Madoff Scheme

The serious ethical issues in the Bernard Madoff Ponzi scheme all center around lying.  Lying is defined as “marked by or containing falsehoods” (Lying, 2012).  Madoff fabricated an investment securities firm and deceived his investors as well as the legal system.  The lies compelled Madoff to commit more unethical actions including misrepresentation and corruption.  He misrepresented how the company conducted its business practices (Clark & McGrath).  He corrupted his staff by coercing his employees into creating false documents to corroborate the lies (Clark & McGrath).  

The fact that the full nature of what was going on at the Madoff Investment Securities firm was not found out he confessed to his crimes proves that even though he was doing something wrong he was doing it right.  From what I have gathered, he used his successful reputation in the financial community to smooth any exterior concerns and convince investors and regulators to trust him and the firm that bore his name (Clark & McGrath).  To complicate matters, Madoff did in fact run a legitimate business at the same time which eliminated some suspicions (Clark & McGrath). 

There is also some research that suggests that the Securities and Exchange Commission did not do due diligence when auditing the Madoff Investment Securities firm (Clark & McGrath).  The success of this scheme is in large part due to the lackadaisical enforcement of regulations in financial corporate culture.  This may not have been possible to prevent, but if the necessary parties had conducted the proper audits and more extensively investigated tip-offs and suspiciously consistent investment returns this could have been stopped sooner.  Corporate culture has silently consented to shady business practices by not enforcing and updating the practices and codes on the books.  The culture revolves around profit not ethical practices.     

If I were an employee in this company and the scheme came to my attention I would have to report what I found to my superiors and if they choose not to act then I would report this information and any evidence to the regulating body responsible for our industry.

Here is my decision making process.  The first step in the ethical decision making process is to look at the facts in the situation.  The facts here are that someone, namely Madoff, is scheming people and organizations out of billions of dollars for self-profit and doing it through the banks and a false investment securities firm.  He is lying and stealing on a large scale. 

The next step says to look at my ethical values.  As an employee I would know what my professional code and business code of ethics say about ethical financial practices.  Lying and stealing are certainly against anything that I stand for and they are illegal.  It is important to me not to be a part of a scheme or allow others to continue committing these crimes.  I also know that people, charities and other stakeholders, including the government will be affected negatively.  I could also go a prison for knowingly committing financial crimes. 

Next I have to consider the available alternatives.  In this case, I do not believe there are many alternatives.  I could either go along with the scheme and potentially go to jail or report the crimes and release myself of any wrongdoing or responsibility and avoid criminal charges brought against me.  This scheme is not justifiable and goes against my ethical values as well as my professional code of ethics/conduct.  The final step asks me to make a decision.  The only ethical choice would be to do as I said previously and report the findings to my superiors and/or regulating bodies in my industry.  Ethically, I could not participate once the nature of the scheme and crimes came to my attention.  

References

Clark, J., & McGrath, J. (n.d.). Bernard Madoff's and Allen Stanford's Ponzi Schemes. Retrieved October 25, 2012, from How Stuff Works: http://money.howstuffworkds.com/ponzi-scheme5.htm

Lying. (2012). Retrieved October 26, 2012, from Merriam-Webster: http://www.merriam-webster.com/dictionary/lying?show=0&t=1351272295

Week 9 Reflection

There was more information about how to approach real-life situations and come out an ethical professional.  The most valuable player this week was the ethical decision making process.  The lecture and the reading spent quality time and space on explaining the steps in the process; it was the emphasis this week.  The time spent on the ethical decision making process was well spent because it lays the foundation for ethically operating in any setting.

It also gave me the opportunity to find out where my strengths and weaknesses are when it comes to ethical behavior.  I found that my strength lies in being able to quickly identify the ethical issues in a given situation and that my ethics are clearly defined; my weakness is sometimes spending too much time on the third step and letting the thoughts and possibilities wander.  I like having one main concept to learn and other supporting concepts and applications.    

This week the supporting concepts were the codes of ethics.  One thing that I understand now that I did not before was that at any time a person is operating several different codes, namely their business code, professional code, and code of ethics.  These are definitely important and very practical.  In a job, a person will be interacting with other co-workers, their superiors, and/or clients.  Whenever those exchanges are taking place or being planned or prepared for having a code that you can operate by and/or hold others to makes things so much easier and maintains a healthy, positive atmosphere in the workplace.  

 Knowing that there are regulations and ethical expectations in place creates a confidence and controls conduct, yours and others.  When the times comes to make a decision about how to approach something having the codes give you something to fall back on, knowing that you will have the business’/profession’s support.  Seems so simple but it was good to go over these types of things explicitly this week.     

Primark Ethics

The case study of Primark does present them in a somewhat angelic light.  The brand appears to be high-end fashion at low cost to the consumer.  This is more often than not accomplished by sweatshop labor, child labor, unlivable wages for employees, and other seedy practices.  How does Primark do it?  The case study says that they have very high ethical standards and closely monitor the steps of production to ensure ethical practices. 

The only issue that I find with the information presented in this case study is the lack of concrete details or examples.  For instance, there is a section titled “Auditing and compliance”.  The author talks about who an auditor is and what they do in general.  What audits have been done recently?  What were the findings?  And even more unimpressive was the statement: often factories need support and training to implement changes to their factories that are permanent and effective” (Ethics in Practice: Providing consumers with ethically sourced garments, 2012).  What are some examples of those training techniques or types of support they have available?  We are simply left wondering. 

