BECSR Week 2 Sebastian Boo

Business Ethics &
Corporate Social
Responsibility
Lecture 2
15th September 2022
Sebastian Boo
Faculty of Business and Management
Review of Week 1/ Chapter 1
• What is ethics ?
• Study of how we decide what is right and wrong behaviour
• Morals
• Rules/principles about good and behaviours in specific situations
• Where do they come from? Family, school, culture etc.
• Values
• What is valuable to you in your life (friendship, success, health).
Intrinsic values good in them selves. Instrumental values help you get
things you value
• Conflicts between values
• Copyright © 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Review of Week 1/ Chapter 1
• Ethical theories
• Virtue ethics – aiming to be your best self – live life according to the
ideal of who you want to be
• Utlitarian ethics – what is good is what is good for the greatest
number
• Universal ethics –stick to the moral principl (follow the rule e.g. never
kill) regardless of the situation (even if you are being attacked)
• Ethical relativism
• The situation/ the culture, the individual determine the ethical
principles that are used to decide what to do.
• Where do they come from? Family, school, culture etc.
• Ethical dilemmas and ethical reasoning
Copyright © 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Resolving Ethical Dilemmas 2
Arthur Dobrin’s questions for

resolving an ethical dilemma: BUT based on the following
• What are the facts? key assumptions:
• What can one guess about the facts one doesn’t • Sufficient time is there for the
know? degree of contemplation that
• What do the facts mean? such questions require.
• What does the problem look like through the • Enough information is
eyes of the people involved?
available to answer the
• What will happen if one chooses one thing rather questions.
than another?
• Dilemma presents alternative
• What does one’s feelings tell oneself?
resolutions for one to select
• What will one think of oneself if one decides one from.
thing or another?
• Can one explain and justify one’s decision to
others?
Chapter 2
Defining Business
Ethics
Learning Outcomes
• Define the term business ethics.
• Identify an organization’s stakeholders.
• Discuss the position that business ethics is an oxymoron.
• Summarize the history of business ethics.
• Identify and propose a resolution for an ethical dilemma in
your work environment.
• Explain how executives and employees seek to justify
unethical behavior.
Learning Outcomes
• Define the term business ethics.
• What does business ethics mean?
• Identify an organization’s stakeholders.
• What are the stakeholders of an organization?
• Discuss the position that business ethics is an oxymoron.
• What does it mean that business ethic is an oxymoron?
• Summarize the history of business ethics.
• Identify and propose a resolution for an ethical dilemma in
your work environment.
• Explain how executives and employees seek to justify
unethical behavior.
Business ethics
• Ethics: The manner by which one tries to live one’s life
according to a standard of right or wrong behavior.
• In both how one thinks and behaves toward others and how one
would like others to think and behave toward them.
• Business ethics: the application of ethical standards to

