BUSINESS ETHICS NOTES

Q1. Short Notes;

A) Whistle Blower
Ans) A whistleblower (also written as whistle-blower or whistle blower) is a person, often an employee,
who reveals information about activity within a private or public organization that is deemed illegal,
immoral, illicit, unsafe or fraudulent. Whistleblowers can use a variety of internal or external channels to
communicate information or allegations. Over 83% of whistleblowers report internally to a supervisor,
human resources, compliance, or a neutral third party within the company, hoping that the company will
address and correct the issues. A whistleblower can also bring allegations to light by communicating with
external entities, such as the media, government, or law enforcement. [1] Whistleblowing can occur in
either the private sector or the public sector.
Origin of term[edit]
U.S. civic activist Ralph Nader is said to have coined the phrase in the early 1970s[3] in order to avoid the
negative connotations found in other words such as "informer" and "snitch".[4] However, the origins of the
word date back to the 19th century.
The word is linked to the use of a whistle to alert the public or a crowd about such problems as the
commission of a crime or the breaking of rules during a game.
CHANNELS OF WHISTLE BLOWER
Internal channels[edit]
Most whistleblowers are internal whistleblowers, who report misconduct on a fellow employee or
superior within their company through anonymous reporting mechanisms often called hotlines. [8] One of
the most interesting questions with respect to internal whistleblowers is why and under what
circumstances do people either act on the spot to stop illegal and otherwise unacceptable behavior or
report it.[9] There are some reasons to believe that people are more likely to take action with respect to
unacceptable behavior, within an organization, if there are complaint systems that offer not just options
dictated by the planning and control organization, but a choice of options for absolute confidentiality

B) Integrated Approach at Business Ethics

Ans) Ethics & Business: An Integrated Approach for Business and Personal Success gives students the
practical knowledge and skills to identify ethical dilemmas, understand ethical behavior in themselves
and others, and advocate for ethical behavior within their organization. The other element of an integrated
ethics strategy is to ensure that ethics is incorporated into the organization, beyond the ethical standards,
measurement and reporting. For example, ethical conduct and the company's values can be included as
criteria for the company's performance management system.
C) TENETS OF BUSINES ETHICS

The Fundamental Principles of Ethics. Beneficence, nonmaleficence, autonomy, and justice constitute

the 4 principles of ethics. The first 2 can be traced back to the time of Hippocrates “to help and do no

harm,” while the latter 2 evolved later. .

THERE ARE 8 PRINCIPLES AS FOLLOWS

HONESTY

All personnel must be committed to telling the truth in all forms of communication and in all actions. This
includes never purposely telling partial truths, selectively omitting information, making
misrepresentations or overstatements. Honesty also means reliably sharing both good and bad news with
equal candor.

2. FAIRNESS

All dealings and relationships must be founded on a conscious commitment to fairness, treating others as
you would like to be treated. Fairness requires treating all individuals equally and courteously, never
exercising power arbitrarily and never exploiting weaknesses or mistakes for personal or corporate
benefit.

3. LEADERSHIP

Demonstrated by a conscious effort to set a positive example of ethical behavior, leadership is a

commitment to excellence through ethical decision-making. Businesses and business executives maintain
their leads by constantly improving operational efficiency, worker satisfaction and customer approval.

4. INTEGRITY

Organizations and personnel demonstrate integrity through a consistency between actions and words that
inspires trust and credibility. Integrity also means keeping promises, honoring commitments, meeting
deadlines and refusing to participate in unscrupulous activities or business dealings.

5. COMPASSION

Fostering a business environment of empathy and compassion requires a commitment to being kind and
caring toward all personnel, business partners and customers. Business goals must be benevolent, ensured
by spending enough time to understand the needs and sensitivities of others, including the local
community.

6. RESPECT

Respect is demonstrated by a full commitment to the human rights, dignity, autonomy, interests and
privacy of all personnel. It means recognizing that everyone deserves equal respect and support for
sharing ideas and opinions, without fear of any penalty or form of discrimination.

7. RESPONSIBILITY

Employees exhibit responsibility by taking full ownership of their jobs, striving to be conscious of the
emotional, financial and business consequences of their actions. Taking their responsibilities seriously
also demonstrates employee maturity and ability to do a job without needing strict supervision.

