Saturday, April 19, 2014

NYPD: Stop-and-Frisk Policy (2014)

Controversy
NYPD logo

The New York Police Department (NYPD) is one of the largest police departments in the world. With New York City having more than eight million inhabitants a large police force is needed to protect and serve the citizens. Mayor Bloomberg and Commissioner Bratton are highly in charge with decisions and judgments that occur in the city, with the Stop-and-Frisk policy being one of their tactics they oversee. Controversy has surrounded this policy as many New Yorkers are stopped daily having their time taking away from them and more importantly their rights in some cases.
New Yorkers are dissatisfied with this policy as many think their rights are being violated and racial profiling is a huge part of the policy. The following looks at this case from different ethical perspectives (Individualism, Kantianism, Utilitarianism, and the Virtue Theory) that could either prove the point that what the NYPD is doing is unethical or justify their actions. According either of the four ethical theories, the Stop-and-Frisk is unethical in every sense. The NYPD is saying it is for the good for the people, while not realizing how much this terrorizes its citizens on a daily basis, while damaging the relationship between law enforcement and the citizens. People in the city respect law enforcement less and less as each day passes with the policy still in place.
Company BackgroundThe New York Police Department, or NYPD, began in 1845 with a force of about 800 men under the order of the first Chief of Police George W. Matsell. New York City had a form of patrol since 1625 when the sheriff-attorneys, or “Schout-fiscal” as they were called, were in charge of keeping peace, notifying colonist of nighttime fires, and settling minor disputes. Throughout the years the NYPD has increased the number of men and women in the force and has also gained responsibility all over the city. There are over 34,000 uniformed officers in the country’s largest police department, with 17,000 other employees; all ran under Police Commissioner William J. Bratton.
Statistics have shown that the NYPD use almost 15 percent of the whole city’s salary in a year. With a force bigger than the FBI, the NYPD’s proposed budget in 2013 was 4.6 billion dollars. In an interview with the mayor of New York, Mayor Bloomberg, he bragged that the NYPD is “7th largest army in the world.” The NYPD is not actually the size that Mayor Bloomberg exclaims but it shows relatively how big the department is. New York City population is over 8 million so it is right that there is an “army” protecting the city.
Many controversies surround the department with their practices and their actions. Many people believe the NYPD takes over the citizens’ rights and privacy with actions such as constant intrusion and surveillance. Police brutality has been linked with the NYPD as well which has many skeptics. The policy that has the most controversial conversations and is most skeptical is the Stop-and-Frisk policy.
The New York Stop-and-Frisk policy relates all the way back to 1968 in the Terry v. Ohio case which gave legal basis for officers to stop, question and frisk citizens. This policy gives Police officers to Stop-and-Frisk “suspicious” people or citizens that are “up to not good”. In 1999 was when the uproar and the controversy began about the Stop-and-Frisk policy with the Daniels, et al. v. The City of New York, et al. case. In the aftermath of the shooting of an unarmed African man a first class action lawsuit was filed against New York for what was considered an unlawful Stop-and-Frisk. It was believed police officers used racial profiling in this case which lead to the death of Amadou Diallo. In conclusion of this case the Center of Constitutional Rights wished that the court would stop with NYPD's Street Crime Unit.
This is the ongoing problem that continues today with the Stop-and-Frisk policy that people believe to be one unethical, and secondly unconstitutional. Racial profiling is what drives this policy and the numbers behind policy drives peoples arguments as well. In the NYCLU (New York Civil Liberties Union) report, 2002 is the first year where statistical data was recorded. In that year New Yorkers were stopped by the police 97,296 times while 80,176 were totally innocent. This does not even show what races or ethnicities were stopped the most but it shows how many people are being stopped that are not even doing anything wrong. There was 82 percent that were not guilty of anything and averaged out more than 250 people were stopped a day due to this policy. To fast forward a bit in time and to look at some stats about race in 2011 685,724 people were stopped by the NYPD. A staggering 88 percent were not guilty of any crime. More than it was in 2002 with a lot more stop and frisks occurring. In total 53 percent of the people stopped were blacks and 34 percent were Latinos. Only 9 percent were whites and more than 50 percent were between the ages 14-24. This proves why people can argue the fact racial profiling is a tactic with this policy.
Many people have argued this policy claiming it is unconstitutional and unethical since racial profiling is a major enforcer in the policy. However, NYPD denies claims that this is one of the tactics used for the policy. Many suspicious policy changes have occurred as well that have people feeling as if what the state is trying to cover up these claims of racial profiling to continue with stop and frisks. July 16th of 2010 Governor Paterson changed the policy so it prevents the NYPD from keeping data about people who are not guilty of anything. Could this mean that the state is just covering the data up about minorities and blacks so that the policy does not seem to be committing racial profiling? Some would say so. The crazy part about these numbers of minorities and blacks is that they make up less than 14 percent of the population of New York and are being stopped the most. May 16th of 2012 a federal judge granted a class action lawsuit against the NYPD of discriminating against blacks and Latinos with the Stop-and-Frisk policy. Right after this story came out Mayor Bloomberg immediately made a statement defending the policy stating that “This is a program that is effective. We’re going to keep doing this. … We’re not going to walk away from tactics that work”
Last year on August 12th, Judge Shira Scheindlin of the U.S. District Court decided that the NYPD had violated the Fourth and Fifth amendments. However, Mayor Bloomberg still gave his words which still supported and somewhat gave excuses to why the policy exists and how he does not believe it is a problem. Relating this to business practices and ethical theories this whole policy still is an issue in many people eyes.

Stakeholders
NYPD cruisers
In this case the major stakeholders would be considered the mayor of the city, the commissioner of the police department. Also all the people who work for the NYPD would be considered stakeholders. The mayor and the commissioner serve as the two biggest stakeholders as they are in the spotlight getting all the pressure and attention from the city and public. They are seen as the "bad guys" is this case. Both parties seem to be in total support of the Stop-and-Frisk policy in the public eye, and they both don't seem to be budging at all when it comes to the complaints and requests of the community. Mayor Bloomberg and Commissioner Bratton believe there is nothing wrong with the policy and believe more Stop-and-Frisks should occur given a bad rep to the rest of the stakeholders as we'll. Also the pressure provided by these two major stakeholders forces the other stakeholders, like uniformed officers, follow the policy and continue with applying the policy to the city. Lastly, the whole city of New York can be seen as stakeholders, since it is their city. The population is what makes the city what it is so they have some say or are affected by the policy.

Individualism
The first ethical theory is Individualism by a man named Milton Friedman who is a renowned economist of the twentieth century. Friedman states "The only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders.” The stakeholders in this case would be the NYPD and those who work throughout the department. Since this case is not about money, profits are measured by the gains and or loses made by each stop made by the policy and how the policy is viewed by the public. The NYPD does not gain much from this policy as seen through the numbers stated previously that most people are not found guilty of anything. Sure the policy will have some success on bringing some criminals off the streets but it creates more of an uproar within the city and communities and that helps no one out. The only justification individualism could support the actions by the Mayor and the Commissioner is that what they are doing is technically lawful. They are not breaking any law since they are the law. Racial profiling could be denied by officers and the two major stakeholders but it is apparent to most what really is going on. This leads to the next ethical theory which is Kantianism.