business behavior.
• Why is this important ?
• In 2002 the US economy faced 7 of the largest bankruptcy in
US corporate history such as World Com
• In 2007-08 more huge bankruptcy e.g. Lehman Brother
• Recession with negative economic and social impacts for
many people across the world (world economy declined by
50%)
Business ethics
• Unethical behaviour was largely responsible for the
bankruptcy that .
Some example from the US
Worldcom accounting fraud
• Worldcom incorporated executives Scott D. Sullivan and David F. Myers. were
charged with seven counts of securities fraud
• This telecommunication Corporation held the record for biggest bankruptcy in
2002 before the Lehman Brothers collapse took its unwanted title six years
later. Throughout the early 2000s, the company was utilizing a complex
scheme of adjusting its books to hide the considerable losses,
• Although I would like more than you know, to answer the questions that you and your
colleagues have about Worldcom. I've been in instructed by my counsel not to testify based on
my fifth amendment constitutional rights.
• By 2003, It's thought that their total assets had been fraudulently inflated by
around $11 billion. In 2005. Former CEO Bernard Ebbers was convicted of
various types of fraud that would keep him behind bars for 25 years. A
sentence many would say was befitting someone who deceived so many.
• Hopefully, it will deter people from hurting investors, former employees like
myself, who basically have little or no recourse except for a class action lawsuit.
Lehman Brothers bankruptcy
• Stocks all around the world are tanking because of the crisis on Wall Street. The 2008
financial crisis was a tough time for reckless investment banks, as Bear Stearns found out.
But the Lehman Brothers collapse was the economic events greatest victim.
• The financial services firms leveraging of borrowed money caused the biggest
bankruptcy in US history in 2008. And the company fizzled out of existence and a rapid
decline that enhanced the economic devastation of the ongoing crisis.
• So you've been able to pocket close to half a million dollars. And my question to you,
there's a lot of people ask, is that fair, for the CEO of a company that's now bankrupt, to
have made that kind of money, it's just unimaginable to so many people,
• News emerged that executives increased their pay just before the bankruptcy and
that accounts had been altered to hide the bank's poor financial position. This case
stands as the perfect example of the culture of excess causing worldwide suffering for
billions of people.
• This report comes just short of suggesting this is by no means an accident, but instead
one of the greatest crimes ever perpetrated against a group of people. This crime and
accounting fraud perpetrated by bank CEOs against the American taxpayer and enabled
by the US government.
Tyco International Theft
• Dennis Kozlowski and Mark H. Swartz were infamous for their extravagant
lifestyles that were built through the success of the security systems company
known as Tyco International Limited. And in 2002, they were accused of
stealing over $150 million from the business, the then CEO and then CFO
contended that the board had authorized these payments as bonuses. The
following trial was something of a sham, but eventually both men were
sentenced to up to 25 years in prison during a retrial, due to the duo's
falsification of records. Tyco was forced to pay almost $3 billion dollars to
defrauded and likely very angry investors
Recognition that lack of ethics in business
• Why ?
• An attitude that “business is business”
• So long as we make money nothing else matters
• In business ethics is not relevant
• Ford Pinto example show clearly how in the past ethics not
considered seriously
Ford Pinto
Ford knew there was a safety problem with the fuel tank
Cost-benefit analysis 11US$ (8 RMB) fix be car would solve the safety problem
But if 12.5 million car recalled it would cost 137 million dollars
This would save 180 lives and 180 serious injuries
Using the figure of 200,000 US$ per human life Ford would have to pay if driver died, this
means fixing the car save Ford 49 million dollars BUT
137 million (to fix the car) – 49 million saved in compensation to family of killed drivers
results in net loss of 87 million
Therefore, Ford decided not to fix the car
too expensive !
Justifying Unethical Behavior
• Belief that the activity is within reasonable
ethical and legal limits.
• Belief that the activity is in the individual’s or
the corporation’s best interest.
• Belief that the activity is safe because it will
never be found out or publicized.
• Belief that because the activity helps the
company, it will be condoned, and the
perpetrator will be protected.
Business ethics
• Business need to recognize the identity of the key players
impacted by any potentially unethical behavior—the
stakeholders.
• In workplace, people can identify the ethical dilemma where
their personal values may be placed in direct conflict with
actions they need to take considering the interests of other
important stakeholders.
Business Ethics
Can be approached from two perspectives:
• Descriptive ethics: summation of the customs,
attitudes, and rules that are observed within a
business.
o Documentation of what is happening. (what do
people think is right?)
• Normative (prescriptive) ethics: evaluation of the

degree to which the observed customs, attitudes,
and rules can be said to be ethical.
o Recommendation of what should happen.
(How should people act?)
In either case, business ethics should not be applied as

a separate set of moral standards or ethical concepts
from general ethics. Ethical behavior, it is argued,
should be the same both inside and outside a business
situation.
Examples
Descriptive ethics Normative ethics
“68% of employees don’t “It is wrong for a CEO to

like the aggressive make 200 times as much as
leadership style.” a front-line employee.”
“9 out of 10 employees “Companies should take

