ethics case (pramod)

8/9/2019 Ethics Case (Pramod)

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Case Study Analysis

Submitted To:

Mr. Shanker Bhattarai

Prepared By:

Pramod Shah

Case I:

1. Enron Case:Case summary:


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Enron, the 7thlargest company of the USA, was involve in one of the

!iggest scams !ac" in #$$1 when it %le for !an"ruptcy. &he company's

chairman (enneth )ay, the C*+ Anrew *astow an Enron's chief auitor

Arthur Anerson ha not only estroye company ocuments !ut also lie

a!out pro%ts an conceale e!ts from faile eals an proects an

proects. &his massive cover-up ha the eect of ta"ing away o!s an

pension savings from thousans of wor"ers an resulting in losses of millions

of iniviual investors.

#. Satyam Case:Case summary:Satyam, an outsourcing company from Inia which serve more than

one-thir of the *ortune /$$ companies, is now referre to as Inia's versionof Enron !ecause it ha signi%cantly in0ate its earnings an assets for years

an manipulate the Inian stoc" mar"ets an throwing the inustry into

turmoil. &he culprits !ehin the !iggest corporate frau in Inia were

amalinga au 2Chairman3 an his younger !rother ama au 24anaging

5irector3 along with their auiting %rm, 6C, who ha maligne their

%nancial statements for years. &his scanal ha the eect of hurting the

interests of thousans of employees an investors an also shame an

shoc"e the Inian inustry.

8. Stanfor 9roup Case:

Case summary:o!ert Allen Stanfor an his company, the Stanfor 9roup was force

to shut own from a massive %nancial frau which ha stretche from the

Cari!!ean to &eas an aroun the worl. As far as the charges %le !y the

US Securities an Echange Commission 2SEC3, the Stanfor *inancial 9roup

an Stanfor Capital 4anagement ha efraue investors worlwie which


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resulte in losses in !illions of ollars. &he SEC ha charge the wealthy

&eas %nancier an his allies in an ;< !illion frau an allege that he ha

lure investors with the promises of giving high returns on their investment

!ut ha transferre the investors' money into a =!lac"-!o' of har-to-trae

assets.

&heoretical contet:

Ethical ilemma:An ethical ilemma is a situation wherein moral precepts or ethical

o!ligations con0ict in such a way that any possi!le resolution to the ilemma

is morally intolera!le. In other wors, an ethical ilemma is any situation in

which guiing moral principles cannot etermine which course of action is

right or wrong.

+rgani>ational culture: +rgani>ational culture is the !ehavior of humans who are part of an

organi>ation an the meanings that the people attach to their actions.

Culture inclues the organi>ation values, visions, norms, wor"ing language,

systems, sym!ols, !eliefs an ha!its. +rgani>ational culture aects the way

people an groups interact with each other, with clients, an with

sta"eholers.

Con0ict of interest:A con0ict of interest is anything that impees or might !e perceive to

impee an iniviual?s or %rm?s a!ility to act impartially an in the !est

interest of a client. A con0ict of interest can cast ou!t on your integrity@ it

can also have a amaging eect on your %rm an the profession as a whole.

Corporate governance:&he system of rules, practices an processes !y which a company is irecte

an controlle. Corporate governance essentially involves !alancing the

interests of the many sta"eholers in a company - these inclue its


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shareholers, management, customers, suppliers, %nanciers, government

an the community.

Corporate frau:Activities undertaken by an individual or company that are done in a dishonest or illegal

manner, and are designed to give an advantage to the perpetrating individual or company.

Integrity capacity:Integrity capacity is the iniviual an collective capa!ility for the repeate

process alignment of moral awareness, eli!eration, character, an conuct

that emonstrates !alance ugment, enhances ongoing moral

evelopment, an promotes supportive systems for moral ecision ma"ing.

Ethical issues on Enron case:

&he organi>ational culture ha contri!ute greatly towars the ethical

scanal at Enron. Enron was a harsh an conescening company that

emphasi>e competition an %nancial goals. *irstly, Enron's competitive

environment an rigorous performance evaluation stanars cause a

culture of eception. Employees starte ignoring ethical stanars an only

focuse on achieving their goal. +nce one employee starte to cheat on their

o!s, this ha a ripple eect where all employees starte cheating on their

o!s. *urthermore, this competitive environment contri!ute to the coveringof errors !ecause employees tene to !e uncooperative an selom

communicate with one another. Aitionally, Enron culture put more

emphasis on %nancial goals. All of the eecutives an employees were only

focuse on ma"ing goo %nancial num!ers an not on raising the economic

value of the company. Enron was also less concerne regaring the nees,

values, esires an the well-!eing of its employees. o!oy at Enron

followe ethical stanars as it was only for show to the eternal auience.

