ASSIGNMENT ON Ethical and Unethical Business Practices Subject-Business Ethics Submitted To Prof Gauri SYMMS Roll No-27 Efforts By- Pooja Lilani
Ethical and Unethical Business PracticesBusiness ethics is the most debated topic of our times. The difference is betweendoing the right thing and the wrong thing. Business ethics are the philosophicalcore of any business and their outcome is crucial for economic development.Peter Cooper – the great American Investor says "I have always recognized thatthe object of business is to make money in an honorable manner. I haveendeavored to remember that the object of life is to do good."Business ethics are more than moral values and principles that determine ourconduct in the business world. It refers to the commercial activities, either withother business houses or with a single customer. They can be applied to all aspectsof business; from generation of an idea to its sale. Business uses the society for itsresources and functioning, thereby obligating it to the welfare of the society. Whilethe objective of all business is to make profits, it should contribute to the interest ofthe society by ensuring fair practices. However, greed has led the present businessscenario towards unethical business practices, legal complications and generalmistrust.Code of EthicsLot of organizations implement the code of ethics in their company polices, whichthey implement during induction and regular training. A Code of Ethics isgenerally a more blanket statement of values and beliefs that defines theorganization.So what is it for? Companys assets, funds and records Conflict of interest Management and employee practices Information on competition
Ethical Business PracticesHere are a few ethical business practices that should be followed to build a honestreputation and ensure smooth running of any organization. Investors: Ensuring safety of their money and timely payment of interest. Employees: Provision of fair opportunities in promotions and training, good working environment and timely payment of salaries. Customer: Complete information of the service and product should be made available. Personal information of the customers should not be used for personal gain. Competition: Unscrupulous tactics, competitor bashing and wrong methods should be avoided while handling competitors. Government: Rules and regulations regarding taxes, duties, restrictive and monopolistic trade practices and unlawful activities like corruption and bribing should be adhered to. Environment: Polluting industries should ensure compliance with the government norms regarding air, water and noise pollution.Unethical Business PracticesYou might find many companies who blatantly thrive on unethical behavior andpractices. A free environment is present or promoted where acts of violation ofnorms to amass wealth in an unethical manner is followed.Following are some of the activities that come under the ambit of unethicalpractice. Resorting to dishonesty, trickery or deception. Distortion of facts to mislead or confuse. Manipulating people emotionally by exploiting their vulnerabilities. Greed to amass excessive profit. Creation of false documents to show increased profits. Avoiding penalty or compensation for unlawful act. Lack of transparency and resistance to investigation.
Harming the environment by exceeding the government prescribed norms for pollution. Invasion of privacy used as leverage, for obtaining personal or professional gains. Sexual discriminationBusiness houses that comply with ethics to determine their conduct are shrinkingin number. The lack of business ethics in the market, is the reason the worldeconomy is presently in crisis. Organizations now recognize the positive effectsand outcomes of being ethical, humane and considerate. They have a competitiveedge in the market, because of the honesty they show in their services. Theirmorally upright reputation attracts better staff and helps in retention. Though ethicsare legally binding in most cases, self-monitoring, transparency and accountabilitywill go a long way in establishing trust of the people. Besides this, it makes senseto change, before you are penalized.When would we as Indians observe ethical business practices in totality? It is a bigquestion but it has a straight simple answer. Each one of us should be accountableand responsible to stop unethical business practices.We must create an environment which adheres to strictest philosophies of clean,transparent, honest business.Integrity is most wanted.