agree that punctuality is greater responsibility for the
important in our company” environmental damage they
do.”
What are ethical/unethical behaviours in the workplace?
Example of ethical behavior in the Unethical workplace behavior
workplace
Obey the company’s Rule & regulation Lies
Communicate Effectively Taking Credit for Others Hard Work
Develop Professional Relationships Verbal Harassment/Abuse
Take Responsibility Violence
Professionalism/Standards Non-Office Related Work
Be Accountable Extended Breaks
Uphold Trust Theft/Embezzlement
Show Initiative without being told Sexual Harassment
Respect Your Colleagues Corrupt Practices
Work Smarter Nepotism/Cronyism
Why Business Ethics is important
• Like finance and marketing, ethics has become an essential
business function. Why?
Why business Impact?
ethics?
Ethics in Building on a foundation of ethical behavior helps create long-
Leadership lasting positive effects for a company, including the ability to
attract and retain highly talented individuals, and building and
maintaining a positive reputation within the community. Running
a business in an ethical manner from the top down builds a
stronger bond between individuals on the management team,
further creating stability within the company.
Employee Ethics Employees make better decisions in less time with business ethics
as a guiding principle; this increases productivity and overall
employee morale. When employees complete work in a way that
is based on honesty and integrity, the whole organization
benefits.
The Bottom Line Business ethics cultivates trust, which strengthens branding and
sales, it can improve profitability.
Shareholder’s view Stakeholder’s view
‘The Social Responsibility of Managers should aim to ‘balance’
Business is to Increase its Proﬁts the interests of all stakeholders.
VS
R. Edward Freeman
Milton Friedman
(1912 –2006) (1951 -)
Economist Philosopher
Stakeholders
Stakeholder: Someone with a share or interest in a
business enterprise.
• Not every stakeholder will be relevant in every business
situation.
• E.g., Customers would not be involved in payroll decision between the
organization and its employees.
• E.g., Not all companies use wholesalers to deliver their products.
Concerns in terms of ethical operations.
• Involvement of the stakeholders with the actions of the
organization.
• Extent to which they would be impacted by unethical
behavior.
Stakeholders
Stakeholder: Someone with a share or interest in a
business enterprise.
• Not every stakeholder will be relevant in every business
situation.
• E.g., Customers would not be involved in payroll decision between the
organization and its employees.
• E.g., Not all companies use wholesalers to deliver their products.
Concerns in terms of ethical operations.
• Involvement of the stakeholders with the actions of the
organization.
• Extent to which they would be impacted by unethical
behavior.
Figure 2.1: Stakeholder Interests
Stakeholders Interest in the Organization
Stockholders or • Growth in the value of company stock.
shareholders • Dividend income.
Employees • Stable employment at a fair rate of pay.
• A safe and comfortable working environment.
Customers • “Fair exchange”—a product or service of acceptable value and quality
for the money spent.
• Safe and reliable products.
Suppliers/vendor • Prompt payment for delivered goods.
partners • Regular orders with an acceptable profit margin.
Retailers/wholesal • Accurate deliveries of quality products on time and at a reasonable
ers cost.
• Safe and reliable products.
Federal • Tax revenue.
government • Operation in compliance with all relevant legislation.
Creditors • Principal and interest payments.
• Repayment of debt according to the agreed schedule.
Community • Employment of local residents.
• Economic growth.
• Protection of the local environment.
Figure 2.2: Stakeholder Impact from Unethical Behavior
Stakeholders Interest in the Organization
Stockholders or • False and misleading financial information on which to base investment
shareholders decisions.
• Loss of stock value.
• Cancellation of dividends.
Employees • Loss of employment.
• Not enough money to pay severance packages or meet pension
obligations.
Customers • Poor service quality (as WorldCom struggled to combine the different
operating and billing systems of each company it acquired, for
example).
Suppliers/vendor • Delayed payment for delivered goods and services.
partners • Unpaid invoices when the company declared bankruptcy.
Federal government • Loss of tax revenue.
• Failure to comply with all relevant legislation.
Creditors • Loss of principal and interest payments.
• Failure to repay debt according to the agreed schedule.
Community • Unemployment of local residents.
• Economic decline.
An ethical crisis: is business ethics an oxymoron?
• Over the two decades, the ethical track record of