Also, the con0ict of interest policy was waive o to let the oBcers of Enron

practice o-the-!oo" entities of the %rm.Among the various causes of Enron collapse, one is the con0ict of

interest !etween the two roles playe !y Arthur Anersen, as !oth an auitor

an also as consultant to Enron. &he lac" of attention on the part of the


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oar of 5irectors to the manipulation of its %nancial statements an the

lac" of truthfulness !y the management regaring the health of the company

an its !usiness operations contri!ute to the ownfall at Enron. Dowever,

the primary cause of the collapse can !e attri!ute the organi>ation culture

at Enron %lle with eception an concealment of the real %nancial situation

of the !usiness.&he Enron collapse is an eample to all on the conseuences of

isregar to ethical stanars an principles an its short-term an long-

term amage to all the sta"eholers of the company. In orer to avoi such

collapses, a "ey aspect can !e the proper application of corporate

governance in a company so that issues such as corporate frau woul never

come into eistence. &he short-term rewars of resorting to unethical!ehavior ultimately negate the long-term impact it has on the egraation of

the company an in etreme cases to liuiation an !an"ruptcy.

Ethical issues on Satyam case:Ethics in a !usiness is greatly in0uence !y the culture of the company.

&herefore, ta"ing the right course of action often means reecting short-term

pro%ts. In regar to the Satyam case, the !usiness face intense competition

from other !usinesses an this ha the eect of reucing the gap !etween

Satyam an other !usinesses !y resorting to unethical !ehavior. &he main

ethical issue at Satyam is not ahering to the corporate governance norms.

5ue to the increasing competition, Satyam !usiness felt they ha to reuce

the gap !y maintain their company growth !y aopting any means possi!le

with isregar to its conseuences. If they ha followe the norms of

corporate governance, the ownfall of Satyam woul never have occurre.

&he secon issue at Satyam is the tampering of its %nancial ata an

in0ating its earning over the years. &he main culprits here were amalinga

au 26romoter3, ama au 2Chairman3 an their auiting %rm, 6C, who

ha manipulate the company's !oo"s for several years. &he thir ethical

issue at Satyam was misleaing the shareholers fun. &his means that the


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three aforementione culprits mislea the shareholers through eaggerate

pro%ts through the manipulation of %nancial statements which meant that

shareholers were falsi%e into thin"ing that their returns on their

investment were increasing. )astly, the promoter, chairman an the auiting

%rm ha put their self-interest at the epense of shareholer's interests. So,

con0icts of interest were also evient at Satyam which eventually le to its

ownfall.&he Satyam case highlights that corrective measures shoul !e ta"en

at the earliest to stem the etent of the amage an stringent laws shoul

!e put in place to avoi such trageies in the future.

Ethical issues on Stanfor 9roup:&he Stanfor 9roup scanal also emonstrates the role of playe !y

corporate culture an the impact it has on moral ecision ma"ing, moral

awareness, moral intent an moral action which are the four crucial factors

which in0uence ethical conuct in an organi>ation. 6eople may vary in their

capacity for moral ugment an moral !ehavior. 6eople li"e Allen Stanfor in

leaership positions ten to have a high egree of con%ence in their own

ugment that can reaily lea to arrogance, over-optimism an an

escalation of commitment to choices that turn out to !e wrong factually or

morally. As a result, people may ignore or suppress issent, overestimate

their a!ility to rectify averse conseuences, an cover up mista"es !y

enying, withholing, or even estroying information.


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A person's ethical reasoning is also aecte !y the organi>ation

structure an norms. Employees' perceptions of unfairness in rewar

systems, as well as leaers' apparent lac" of commitment to ethical

stanars, increase the li"elihoo of unethical !ehavior. Another in0uence to

ethical conuct is the ethical climate i.e. the moral meanings that employees

give to wor"place policies an practices. 6eople ten to wor" !etter when

they !elieve that the wor"place is treating them with ignity an rewaring

ethical conuct.So, companies shoul consier the corporate culture !ecause a

company's culture will impact the ecisions of !oth employers an

employees when they face ethical ilemmas. Also, companies nee to !uil

a ro!ust ethics infrastructure an follow it on a aily !asis. )astly, companiesnee to learn !usiness ethics theories an moels !ecause these moels

give out goo ways of !alancing the interests of relate parties when face

with an ethical ilemma.Dence, to avoi another Stanfor failure, companies shoul consier

whether they have a healthy !usiness culture, whether they have a well-

written coe of ethics an also follow the coe, an whether the employers

an employees have enough "nowlege a!out !usiness ethics.


