Ethical Issues in Global Business

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Table of Contents

IntroductionPage 3

Ethics

Corruption in the United StatesPage 3

Corruption and the OlympicsPage 6

Corruption AbroadPage 7

Affects of CorruptionPage 8

Anti-Corruption Strategies Page 10

ConclusionPage 11

Back Up Materials

Transparency International, Global Corruption Report 2001Tab 1

Time Trail Article: Italy, The Mani Pulite ScandalTab 2

Economic Perspectives 1998, View from Stuart EizenstatTab 3

Promoting the Rule of Law and Anti-Corruption in a Globalized Economy

Foreign Corrupt Practices Act of 1977Tab 4

Transition: The Newsletter about Reforming EconomiesTab 5

Ethical Issues in Global Business

Navigating the boundaries between right and wrong can prove tricky for companies that operate in several nations and across cultures. Ethics is essential to economic development. The field of ethics, also called moral philosophy, involves systematizing, defending, and recommending concepts of right and wrong behavior. Business ethics is the study and evaluation of decision making by businesses according to moral concepts and judgments. Ethical questions range from practical, narrowly defined issues, such as a company's obligation to be honest with its customers, to broader social and philosophical questions, such as a company's responsibility to preserve the environment and protect employee rights. Many ethical conflicts develop from conflicts between the differing interests of company owners and their workers, customers, and surrounding community.

Enron Corporation's fishy accounting practices, the siphoning of profits at Adelphia Communications Corp., allegations of tax fraud and lavish personal spending of company money at Tyco International and WorldCom Inc.'s bid to hide billions of dollars worth of expenses are just a few examples of unethical activities. Scandals and bankruptcies in the United States at companies like Enron and WorldCom Inc. have focused attention on the abuse of the power entrusted to executives by shareholders, employees and customers and they underscore the need for reforms to bolster business ethics. The free enterprise system is based on transparency and integrity. Transparency is being open to public scrutiny, even for a private company. Integrity is about keeping promises, telling the truth and acting fairly and responsibly.

Enron is the story of the largest bankruptcy in U.S. history that has cost thousands of employees their jobs and their retirement. Enron, through a variety of accounting tricks relating to partnerships, inflated their profits and lowered their debt. They misled their employees, investors and the general public about the company's financial condition. Once those off-the-book partnerships were exposed, the bottom dropped out, with Enron's stock plummeting from almost $80 to less than $1 a share. Enron executives reaped millions through these partnerships and by selling off stock before the demise, while Enron employees lost much of their retirement and investors lost millions. info@alternet.org

Arthur Anderson a firm that once stood for trust and accountability ended 90 years as an auditor of publicly traded companies under a cloud of scandal and shame. Its felony conviction for obstructing a federal investigation into Enron Corp., its now notorious client, cost Andersen the heart of its practice. It will continue with a tiny fraction of the 85,000 employees it spread across the globe just months ago. In the 1990s, the firm embarked on a path that valued hefty fees ahead of bluntly honest bookkeeping, eroding Andersen's good name. Andersen shunted aside accountants who failed to adapt to the firm's new direction. In their place, Andersen promoted a slicker breed who could turn modestly profitable auditing assignments into consulting gold mines.

In the years before WorldCom Inc. announced the $3.9 billion in improper accounting that led to its bankruptcy this summer, the telecommunications giant was...
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