HOUSING DEVELOPMENT FINANCE CORPORATIONLIMITEDFAIR/ETHICAL PRACTICES CODE Intent and Content This Code has been formulated by Housing Development Finance Corporation Limited (the Corporation) pursuant to the Guidelines issued by the National Housing Bank on Fair Practices Code for Housing Finance Companies vide its circular bearing No. NHB(ND)/DRS/POL- No. 16/2006 dated September 05, 2006. This Code has come into force from 19th October, 2006 which has been modified pursuant to the Guidelines issued by the National Housing Bank on Fair Practices Code for Housing Finance Companies vide its circular bearing No. NHB(ND)/DRS/POL- No. 34/2010-11 dated October 11, 2010 and has been effective from December 23, 2010 . The said Guidelines has been further modified by the National Housing Bank on Fair Practices Code for Housing Finance Companies vide its circular bearing No. NHB(ND)/DRS/POL- No. 38/2010-11 dated April 25, 2011. This Code has come into force from May 10, 2011.Objectives Follow good, fair and transparent business practices by setting reasonable standards; Encourage market forces, through fair competition, to achieve higher operating standards; Relate to the customer in such manner so as to promote a fair and cordial relationship; Set such standards and practices so as to foster confidence in the housing finance system.Application To be applicable to all persons offering the Products and Services of the
Corporation as an employee or otherwise in any manner and/or by any mode.The Code is applicable under normal operating environment except in the eventof any force majeure.The Code is based on ethical principles of integrity and transparency and allactions and dealings shall follow the spirit of the Code.CommitmentThe Corporation shall at all times do its best to act fairly, reasonably and meetthe standard practices prevalent in the housing industry.The Corporation shall abide by all the relevant laws, regulations and meet withthe ethical principles of integrity and transparency during its interaction withcustomers.While interacting with customers, the Corporation may take all steps as may berequired to provide clear information either in English or Hindi or theappropriate local language regarding: o its various products and services; o the terms and conditions, the interest rates/service charges; o benefits available to customers and the implications, if any; o contact persons for addressing the queries, if any;The Corporation will provide a copy of this Code, at request, to the customer.The Code will also be made available on its Website and at every branch/ office.The Corporation would not discriminate on grounds of sex, caste and religion inthe matter of lending. However this does not preclude the Corporation fromparticipating in credit-linked schemes for the weaker sections of society and inrespect of schemes formulated by NHB/ other Government Agencies,implemented through the Corporation.The Corporation shall treat the information relating to customers as strictlyconfidential and shall not share any information, unless required under law orwaived or permitted by the customer.The Corporation shall take necessary steps to inform its customers of their rightto information regarding their account and the facilities available to them.The Corporation shall be clear and not misleading in any of its advertising andpromotional materials.The Corporation shall inform its customers of all financial information such asrates of interest, charges, method of calculation etc through brochures, posters
or during the course of meeting with the customers etc prior to entering into any transaction. The Corporation shall endeavor to keep its customers informed of any change in interest rates / charges etc through letters or any other form of general or public announcement or displays, from time to time. The Corporation shall disclose, by such mode and in such manner as deemed fit, to ensure transparency, all information affecting the interest of the borrower including but not limited to : o fees/charges payable for processing loan application; o the amount of fee refundable, if any, if the loan amount is not sanctioned; o Prepayment options and charges, if any; o Penalty for delayed payment, if any; o Conversion charges (Switching loan from fixed to floating rate or vice – versa); o Existence of interest re-set clause, if any. The disclosure shall be done so as to ensure that the borrower is aware of “all in cost” parameters involved in processing and sanctioning of loan. The Corporation shall not indulge in any act which is discriminatory among equals. The Corporation will review the compliance of this Code and a consolidated report of such review may be submitted to the Board. LoansThe Corporation in the normal course of its business shall endeavour at all times toguide its customers about the process and procedure to be followed for availing aloan.Each application shall be considered independently on merit, upon scrutiny of allthe information, documents required for verifying the title of the property, identityof the person, entity and the security to be offered, including guarantees.The letter of guarantees to be executed by the guarantors would cover theirobligations, liabilities and circumstances in which they can be called upon to paythe dues of the customer/borrower.The Corporation shall communicate in writing to the customer whose applicationhas been reject Collection of Dues
The Corporation shall provide the customers with all the information regardingtheir dues and provide reasonable time for payment of the same.The Corporation shall while protecting its interest adopt reasonable and lawfulmeasures to recover its dues from defaulting customers, including use ofpersuasive methods for the purpose of collection of its dues.Complaints and GrievancesThe Corporation shall endeavour to address/respond to all complaints andgrievances within a reasonable time and keep the customers informed about thestatus of their complaints.The Corporation shall make available facilities at each of its branches andoffices for the customers to lodge and/or submit their complaints or grievances,if any.The Corporation will ensure that its grievance redressal procedure is madeavailable on its website. ETHICAL PRACTICES BY HDFC BANK
HDFC only Indian bank in global list of ethical companyPosted: Thu, March 17, 2011 | 12 PM ISTMumbai, March 17: HDFC Bank, second largest private sector bank, is theonly Indian organization got listed in the worlds most ethical companies listthis year. As per the list prepared by the Ethisphere Institute, only one Indianfirm HDFC has made a place in the 110 worlds most ethical companies.HDFC is one of the most trusted brands in the India and for a financialservices company it is quite noticeable that people should perceive that it asethical as well. Commenting on the attainment HDFC Vice-Chairman andCEO Keki Mistry said: "It obviously feels nice to be one of the worlds mostethical company and the only one from India." The new achievement ofHDFC will help to inhance the brand equity of the company going forward.Among the list of companies online market portal eBay, Ford MotorCompany, banking giant Standard Chartered Bank, Accenture, AdobeSystems, software giant Microsoft and food and beverage firm PepsiCo foundin top position.
