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Ethics And Morality in Business

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This presentation was prepared ( As a guest lecture) for Northeastern University MBA students

This presentation was prepared ( As a guest lecture) for Northeastern University MBA students


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  • 1. Ethics and Morality in Business                                                           
  • 2.                                                                         Crisis Of Trust
  • 3.  
  • 4. TYCO CEO’s $6000 shower curtain Tyco probe may expand
  • 5. TYCO CEO Arrrested $15000 Dog umbrella stand $14000 portable potty
  • 6.  
  • 7. SEC Bars Ex-Tyco Auditor
    • PricewaterhouseCoopers partner Richard P. Scalzo . Under the settlement, Scalzo, Tyco's lead auditor from 1997 to 2001, is permanently barred from working on any part of a public company's finances. The SEC found that Scalzo violated securities law by overlooking material facts in his audit of the company. Scalzo also shirked on the SEC's rules of professional conduct.
  • 8.  
  • 9. Enron files for bankruptcy                                                                                                                                                                                                
  • 10.  
  • 11.  
  • 12. ENRON WHISTLE BLOWER
  • 13. ENRON WHISTLE BLOWER
  • 14.  
  • 15. ENRON WHISTLE BLOWER
  • 16. Here comes the crook
  • 17.  
  • 18. Jeff,I heard You get vegetarian diet in the jail I hope my jail mate is not former TYCO CEO
  • 19. Enron CFO I love 5 th amendment
  • 20. Former Enron Exec Kopper to Plead Guilty Kopper admits to laundering and fraud, agrees to help Feds in case                                    
  • 21.                                                       
  • 22. Wow ! My boss made so much money - but won’t give me a 5% raise?
  • 23. Yes - You did ! Andersen CEO Andersen Partner We did not ask him to shred
  • 24. Yes ! I ordered the shredding                                               
  • 25. Andersen's Houston office
  • 26. Worldcom to restate the numbers                                                                   WorldCom facing world of obstacles WorldCom files for bankruptcy
  • 27.  
  • 28. EBBERS GETS 25 YEARS
  • 29. EBBERS GETS 25 YEARS
  • 30. Former WorldCom chief, 63 years-old, could spend the rest of his life in prison .
  • 31. Scot Sullivan - Worldcom CFO
  • 32.  
  • 33.  
  • 34.  
  • 35. Worldcom Controller
  • 36.  
  • 37.  
  • 38.  
  • 39.  
  • 40. Xerox was forced to restate earnings to reflect $1.4 billion less in pre-tax profits over the past five years as part of a settlement with the SEC which also included a $10 million penalty .                                                                         More Accounting Woes For Xerox
  • 41. Adelphia CEO arrested Adelphia Files Lawsuit Against John Rigas and Other Former Executives and Board Members of Adelphia
  • 42. Adelphia CEO arrested
  • 43. Like father - Like Son
  • 44.  
  • 45. Qwest to restate the numbers Federal regulators believe that Qwest Communications International Inc.’s disclosure late Sunday night that it improperly accounted for more than $1.1 billion of transactions during the past three years raises questions that need further investigation, according to people familiar with the matter SEC gets tough on Qwest accounting
  • 46. When did Martha call the broker ? Martha’s broker blames his assistant                                                                                                   
  • 47. Stewart convicted on all charges
    • Jury finds style maven, ex-broker guilty of obstructing justice and lying to investigators
    Martha Stewart Gets 5 Months in Jail
  • 48.  
  • 49.  
  • 50.  
  • 51. Lea Fastow enters prison Wife of ex-Enron CFO Andrew Fastow begins day one of one-year jail term Monday
  • 52.  
  • 53. Imclone CEO indicted Feds want Waksal behind bars In plea negotiations, prosecutors seek prison term of 7-to-10 years , indictments of family. July 30, 2002: 9:36 AM EDT NEW YORK (CNN/Money) - Federal prosecutors have demanded during plea negotiations that former ImClone CEO Samuel Waksal serve a 7- to 10-year prison term for charges related to insider trading and are not willing to let his family members get off easy, a source close to the situation confirmed to CNN/Money Tuesday .                                                    
  • 54. ImClone’s CEO Arrested
  • 55.  
  • 56. ImClone’s complex connections
  • 57.                             
  • 58. Salomon telecom analyst Grubman quits Controversial Salomon Smith Barney telecommunications analyst Jack Grubman, once one of Wall Street's biggest stars and dealmakers, resigned Thursday. Grubman, the subject of congressional and regulatory probes, is the latest casualty of the telecom meltdown that has wiped out $2 trillion in shareholder wealth and sent once-soaring companies, such as WorldCom and Global Crossing, to bankruptcy court .
  • 59. Too Close for Comfort GE's legendary former CEO Jack Welch kicks up a controversy over his affair with a journalist                                                                                                                                                                                                                                                                       
  • 60. Jack Welch’s perks after retirement The divorce papers filed by Welch's wife, Jane, detail his use of an $80,000 per month Manhattan apartment owned by the company, court-side seats to the New York Knicks and U.S. Open , seating at Wimbledon, box seats at Red Sox and Yankees baseball games, country club fees, security services, and restaurant bills ,
