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Policy Implementation and Application Individual Project, Research Paper Example

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Research Paper

Ethics review committee | scenario 1

In the untended acquisition of ‘Government Allies’, the due diligence has discovered that an Executive of ECG and the spouse  have previously undisclosed interests in Government Allies. This essentially creates a situation of conflict of interests and is ethically not tenable. In this situation, the Executive and spouse will be seen to benefit and create a profit resulting from the acquisition. Further, both parties failed to notify the Company of their investment in Government allies.  This in essence also creates a breach of trust and confidence, a further violation in ethical principles. There is also the situation that the Executive was seen to be heavily promoting the acquisition and this might be seen as incorporating deceit and potential misrepresentation to the ECG Board of Directors and as a Senior Officer (Executive) of the company this would be considered as unethical management practice.

Conflict of Interest situations are not uncommon for Executives and Boards of Directors. This is an easy trap to become a victim of. The ramifications, in legal terms, however can have serious consequences. There remains the concept of ‘ignorance of the law is no excuse’; equally, this heightens in severity when there is a deliberate act of causing the conflict of interest with a deliberate motivation towards material gain.  You then enter the realm of criminal law and particularly where this may injure or prejudice the legal rights of others. From an ethical perspective, the Executive and Directors have a fiduciary responsibility to the Shareholders of the Company and they are expected to act in accordance with the benefit and safeguard of the  Company without exposing it to undue risk by taking action of personal gain.  So in essence, this crosses both ethical and legal boundaries Consider the case of  Tekni-Plex, Inc. v. Tang, 674 N.E.2d 663 (N.Y. 1996).  These cases however can often become complex in case law and in this case it moved towards breach of contract or contract law. (Freivogel, W. 2011)

The ethical breaches of trust and confidence relate more to the fiduciary responsibilities of the Executive and Board of Directors.  Where there are deliberate breaches of responsibility this may result in criminal cases.  For example the Enron Directors were named as individuals, in a class action lawsuit, that reflected upon their individual fiduciary responsibilities to the Company. (Denali Fiduciary Management, 2011).  In this instance the Ethics Board should recommend dismissal of the Executive responsible.

The Ethics Board should really be examining where the conflict of interests occurred through a deliberate act or one of potential hazard in the job.  In this case it was clear that both the Executive and his Spouse knowingly undisclosed their financial interests with a view towards making money.  As such the Executive was in clear breach of the fidiciary responsibilities to the Company and as such placed the company in at ‘at risk’ situation and compromised the other member of the Board of Directors and Shareholders of the Company.  This is a complete breach opf confidence and trust and is just grounds for removal as a Director of the Company and subsequent dismissal.

The Executive Director has failed on three counts of professional ethical responsibility to the Company.  First, that of providing a duty of care to the organization  by not acting in good faith and representing the company interests.  Secondly,  the duty of loyalty to the company and not putting the company before self interests and thirdly,  the duty of obedience and respect; putting himself above the rules, policies and regulations of the company and potentially putting other officers and the company in harms way or at risk.

Ethics review committee – scenario 2

In this instance, ECG is competing on a bid for a lucrative assignment i.e. a consulting contract for X TelCo.  One team member previously worked for the contracting firm (X TelCo) and used his influence to try and sway the decision of the bid.  ECG did not know of this or the contacts of the employee with the contracting firm.  There are a number of ethical standards being violated here.  There is a breach of trust to the ECG Management team as such unethical behaviour may result in the firm being dismissed from the bid. This also leads the firm to suspect whether any other inducements, financial or otherwise, may have been used to secure preferential treatment to ECG.  The act equally, if subsequently exposed, would look upon ECG as being guilty of underhanded and shoddy business practices. There may not be any legal breaches but certainly, the team member is guilty of unethical behaviour as this may ultimately bring the company into disrepute.

These acts often sort of cross the line when there are bribes, financial inducements or other offers in order to secure and win contracts.  In a more extreme case involving a Federal Sting operation where arms salesman had been taking lucrative bribes in order to ensure award of contracts, the jury remain deadlocked and the judge declared a mistrial. [USA v. Goncalves et al, No. 09-cr-335 in U.S. District Court for the District of Columbia].  It does however help to illustrate the gravity to which these cases may ascend to from basic unethical stances and crossing the line in breach of legal rulings, in this case Federal Bribery laws. (Pelofsky, J. 2011).

The Ethics Board of ECG needs to discipline the team member that has breached the Company Code of Ethics.  It is not necessarily a dismissible offence but the individual needs to be made crystal clear on the company’s stance and position towards ethical responsibilities within this area.  The management also need to be chastised for not being more aware of the situation and allowing this situation to develop. There is clearly a need to educate and communicate with the staff on the companies ethical policies. These situations are often caused by complacency and the enthusiasm to win business without taking a more holistic view on their actions and behaviours in a competitive bid process. (CAC News, 1996)

Business has a responsibility to conduct itself in a fair, equitable and professional manner exercising a responsibility to its shareholders. The conditions to employ women and children, particularly in third world overseas locations, are such that it should ensure a safe, hygienic and environmentally safe workplace. It must pay a remuneration that is equitable to the value of the work done i.e. consider the organic fair trade producers of Coffee in Africa and South America.

Business Organizations need to conduct an audit of their operational practices in order to ensure they are not faced with these types of ethical dilemmas. The shoe Company Nike did not realise its extent in the use of child labour, particularly in Cambodia and Pakistan and had to make a series of adjustments . Large firms can be unaware of the activities of  high ranking employees, particularly in overseas subsidiaries where they he responsibility for dealing with large contracts and maintaining the company image. Standards of ethics can be very variable between companies and this can pose considerable challenges for maintaining a standard ethical response across the organization. You face a certain degree of frustration with some ethical dilemmas.  Often a conflict between personal choice and the duty of organizational instruction. This means weighing the balance of ethical considerations but maintaining the moral and ethical duty in order to achieve the right thing.  This leaves little room for compromise in decision making.  The law is not always black and white and determining the shades of grey often poses ethical challenges.

References

CAC News. (1996, 9). Duties of the Ethics Committee. Retrieved 8 31, 2011, from CAC News: http://www.cacnews.org/organization/Ethics_duties.pdf

Denali Fiduciary Management. (2011). Board of Directors Fiduciary Duty and Liability . Retrieved 8 31, 2011, from Denali Fiduciary Management: http://www.denalifm.com/resources/resources_8.html

Freivogel, W. (2011). Freivogel on Conflicts. Retrieved 8 31, 2011, from A Guide to Conflicts of Interest for Lawyers: http://web.me.com/billfreivogel/Freivogel/Freivogel_on_Conflicts.html

Pelofsky, J. (2011, 7 7). Mistrial in U.S. bribery sting after jury deadlock. Retrieved 8 31, 2011, from Thomson Reuters: http://newsandinsight.thomsonreuters.com/Legal/News/2011/07_-_July/Mistrial_in_U_S__bribery_sting_after_jury_deadlock/

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