This is an article reasoning how ethics is the major reason behind today's global crisis.
|The most common ethical issues seen by public are fraud, embezzlement,accepting bribes or lying etc. But is it spread at only small level or does it play a vital role somewhere in being a reason for today’s global crisis??|
The question is big but the more bigger is the shock which is given by it’s answer because the answer is “Yes, there is an important role of unethical activities of some CEO’s behind the global crisis.”
Well today’s global crisis start from a big turbulence in investment sector of America. This turbulence occur due to bankrupt of a very big bank of America known as “Lehman Brothers”. Here arises many questions like ” Can a turbulence in a specific investment sector f a company can be a cause of global crisis?? Can a policy of such a reputed and experienced company having a committee of advisers and a very qualified management go so wrong that it shakes the world?? Or are we neglecting some unethical things hidden behind this scenario??
Answers are different to different people. Justifications are given to the people making globalization responsible for changing this turbulence into global crisis. But giving justifications are not enough, we have to accept that there are some bigger issues than wrong planning and following a wrong strategy by management which cause this global crisis. What are those bigger issues?? a simple question which can many financial experts. And the answer is very disheartening, That is lack ethical behavior by the companies.
Before discussing about those behavior of the company i would like to raise another question, that ” Is this new trend of being unethical by a big company or it has been followed from decades by many companies??” Answer of this question is again unfavorable. This is not a new thing of being unethical by big companies. If we take example of Microsoft, at one point of time the rivals of Microsoft accused the software giant of using unfair and monopolistic practices to maintain market dominance with it’s internet explorer browser. Taking another example of Johnson and Johnson who settled the case at $860 million filed to them to sell the same product by two names in the same market. This policy of company was benefiting them by $1.1 billion. But all the companies are not like that for example if we see the Wal – Mart, the founder of this Sam Walton prohibited company buyers from accepting even a cup of coffee from suppliers.
So what was that which Lehman Brothers did not follow? It was not one person mistake. All the people involve in decision making, making internal reports etc are responsible for this. But a clear negligence of ethics which we can see are:
1) Corporate governance failure – The position of the chairman and CEO should not rest with the same person as per the corporate governance standards but Richard S. Fuld was the CEO and Chairman of the company.
2) Conflicts of interest – Richard Fuld pocketed an estimated $363 million between 1993 and 2007 by cashing in share options while the market value of shares had fallen from nearly $600 million to nothing when the firm went bankrupt.
3) Unusual CEO pay and bonuses – Corporate governance advisory services deemed executive pay of $34.4million to be too high and criticized the secretive process by which executive compensation was determined. There was also criticism of bonuses paid to executives immediately prior to bankruptcy.
These are the Only abstract of the unethical issues occurred in the company which proves to be a major reason behind today’s global crisis. This shows that when ethics are misunderstood as bookish knowledge we land to today’s scenario.