  • 61. SEC probes Williams energy trading Inquiry into trading volumes, methods determining reserves Aug. 16 — Opening a fresh line of inquiry into Williams Cos., the Securities and Exchange Commission has asked the energy concern for information about how it accounts for credit and “prudency” reserves associated with its trading business.
  • 62. SEC Chief Vows Ongoing Audit Probe of Halliburton
  • 63. SEC investigates Halliburton Now that President Bush has already told in public that SEC will clear Cheney – I wonder What else I can do! Harvey Pitt Chairman - SEC
  • 64. Computer Associates' Sanjay Kumar Resigns Davide Dukcevich, 06.04.04, 1:00 PM ET NEW YORK - Tech giant Computer Associates (nyse: CA - news - people ) said that Chief Software Architect Sanjay Kumar will resign from the company as the firm tries to resolve a criminal investigation into its accounting . Computer Associates said it is committed to reaching a settlement of the government's probe as soon as possible, and that Kumar's decision to step down was made in that spirit. Kumar, who resigned as chairman and chief executive in April, will cease all involvement with the firm, effective immediately.
  • 65.  
  • 66.  
  • 67. Senate passes fraud bill Fraud bill rushed through Congress
  • 68.                                        
  • 69.  
  • 70.  
  • 71. Average investor - Screwed
  • 72. Corporate greed
  • 73. Summer Of Mistrust Scamming CEOs have accomplished what Osama bin Laden could not – i.e. denting our spirit. Can anything restore our faith in the stock markets?
  • 74. Many CEOs bend the rules (of golf) In that survey, commissioned by Starwood Hotels & Resorts, 82 percent of 401 high-ranking corporate executives admit to being less than honest on the golf course
  • 75.                                                       
  • 76. Morality and Ethics - Definition
    • Morality
      • Involves limitations on behavior
      • Limitations often benefit others
      • Limitations are often contrary to self-interest
      • Limitations are based on principles of right and wrong
    • Ethics
      • Social rules that govern conduct
      • Implementation of Morality + Etiquette
      • Organizational ethics
      • Personal Ethics:  Informed by Sense of (& Commitment to) Moral Standards
      • Professional Ethics:  Also informed by professional self-interest
  • 77. The Serbanes Oxley Bill
      • Sets guidelines for accounting oversight board with limited authority
      • Names two things auditors can't do for audit clients and asks SEC to name more, if needed
      • Outlaws executive interference with audits
      • Requires immediate disclosure of material information, including insider trades and loans to officers
      • Outlaws executive stock trades during pension-fund "blackout" periods
      • Requires periodic disclosure of off-balance-sheet transactions, asks SEC if other changes needed
      • Tells companies to disclose when they change their ethics codes
      • Tells SEC to toughen corporate transparency rules
      • Tells SEC to review financial statements more often
      • Makes accountants keep audit papers for 7 years
      • Strengthens SEC's ability to bar violators from serving as corporate officers
      • Lets SEC take profits from officers who sold stock before restating finances
      • Tells SEC to give to Enron employees money it takes from Enron or Andersen officers
      • Asks for government studies of analysts, corporate governance and other subjects
      • Exempts investment companies from 6 of these requirements
  • 78. Sarbanes-Oxley Act of 2002
      • Corporate responsibility
      • Enhanced Financial disclosures
      • Auditor independence
      • Professional responsibility rules for attorneys
      • Public Company Accounting oversight board
      • Other provisions
        • Research Analysts
        • Whistle blower protection
        • Corporate Tax Returns
        • Temporary Freeze Authority
    Ethics Trust Morality
  • 79. SEC paperwork requirements Serbanes – Oxley Bill aka Fraud Bill
    • 10 Q to Personal liability
    • Not just companies with $1Billion revenue – But all public companies
    • Detailed certification witgh every 10K and 10Q
  • 80. Corporate responsibility
    • Audit committees
    • Certification of Financial Statements
    • Improper influence
    • Bonus and compensation forfeiture following accounting statement
    • Insider trading pension fund blackout period
  • 81. Enhanced Financial Disclosures
      • Accuracy of financial reports
      • Off-Balance sheet transactions
      • Presentation of Pro Forma Financial information
      • Prohibition on personal loans to officers and Directors
      • Reporting of stock transactions
      • Internal Controls
      • Code of ethics for senior officers
      • Audit committee financial expert
      • Enhanced SEC review
      • Real Time disclosures
  • 82. Auditor independence
    • Prohibited Non-Audit services
    • Audit committee pre-approval of Audit and Non-Audit Services
    • Audit partner rotation
    • Reports to Audit committee
    • Conflicts of Interest
  • 83. Other provisions
    • Research Analysts
    • Criminal provisions for destruction
    • Debts in Bankruptcy
    • Extended statute of limitations of security fraud claims
    • Whistleblower protection
    • Corporate tax returns
    • Temporary freeze authority
    • Officer and Director Bars
                                                                     
