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BADM 2133 UNIT 10
- 1. Business Ethics: Cases and
Selected Readings, 7th Ed.
Marianne M. Jennings
Unit 10
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
- 2. Falling Short on the Basics:
Board Issues
• Arizona Baptist Foundation
− Board lacked expertise
− Board did not raise sufficient questions
− Board members were involved in the
transactions
− Board allowed management too much control
− Nonprofit board and assumptions about
integrity
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
351
- 3. Mistakes United Way Board
Made
• Board met semi-annually and an Executive Committee of the Board also
met twice each year
• Neither received material information
• Board approved creation of spin-off corporations per Aramony's requests
and despite full information
• The UWA Board lost control and supervision over the spin-offs
• Spin-offs provided compensation perquisites to some individuals and
engaged in questionable business transactions which might not have been
authorized if the UWA Board had scrutinized them
• Annual audits failed to disclose numerous abuses of the UWA accounting
system, including: avoiding control procedures, using restricted funds for
purposes other than those stipulated, paying questionable fees, and
financing transactions with the spin-off corporations
• Board had no compensation committee
• Board played almost no role in evaluating officers or setting their salaries
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
352
- 4. Falling Short on the Basics:
Board Issues
• William Aramony and the failure to supervise
– Failure to rein in expenses
– Personal lives and bad judgment
– Nonprofit, assumptions about integrity
– Icon status
Felicity Barringer, United Way Head is Forced Out in a Furor Over His Lavish
Style, N.Y. Times, Feb. 28, 1992, at A1; United States v. Aramony, 88 F.3d
1369 (4th Cir. 1996), cert. denied, 520 U.S. 1239 (1999).
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
353
- 5. Stakeholders at Cornell
• Those who funded the research
• Those using the research: physicians and
patients
• The journal editors
• The journal readers
• Cornell
• The foundation
• Other researchers
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
354