Free «Business Ethics» Essay

Business Ethics

The Malay Mail

Bursa fines dealer, an article published in the Malay Mail, gives an explanation of how Zackery Aziz, a Kenanga Investment Bank Bhd dealer, was fined by Bursa Malaysia Securities Bhd for engaging in both unethical and unlawful activities and his license revoked (Malay Mail 2012).

Table 1: Analysis of Kenanga Investment Bank Bhd stakeholders

Stakeholder

What does the organization mean for the stakeholder

What does the stakeholder mean for the organization

Shareholders

Shareholders expect the company to trade their shares with honesty, integrity, and respect, and execute their requests while advising them on the current trends in the stock market.   

The Company expects shareholders to trust them with their shares and trade more shares through them.

Employees

Employees expect the company to trust them with its properties, punish those who do not follow its regulations, employ those with integrity, trust professional bodies, pay taxes and other levies in time, and provide a conducive environment for working.

The Company expects employees to be honest, hardworking, maintain integrity in all their dealings, observe and respect their business regulations, and work hard to maximize profits.

Other trading companies

Other trading companies expect the Company to be honest with shareholders’ shares and advice on the current stock trends in the market as its misconduct enables shareholders to sell their shares which can adversely affect their operations.

The Company expects other trading companies to trade shares through them and trust them with their shareholders. 

Financial Institution

Financial institution expects the Company to pay taxes and other business levies in time, employ qualified professionals who work with integrity to manage its funds, and meet all their objectives including making profits.

The Company would like financial institution to trust them with their monies, trust their employees, and offer them more finances in future without doubting whether it would be properly utilized or not.

Customers

Expects the Company to employ highly qualified professionals whose integrities are not questionable to manage shares and provide the best for them. They also expect to receive quality services and in this case expect the company to follow the law and ensure the trader pays for the damages.   

Company would like customers to trust their employees, products, and services and trade with them without fear. It would also require customers to report employees who engage in unethical activities and in this case, provide information about the trader’s behaviors while dealing with them.

Government

The government expects the Company to follow all laws and regulations, to take any complaints stakeholders bring about its employees and services seriously, employ professionals from accredited professional bodies, and in such a case, report the incident to law enforcement agencies and ensure justice prevails.

The Company expects the government set up institutions that train professionals work professionally and maintain integrity in their careers.  It also expects the government put up measures that ensure people who commit crimes do not escape.

How does the issue relate to conflicting or converging stakes?

Shareholders will want honest interpretation of what happened, while the Company will want to save its reputation with minimum information given to shareholders who will upset its market value by trying to dispose shares or ask too many questions. Collectively, both the Company and the shareholders would want to clear the matter with minimum damage to the Company and its value as fast as possible.

The companymay put additional controls, procedures and bring in new policies and guidelines to prevent such situations in future, which will create changes to the way employees work. The Company expects employees to be honest, hardworking, maintain integrity in all their dealings, and observe and respect their business regulations.

Customers will want additional information and more guarantees that their monies are properly handed under proper controls and supervision. However, the Company would want to balance policies and procedures as it sometimes affects performance and flexibility in decision making. Both would not want to pay for mistakes or illegal activities conducted by one person.

Trading companies would want proper explanation as to what happened with the shares of their shareholders from the Company. Both would like to save the situation with very little information given to shareholders and customers to continue doing business with them.

Deontological theory

Trader did trades without notifying the clients and this, according to deontological theory (Jeurissen 2007), is wrong as the money does not belong to him. Morally, even the trader could not have wished his money or property be used without his knowledge. So it is not morally correct to use someone else’s resources without their permission.

The trader has not carried out the instructions given by the customer. The trader as a representative of the client is duty bound and under obligations to do what the client says as long as it is legal, even if it is not morally right. So even if the client’s instructions are against the self-interest of the client, the trader has to do what the client instructs.

Consequentialist theory      

However, why the client engages a trader is that trader will know the best!  Since client does not know as much as the trader, we can also assume that the trader would have acted in the interest of the client by trying to increase the profitability. Also he would not have told the client because if he told, the client would have acted against their own interest due to not having correct information or knowledge like the trader.

It so happens that his trades have gone wrong, however, since there is no evidence he made money, according to consequentialist theory (Winston & Edelbach 2011; Business Ethics 2005), he would have acted to get the best result for the customer.