In my research I found that Primark has been accused of child labor violations.  Although substantial evidence was never produced to corroborate the claims a BBC Trustee went on the record as saying that there was “evidence else that Primark was contravening its own ethical guidelines…. [and] there was clear evidence that work was being outsourced from factories in India in contravention of Primark’s own ethical trading principles” (Sweney, 2011).  This does not incontrovertibly prove anything, nevertheless there does appear to be something going on behind the scenes at Primark.  Vague reports and general statements about ethical practices do not mean that strict practices are not enforced however, I am inclined to believe that they may be doing the bare minimum or skirting around the issue by not directing purchasing or participating in the unethical behaviors.

After reading the case study and a few other reports about Primark and their business practices, one thing is clear.  They should have an outside company come in and complete an exhaustive audit of internal corporate practices.  A special training may need to be done to enlighten employees about current Primark procedures and policies.  The lecture this week mentioned that the construction of policies is only half the battle.  Primark may have great ethical policies in place but improper training compounded by greed may be to blame for the suspicions surrounding the company’s ethical standing in recent years.  They may need to fight the other half of the battle: training knowledgeable and ethical employees.   

   

References

Ethics in Practice: Providing consumers with ethically sourced garments. (2012). Retrieved October 18, 2012, from The Times 100: Business Case Studies: http://businesscasestudies.co.uk/primark/providing-consumers-with-ethically-sourced-garments/ethics-in-practice.html

Sweney, M. (2011, June 16). Primark legal chief claims BBC made firm 'poster boy of child labour'. Retrieved October 18, 2012, from The Guardian: http://www.guardian.co.uk/media/2011/jun/16/bbc-primark-child-labour?intcmp=239

Anglo American Ethics

This is the first time I have ever heard of Anglo American.  That may be a good thing.  Usually when I tune into the news or go over the evening headlines in the newspaper, the companies mentioned are involved in some type of scandal or other misfortune.  Anglo American may have avoided the attention by creating and adhering to its well-thought corporate principles.  

The first thing I noticed about Anglo American is its commitment to the law, both nationally within the countries it operates and internationally with the United Nations.  The case study says that they have played an active role in forming ethical codes and regulations.  The key word was active.  Their role is not passive.  They are working and taking responsibility to craft a better tomorrow for their shareholders, stakeholders, and even communities they do not know through environmental sustainability programs.   

The Socio-Economic Assessment Toolbox (SEAT) process shows that the company is putting forth a huge effort to behave ethically.  Through SEAT they engage with the community where they operate and respond to their needs as well as gauge their approval of company activities (i.e. relocation proposals).  Another process that I believe shows a serious effort on the part of Anglo American is its commitment to the health of its employees.  Most companies stop at providing medical insurance but Anglo American takes it a step further by providing AIDs education and free anti-retroviral drugs, both of which are desperately in need as they operate in a part of the world where AIDs is rampant in many communities.  They understand that the health of their employees is directly correlated to their health as a company, morals and monetarily.   
      

According to the textbook being ethical is more than practicing good corporate social responsibility and corporate citizenship.  There can be serious financial benefits or repercussions to unethical behavior.  The fines or sanctions against a corporation can financially ruin a company and further damage their brand or reputation.  Finances are the least of your trouble once the name goes down the drain.  Rebuilding a reputation or brand can be an insurmountable challenge.  All of which could have been avoided by careful ethical decisions and practices.  In the case of Anglo American I believe that their commitment to the employees health and well being as well as their communities and upstanding relationships with national governments and transnational organizations have firmly established them as a trustworthy brand and secured their positive reputation for the time being.  For these reasons the brand should succeed in its sector.

From what I have read, the company appears to have adequately considered ethics in its business plan.  They are not only distinguishing right from wrong but taking that extra step and choosing to do right.  Their goals are not solely based on profit margins which distinguishes them from other companies in the primary sector of the world economy.  Anglo American is taking the initiative to not only follow established guidelines and regulations for ethical business practices, but to also actively search for better and more effective policies and processes to ensure ethical behavior and create more levels of accountability. 

Week 7 Reflection

There was a lot to take in this week.  This may have been one of the first weeks that I have really seen concrete ethical principles and strategies in corporate business.  I liked the presentation of the information this week.  The style and flow was different but it worked for me.  There was a certain practicality to what the textbook discussed.  The information about corporate social responsibility vs. corporate citizenship was particularly interesting as I did not know the difference until the book clarified the matter.  The topics were practical and the information was thorough.  It was not abstract.  Even though ethics can be a little wishy-washy sometimes, this week it was clear, very cut and dry.  Not only was the text clear on they what and the whys but so was the lecture.  

One question in particular that usually gets ambiguous responses is what to do if there are extenuating circumstances or pressures.  For me, I have my faith in Christ guide me and hold me accountable for my actions regardless of circumstance.   The lecturer made a very clear statement about ethics in relation to circumstances that could apply to people who maybe do not have that clear conviction of faith.  She said something to the effect of: if one person does it then it is alright for anyone else to do the same thing in any situation.  

In short if what we are doing only applies to us then we are not playing by the rules and probably acting unethically.  If someone else were to do the same thing as me, would I be upset or offended?  With that said I’m not a huge fan of ethical universalism or relativism.  I lean more toward the integrative social contracts theory.  There are times when local ethics may be more relevant to a company or the consumers; however, there are certain universal ethics that should be adhered to if local customs or norms could cause harm or other negative consequences.  The text and lecture were clear.  We cannot make blind isolated decisions.  Ethics has to be intentional.