Kantianism
NYPD officers on duty

The Kantian Theory claims that "our fundamental ethical duty is to treat people with respect, to treat them as equally capable of living an autonomous life. But since each person has this same fundamental duty towards each other’s, each of us can be said to have the rights to be treated with respect, the right to be treated as an end and never as a means only" (DesJardins, 38). This theory states “our fundamental ethical duty is to treat people with respect…” and clearly with the Stop-and- Frisk policy this is being overlooked. Police Officers are committing racial profiling, accidentally or purposely, seemingly with the support of the Mayor. Respect towards blacks and Latinos is not apparent and many people see the problem that is going on and it seems as if the NYPD is just ignoring the obvious signs and complaints. And the justifications being provided by high ranking officials such as Mayor Bloomberg are cover ups to continue with the policy. Respect is an important thing to have for someone else and if the officers are not respectful, they should not expect it back. People do not respond to authority that is disrespectful and hurtful. If the citizens are not respected they will not respect law enforcement which causes more turmoil and more problems for the city overall.

UtilitarianismThe third ethical theory is Utilitarianism which is "an ethical tradition that directs to make decisions based on the overall consequences of our acts" (24 DesJardins). Or described in other words "maximizing the overall good" or "the greatest good for the greatest number" (27). The NYPD cannot use this ethical theory to justify their actions since the maximizing the overall good for the people is not really the main focus as complaints and lawsuits keep being filed which continue to be ignored. People are asking for a change since this policy is providing heartache and problems throughout the city. Although more than 70 percent of people were found innocent people who were stopped were still having problems, allegedly being targeted for criminal investigations. With the settlement reached in 2013 court case with Judge Shira Scheindlin, NYCLU ordered that the NYPD were to delete the names of those people who were stopped due to the policy and were not guilty. This shows how this policy was not looking out for the good of the people as they were forced to do a simple task that was causing problems to people.

Virtue Theory
Officers performing "Stop-and-Frisk" policy
The last ethical theory is the Virtue Theory which is based on the four primary virtues which are “courage, honesty, temperance, and justice" (Salazar). Courage defined by Salazar is "risk-taking and willingness to take a stand for the right ideas and actions" and the NYPD as they are not standing up for the right ideas or actions as they continued to let racial profiling drive the Stop-Frisk-Policy. The NYPD is not severing it community as they should. They ignore all the complaints and come up with bogus excuses to keep the policy alive. Honesty is the one sensitive topic of this whole case as it seems as if the NYPD was telling lies to the people as a way to keep the policy in place. A lot of the actions made by some high ranking officials that were sketchy and made the whole policy seem improper in people’s eyes. There are interviews with of the mayor and the commissioner claiming that people actually like the policy and that there should be more Stop-and-Frisks in their eyes, although the majority are highly against the policy. The definition of justice is just behavior or treatment and it is apparent that this does not occur on a regular basis with the NYPD and the Stop-and-Frisk policy. People are not being treated fairly which the definition claims. Also the behavior of officers and the orders given are unjust as well. As seen in the video of a New Yorker names Alvin the behavior of the officers are extremely and excessively disrespectful. These three topics in the Virtue Theory were heavily violated and provided reasons to why this ethical theory did not support the action going on by the NYPD.

Justified Ethics EvaluationThe major stakeholders in this case seem to have a heavy influence on one the rest of the other stakeholders in this case but as well as the rest of the city and community. As commissioner of the NYPD Bratton's job is to have his officers protect and serve the community. The protecting seems to be going too far with the Stop-and-Frisk policy. People believe their rights are being violated and that they are being taken advantage of and the two most influential people and the two people that could help out the community the most are on the opposing side, fighting against them. The city and the community have no chance practically of getting what they want from this situation; it is like David versus Goliath. The city should have some say and influence of how they are being treated. The NYPD is there to "serve" as well as protect and the serve part seems to be overlooked.
As the Mayor and Commissioner they should not expect much respect from the community. The people want their opinions and ideas to be heard and when they are feeling overlooked, plus being violated on the streets nothing will change for the better. It will always be the city against the NYPD. I think that the policy needs some major overhaul or monitoring so the relationship between citizens and officers betters itself. In such a big city I can see why a policy like this should exist but in its current form I believe people are being violated and profiled against, and this causes problems all throughout the city and between citizens and law enforcement.

Action Plan
Protestors urging NYPD to end the "Stop-and-Frisk" policy
As many people question the NYPD and their policies, some changes should be made for the good of the city and the communities within the city. The tactics and procedures used by officers are of concern and looked at as unethical. For the NYPD to get their reputation up and have people trust in them again adjustments have to occur.
Mentioned before was how people who were stopped by the Stop-and-Frisk policy were put in a database and kept in the system. Like it was brought up in court on July 16, 2010 the NYPD should not be able to keep this information about the people they have stopped. This is a way to better their reputation and create a positive look on the policy. The information has been reported to be used to target people. This means that the police is taking advantage and using their powers to benefit themselves at the cost of the community. People feel as if they are being watched or under surveillance 24/7.
Another plan the NYPD can try to launch is a scrutinized protocol which gives the officers in the city guidelines of when to commit a Stop-and-Frisk search. There are many cases and stories that show reasons why the policy should be done with. A specific story of a teen named Alvin who recorded his encounter with offices during a Stop-and-Frisk search really gives a glimpse of what the people go through. Alvin recording starts with him explaining to the officers how he was just stopped two blocks earlier. Officers just claim that he looks very suspicious and they have the right to top him again. Alvin in this case is a Hispanic man in his late teens or early twenties that is just walking the street in broad daylight with a backpack. The officers claim that the backpack makes him look very suspicious. This case goes along with a video that brings in a former police officer who is asked about the policy and the officer goes on to explain that the lieutenants and sergeants give them orders which are exactly “were going to go out there, and violate some rights.”
This shows the action plan that the officers have with the policy in place. The officers are disrespectful to the citizens and harassed them as well as they are told to do. The worst part is that the police commissioner of the NYPD and the mayor of New York allow this to happen and in fact encourage it. They actually want more Stop-and-Frisks. The action plan should be to find some uncorrupted leaders first off. If the two most influential and powerful people in New York agree with the policy and believe nothing is wrong, nothing will ever change. Finding leaders that understand the community and accept the fact that the policy is unethical would be a first huge step. People can protest as much as they want but with no say Stop-and-Frisks will continue throughout the city.
If change were to happen in the administrative aspect the next step would have to be to establish guidelines for the officers. Make the reason for a Stop-and-Frisk to occur be for substantial reasons. If rules to a Stop-and-Frisk were not to racially profile citizens, things would never change. People perceive other people in other ways that are already established in their mind. For their perception of people to change it would be nearly impossible. Guidelines would have to be very specific of when and how, or who to stop. 

