However, he had become more and more greedy. Finally, he manipulated the company’s resources to use for his personal purposes, which is the beginning of the end. The case discusses unethical and illegal actions taken by Tyco’s former CEO Dennis Kozlowski, CFO Mark Swartz, and some other members of the board of directors. Those actions have caused much damage to Tyco Corporation and led to the criminal investigation by the court. According to the author’s viewpoint, many scandals have happened because of the following illegal behaviors.
1. What led to the eventual collapse of Enron under Lay and Skilling? All the fraud activities conducted by Lay and Skilling and bad corporate culture led to the Eventual collapse of Enron. Both were aware of the Enron Code of Ethics but they did not follow it. Kenneth Lay former CEO was indicted on 11 criminal counts of fraud and making misleading statements.
He was even taped making fun of the SEC regulators during a phone conversation with a Connecticut Hedge fund Fairfield Greenwich Group. www.cnbc.com/id/32767249. Employees were affected by the scandal because they lost their jobs and employment opportunities through no fault of their own. The economy suffered also by the loss of $50billion in wealth. Madoff scheme was quite simple; He paid one investor with other investor’s money.
People thought these very companies were worth a fortune but because they were completely made up, they didn't have any value! He definitely abused capitalism and how the market runs. Ken Lay got obsessed with this fraud/ponzi scheme even when Enron was out of money and bankrupt. Ken Lay thought that this would in turns help them get back on their feet but he kept making the company go deeper and deeper into the hole where there was no chance of coming back up. Some of the head people in charge saw what was going on and took a couple of millions and bailed out just in time.
pg. 417). Additionally, Mr. Madoff was able to convince others that his company was much more lucrative than it actually was by controlling the stream of cash flow. Madoff Due to Mr. Madoffs’ greed many people and organizations (both for profit and non-profit) lost millions of dollars. Due to these loses, unfortunately some lost everything and others took their own lives, including one of his sons, Mark.
Ethics play a role in everyday business. Company executives attempt to build a profitable organization but unethical decisions lead to the demise of organizations because of greed and power. Penn Square Bank and Dow Corning both made decisions in their business that started out making millions of dollars but in the end cost the companies more than possibly imagined. Because of the unethical decisions made by both companies they acquired large losses of money by one filing bankruptcy, and the other closing down. Not only were there large losses of money for both companies, but the loss of reputation as well.
Unethical Practices of Arthur Andersen Carol Hornsby ACC/260 09/14/13 Jana Rideout 1. What did Arthur Andersen contribute to the Enron disaster? Arthur Anderson, as Enron's accountant was supposed to objectively review the condition of company's finances and report on that condition honestly. He contributed by failing to have Enron establish and enforce internal controls. He also destroyed audit papers which in turn covered up deficiencies that contributed to Enron’s disaster.
He engaged in unauthorized trades totaling as much as €49.9 billion by creating losing trades intentionally so as to offset his early gains. Around 1.4 billion in hidden profits were generated by the end of 2007. Kerviel stated that his actions were known by superiors and that the losses were caused by panic selling by the bank. However, criminal charges were made against Keirvel for abuse of power, forgery of documents and illegal entry into company computer systems. The banks losses due to Keirvel’s activities among other actions were of €4.9 billion.
A lengthy investigation and several hearings pressed JPM leaders on their trading practices. One hearing in particular, conducted by the Permanent Subcommittee on Investigations accused the banking giant of misleading investors and regulators about the risks taken during trading. In his testimony, JPM’s chief financial officer, Douglas Braunstein, “said his statements were based on what he knew at the time, conceding that in hindsight the credit portfolio ‘did not act as a hedge, it changed dramatically and we misunderstood the risks’” (www.4-traders.com, 2013). Later in his testimony, Braunstein mentioned that his 2012 pay was cut in half to approximately $5 million, because of the trading debacle. Other bank officials made similar statements in an attempt to dispel public opinion that they, and everyone in the banking industry, were overpaid and over-privileged.
Ethicality of Accounting Activities Ethicality of Accounting Activities The case involving WorldCom, a telecommunications company, was one of the biggest accounting scandals to happen in the US. The company filed for bankruptcy in 2002 after an internal auditor, Cynthia Cooper, discovered discrepancies in the accounting data. After a complete audit with a team, Cynthia found that the discrepancies were fraudulent and unethical. More than one department in the company played a role in covering up the accounting activities that were not ethical or legal. Accounting Activities in Detail The key accounting activity in the case dealt with incorrect journal entries for capital expenditures.