BUSINESS ETHICS AND CORPORATE SCANDALS

BUSINESS ETHICS: 

Business ethics (also known as corporate ethics) is a type of applied ethics or professional ethics that looks at ethical principles as well as moral or ethical issues that emerge in the workplace. It applies to both people and huge companies and encompasses all aspects of business activity.

Business ethics has both normative and descriptive dimensions. As a business practice and a professional speciality, the field is mostly normative. When trying to understand business behaviour, academics use descriptive methodologies. The breadth and number of business ethical challenges reflect the coupling of profit-maximizing behaviour with non-economic concerns. During the 1980s and 1990s, both within big firms and within academia, there was a surge in interest in business ethics. Most big firms, for example, now emphasize their devotion to non-economic ideals under terms like ethics codes and social responsibility charters. "People of the same trade rarely get together, even for amusement and entertainment," Adam Smith observed, "but the discourse always ends in a conspiracy against the public, or in some device to raise prices." Governments employ laws and regulations to steer corporate activity in the direction they believe is best. Ethics regulates regions and specifics of behaviour that are not within the control of the government. The growth of huge corporations with limited contacts and sensitivity to the communities in which they operate spurred the development of formal ethics regimes. 


CORPORATE FRAUDS: 

Corporate frauds/crime is viewed as ‘illegal acts or omissions, punishable by the State under administrative, civil or criminal law, which are the consequence of purposeful decision making or culpable carelessness within a lawful formal organization.' Individuals who have the legal capacity to speak for a corporation or company are also guilty of corporate crimes. Presidents, managers, directors, and chairmen, as well as salespeople, agents, and anybody else with authorization to act on behalf of a corporation, fall into this category. Antitrust crimes, fraud, environmental damage in violation of environmental legislation, exploitation of labour rules, and failing to maintain a fiduciary responsibility towards shareholders are all examples of corporate criminal behaviour in most jurisdictions. 

Activities carried out by an individual or company dishonestly or illegally with the intent of benefiting the perpetrator individual or company. Corporate fraud schemes are defined by their sophistication and financial impact on the company, other employees, and third parties, and they extend beyond an employee's supposed to function. 

Corporate fraud is difficult to detect and prevent. By adopting effective regulations, a system of checks and balances and physical protection, a corporation may limit the extent to which fraud can take place. It's regarded as a white-collar crime.


WHITE-COLLAR CRIMES: 

White-collar crime is classified into two categories by Marshall Clinard and Richard Quinney: occupational crime and corporate crime. Infractions committed by corporations and their officials for the profit of the corporation are included in the first category. Employee theft and vandalism are the most visible and common types of occupational crime. The second type of crime is described as one done "in the course of engagement in a lawful occupation," and it encompasses transgressions involving people from all walks of life. This bi-polar difference is useful to some extent, but it is unreliable; the category of occupational crime should be narrowed such that it does not include blue-collar crimes. However, the apparent distinctions between organizational and professional crime could be considered to be "distinctions without a difference."


SOME OF THE BIGGEST CORPORATE FRAUDS:


SATYAM COMPUTERS SCANDAL: B. Ramalinga Raju, the founder and CEO of Satyam Computers, India's fourth-largest IT services firm, announced on January 7 that his company had been falsifying its accounts for years, overstating revenues and inflating profits by $1 billion, in one of the biggest corporate frauds in India's history. In Sanskrit, Satyam means "truth," but Raju's admission — along with his departure — demonstrates the company had been feeding investors, shareholders, clients, and staff a continuous diet of Satyam (or lying), at least in terms of its financial performance.


TATRA SCAM: The Tatra agreement was signed around the same time as the Bofors agreement. Although the Bofors scam was exposed within a few years, the Tatra defence scam continued to rob India for another 15 years until it was raised by an honest Chief of Staff of the Indian army, General V K Singh, who attempted to stop the looting. In the acquisition of components for Tatra trucks, the backbone of the army's artillery and transportation wings, top executives of BEML Limited, a Bangalore-based company, and the defence ministry have syphoned off at least Rs750 crore in bribes and commissions over the last 15 years.


2G SCAM: The 2G Spectrum Case is an ongoing[1] alleged scandal in which politicians and private officials from India's United Progressive Alliance coalition government are accused[2] of selling or allocating 122 2G spectrum licenses on terms that benefited certain telecom providers.


CONCLUSION: 

Finally, it may be stated that the globe has evolved into a borderless global village. The desire to establish internationally acknowledged corporate governance principles has been expressed in the private, public, and government sectors. The framework for corporate governance is not only crucial for the long-term success of businesses, but it is also critical for national governance. 

It's also worth noting that, in order for ethics to work in an organization, the vision statement, mission statement, core values, general business principles, and code of ethics must all be in sync. Corporate management's willingness to adopt an ethical code of conduct has several advantages.


REFERENCES: 

http://www.legalservicesindia.com/article/1912/Business-Ethics-and-Corporate-Frauds.html

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