Reliance Unethical PracticesComplaints India enables consumers and users of services and products to posttheir common complaints and suggestions regarding airline, bank, business,companies and Government and non Government organizations in India andabroad. Track your car complaints, mobile phone complaints, bank complaints,credit card complaints etc at this website. Its a consumer forum, board or bureaufor consumers to redress their complaints.Consumer Courts in India now gives the power to consumers to fight for theirconsumer rights at district level consumer forums. However consumers canproceed to confront companies and try to get quicker responses through thewebsite. For companies its important to quickly address consumer complaints toprotect their product or service brand image. Consumer-India web site has anumber of resources for your assistance. Separate new product complaint and NRIcomplaint sections help in easier posting and tracking of complaints.With online internet scams proliferating, its easy to get cheated by fraudcompanies. Consumers need to protect themselves from online scams, emailscams, phishing etc.Complaints can be posted on all products and services. You can post complaintsMobile Services (Airtel, BSNL, Idea, Reliance, Docomo, Unior, Aircel etc),Mobile Phones (Nokia, LG, Samsung, Sony Ericsson, Blackberry,
MicromaKarbonn etc), Home Appliances like TVs, Refrigerators, ACs,Cooking Ovens etc.Unethical PracticesInfosys Employee Testifies on Alleged Visa FraudBy Megha Bahree and Miriam JordanAn Infosys employee, who has alleged that Indian tech giant, Infosys TechnologiesLtd., engages in visa fraud, provided more details to a U.S. Senate subcommitteethis week. Tony Avelar/Bloomberg News In a testimony, an Infosys employee provided more details about alleged visa fraud at Infosys.In a statement to the Senate Judiciary Subcommittee on Immigration, Refugees andBorder Security on Tuesday, Jay Palmer, the whistleblower at Infosys, said thecompany “intentionally violated our visa and tax laws for the purpose of increasingrevenues.” Mr. Palmer accused Infosys of frequently violating U.S. visa laws and
of staffing multiple client projects with illegal employees, including at GoldmanSachs, American Express, Wal-Mart and Johnson Control, among others.Mr. Palmer filed a lawsuit against the company in February in Circuit Court inAlabama, alleging the company sought his help to circumvent U.S. law. Thelawsuit has led to a probe by U.S. authorities.Infosys, which is cooperating with the inquiry, denied the allegations. Paul N.Gottsegen, chief marketing officer for Infosys, said in a statement Wednesday thatMr. Palmer’s remarks were “full of inaccuracies, exaggerations and falsehoods.”“There is not, nor was there ever a strategy, scheme, or policy by the company touse the B-1 visa program to circumvent the H-1B visa program,” he said. “Thecompany did not have a practice of sending unskilled employees to the UnitedStates on B-1 visas to do the work expected of skilled individuals in the U.S. on H-1B visas.”Mr. Palmer disagreed. This is how, he says, it was done.During a March 2010 visit to Bangalore headquarters he says he heard severalconversations between Indian managers and U.S.-based managers where it wasmade clear that Infosys was going to increase the use of the B1 visa program to getaround tough new restrictions the U. S. had placed on the H-1B program. Infosys,he says, decided to flood the local Indian consulate with visa applications in orderto get as many approved as possible no matter the level of an individual’s skill. Hesays that in many cases the company sent relatively inexperienced workers to theU.S. for projects.He says Infosys sent employees on B1 visas to the U.S. for specific full-time jobsat client sites but instead of paying them U.S. salaries, it would pay them muchlower Indian salaries, calling it a stipend. Infosys, however, charged its clients U.S.rates for the employees, thus getting full reimbursement from their Americanclients for Infosys’ labor costs. He also says Infosys paid no taxes on payments tothese workers.According to Mr. Palmer, Infosys created an internal website of “do’s and don’ts”with tips including: “Do not mention activities like implementation, design &