Conclusion
With so many people in New York City some regulations and policies should be in place to help with crime and to control the public. However, I don’t believe the Stop-and-Frisk policy is the answer. People are being violated against their rights and are being discriminated against. Individuals in the city should not feel like they are under a telescope or being watched when walking the streets of New York. The disrespect some citizens receive as well just adds to the tensions between the city and the NYPD.


References
"Bloomberg Wrong about NYPD Being "7th Largest Army in the World" - Try 96th - AMERICAblog News." AMERICAblog News RSS. N.p., n.d. Web. 19 Apr. 2014. <http://americablog.com/2011/12/bloomberg-wrong-about-nypd-being-7th-largest-army-in-the-world-try-96th.html>.

"Civil Rights Law & Policy Blog." Civil Rights Law & Policy Blog. N.p., n.d. Web. 05 Apr. 2014. <http://lawprofessors.typepad.com/civil_rights/2014/01/debate-the-constitutionality-of-stop-and-frisk-in-new-york-city.html>.

DesJardins, Joseph R. "Ethical Theory and Business." An Introduction to Business Ethics. 5th ed. New York, NY: McGraw-Hill/Irwin, 2014. 38-41. Print.

"Floyd, Et Al. v. City of New York, Et Al." Center for Constitution RSS. N.p., n.d. Web. 04 Apr. 2014. <http://ccrjustice.org/floyd>.

"Nine Terrifying Facts about America’s Biggest Police Force." Saloncom RSS. N.p., n.d. Web. 19 Apr. 2014. <http://www.salon.com/2012/09/28/nine_terrifying_facts_about_americas_biggest_police_force/>.

"NYPD - Administration." NYPD - Administration. N.p., n.d. Web. 19 Apr. 2014. <http://www.nyc.gov/html/nypd/html/administration/headquarters_co.shtml>.

"NYPD's Controversial 'Stop and Frisk' Policy Ruled Unconstitutional." NY Daily News. N.p., n.d. Web. 05 Apr. 2014. <http://www.nydailynews.com/new-york/nypd-controversial-stop-frisk-policy-ruled-unconstitutional-article-1.1235578>.

"NYPD History." NYPDRECRUIT.COM |. N.p., n.d. Web. 19 Apr. 2014. <http://www.nypdrecruit.com/inside-nypd/nypd-history>.

Salazar, Heather. “Kantian Business Ethics,” in Business in Ethical Focus, ed. Fritz Allhoff and Anand J. Vaidya (Broadview Press, 2008).

 "Stop-and-Frisk Data | New York Civil Liberties Union (NYCLU) - American Civil Liberties Union of New York State." Stop-and-Frisk Data | New York Civil Liberties Union (NYCLU) - American Civil Liberties Union of New York State. N.p., n.d. Web. 05 Apr. 2014. <http://www.nyclu.org/content/stop-and-frisk-data>.

 "Stop and Frisk Policy - New York City Police Department." Stop and Frisk. N.p., 04 Apr. 2014. Web. 04 Apr. 2014. <http://topics.nytimes.com/top/reference/timestopics/subjects/s/stop_and_frisk/>.

 "Topics." WNYC News. N.p., n.d. Web. 05 Apr. 2014. <http://www.wnyc.org/story/212932-timeline-citys-use-stop-and-frisk/>.

"Topics." WNYC News. N.p., n.d. Web. 05 Apr. 2014. <http://www.wnyc.org/story/311230-nypd-erase-all-names-stop-and-frisk-database/>.

"Topics." WNYC News. N.p., n.d. Web. 05 Apr. 2014. <http://www.wnyc.org/story/311311-stop-and-frisk-decision-comes-down/>.

"Topics." WNYC News. N.p., n.d. Web. 05 Apr. 2014. <http://www.wnyc.org/story/210426-blog-bloomberg-says-nypd-isnt-walking-away-stop-and-frisk/>.

"Topics." WNYC News. N.p., n.d. Web. 05 Apr. 2014. <http://www.wnyc.org/story/209936-blog-nypds-stop-and-frisk-policy-faces-class-action-suit/>.

"Topics." WNYC News. N.p., n.d. Web. 05 Apr. 2014. <http://www.wnyc.org/story/207858-blog-nypd-targets-black-latinos-stop-and-frisks-report/>.

Weiser, Benjamin, and Joseph Goldstein. "Mayor Says New York City Will Settle Suits on Stop-and-Frisk Tactics." The New York Times. The New York Times, 30 Jan. 2014. Web. 04 Apr. 2014. <http://www.nytimes.com/2014/01/31/nyregion/de-blasio-stop-and-frisk.html>.

Tuesday, April 8, 2014

Top Silicon Valley Companies in Wage Fixing Scandal (2014)

Controversy
Apple Inc. logo (left) "shaking hands" with Google logo (right)

In early 2005, as demand for Silicon Valley engineers began booming, Google and Apple have been involved in an illegal agreement with dozens of other technology firms to keep their employees’ wages low, according to court documents filed in the United States. Confidential internal emails allegedly reveal how the companies artificially kept control of their wage bills by agreeing not to recruit each other’s employees and push their salaries upwards. On February 27, 2005, Bill Campbell, a member of Apple’s board of directors and senior advisor to Google, emailed Jobs to confirm that Eric Schmidt “got directly involved and firmly stopped all efforts to recruit anyone from Apple.” Later that year, Schmidt instructed his SR VP for Business Operation Shona Brown to keep the pact a secret and only share information “verbally, since I don’t want to create a paper trail over which we can be sued later?”
What is “wage-fixing”? It’s like price-fixing. It’s technically illegal for companies to collude to hold prices artificially high; that’s called interfering with the “free market” and with buyers’ right to bargain with multiple vendors for lower prices. When companies do this, when they act like a “cartel,” they can be prosecuted, at least technically. Wage-fixing is the same thing; it’s when companies in an industry agree to keep wages artificially low, to eliminate workers’ right to force employers to compete for their services.
The Obama Administration first exposed these secret conversations and agreements between some of the biggest names in Silicon Valley in a Department of Justice antitrust investigation launched in 2010. That DOJ suit became the basis of a class action lawsuit filed on behalf of over 100,000 tech employees whose wages were artificially lowered — an estimated $9 billion effectively stolen by the high-flying companies from their workers to pad company earnings — in the second half of the 2000s. At the end of January, the 9th Circuit Court of Appeals denied attempts by Apple, Google, Intel, and Adobe to have the lawsuit tossed, and gave final approval for the class action suit to go forward. A jury trial date has been set for May 27 in San Jose. According to court documents obtained by the Silicon Valley website Pando Daily ahead of the case, dozens of other technology firms including companies ranging from Dell, IBM, Ebay and Microsoft, to Comcast, Clear Channel, Dreamworks – and potentially more than a million of their employees – were implicated in the scheme.

Individualism
Bill Campbell, member of Apple's board of directors

Theory of individualism says that the only goal of business is to profit, so the only obligation that the businessperson has is to maximize profit for the owner or the stockholders. (Salazar) Since we don't know yet the court's decision, we can't say that this whole action was illegal. You can look at this case through different perspectives. In short run, is more profitable to save money by paying less to your employees and in addition you have some kind of insurance that your main competitors wont try to recruit your employees. However in long run, in this case, when your employees will find out what is going on, they probably will sue you and your business, which will create some problems and damage to the reputation. You will face troubles finding new employees, which may affect productivity. That is exactly what happened in this case.