many corporations lead us to believe that no ethical
policies or procedures have been in place—there was
an ethical crisis.
• Many business organizations have been unable to
tackle:
• Unethical concerns that can arise in the business
environment
• Impact that such unethical behavior can have on
the stakeholders of an organization
Oxymoron
poor billionaire
Oxymoron
old baby
Oxymoron
ugly princess
Ethical Business
An oxymoron ?
Is Business Ethics an Oxymoron?
Unfair to brand every organization as fundamentally
unethical in its business dealings.
Oxymoron: The combination of two contradictory
terms, such as “deafening silence” “jumbo shrimp” “the
most familiar stranger”, “the poor billionaire”
Numerous prominent organizations that were
previously held as models of aggressive business
management have later been proved to be
fundamentally flawed in their ethical practices.
Corporate governance: System by which business
corporations are directed and controlled.
• The standard of corporate governance appears to be
at the lowest level in business history:
1. Several prominent organizations—Enron, WorldCom, Lehman
Brothers, Bear Stearns—have been found to have hidden the true
state of their precarious finances from their stakeholders.
2. Others—Adelphia Cable, Tyco, and Merrill Lynch—have been found
to have senior officers who appeared to regard the organization’s
funds as their personal bank accounts.
3. Financial reports are released that are then restated at a later date.
4. Products are rushed to market that have to be recalled due to safety
problems at a later date (Toyota).
5. Organizations are being sued for monopolistic practices (Microsoft),
race and gender discrimination (Walmart, Texaco, Denny’s), and
environmental contamination (GE).
6. CEO salary increases far exceed those of the employees they lead.
7.CEO salaries have increased while shareholder returns have fallen.
8. CEOs continue to receive bonuses while the stocks of their companies
underperform the market average and thousands of employees are being laid
off.
• Positive outcome: Increased attention to the need for third-party guarantees
of ethical conduct and active commitments from the rest of the business world.
• Institutions such as the Ethics and Compliance Officer Association
(now part of the Ethics and Compliance Initiative (ECI)), the Ethics
Resource Center (also part of the ECI), and the Society of Corporate
Compliance and Ethics, among others, now offer organizations clear
guidance and training in making explicit commitments to ethical business
practices.
Factors Ensuring Ethical Conduct
• The recent negative publicity has served as
a wake-up call for many organizations to
take a more active role in establishing
standards of ethical conduct in their daily
operations.
• One of the key indicators in this process has
been the increased prominence of a formal
code of ethics in an organization’s public
statements.
• Code of ethics: Company’s written
standards of ethical behavior that are
designed to guide managers and
employees in making the decisions and
choices they face every day.
• Ethical: More stakeholders are considered
Code of ethics
The Ethics Resource Center (ERC) defines a Code of Ethics as:
"..a central guide to support day-to-day decision making at
work. It clarifies the cornerstones of your organization – its
mission, values and principles – helping your managers,
employees and stakeholders understand how these
cornerstones translate into everyday decisions, behaviors and
actions. While some may believe codes are designed to limit
one’s actions, the best codes are actually structured to
liberate and empower people to make more effective
decisions with greater confidence."
Dual Function of Code of Ethics
Code of ethics is a company’s
written standards of ethical
behavior that are designed to
guide managers and employees
in making the decisions and
choices they face every day.
Serves as:
• A message to the organization's
stakeholders.
• Represents a commitment to the
highest standards of ethical
behavior.
• An internal document.
• Represents a guide managers and
employees in making the decisions
and choices.
Figure 2.3: A Brief History of Business Ethics 1
Decade Ethical Climate Major Ethical Business Ethics

Dilemmas Developments
1960s Growing concern over • Pollution. • Consumers Bill
the power and influence • Profits over of Rights.
of the military- people. • Corporate
industrial complex • Civil rights. codes of
leads to social unrest • Product safety conduct.
and anti-war protests. • Job security. • Expectations
Increased consumer of equality,
activism and the social justice,
development of a more and economic
adversarial relationship stability.
between employees and
management.
Decad Ethical Climate Major Ethical Business Ethics

e Dilemmas Developments
1970s Major scandals draw • Pollution. • 1977 Foreign
attention to unethical • Labor issues: Corrupt
conduct. Nixon's workplace Practices Act
Watergate leads to safety, wage (FCPA).
questions about ethics in equality, • Business
government. Greater forced labor. ethics gains
corporate awareness of • Covering up credence as a
public image. Recession unethical distinct area
exacerbates conduct to of academic
unemployment and labor protect study.
issues. corporate • 1977 Ethics
image. Resource
Center (ERC)
founded.
Decad Ethical Climate Major Ethical Business Ethics

e Dilemmas Developments
1980s Aggressive downsizing • Savings and • 1986 Defense
by corporations Loan scandal. Industry
redefines the social • Bribery and Initiative on
contract between corruption in Business Ethics
employers and international and Conduct (D I
employees. Loyalty contracts. I).
erodes in the face of a • Waste and • 1986 False
clear message of fraud in Claims Act
expendability. government amended to
Stakeholder model contracting control waste,
introduced as a and defense fraud and abuse
construct for business spending. in federal
ethics decisions. spending.
Decade Ethical Major Ethical Business Ethics

