Assignment 1 - Corporate Crime

Topics: Finance, Business, ABC Learning Pages: 9 (3365 words) Published: September 27, 2010

“Greed can be defined as the desire to acquire wealth or possessions beyond the needs of the individual, especially when this accumulation of possession denies others legitimate needs or access to those or other resources It is an extreme or excessive desire for resources and symbols of wealth.” (Taflinger, 1996) The key word to consider is “excessive” which can be denoted as “going beyond the usual, necessary, or proper limit or degree.” The real problem to consider is the fact that “wealth in this world is limited as population increases. If one person possesses an extensive amount of wealth, this results in the reduction of another’s wealth.” (Taflinger, 1996) This leads to conflict within human society. Many greedy people tend to focus on the perceived short-term benefits that greed brings. This includes financial independence, a good image, being socially accepted through wealth, respect, marketability, success and instant gratification. However these forms of satisfaction are only temporary and greed tends to create a negative impact on people. Greed may be perceived as having a positive impact to an individual, yet however develops a negative impact on society as a whole. ‘Greed is thought to be a major factor in corporate collapses.’ Throughout this essay, the effects of greed will be discussed, as well as how greed affects many corporations and businesses, and measures which may be taken within countries and internationally in minimizing greed in businesses.

As people tend to focus on their own individual satisfaction, the concept of greed overcomes them and manages to manifest itself into many business enterprises. “There are typical behaviour traits that greedy people attain. Greedy business people embark on transactions that are too good to be true. They take no or little risks compare to other people and investors, they charge very high gross margins and they are dishonest.” (Winter, 2008) This creates a negative impact on society and society as a whole because it destroys relationships, and creates social conflict between people. At the same time, greed overcomes an individual to the extent where an individual would even commit illegal and immoral actions to obtain financial success, and other types of success. For example, a director of a company may be overpowered by greed. Due to their desire for power and wealth they may make self-interested transactions with the company, while failing to disclose this with other members of the company and shareholders. They then use the company’s funds to gain some personal profit. Due to their excessive desire for wealth, the company may suffer from financial loss and may become insolvent, which affects the company as a whole. The company suffers financial difficulties and people are forced to lose their jobs. This also affects the director, because they end up with financial ruin and also have legal ramifications placed on themselves. Directors who partake in self interested transactions with a company is a breach of s182 of The Corporations act and is a civil penalty, and if the director was proven to be dishonest, their action may be considered as a criminal offence.

There are many examples of major corporations whose failures can be attributed partly or wholly to the conduct of greedy executives. One of example of a company who began to fail and go downhill is when Trujillo became the CEO of Telstra in 2005. Trujillo is clear example of a CEO who dwells under corporate greed, evidently not caring for the society around him. (Scwab, 2010) explains that ‘in July 2005, Telstra’s share price was $5.06, and more than three years later their share price was a record low of $3.62, and Trujillo had only been in the job for a year. Despite the descending of Telstra’s share price. In 2006, Trujillo was paid a short-term bonus of $2.58 million. The company’s share price had slumped down by thirty percent. Each year, Sol Trujillo would...
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