Utilitarianism
The definition of utilitarianism theory is happiness or pleasure is the only things of intrinsic value. This illegal wage fixing agreement does not follow this ethical theory because employees are getting paid less than they have to, which makes them unhappy and unsatisfied. Just by performing utilitarian cost-benefit analysis, we can assume overall happiness is pretty low for this price. More than million employees were underpaid and their rights were abused just to make couple hundreds people happy, that’s just ridiculous.

Kantianism
"Special Agreement Hiring Policy" created by Google for parent companies

According to Kantianism, “You should act rationally – don’t act inconsistently in your own actions or consider yourself exempt from rules. Also, allow and help people to make rational decisions. Next, respect people, their autonomy, and individual needs and differences. Lastly, you should be motivated by Good Will, seeking to do what is right because it is right,” (Salazar) Silicon Valley bosses definitely acted inconsistently. They also tried to hide this agreement - “verbally, since I don’t want to create a paper trail over which we can be sued later?” which means they were manipulating their employees rather than let them make rational decisions. They were motivated to fulfill their ego, rather than by good will, they acted without any respect towards their employees, their will and individual needs. Employees had no chance to stand against huge corporations, you either agree to work for them and get underpaid or you don’t have a job at all.

Virtue Theory
The last ethical theory is the Virtue Theory, which is based on the four primary virtues, which are “courage, honesty, temperance, and justice" (Salazar). Courage is defined as risk-taking and willingness to take a stand for the right ideas and actions, honesty stands for honesty in agreements, hiring and treatment of employees, customers and other companies. Temperance is “reasonable expectations and desires” (Soloman 34) and Justice is hard work, quality products, good ideas, and fair practices. Illegal wage-fixing agreement between major Silicon Valley CEO’s violates all 4 virtues. It is unfair and dishonorable agreement, it does not stand up for right ideas or fair practices. The idea behind this agreement is very wrong, it makes employees vulnerable, either if they decide to leave their company or they decide to stay and get underpaid.


References
Stempel, Jonathan. "Silicon Valley Workers May Pursue Collusion Case as Group- Court." Reuters. Thomson Reuters, 14 Jan. 2014. Web. 08 Apr. 2014.

"Steve Jobs Threatened Palm's CEO, Plainly and Directly, Court Documents Reveal." PandoDaily Steve Jobs Threatened Palms CEO Plainly and Directly Court Documents Reveal Comments. N.p., n.d. Web. 08 Apr. 2014.

"Tech Giants Lose round in Wage-fixing Suit." CNET. N.p., n.d. Web. 08 Apr. 2014.

"The Techtopus: How Silicon Valley’s Most Celebrated CEOs Conspired to Drive down 100,000 Tech Engineers’ Wages." PandoDaily The Techtopus How Silicon Valleys Most Celebrated CEOs Conspired to Drive down 100000 Tech Engineers Wages Comments. N.p., n.d. Web. 08 Apr. 2014.

Heather Salazar "An introduction to a business ethics" lectures

"UPDATED: Google Begged Steve Jobs for Permission to Hire Engineers for Its New Paris Office. Guess What Happened Next…." PandoDaily UPDATED Google Begged Steve Jobs for Permission to Hire Engineers for Its New Paris Office Guess What Happened next Comments. N.p., n.d. Web. 08 Apr. 2014.

Saturday, April 5, 2014

Scott Thompson vs Yahoo, Inc.: Fraudulent Resume (2012)

Controversy
Yahoo! Inc. logo

2012 was the year of the CEO for Yahoo, Inc. The company had two CEOs, Scott Thompson and Marissa Mayer. The question is why. A scandal caused the shift in power from Thompson to Mayer. It was released that Thompson’s résumé that was submitted to the SEC (Securities and Exchange Commission) and to the Yahoo Board of Directors contained information that was not true. It appeared as though Thompson falsified his résumé to claim he had a degree in computer science because it was discovered that Thompson only has a degree in accounting from a college near Boston (Carlson). How did this seemingly small error cause a scandal at the company when Thompson had made a successful career as a high level executive for other companies?
A Yahoo, Inc. shareholder began his own investigation of Thompson.  When confronted about the issue Thompson had not done anything to clear up the issue or attempt to alert the public or shareholders of the issue.  As a result of his actions along with the moral conflict from Yahoo employees, Thompson was asked to resign by the Board of Directors.  His resignation did not appear to come as a result of the scandal but due to issues with his health.

Stakeholders
Stakeholders involved in the scandal include Yahoo, Inc. employees, shareholders, and other potential candidates for the Yahoo, Inc. CEO position.  The employees, who began to distrust their CEO Scott Thompson, also had internal moral conflicts about working for a man who added false information to his résumé to get his job which made many employee unhappy and embarrassed to work for the company.  The shareholders were affected because they entrusted the Board of Directors to choose the best CEO for the company, which to many shareholders who value honesty, would not have been Scott Thompson.  Other potential candidates for the Yahoo, Inc. CEO position were affected because they were most likely honest on their résumés and might have had the same if not more qualifications for the job but a dishonest Scott Thompson was hired instead as a result of his embellished résumé.

Individualism
Yahoo's Scott Thompson and Marissa Mayer
The Theory of Individualism was created by Michael Friedman.  It claims that a business’ only goal is to maximize the business’ profits (Salazar).  One can say that Yahoo failed at doing this by not conducting a more thorough investigation of Thompson’s résumé.  By doing this before hiring him as the CEO, the company would not have appeared shaky and not trustable especially during a period where the company was already having competition issues with Google and Facebook (Stewart).  By hiring a credible, honest, and competent CEO Yahoo, Inc. would have been able to keep employees happy which in turn affects the profitability of the company.  If Yahoo wanted to keep Thompson despite the résumé issue, the Board of Directors should have made him publicly rectify the issue to acknowledge the shareholders and the public.  This would have shown that he could be trusted.  The manner in which the scandal was handled did not maximize profits.  This can be seen from the decreasing Yahoo stock prices during the first few weeks of May when the scandal ensued.  The stock fell from trading at $15.77 on May 2nd, the day before the scandal, to $15.19 on May 11th, the last day that Thompson was in office ("YHOO Historical Prices | Yahoo! Inc. Stock - Yahoo! Finance.").

Utilitarianism
The theory of utilitarianism states that happiness is the only thing that is of real value (Salazar).  This scandal questions whose happiness is to be valued the most.  Is it the happiness of Scott Thompson or the happiness of Yahoo’s shareholders?  Utilitarianism is an ethical tradition that directs us to make decisions based on the overall consequences of our acts (DesJardins 24).  Scott Thompson made the decision to falsify his résumé in order to obtain the position of CEO for Yahoo, Inc.   To him, this decision was necessary to achieve happiness because of getting the job that he wanted.  The happiness of the employees and shareholders was taken into account when Thompson was asked to come clean about the issue and ultimately asked to leave his position at the company.  Yahoo, Inc. took the happiness of the stakeholders into account and subsequently hired a more trustworthy and competent CEO to run the company.