testing, consulting etc., which sound like work. Also do not use words like, work,activity, etc., in the invitation letter. Please do not mention anything about thecontract rates as you’re on a B-1 Visa.”He says that in order for this to work, the U.S. contracts had to be written as “FixedPrice” contracts and not as “Time and Material” contracts. On a Fixed Pricecontract a customer is charged a lump sum for labor, and the people doing thework do not need to be identified to the client. But on a T&M contract, on the otherhand, the people doing the actual work had to be named along with their hourlyrate. In August 2010 Mr. Palmer says he received emails and requests to rewrite T& M contracts to FP contracts.Describing a specific instance, he says that in December 2010 an Infosys employeeshowed him a spreadsheet with a list of B1 visa workers on a project at JohnsonControl, who should not have been doing such work. He said that these workerswere working full-time testing software code and writing scripts but were paidtheir salaries by Infosys depositing money into the cash card accounts withoutwithholding any income tax.Mr. Palmer’s testimony comes as the Indian IT industry finds itself facing morescrutiny than ever. Outsourcing has always been a hot-button issue in the U.S., butwith a stubbornly high unemployment rate in the U.S., the offshoring of what areperceived to be American jobs has become an increasingly sensitive political issue.Last year the U.S. passed legislation that raised fees for skilled visas, particularlyaffecting Indian IT firms. IT firms based in India generate 60% of their revenuefrom the U.S.On their part, Indian firms have seen the increased visa fees as well as delays ingetting approvals and much tougher interviews as part of a concerted campaignagainst them. Some Indian officials have even labeled the U.S. moves unfair tradepractices.In his testimony Mr. Palmer, says he and his attorney have received over 40communications from individuals at other Indian companies stating that the sametype of H-1B and B1 visa fraud is being committed there as well.
Infosys said it would not rebut Mr. Palmer’s remarks point-by-point at this timebecause of its ongoing litigation with him.“We take very seriously our obligations under the law and specifically ourresponsibilities to comply with the immigration laws and visa requirements in alljurisdictions where we have clients,” said Infosys’s Mr. Gottsegen. “Mr. Palmer isobviously intent on spreading his falsehoods about Infosys and our businesspractices as broadly as possible in order to advance his objective of getting as bigof a payout as he can from the Company.”In his testimony, Mr. Palmer also lobbied for more restrictions on work visas toforeign companies.“My real life experiences have educated me to the point that if Congress decidesthat an increase of Green Cards or legal work visas in the U.S. is a must, then thereshould be limitations or ratios,” he said. “For example, for every H-1B visa issuedto foreign national company they should have to hire an American worker.”More In Infosys Infosyss High-Margin Quest Comes at a Cost Infosys Earnings Likely Stellar, But Dont Be Fooled Nilekani Says ID Project on Track Quo Vadis Cognizant? Infosys Noses Ahead of TCS After EarningsHe also said Indian companies were benefiting at the expense of the Americaneconomy, a charge the Indian IT industry disagrees with. Indian software andservices industry body NASSCOM has said in the past that the cost savings theyprovide help make U.S. firms more competitive.“I have read statements from NASSCOM stating that not increasing Green Cardnumbers and with the current visa restrictions, the Indian economy would suffer,”said Mr. Palmer. “Let me ask the committee, what about our economy? Whatabout the years and years of ignoring the laws. These companies maliciously donot hire Americans and look at ways to circumvent policy and law instead of
working with it. Look at the stock and growth of these large foreign companies in adown environment — they are not suffering.”ndian financial industry has always been successfully able to trace every prospectoffered by the Indias fiscal policy both in terms of alteration and expansion. Inspite of all the endeavors implemented to develop the financial market, it stillremains fatally faulted due to lack of three major key elements namely inadequatemanagement, stringent accountability, and proper punishment. As a result, the capital market of India has remained one-dimensional and hasstaggered from one investment scandal to another. A straightforward listing of thetop 10 investment scams narrates the account of why Indian investors were leftannoyed by the scamsters.Unethical PracticesA brief about Top 10 Investment Scams in India1. The Securities Scam The capital market witnessed its foremost investment scandal in the form of securities scandal in the year 1992. It revealed the utter anarchy and lack of administration in the prevailing fiscal market. The money market at that time permitted funds to be relocated with impunity from financial institution and corporates into equity and consequently witnessed crores of banks capital to transfer into brokers account. This illegal market practice was later asserted as "legal and acknowledged". In an attempt to punish the tricksters, a special court was initiated and scrutinized around 70 cases registered by CBI. Surprisingly, not even a single trickster was found guilty by the dreadfully sluggish judicial system. As a