Climate Dilemmas Developments
1990s Expansion of • Financial fraud. • 1991 Federal
the Internet • Avoidance of Sentencing Guidelines
facilitates regulations by for Organizations
global opening (FSGO).
commerce manufacturing • Class-action lawsuits.
and presents plants in • Legal precedent for
new ethical developing Board of Directors’
challenges. countries. responsibility for
Corporate • Corporate business ethics.
liability cases liability for • Ethical performance
increase. personal documented in annual
damage (Dow report (Royal Dutch/
Chemical, Big Shell International).
Tobacco).
Decade Ethical Climate Major Ethical Business Ethics

Dilemmas Developments
2000s Increased concerns that • Cyber crime. • 2002 Sarbanes-
business ethics was being • Falsifying financial Oxley Act (SarBox).
taught in business reports. • Anti-corruption
schools but not practiced • Privacy issues efforts grow.
in the marketplace. A (data mining and • Emphasis on
series of financial identity corporate social
scandals (Enron, protection). responsibility
WorldCom, HealthSouth) • International (CSR).
prompted calls for corruption. • 2010 Dodd-Frank
increased regulations and • Loss of privacy— Wall Street Reform
harsher penalties. employees versus and Consumer
employers. protection Act.
Source: Adapted from Ethics Resource Center, “Business Ethics Timeline,.” 2002.
Doing the right thing in business
• When employees observe unethical behavior

(e.g., fraud, or theft of company property) or are
asked to do something that conflicts with their own
personal values, the extent of the guidance
available to them is often a series of clichés:
• Consult the Company Code of Ethics.
• Do what’s right for the Organizations
Stakeholders.
• Do what’s legal.
• Do what you think is best (‘use your best
judgment’).
Ethical Dilemmas in Business-Example 1
You have worked at the same company with your best friend
for the last 10 years—in fact, he told you about the job and
got you the interview. He works in the marketing department
and is up for a promotion to marketing director—a position
he has been wanting for a long time. You work in sales, and on
your weekly conference call, the new marketing director—
someone recruited from outside the company—joins you.
Your boss explains that although the formal announcement
hasn’t been made yet, the company felt it was important to
get the new director up to speed as quickly as possible. He
will be joining the company in two weeks, after completing
his two weeks’ notice with his current employer.
Should you tell your friend what happened?
You work in a small custom metal fabrication company that is

a wholly owned subsidiary of a larger conglomerate. Your
parent company has announced cost-cutting initiatives that
include a freeze on pay increases, citing “current market
difficulties.” At the same time, the CEO trades in the old
company plane for a brand-new Gulfstream jet. Your
colleagues are planning to strike over the unfair treatment—a
strike that will cause considerable hardship for many of your
customers who have come to rely on your company as a
quality supplier.
Do you go on strike with them?
At a picnic given by your employer for all of the

company’s employees, you observe that your
supervisor—who is also a friend—has had a bit too
much to drink. As you’re walking home after the
party, she stops her car and asks if you’d like a ride
home.
Do you refuse her offer, perhaps jeopardizing the
friendship, or take a chance on not getting home
safely?
Resolving Ethical Dilemmas
Ethical dilemma: Situation in which there is no obvious
right or wrong decision, but rather a right or right
answer.
• Can be resolved by recognizing the four types of ethical
conflict.
• 1 Truth versus loyalty—do you tell the truth or remain loyal to the person
or organization that is asking you not to reveal that truth? E.g. Example 1
• 2 Short-term versus long-term—does your decision have a short-term

consequence or a longer-term consequence?
• 3 Justice versus mercy—do you perceive this issue as a question of

dispensing justice or mercy? (Which one are you more comfortable with?)
• 4 Individual versus community—will your choice affect one individual or a

wider group or community?
Resolution Principles for Ethical Dilemmas
Ends-based.
• Which decision would provide the greatest
good for the greatest number of people?
Rules-based.
• What would happen if everyone made the
same decision as you?
The Golden Rule.
• Do unto others as you would have them do
unto you.
• Belief that the activity is within reasonable
ethical and legal limits.
• Belief that the activity is in the individual’s or
the corporation’s best interest.
• Belief that because the activity helps the
company, it will be condoned, and the
perpetrator will be protected.
Belief that the activity is within reasonable ethical and

legal limits.
Belief that the activity is in the individual’s or the

corporation’s best interest.