Kantianism
Yahoo! Inc. headquarters in Sunnyvale, CA
The Kantian theory states that “people should be treated as ends and not as means” (DesJardins 38).  It appears that Thompson used the Board of Directors as a means of obtaining his position of CEO.  By submitting a résumé with false but possibly crucial information, Thompson lied to the Yahoo Board of Directors and the SEC.  Yahoo, Inc. is also guilty of using Thompson as a means and not as an end.  Whether the company wishes to acknowledge it or not, they hired Thompson to make Yahoo more successful against its competitors.  Based on Thompson’s résumé and his past success with PayPal and Ebay, the Board of Directors wanted him to work magic for Yahoo.

Virtue Theory
The virtue theory consists of four basic virtues:  courage, honesty, temperance/ self-control, and justice/fairness (Salazar).  In this case, Scott Thompson displayed courage by not wanting to resign due to the scandal or his health issue of thyroid cancer (Stewart).  Thompson doesn't exhibit the honesty virtue.  His résumé containing false information was given to Yahoo and PayPal as well (Pepitone).  Yahoo, Inc. does show honesty because the issue was released to the shareholders and the public despite it being bad publicity.  Thompson did not display self-control by supplying a falsified résumé to the Yahoo Board of Directors and the SEC in order to get the job that he wanted.  Justice/ Fairness is seen from Yahoo, Inc. because they got rid of Thompson as a result of the scandal and hired Marissa Mayer as the new CEO.

References
Carlson, Nicholas. "Scott Thompson Resume Scandal Is Not 'An Inadvertent Mistake' - He Also Claimed Comp Sci Degree As CTO Of PayPal." Business Insider. Business Insider, Inc, 3 May 2012. Web. 2 Apr. 2014. <http://www.businessinsider.com/here-is-scott-thompsons-paypal-bio-2012-5>.
DesJardins, Joseph R. An Introduction to Business Ethics. New York, NY: McGraw-Hill/Irwin, 2014. Print.
"List of Public Companies Worldwide, Letter  - Businessweek - Businessweek." Businessweek.com. N.p., n.d. Web. 2 Apr. 2014. <http://investing.businessweek.com/research/stocks/people/person.asp?personId=20480823&ticker=EBAY>.
Pepitone, Julianne. "Yahoo CEO Scott Thompson out after resume scandal." CNNMoney. Cable News Network, 13 May 2012. Web. 2 Apr. 2014. <http://money.cnn.com/2012/05/13/technology/yahoo-ceo-out/>.
Powerpoint Presentations by Heather Salazar
Stewart, James. "In the Undoing of a C.E.O., a Puzzle." The New York Times. The New York Times, 18 May 2012. Web. 2 Apr. 2014. <http://www.nytimes.com/2012/05/19/business/the-undoing-of-scott-thompson-at-yahoo-common-sense.html?pagewanted=all&_r=0>.
"YHOO Historical Prices | Yahoo! Inc. Stock - Yahoo! Finance." YHOO Historical Prices | Yahoo! Inc. Stock - Yahoo! Finance. N.p., n.d. Web. 2 Apr. 2014. <http://finance.yahoo.com/q/hp?s=YHOO&a=04&b=2&c=2012&d=04&e=14&f=2012&g=d>.

"Knightmare" on Wall Street (2012)


Controversy
Knight Capital on Wall Street

Knight Capital was one of the US's biggest trading firms. Its primary business was selling and buying stocks for its clients. “Knight uses complex computer algorithms to trade swiftly in and out of stocks while retail brokerages rely on the company to execute billions of dollars of trades a year for small retail customers” (Strasburg). On August 1st, 2012 Knight's computer system sent out a wave of more than four million stock orders. They were testing out a new program that was not supposed to trade anything in the public. This resulted in a tremendous loss for the company of $460 million, which almost sent the firm into bankruptcy and their stock price slid by 63%. Most of the trades were made within a 45 minute time period, and amounted to about $10 million a minute.

Stakeholders
This error affected many different stakeholders, and could have been potentially a lot worse. The stake holders in this case includes Knight Capital as a company, all of its employees, all of its clients and the stock market as a whole including all trading firms, and independent investors. The company called this a computer error, and put the blame entirely on the software malfunction. The Securities and Exchange Commission (SEC) had something else to say about blame for this incident, but Knight Capital still refuses that theyo did anything wrong. They SEC launched an investigation to determine were the company went wrong. There results were that the company “violated trading rules by failing to put adequate safeguards in place to prevent the barrage of erroneous stock orders” (Stevenson). They charged Knight Capital a $12 million fine. The SEC found that the error was in the computer system, but blamed the incident on human error. They said that Knight failed to keep necessary safeguards and controls to prevent something like this from happening. There were also several alerts sent out to employees that could have acted as warnings that morning but were ignored. “Knight Capital’s violations put both the firm and the markets at risk,” Andrew Ceresney, co-director of the SEC’s Division of Enforcement said in an article (Philips). The result of humans not putting in the right protection methods and ignoring warnings costed the company huge losses. The company had to have other companies invest in it to help save it. It eventually merged with Getco to form what it is now known as, KCG Holdings. This is what the problem comes down to; the human error had a huge impact on the company, and the stakeholders. This question to be answered is, were the actions of the employees before the error happened ethical? To judge if the actions were ethical or not, four key theories of ethics must be used.
The chart shows the loss of profit that Knight Capital
experience throughout the day on August 1, 2012
IndividualismThe first theory to be used is Friedman’s Economic Theory, also known as Individualism and was founded by famous economist Milton Friedman. Individualism states that everyone has the right to pursue their own interests, but people do not have the right to stand in the way of others pursing their own interests. This theory also applies to business and corporate social responsibility. "The only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the shareholder's" (Salazar). Under Individualism, a business is solely concerned about profit maximization to benefit the shareholders, and not of the business' obligations to society at large. When applying this to Knight Capital’s case the fact that the company had tremendous losses must be looked at. The company experienced losses so large that it almost went into bankruptcy without other companies bailing it out. It ultimately was faced with a merger because the company was having difficulties surviving. This is the complete opposite of profit maximization. The stock price fell by 63%, so they didn’t maximize the price for shareholders either. Under the individualism approach the action by Knight Capital employees would not be considered ethical because they did not effectively maximize profit or shareholder wealth.

Utilitarianism
The next of the four theories is utilitarianism. Utilitarianism ethics often refers to doing the greatest amount of good for the greatest amount of people, and can be defined as “an ethical tradition that directs us to make decisions based on the overall consequences of our acts" (DesJardens 24). This means that decisions are said to be ethical if the result benefits the majority of people involved. When applying the theory of utilitarianism to the Knight Capital case, the stakeholders involved must be examined. The first of the stakeholders is the company Knight Capital itself. They were affected negatively because of the huge losses and fines that they suffered from. The next set of stakeholders includes the firm’s employees. These employees were affected because they were forced to work long hours trying to resolve the problem, and some even slept in the office overnight (Strasburg). The employees also do not benefit when the company is doing poorly, because that often leads to pay cuts and job losses. The clients did not benefit from this situation. A lot of them were afraid they were going to lose their entire investment so they switched firms. They had no faith in the company. The stock market as a whole was affected by the error because it falsified the stock prices. It made the value of Knight Capital’s stock decrease drastically, but it also affected the prices of the accidental stocks. Investors of Knight Capital lost money, and it had an overall bad effect on the market. So, since none of the stakeholders benefited the actions did not do the most amounts of good for the most amounts of people. In fact, it did no good for anybody, so the actions can be ruled unethical under utilitarianism.