The trader’s refusal to sell all the client’s shares may also be with good faith i.e. for the continuity of the company. May be the client’s shares constituted a larger percentage of the overall shares and their sale would have made the company to collapse, negatively affecting stakeholders.

Unfortunately the trades went wrong. What if the trades went right and the customer made 20-50% gains? Will he be still fired and fined? Or will he be recognized by clients as a star?

Relevant laws and regulation, sector standards, agreements

The following laws and regulations could be applied in the case: Anti-corruption, banking and financial institutions, contract, and Convention on Settlement of Investment Disputes laws (Malaysian Law List 2007).

The Star Online

Accountant gets three years jail, cane for CBT, an article published in The Star Online, explores how an accountant, P. Suramanian, failed to remit a check worth RM 250,000.00 given to him by Syarikat Cashflow Horizon Sdn Bhd to Inland Revenue Board (The Star Online 2012).

Table 2: Analysis of Syarikat Cashflow Horizon Sdn Bhd stakeholders

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Stakeholder

What does the organization mean for the stakeholder

What does the stakeholder mean for the organization

Government

The government expects the Company to submit its tax returns without delay and obey tax regulations.   

The Company expects the government to be efficient in calculating tax and to trust them.

Employees

Employees expect to be trusted, fairly treated, and their efforts recognized.

The Company expects high levels of integrity, honesty and hard work from employees.

Courts

Courts expect the Company to report those who behave unlawfully and unprofessionally to law enforcement agencies and report to court when required to provide all the evidence to ensure justice prevails.

The Company expects the courts to sermon the accountant or issue a warrant of arrest against him, start investigations, hear both sides of the story, and come up with a sound judgment.

Accounting professionals

Accounting professionals expect the company to perform thorough recruitment to enable it get highly qualified professionals who can be trusted and consult their professional bodies when they want to employ and when in problems like the one it is facing.  

The Company expects accounting professionals to maintain integrity, be honest, and revoke certificates from unscrupulous professionals.

How the issue relates to conflicting or converging stakes

The government would impose penalties to the Company for not delivering tax in time and provide measures including alternative mode of payments to prevent such incidences from happening in future. Both the government and Company expect employees to work hard, maintain integrity, and respect and observe business regulations including payment of taxes.

The court will want evidence to prove the case. All stakes would want justice to prevail in the case.

The accounting professional body would want the accountant’s practicing certificate revoked and put in place stringent measures to ensure such incidences do not occur. It would also want to its integrity. However, both the body and the company would like the accountant arrested and jailed.

The company may put more tough measures on the remaining employees to curb reoccurrence of such incidences in future. Both the Company and employees would want justice to prevail.

Deontological theory

The accountant failed to remit the cheque even after the company trusted him. This is morally wrong as the cheques belonged to the revenue authority. According to deontological theory (Ferrell O., Fraedrich, & Ferrell L 2009), accountant would have not liked another person to do to others or him whatever he did to the Company.

The accountant refused to obey the instructions of the company. As an employee, he ought to obey the instructions of the company so long as it is legal. Even if the interests of the accountant contradicted that of the company, he would have just obeyed.

The company, court, and the accountant would all like to be represented by witnesses at the court. The eight prosecution and two defense witnesses who testified in the case were morally right. Every person has a right to use witnesses to defend him or her in court. The judge’s decision to listen to both parties and deliver a sound verdict is very right. It is his duty to listen to both parties in the case and deliver a ruling without fear or favor.

The public prosecution defended the Company and ensured justice prevailed. They also demanded a severe punishment. The public prosecution’s representation of the Company in court is morally right. The Company also saw it good to pay taxes in time to allow smooth operation of the government. 

 Ethics of virtue theory

The moral characters of people involved in this portfolio can be evaluated based on various ethics of virtues (Koehn 1995). The judge made the judgment without fear or favor and the prosecution fearlessly defended the company, they are therefore said to be brave and had passion for justice. The Company wanted to pay the cheques in time and is said to be responsible. Both defense and prosecution witnesses took their time to provide the courts with information regarding the case, they were courageous and patient.  The accountant did not remit the cheques given to him by the Company to Inland Revenue Board, he was irresponsible and untrusted.

List relevant laws and regulation, sector standards, agreements

The Malaysian laws governing this portfolio include contract laws (Malaysian Law List 2007), Minor Offenses laws, Stamp and tax laws (Stamp Act 2006), and Penal Code laws (Penal Code 2006).

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