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Case II: D 6ractice at 6+

Case Summary:&he case is !asically a!out D practices occurring at 6+ an focuses

on the various relationships !etween the 6+'s employees, D Dea, D

4anager, +perations 4anager an the Supervisor. &he main issue

highlighte in the case revolves aroun si isgruntle shift-wor"ers who

have a grievance that they are unerpai in comparison to other employees

who have oine the 6+ after them. &hey give a ay to the D 4anager to

sort this matter out !ut two ays go !y an the D 4anager oes not atten

to their pro!lem an they wal" out a o not report to wor". Somehow, the

operations manager patches things up an even gets them wor"ing longer

hours an also on wee"ens. As further time passes, the employees feel that

things have not change from !efore an neither is the management

materiali>ing their eman to hi"e their salaries an they have no iea

regaring the volume of wor" an also its perio of time. &he employees

want to uit the 6+ !ut the management cannot aor to lose them. &his is

at the cru of the case an what the response shoul !e from the

management is the vital uestion that nees to !e answere.

&heoretical contet:

Employment Issues:Employment issues pertain to various D processes such as hiring, %ring,

recruitment an compensation an !ene%ts. &he maor ilemma facing D

managers is regaring employee hiring an its !asis. Also, cash an

compensation pac"ages can also !e pro!lematic for D managers in the

sense that employees shoul !e pai fair wages.

Employers an employees rights an uties:Employers an employees have responsi!ilities to each other an they

shoul also epect their rights to !e uphel. &hese rights an responsi!ilities


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relate to areas such as Dealth an Safety, the provision of &erms an

Conitions of Employment, Eual +pportunities an the right to !e pai a

minimum wage.

Cash an Compensation 6lans:&here are ethical issues pertaining to the salaries, eecutive peruisites an

the annual incentive plans etc. &he D manager is often uner pressure to

raise the !an of !ase salaries. &here is increase pressure upon the D

function to pay out more incentives to the top management an the

usti%cation for the same is put as the nee to retain the latter.

Employees' health an safety responsi!ilities:Employers have legal o!ligations to ensure a safe an healthy wor"place. As

an employee, you have rights, an you have responsi!ilities for your own

well!eing an that of your colleagues. An employee has the right to wor" in a

safe an healthy environment which are given to you !y law, an generally

can?t !e change or remove !y the employer.

)a!or unions:An organi>ation intene to represent the collective interests of wor"ers in

negotiations with employers over wages, hours an wor"ing conitions.

)a!or unions are often inustry-speci%c an ten to !e more common in

manufacturing, mining, construction, transportation an the pu!lic sector.

Ethical issues of D 6ractice at 6+:&he heart of the case re0ects the various rights, uties an o!ligations

employees an employers have to one another an the company. Employees

have the uty to perform their wor" in accorance with the employment

contract an must a!ie this contract at all times. Employees also have the

right to convey their feelings, thoughts an grievances to the management

an epect a positive response from the management in this regar.

Employees also have the right to a safe an conucive wor"ing environment.

ith reference to the case, the isgruntle wor"ers grievance is that they are

unerpai with respect to their uniors in the company. &hese employees o

have the right to fair wages an it is the responsi!ility of the D manager,


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D hea an Supervisor to ensure that employees have access to

appropriate wages. *rom the case, it is clear that the D manager ma"es no

eort in reality to aress the employees' pro!lems an turns a !lin eye to

their grievances. Dowever, the operations manager intervenes an

convinces them to return to wor" an also manages to get them wor"ing

longer hours. ut as time progresses, the employees' remuneration show no

sign of increasing an they again threaten to uit. ut the main culprit in this

case is the Supervisor who "nows the pro!lems of the youth an yet reserves

his ugment on the issue.Employees' iscrimination is another aspect of the case though it is not

eplicitly state in the case. Employees shoul not !e iscriminate on the

!asis of age, gener, religion, nationality etc. &hey shoul have access to fairwages.