Kantianism
Kenneth Pasternak, founder of Knight Capital

The third theory to be applied is the Kantian approach, which is essentially the opposite to Utilitarianism. The Kantian approach "emphasizes acting with respect toward all autonomous beings" (Salazar). This means that all people must be treated with equal respect, no matter what. A person following the Kantian approach would but individuals before the consequences of their actions, which is why it is the opposite of Utilitarianism. The Kantian approach also focuses on the formula of humanity, which expresses the need to not use people as a means. It is somewhat difficult to apply the Kantian theory to this case. The employees chose to ignore the alerts that something may go wrong, and by doing so they did not show respect to the stakeholders in this case. They had the knowledge that if something like what happened occurred there would be huge losses. They knew it could potentially crash the stock market because of the volume of the firm. If that had happened millions of people would be affected. So, they did not treat all people with respect when they chose to ignore the alert emails that morning. Management also did not show respect to all people when they chose to not have adequate protection against this happening. Knight Capital’s actions are unethical under the Kantian approach. 

Virtue TheoryThe last theory to be used is virtue theory. Virtue theory is based off of Aristotle’s ethics and says that for something to be good it must perform its function well. It also says that people must perform rationality to function well, which will in turn make them happy. To apply the virtue theory four key virtues must be examined. The first question to be asked is, did the company show honesty? No, the company did not show honesty because they are still denying that there was any blame to be put on humans. They say it was all because of a computer malfunction, which is not the case. The next virtue is courage. The company did show courage, but immediately trying to fix the problem. They had their employees stay over night working. The next virtue is temperance, or reasonable desires. They did not display temperance in their actions. By not setting up the proper protection it shows that they were not wiling to think beyond what was supposed to go right. They did not desire things to go wrong, but also did nothing to prevent it. The company does not display the last virtue, which is justice. They do not show justice because when they got into the mess they were unable to bail themselves out and had to heavily rely on outside investors. They should have been able to fix their own mess, or file bankruptcy instead of dragging other companies into it. So, reflecting back on the virtues it can be said that Knight Capital’s actions were not ethical.


References

DesJardins, Joseph R. "Ethical Theory and Business." An Introduction to Business Ethics. 5th ed. New York, NY: McGraw-Hill/ Irwin, 2014. 23-37. Print.

Philips, Matthew. "The SEC's Knight Capital Fine Adds Insult to Injury." Bloomberg Business Week. Bloomberg, 17 Oct. 2013. Web. 01 Apr. 2014.

Salazar, Heather. Business Ethics, Economics, and Individualism. Powerpoint Slides
Salazar, Heather. “Kantian Business Ethics,” in Business in Ethical Focus, ed. Fritz

Allhoff and Anand J. Vaidya (Broadview Press, 2008).
Stevenson, Alexandra. "Knight Capital to Pay $12 Million Fine on Trading

Violations." DealBook Knight Capital to Pay 12 Million Fine on Trading Violations Comments. N.p., 16 Oct. 2013. Web. 01 Apr. 2014.

Strasburg, Jenny, and Jacob Bunge. "Loss Swamps Trading Firm --- Knight Capital

Searches for Partner as Tab for Computer Glitch Hits $440 Million." Wall Street Journal, Eastern edition ed. Aug 03 2012. ProQuest. Web. 1 Apr. 2014 .

Nigerian Central Bank: Missing Oil Claims (2014)

Controversy
Central Bank of Nigeria logo
Nigerian central bank head, Lamido Sanusi, was once widely respected throughout the country. In 2009, Sanusi stopped the banking industry from nearly collapsing by "keeping interest rates at a record in the face of calls from businesses for lower borrowing costs and bringing inflation down below ten percent" (Kay). He "shut down fraudulent banks, uncovered theft that led to an unprecedented conviction, and earned trust in international financial markets" (Nossiter). He was even named central bank governor of the year in 2010 by Banker Magazine. In reality, Mr. Sanusi was not what he made himself seem to be. Sansui began taking his position and power roll to the next level. In Nigeria, "oil yields 95 percent of the country's total export earnings, and Mr. Sanusi has been saying for months that a substantial portion of the money was missing from the public coffers" (Nossiter). In previous years government commissions, parliamentary inquiries, and civil society groups have all recognized missing amounts of money in oil revenues and have been ignored. Mr. Sanusi is butting heads with the wrong people. He has accused the Nigerian National Petroleum Corporation (NNPC) of this scandal. They are the agency that buys, sells, regulates and produces the country's oil. He says that they are the ones not turning over the oil revenue earnings to the country's central bank. These actions are causing a bad reputation on President Goodluck Jonathan's government. New York Times States, "a series of accusations of misspending by high officials and a presidential pardon last year for a state governor convicted of stealing millions, has prompted Nigerian news outlets to depict Mr. Jonathan's government as too casual about corruption" (Nossiter). President Jonathan had no choice but to remove Sanusi from his post as central bank governor for "financial recklessness and misconduct".

Stakeholders
This particular ethics case involves more people and business then one would even imagine. Most importantly, one of the stakeholders, in this case, is the Nigerian Central Bank itself. They were given a bad reputation due to Sanusi's actions accusing the NNPC for false actions. The president of Nigeria, Goodluck Jonathan is also the main stakeholder in this case. When Sanusi hoversteppedped his power, he made Jonathan look as if he was not monitoring the actions of his government employees. Relating to that, the government is also a stakeholder. They were given a bad name to the people because of Sanusi's it has caused the people of Nigeria to believe that the government is too casual about corruption. This ethics case is also affecting the country of Nigeria as a whole. Another stakeholder would be the NNPC, due the the fact that they are being the ones accused for not returning the "missing" profit to the bank. Other countries could also be considered a stakeholder in this case. The New York Times States, "this is a country that could soon be declared Africa's biggest economy and already attracts the most direct foreign investment on the continent" (Nossiter). This case gives the country's central bank a bad reputation, therefore allowing other countries to possibly believe that maybe the country is not stable.

