our networks of relationships are more extensive. We are taught to be loyal to our family, but also to our friends, our company, society, a cause, and most importantly, to Flamengo. It is therefore common for these interests to clash.

The loyal expect to receive only loyalty in return.

Loyalty is a two-way street. Nothing is expected in return except reciprocal loyalty. It is the formula on which trust is established in any relationship: personal, professional, and social. It is the ability to consider others altruistically and to stand by them in good times and bad. It should not be confused with fidelity, which stems from an obligation, while loyalty is associated with a connection to each individual's values. Thus, not all faithful people are loyal, as they may be following what they consider an obligation and not following their individual values. Therefore, more than being loyal to others, a person is loyal to themselves, their values, and their principles. That is why a breach of loyalty causes so much suffering. When one devotes one's life to a person, family, or company, with demonstrations of loyalty and sacrifice, and this loyalty is not reciprocated in the most acute moments, the disappointment is profound, with irreparable scars.

This brings us to the realm of motivations and personality. In the realm of people, that is, to whom one should be loyal, the issue falls into two categories: being loyal to an abstract entity, such as a company or a cause; and being loyal to people, or a group of people, such as friends or family. In the case of abstract entities, being loyal will not make the company or cause loyal to you. On the contrary, legal entities are motivated to do what is in their best interest at that specific moment and demand concrete acts of loyalty from their executives, even if this leads to personal sacrifices with a significant impact on their family, social life, and reputation. If you are an excellent professional, with exclusive dedication for long periods, it does not mean that your job is guaranteed if there is a desire for your position. A company executive who reports accounting crimes, even with good intentions, will never be seen as loyal to the company. For abstract entities, the prevailing concept is more closely linked to fidelity, since the relationship is established in reciprocal contractual obligations. It does not matter what internal policies, principles, and regulations of companies say, or even the cliché that it is people who make companies. In mass capitalism, companies are loyal to profit and the desires of their controllers. Therefore, when being loyal to a company, make sure you are prepared for the betrayal that it will eventually impose on you.

In personal relationships, however, there is no rule for resolving conflicts. These are managed according to each person's intrinsic values. If the family relationship is solid, there tends to be a natural loyalty to all its members. If friendships are genuine, with shared values, loyalty flourishes naturally, but if relationships are based on interests, loyalty will be faltering. Therefore, when choosing whom to be loyal to, personal relationships prevail over abstract entities. Choosing to be loyal to a company over your family is unnatural.

It remains, then, to address the motivation for loyalty. Here we enter a more objective and complex field. A criminal who is disloyal to his gang is always considered disloyal because he acts in his own interest and not for a moral purpose. However, an executive who betrays his company in pursuit of a noble cause, such as reporting environmental crimes, tends to be accepted by society—though not by the company he has reported—given the altruistic purpose of his conduct.

The popular saying goes that loyalty is priceless. In fact, it is similar to respect, since neither can be bought, but only earned. But there is a price to pay for loyalty. It will cost you relationships, friendships, or professional advancement, because you cannot be loyal to everything and everyone at the same time. The limits of loyalty are tied to the nobility of your motivation.