Another issue in the case refers to the formation of a la!or union at the

6+ to ensure employees' rights an uties an act as a messenger of

conveying employees grievances to the management. Unions in 6+ are

very less common an as such, there is only one such la!or union in est

engal. *ormation of a la!or union may not !e in the interests of the

employees !ecause they function uner the law an they also monitor wor"

memos, attenance register, warnings etc given !y the employer which may

!e etrimental to the employees' eorts of increase in remuneration.Dence, the case is guie !y the various roles, uties an rights that

!oth employers an employees have towars one another an the %rm an

there are various insights as to whether the management or the employees

are performing in an ethical manner which can !e matter for further

iscussion.


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Case III: &he 6rivacy 5ilemma

Case summary:&he case touches on the issue of privacy in ierent societies

throughout the worl. &he )onon-!ase 6rivacy International is an

organi>ation eicate to protect an promote the privacy of people, !e it in

organi>ations or in societies. It ran"s countries for the surveillance of their

respective societies. 5evelope countries seem to !e the worst violators of

privacy in comparison to less evelope countries. Surveillance is usually

carrie out in pu!lic places li"e roas, airports, shopping centers an

supermar"ets in the name of security. &he ecessive surveillance is practice

to ensure safety an security an if surveillance not one, then anger is

imminent. *urthermore, economic evelopment has the eect of increase in

surveillance of their employees to protect the interests of the company an

company enures losses when surveillance is not practice. As the

necessities in the moern worl increase, surveillance also increases an

privacy ecreases.&he %nings of 6rivacy International show that the tren in surveillance

is worsening an privacy protection safeguars are violate. Immigration in

evelope countries have increase !ac"groun chec"s in etail li"e use of

their ientities, %nger prints etc. Countries have starte storing vast amount

of ata of people entering the country an technology has mae it easier for

instant collection of ata, pictures an %nger prints. &he tren is that as

countries evelop economically, surveillance practices increase an

surveillance is a very lucrative inustry coming at the epense of people's

privacy.

&heoretical contet:

6rivacy:6rivacy refers to an iniviual's right to !e free from intrusion or interference

!y others. It is a funamental right in a free an emocratic society.

Iniviuals have privacy interests in relation to their !oies, personal


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information, epresse thoughts an opinions, personal communications with

others, an spaces they occupy.Con%entiality:&he ethical uty of con%entiality refers to the o!ligation of an iniviual or

organi>ation to safeguar entruste information. &he ethical uty ofcon%entiality inclues o!ligations to protect information from unauthori>e

access, use, isclosure, moi%cation, loss or theft.

Security:Security refers to measures use to protect information. It inclues physical,

aministrative an technical safeguars. An iniviual or organi>ation ful%ls

its con%entiality uties, in part, !y aopting an enforcing appropriate

security measures.

&ypes of Information:esearchers may see" to collect, use, share an access ierent types of

information a!out participants. Such information may inclue personal

characteristics or other information a!out which an iniviual has a

reasona!le epectation of privacy 2e.g., age, ethnicity, eucational

!ac"groun, employment history, health history, life eperience, religion,

social status3.

Ethical issues of &he 6rivacy 5ilemma:&here is wiesprea agreement regaring the interests of people an

the protection of their privacy an the uties of countries an companies to

treat personal information in a con%ential manner. &he respect of people's

privacy is an internationally accepte norm an ethical stanar. &he case

highlights the increase role of surveillance in economically evelope

countries in the name of proviing safety an security to its citi>ens.

Surveillance is necessary in countries !ut shoul not intrue the privacy of

the iniviuals !y "eeping personal information which shoul !e "ept

con%ential. Also, companies increase surveillance of their employees in the

interest of the company !ut surveillance shoul !e one in a !alance

manner so as not to interfere with the privacy of iniviuals an con%ential


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information li"e personal ata. *urthermore, the avancement in technology

means it has !ecome easier to store !ul" amount of ata than !efore with

the use of internet an other sources.&he uestion also arises regaring privacy as an ethical issue.

Ecessive surveillance in the name of increase safety an security oes

interfere with the privacy of iniviuals an is an ethical consieration.

Surveillance as such is not a !a thing as long as it unerta"en in an

appropriate manner !y not invaing people's privacy an not isclosing

con%ential information of citi>ens, employees or iniviuals in general.

Dence, the epth of surveillance shoul !e monitore so as to ensure

people's safety an security "eeping into consieration their right to privacy

an preventing con%ential information from !eing isclose.

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