Lamido Sanusi, head of Central Bank of Nigeria
Individualism
One of the four theories of ethics is individualism. According to Salazar's PowerPoint presentation on Business Economic Making Sense, Individualism states "everyone has the right to do his own interests and should do so, but no one has the right to make other peoples choices about their pursuits for them, therefore we need to respect peoples rights to pursue their choices so we can all live the ways we want" (Salazar 11). Milton Friedman, famous economist of the 1900's has a slightly different definition of individualism. He states "the only goal of business is to profit for the owner or stockholders" (Salazar 12). From an individualists point of view, the central bank and the country as a whole would want to bring in as much money as possible to be making a continuous profit. According to one article from The New York Times, Sanusi was going to have the bankers open up their books because he wanted to see where the money was going because "$20 billion from oil sales, mysteriously, was not making its way to the treasury" (Nossiter). Sanusi was acting as an individualist by trying anyway possible to make all the money he could (even though his accusations were false).  According to Friedman, individualists do not take into consideration the happiness of the stakeholders, which is exactly how Sanusi is acting. He had negatively affected so many different parties with his actions, which portrays an individualistic attitude. Sanusi has a right to do what is in his best interest and making more money for the country is just what he had intended on doing, if he had gotten away with it. Sanusi's action in trying to get the money to make more of a profit (undeserved) for the country was an individualist act, even though he was wrong, which in this case made it unlawful, and unethical causing his suspension as central bank governor.

Utilitarianism
According to Salazar's PowerPoint on Utilitarianism and Business Ethics, utilitarianism is defined as "bringing happiness and pleasure to all things capable of feeling it. The reasoning behind this is, if happiness is valuable, there is no difference, morally-speaking between my happiness and yours" (Salazar 6). In the business aspect of utilitarianism, making employees, customers, shareholders and anyone else affected by the business happy is the way to be successful. Keeping all stakeholders happy is the main point of utilitarianism, and in this particular case, Sanusi did the exact opposite. The only interest he had in his actions was gaining more money for the country, even if that meant falsely accusing a very important national company. In the short long of things for all stakeholders, it would have been a good idea to make more money for the country in a different. He very obviously did not make the NNPC happy when he accused them of not handing over profits from the oil revenue. This is a huge cost because they are such an important company to the oil industry and the oil industry play one of the most important roles to Nigeria. Looking from a utilitatianist's point of view it would have been in Sanusi's best interest to benefit this company rather than downgrade it. Another stakeholder that was a huge cost to Sanusi's actions was President Goodluck Jonathan, who was not kept happy through out this scenario. He was given a bad reputation because in this case, Sanusi would be considered an employee, and he was not thinking of the happiness of his co-workers (Jonathan). The customers, or the people of Nigeria, were also unpleased because they were given the idea that a well recognized company was holding out money that belonged to the central bank, when in reality they were not. In the long run of things and following the utilitarianistic way, Sansui should have definitely found a different way to make more money fast, but also keeping his stakeholders happy.

Kantianism
Nigeria Central Bank headquarters in Abuja, Nigeria
Immanuel Kant, a German philosopher of the 1700's, created a theory that focuses on the rights and wrongs of decision making and the consequences of those actions. According to Salazar's PowerPoint, Kantian Business Ethics, The formula of humanity states, "'act in such a way that you treat humanity, whether in your own person, or in the person of another, at the same time as an end and never simply as a mean'(Kant, MM 429)" (Salazar 9). In other words, making decisions according to the Kantian view are in the best interest of the people's well-being. The company is making sure they know all the consequences that come along with the decisions and the choices that they are making by respecting people's autonomy. Kant's primary principles include, acting rationally, allowing and helping people to make rational decisions, respecting people, their autonomy and individual needs/differences, and finally being motivated the by good will of the people. Sanusi did not act the in interest of the people's well-being during this case. One argument that could be made was that he was looking for the best interest for the country's profit revenue, but he did this without making sure that the people knew all the consequences that came along with falsely accusing a company like NNPC and lying about missing money. Sansui was not conforming to Kant's principles. He was not acting rationally; he was putting the idea of more money into the country rather than informing the people around him that his actions are going to cause serious consequences. He is technically allowing people to make rational decisions. One example of this is he is giving the President and the National Assembly reasons to his suspension and even firing him from his position as central bank leader, even though his actions were unlawful. Sansui committed so many actions that did not respect people, their autonomy and individual needs/differences. He did not respect the fact that lying about missing money would have such a strong negative effect on all the stakeholders. Sanusi was not motivated by the good-will of the people. If he were motivated by seeking what is right by doing what is right by following the Kantian view, he would have found a way to make a bigger profit from the oil company. The country could make better trades for oil at a higher price bringing in a larger revenue for the country as a whole.

Virtue Theory
The virtue theory is based on Aristotle's ethics, which states people mist act rationally to function well in the business society. The first of the four primary virtues is courage. Courage is defined as "risk taking and willingness to take a stand for the right ideas and actions" (Salazar 6). The second virtue is honesty. Honesty is "in agreements, hiring and treatment of employees, customers and other companies" (Salazar 6). The third virtue is temperance which Salazar defines using Soloman's definition, "reasonable expectations and desires" (Salazar 6). The final of the four virtues is justice, which is "hard work, quality products, good ideas and fair practices" (Salazar 6).
Sansui definitely portrays temperance and courage with the decisions he makes by accusing the NNPC. He shows courage, by taking an extreme risk and falsely accusing the NNPC just to try and gain more money. He also shows temperance by having reasonable (illegal) actions. He is trying to benefit the company but he is doing it in an unethical manner which is why he is not showing honesty. He also does not have any justice because there is clear evidence that he was wrong in this case and he is not showing good ideas or fair practice. Sansui was ousted for financial recklessness and misconduct. Even though his actions were for good intentions for the country, they would still be considered unethical.


References
Kay, Chris. "Nigerian President Suspends Sanusi After Missing Oil Claims."Bloomberg.com. Bloomberg, 20 Feb. 2014. Web. 03 Apr. 2014. <http://www.bloomberg.com/news/2014-02-20/nigerian-central-bank-governor-sanusi-suspended-by-president.html>

"Nigeria Central Bank Head Lamido Sanusi Ousted." BBC New Africa. N.p., 20 Feb. 2014. Web. 03 Apr. 2014. <http://www.bbc.com/news/world-africa-2627056>


Nossiter, Adam. "Governor of Nigeria;s Central Bank Is Fired After Warning of Missing Oil Revenue." The New York Times. The New York Times, 20 Feb. 2014. Web. 03 Apr. 2014 <http://www.nytimes.com/2014/02/21/world/africa/governor-of-nigerias-central-bank-is-fired-after-warning-of-missing-oil-revenue.html?_r=0>


Salazar, Heather. Business Ethics Lectures. WNEU. Spring 2014.