matter of fact, the scamsters made frequent attempts to re-enter the market with same set of traps and resulted in losses to investors.2. The IPO scam Soon after the entry of international organizational investors, the Control over Capital Issues was banned as the market saw heavy bull trend resulting in the revitalization of the secondary market from the previous scandals. The ban of Control over Capital Issues unlocked the prospects of massive scandal in Initial Public Offerings (IPO). The scam was executed in two parts; the first part was carried out by the firms that increased their market costs to incur profits in order to sponsor lucrative projects. The second part saw the unison of small time merchants, CAs, investment bankers and traders to hoist new firms and heave public capitals. The IPO scam prevailed for three long years from 1993-1996 and finally saw its downfall when the costs of the registered firm started deteriorating.3. Favored share scam The scandal was an outcome of the extensive cost fixing on the derivative market. Besides increasing fresh capital, advocates of Indian firms promptly coordinated general body authorizations to transfer shares to themselves on a privileged basis and at a considerable reduction to the market, thinking that the share prices would never see the ground. Conglomerates started this trend and accrued profits of nearly 55o crores until Securities and Exchange Board of India (SEBI) formulated strict guidelines to abandon the market practice.4. CRBs cardboard scam The ` 1000 crore finacial multinational named as Chain Roop Bhansali (CRB) was the only biggest firm and most impudent of all to benefit and disappear in the loosened market ambiance of mid-1990s. The services offered by his firm
entailed FC collection, mutual fund, banking, etc. The clearances obtained by the firm for the trading of these services required sufficient inspection by SEBI and the RBI and the fact that they managed to qualify shows the supervisory weariness of the regulators. Facilitated by the clearances and profitable credit ranking, CRB accrued greater profits based on high value financing. The CRB collapse not only affected the investors but also the other finance firms.5. Plantation firms scam Since few firms in mid-90s were subject to no guidelines, the plantation companies during that time also got away with profit protrusions. The plantation firms projected themselves as a part of IPO and assured massive returns. The investors were lured and the companies accrued profits from fake campaigns of around ` 8000 crores plus.6. Mutual Funds scam After several mutual fund scams, the UTI bailout reflected the lack of proper guidelines in the Indian capital market. Since UTI was initiated under its own regulations, it was the tax payers who suffered the loss of ` 4800 crore in the process. After three years, the company was back purchasing Ketan Parekhs controlled scrips and incurring massive losses in the process. The evidence of the private mutual funds performance has also been inconsistent after hitting the downfall in 1999 and 2000. It took a considerable amount of time for capital market to win back the trust of mutual fund investors.7. The 1998 scam The scamster of 1992 scam, Harshad Mehta came back with a bag of tricks again in 1998. This time he lured investors through a website by trading stock tips. His unremitting manipulation of several shares resulted in the much expected collapse of Bombay Stock Exchange.
8. Home Trade scam Initiated in 2000, Home trade invested rs 24 crore in promotional campaigns to attract investors. The scam affected 8 co-operative banks that lost ` 82 Crore in EPF scheme. The Chief Executive of Hometrade, Mr. Sanjay Aggarwal was convicted by Nagpur Police later.9. DSQ Software Scam In the year 2000 and 2001, the Managing Director of DSQ Software, Mr. Dinesh Dalmia, was held responsible for ambiguous mergers and prejudiced allocation of the amount of upto ` 595 Crores. He was later convicted in the year 2006.10.Satyam Scam After manipulating the firms documents for several financial years, the former Chairman and Chief Executive of Satyam Computers, Mr.Ramalinga Raju, was arrested for committing scam, following unethical practice and forgery. He showed greater profits and committed fraud of ` 700 crores.