Belief that because the activity helps the company, it will be

condoned, and the perpetrator will be protected.
Thank you!
Business ethics case tutorial
1. Watch the video about Top 10 corporate scandals. In the video they may speak
fast. So, I recommend that you read the text as well. And I will also clarify some of
them.
2. Choose one scandal. Choose the one that you feel is more understandable for you.
3. Describe what is wrong about the action of the company?
4. Identify the stakeholders: which one suffered and which one gained?
5. Under which basis it is consider to be wrong (which ethical value was not
respected)?
6. Are there any good created from the situation?
#10 Bre-X Gold Mining Scandal
• The mining arm of this Canadian company shot to prominence in 1995, when
it claimed it had discovered a huge gold store in Indonesia. The result
increases the stock price. The company minerals limited make over 6 billion in
Canadian dollars. But the bottom line was that it was all based on a lie
perpetrated by geologist Michel de Guzman, the fraud came to light when De
Guzman killed himself by jumping from a helicopter takes off over the jungle.
He's about 400 or 500 feet in the air over some of the deepest rainforest in all
of Indonesia. And the pilot looked into the backseat. And he was gone,
• Further analysis of the mining site revealed there to be insignificant amounts
of gold, which ultimately sent the company into bankruptcy. Although little
money was recovered for those who were misled, the scandal did result in
significant changes to Canadian legislation. With respect to professional
geology.
• It would be somewhat more difficult to pull off a similar type of scam but it
isn't impossible, it's probably still could be done again.
#9 IBM & the Nazis
• During World War Two IBM played an integral role in carrying out the
Holocaust and Poland,
• It's well known that many companies form questionable allegiances in the
interest of business. But aiding the Third Reich in the systematic
identification and genocide of millions of people is a crime, many would
label unforgivable
• The punch cards by the millions had to be printed, and they were printed
exclusively by IBM, and the profits were recovered just after the war,
• The German subsidiary of the company allegedly provided punch cards to
quickly analyze the ethnic backgrounds of the populations of countries the
Nazis occupied to determine who should be imprisoned or killed in a
concentration camp. The company has never openly admitted direct
involvement with the Nazi regime. But this remains a black mark on one of the
biggest corporations in the United States.
• The fact that they have used equipment, you know, that is a fact. But how they
got it, how much cooperation they got. And any kind of collusion trying to
connect dots that are not connected. I think that's the part that is discredited.
#8 Deepwater Horizon Oil Spill
• Massive oil slick now covering some 600 square miles of the Gulf of Mexico,
and it could start reaching the United States close within hours. The major oil
company known as BP may already have had a famously poor environmental
record, but this disaster was the worst in the history of the petroleum industry.
11 people were killed in the initial explosion of the Deepwater Horizon oil
rig in the Gulf of Mexico in 2010. But humans and animals continue to feel the
detrimental effects of 210 million US gallons of oil flowing into the sea.
• This thing would have been a mistake. I can live with that. But this was a
mistake of just pure greed.
• The company was hit with charges that amounted to $18.7 billion in fines for
their gross negligence and willful conduct. However, whether this amount
of money is capable of reversing the environmental damage remains to be
seen. All accidental drilling spill again in the Gulf is a tragedy that should have
never happened. And to all those affected, I want to say we are deeply sorry.
We're sorry. We're sorry.
#7 Lehman Brothers bankruptcy
• Stocks all around the world are tanking because of the crisis on Wall Street. The 2008
financial crisis was a tough time for reckless investment banks, as Bear Stearns found out.
But the Lehman Brothers collapse was the economic events greatest victim.
• The financial services firms leveraging of borrowed money caused the biggest
bankruptcy in US history in 2008. And the company fizzled out of existence and a rapid
decline that enhanced the economic devastation of the ongoing crisis.
• So you've been able to pocket close to half a million dollars. And my question to you,
there's a lot of people ask, is that fair, for the CEO of a company that's now bankrupt, to
have made that kind of money, it's just unimaginable to so many people,
• News emerged that executives increased their pay just before the bankruptcy and
that accounts had been altered to hide the bank's poor financial position. This case
stands as the perfect example of the culture of excess causing worldwide suffering for
billions of people.
• This report comes just short of suggesting this is by no means an accident, but instead
one of the greatest crimes ever perpetrated against a group of people. This crime and
accounting fraud perpetrated by bank CEOs against the American taxpayer and enabled