Dewey & LeBoeuf: Law Firm Financial Fraud Scandal (2014)

Controversy
Dewey & LeBoeuf LLP logo

Dewey & LeBoeuf, a prestigious law firm in New York which employed approximately 3,000 people in 26 offices throughout the world, filed bankruptcy due to financial fraud amongst the firm’s executives. It is the largest bankruptcy on record for a law firm with claims in excess of $550 million. Top executives collaborated for years to produce fraudulent financial records to report higher than actual financial results and used these false records to secure lending and investing. Dewey & LeBoeuf executives face both criminal and civil charges related to the fraud. The firm had half a billion dollars in debt and violated the Securities and Exchange Commission regulations with a 2010 private debt offering of $150 million including bonds which were purchased by several insurance companies. Much of the evidence lies in emails which the executives shared with each other detailing the fraud. There are 106 counts of indictments against Chairman Steven Davis, Executive Director Stephen DiCarmine, CFO Joel Sanders and Client Relations Manager Zachary Warren. Charges include grand larceny, scheming to defraud, falsifying business records, and conspiracy as well as securities fraud. The top executives directed employees to hide the financial condition of the firm from not only creditors and investors but also auditors and some of the firm partners. At least 7 former employees have already pleaded guilty and are cooperating with the investigation. Prosecutors have alleged that the financial fraud began in 2008 and it wasn’t revealed until the merger of Dewey Ballantine and Leboeuf, Lamb, Greene & MacRae in May of 2012. Prosecutor evidence of emails captures executives referring to a master plan to manipulate the accounting records as well as referring to the auditor as clueless. The FBI was taken aback by the display of confidence in the lawyer emails that they would, in fact, get away with the fraud especially considering that lawyers often give the advice to not communicate through email since it is traceable. The emails refer to bonuses ranging from 10-20% based off of the falsely reported financial data. Many are comparing this case to the Enron scandal and claim the law firm was, in fact, being run like a criminal enterprise. As of now, all four men have pleaded not guilty. The actions of the executives at Dewey & Leboeuf created demise for the stakeholders which includes the employees, the clients, the creditors and the investors of the firm. Financial fraud can be examined by business ethics theories such as Individualism – Friedman’s Economic Theory, Utilitarianism, Kantianism, and Virtue Theory.

Individualism
Milton Friedman's view on social responsibility in business was simply to follow the law. As an economist, Friedman emphasized that corporate officers had the sole responsibility of maximizing profits for the shareholders as long as the law was adhered to. As a for-profit corporation, the leaders should not use corporate funds for social welfare simply because they felt it was socially responsible. The officers should, in fact, pay the lowest wages possible, the least benefits and operate a business in the most cost-effective way regardless of potential external consequences as long as they were within the means of the law. The corporation’s sole purpose was to maximize shareholder earnings rather than spend shareholder funds for the social well-being of others. Simply, profits above all else as long as the law was followed.
The executives at Dewey & Leboeuf gave the illusion of maximizing profits for the investors and owners of the firm but were, in fact, destroying the opportunity for future profits by creating fraudulent accounting records that ultimately ruined the firm financially. They violated Friedman’s theory by breaking the law. The executives received bonuses based off of the fraud which was for their own social welfare and against the practice of paying the lowest wages possible and maximizing profits as part of Friedman’s Theory. If the executives were to follow Friedman’s theory, they would have to report accurate financial data and look for ways to improve the firm’s profitability through reduction of expense accounts and better accountability throughout the organization. The actions of the executives at Dewey & Leboeuf were solely in their own best interest and to the demise of the employees, creditors and investors.

Utilitarianism
Outside of Dewey & LeBoeuf in NYC

Utilitarianism is an ethical belief that decisions should be made based on the overall consequences of the actions and how they impact everyone. It focuses on making decisions based on the greater good for all (or as many as possible). Utilitarianism takes into account a cause and effect mentality. These beliefs mean that corporations should be making decisions based on the outcome of the company as a whole, the shareholders, the employees and the consumers. Utilitarianism focused organizations would always be seeking a balance between satisfying shareholder profits, the end users of the products sold as well as the employees of the company. 

Dewey & Leboeuf executives definitely did not make the decision to falsify accounting records based off of the overall consequences and how they impact all involved. The decision was for the benefit of few rather than the greater good for all. While the executives might have felt there was enough cause to commit fraud, they did not think through the effect of getting caught. Had the executives wanted to make the best decision based on how it would impact all stakeholders, they would have looked into the reasons for their lack of profitability and came up with solutions to legitimately strengthen the financial position of the firm to ensure greater good for all employees, clients, creditors and investors. Instead, they set the firm up to ultimately collapse and file bankruptcy.

KantianismKantian ethics focuses on the humanity aspect and ethical duty to do what society views as right and for the greater good without self-interest. The most basic and important relationship is personal and humane. The formula of humanity considers a means to an end where one must not treat others as a means to an end but to see them as ends in and of themselves that must be respected. Kant believed in an undeniable duty to all people and actions that are dependent upon these relationships. Corporations would set out to define a Maxim for Action that would execute a business practice for the greater good of the organization as well as the consumers of the product. In the review of the set Maxim, one wants to ensure it comes from the good will to “do the right thing”, otherwise, it must be consistent with good action or it won’t be praiseworthy. Decisions should be rational and logical and all of those affected should be able to make rational and logical decisions. Kant considers three types of motivation, self-interest, character or sympathy and the moral law or duty. In Kantianism, the only proper motivation is that of moral law or duty.

Everything that the executives at Dewey & Leboeuf related to falsifying financial data violated Kantianism. The executives used their positions as a means to their own ends without consideration for the humanity of the other employees, clients, creditors, and investors. They did the wrong thing for personal gain instead of the greater good for all impacted. Their decisions were neither rational nor logical and only served self-interest rather than the moral law or duty. They violated the law at the cost of all involved. The executives should have considered a maxim for action to improve the firm’s financial condition rather than lie about it and cover it up. Kantian management would have felt a moral duty to implement changes to correct the financial position of the firm or seek necessary business remedies. The executives at Dewey & Leboeuf chose self-gain over moral duty.

Virtue Theory
Steven Davis, Joel Sanders, and Stephen DiCarmine
during a break in the Dew & LeBoeuf trial

Virtue theory involves understanding the motivating factors behind ethical decisions and knowing that while some people are motivated by self-interest others, in fact, are motivated by compassion, and caring for the well-being of others. Steven Davis, Joel Sanders and Stephen DiCarmineThis philosophy requires ethics-related decisions to be based on the character of the person making the decision and requires companies to review its business goals and practices to reflect on setting a corporate culture and environment of individuals that have the same virtues to create the desired method of achieving company goals and workplace practices. Virtues are essentially positive character traits such as honesty, respectfulness, positivity and kindness. The opposite of a virtue is a vice. Vices include greed, envy, arrogance, and selfishness. The four primary virtues are prudence, justice, fortitude, and temperance.
The executives at Dewey & Leboeuf demonstrated poor character with their emails as well as the financial fraud. They set the corporate culture up to fail with bad business practices that led to bankruptcy for the company and imprisonment for themselves and potentially others. There were poor workplace practices in place that allowed this corruption to occur. The executives were not honest or respectful but instead were greedy, arrogant and selfish. When the executives became aware of the struggling financial condition, they should have acted with prudence to develop an action plan that would turn the firm around rather than try to cover it up. There was no justice because the financial fraud is illegal as well as the fact that it was hidden from key people that were impacted by the demise of the law firm. Justice would have entailed full disclosure of the actual financial results. Rather than act with fortitude and courage to attempt to remedy the financial failure, the executives cowardly deceived through fraud their fellow management, employees, creditors, and investors. There was no temperance or humility on the part of the executives that participated in the financial fraud. Rather the opposite was displayed by ego, arrogance, and greed as revealed in the emails that were exposed in the case. The executives violated all of the primary virtues by committing financial fraud at the expense of employees, clients, creditors, and investors.

 References