  • 84. Antitrust – Contact with Competitors
      • Agreements or Understandings with Competitors
      • Discussions Regarding Price or Other Competitive Issues
      • Discounts and Production Limits
      • Trade Association Risks
      • Bid Rigging
      • Market Allocation
      • Supplier Antitrust Issues
      • E-mail Dangers
  • 85. Gifts and Conflicts of Interest
      • Working Ethically with Suppliers, Vendors and other Business Partners
      • Receiving Gifts
      • Receiving Hospitality and Entertainment
      • Giving Gifts
      • Offering Hospitality and Entertainment
      • "Friends and Family" Stock Offerings
      • Investments as Potential Conflicts of Interest
      • Outside Employment
      • Family Interests
                                  
  • 86. Mutual Respect
      • Avoiding Workplace Harassment
      • Sexual Harassment
      • "Electronic" Harassment
      • Harassment on the Basis of Race or Ethnicity
      • Harassment on the Basis of Age
      • Harassment on the Basis of Other Protected Characteristics
      • Reporting and Responding to Harassment in the Workplace
  • 87. Price Discrimination (Robinson-Patman Act)
      • Illegal Price Discrimination in the Sale of Goods
      • Injuring Competition
      • "Meeting Competition" Defense
      • "Cost Justification" Defense
      • "Changing Market Conditions" Defense
      • "Availability" Defense
  • 88. Code of Conduct – Doing business with Integrity
      • The Company's Commitment to Doing Business with Integrity
      • Handling Ethical Dilemmas (e.g., a Competitor's Confidential Information)
      • Compliance and Business Ethics Program
      • Code of Business Conduct
      • Compliance Help line and Other Program Resources
      • Reporting Violations and Asking Questions
      • An Employee's Personal Responsibility
      • Policy Certification (optional)
  • 89. EEO and Workplace Conduct for Managers
      • Avoiding Discrimination in Hiring
      • Employee Leave Issues
      • Working with Disabled Employees (ADA and related issues)
      • Wage and Hour Issues
      • Dealing with Problems in the Workplace
      • Responding to Misconduct and Complaints
      • Avoiding Discrimination in Terminations
  • 90. Intellectual Property
    • Protecting Your Company's IP
    • Appropriate Use of Others' IP
    • Confidential Information
    • Trade Secrets
    • Trademarks
    • Copyrights
    • Patents
  • 91. Summary
    • Ethics and Morality in an organization is a process and not an event
    • The Serbanes Oxley Bill is the first step _ We have long ways to go
    • Organizational ethics and Personal Ethics
    • Corporate responsibility
    • Auditor independence
    • Gifts and Conflicts of Interest
    • Code of Conduct – Doing business with Integrity
    • Finally : Many CEOs bend the rules (of golf)
  • 92. Jay Srinivasan h k n o u y QUESTIONS ?
  • 93.