by the US government.
#6 Tyco International Theft
• Dennis Kozlowski and Mark H. Swartz were infamous for their extravagant
lifestyles that were built through the success of the security systems company
known as Tyco International Limited. And in 2002, they were accused of
stealing over $150 million from the business, the then CEO and then CFO
contended that the board had authorized these payments as bonuses. The
following trial was something of a sham, but eventually both men were
sentenced to up to 25 years in prison during a retrial, due to the duo's
falsification of records. Tyco was forced to pay almost $3 billion dollars to
defrauded and likely very angry investors
#5 Bhopal disaster
• The death toll of this 1984 disaster in India is claimed to be more than 16,000,
but it's unknown how many people actually suffered as a result of the gas leak
at the Union Carbide Indian limited pesticide plant. Former Union Carbide
Corporation CEO Warren Anderson was charged with manslaughter by Bhopal
authorities, but never had to answer for the disaster as the US refused to
extradite him. In 1989 $470 million was paid by UCC to settle litigation but a
lawsuit seeking further compensation for crimes against humanity was
dismissed in 2012. Anderson died two years later, with the Indian public still
feeling as though Justice had not been served.
• There was a number of safeguards that could have been and should have
been in place. But there were not.
#4 FIFA corruption case
• Allegations of systematic corruption, and bribery over the last two decades are
related to all of the major or many of the major football tournament.
• The governing body for the most popular sport in the world has been dogged
by constant accusations of corruption. But in 2015, the suspicions were
confirmed. 18 individuals were indicted on charges including money
laundering and wire fraud.
• There is considerable evidence that bribery of top officials has been key in
deciding where major tournaments like the World Cup are held,
• As of the end of 2015, the whole organization was still in turmoil, as further
accusations of corruption emerged regarding suspended President Sepp
Blatter.
#3 Worldcom accounting fraud
• Worldcom incorporated executives Scott D. Sullivan and David F. Myers. were
charged with seven counts of securities fraud
• This telecommunication Corporation held the record for biggest bankruptcy in
2002 before the Lehman Brothers collapse took its unwanted title six years
later. Throughout the early 2000s, the company was utilizing a complex
scheme of adjusting its books to hide the considerable losses,
• Although I would like more than you know, to answer the questions that you and your
colleagues have about Worldcom. I've been in instructed by my counsel not to testify based on
my fifth amendment constitutional rights.
• By 2003, It's thought that their total assets had been fraudulently inflated by
around $11 billion. In 2005. Former CEO Bernard Ebbers was convicted of
various types of fraud that would keep him behind bars for 25 years. A
sentence many would say was befitting someone who deceived so many.
• Hopefully, it will deter people from hurting investors, former employees like
myself, who basically have little or no recourse except for a class action lawsuit.
#2 Volkswagen emissions scandal
• As in my German words, we have totally screwed up. In this case of fraud. It
was discovered that one of the biggest car manufacturers in the world was
using software to falsify emission test results, with an estimated 11 million
of its vehicles being affected. While the findings by the International Council
on clean transportation may end up costing the company more than $18
billion in fines. What should also be considered is the fact that Volkswagens
reputation in the eyes of the consumer could be irreparably damaged, as well
as substantial financial consequences. The company could be responsible for
deaths due to fumes that they had fraudulently stopped from appearing in
tests.
• I don't think the company self will fail, but the company will suffer a lot as a
result of what's happened.
#1 Enron scandal
• The fatal flaw at Enron was pride, arrogance, intolerance in the space of a
month or so, this energy giant went from being one of the biggest companies
in the world to bankrupt.
• What set the scandal apart from the relatively common instances of
accounting fraud were the failures of accounting firm Arthur Andersen LLP,
which neglected to report Enron's crimes and led to the firm's own dissolution.
The sheer scale of Enron's fraudulent activity is difficult to comprehend, as it
allowed the business to pretend it was running at $100 billion dollars in
revenues through the use of loopholes for financial reporting and more to
conceal its massive debt. Many critics thought that foreign energy company
to be so reckless was particularly important and that those involved deserved
their harsh sentences.
• Ken Lay’s resignation yesterday only escalates the situation is that we will not
stop at resignations, without dealing with some form of restitution to those
that have been hurt.
Seminar
• Chapter 2 Review Questions

BECSR Week 2 Sebastian Boo

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