8. LOYALTY

Loyalty is proven by never disclosing information learned in confidence and by remaining faithful to
coworkers, clients, business partners and suppliers. Loyal employees avoid conflicts of interest, help build
and protect the good reputation of their company and help boost the morale of their coworkers.

Q2. Illustrate/Define/State ethics and recommend principle at ethical organization?

Ans) Derived from Greek word ‘Ethicos’ meaning
Character or Manners Science of character of a person expressed as
right or wrong conduct oraction.
Set of moral principles prescribing code,
Explains what is good and right, or badand
wrong.
Guides Human Behavior
•Includes Values & Morals
•Decision Making
•Enhances Co-operation
•Situation Handling
•Benefits to Society
PRINCIPLES OF ETHICAL ORGANISATION
•HONESTY
•INTEGRITY
•LOYALTY
•FAIRNESS
•ACCOUNTABILITY
•RESPECT / DIGNITY
•LAW ABIDIING
Egoism v/s Altruism
•Ethics & Morality
•Ethics v/s Legality/Law
•Ethics v/s Religion
•Personal Ethics v/s Professional Ethics

Q3. Determine measure to improve Ethical code of conduct?

Ans) ETHICAL CODE OF CONDUCT – FOR
ORGANISATION
•FRAMING CORPORATE COC
•MANAGEMENT AS SOURCE OF INSPIRATION
•CARROT AND STICK (REWARDS AND PUNISHMENTS)
•CONSTANT COMMUNICATION
•EFFECTIVE CONTROLLING
•ARRANIGING SEMINARS/GUEST LECTURES BY PROMINENT PERSONALITIES
ETHICAL CODE OF CONDUCT –FOR GOVERNMENT
•LEGISLATING ROLE
•SUPERVISOR ROLE
•INCENTIVISING ORGANISATIONS
•PENALISING UNETHICAL PRACTICES
ETHICAL CODE OF CONDUCT –FOR SOCIETY
•PROMOTE ETHICS THROUGH MASS MEDIA / SOCIAL MEDIA
•PUBLIC AWARENESS PROGRAMMES
•CONSUMER REDRESSAL FORUM
•SUPPORT BY NGO’S
•FELICITATING SOCIAL REFORMISTS

Q4. Determine Corporate Governance and explain need at in Business fraternity.

Ans) Corporate governance is the system by which companies are directed and controlled. Boards of
directors are responsible for the governance of their companies. The shareholders' role in governance is to
appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is
in place.
It helps build trust with investors, the community, and public officials.
Corporate governance can provide investors and stakeholders with a clear idea of a company's direction
and business integrity.
It promotes long-term financial viability, opportunity, and returns.
It can facilitate the raising of capital.
Good corporate governance can translate to rising share prices.
It can lessen the potential for financial loss, waste, risks, and corruption.
It is a game plan for resilience and long-term success.

Q4. Fundamental Rights granted to Indian Citizen by Constitution of India?

Ans) There are six fundamental rights of Indian Constitution along with the constitutional articles related
to them are mentioned below:
1. Right to Equality (Article 14-18)
2. Right to Freedom (Article 19-22)
3. Right against Exploitation (Article 23-24)
4. Right to Freedom of Religion (Article 25-28)
5. Cultural and Educational Rights (Article 29-30)
6. Right to Constitutional Remedies (Article 32)
Right to Equality (Articles 14 – 18)
Right to equality guarantees equal rights for everyone, irrespective of religion, gender, caste, race or place
of birth. It ensures equal employment opportunities in the government and insures against discrimination
by the State in matters of employment on the basis of caste, religion, etc. This right also includes the
abolition of titles as well as untouchability.
2. Right to Freedom (Articles 19 – 22)
Freedom is one of the most important ideals cherished by any democratic society. The Indian Constitution
guarantees freedom to citizens. The freedom right includes many rights such as:
Freedom of speech
Freedom of expression
Freedom of assembly without arms
Freedom of association
Freedom to practise any profession
Freedom to reside in any part of the country
Some of these rights are subject to certain conditions of state security, public morality and decency and
friendly relations with foreign countries. This means that the State has the right to impose reasonable
restrictions on them.
3. Right against Exploitation (Articles 23 – 24)
This right implies the prohibition of traffic in human beings, begar, and other forms of forced labour. It
also implies the prohibition of children in factories, etc. The Constitution prohibits the employment of
children under 14 years in hazardous conditions.
4. Right to Freedom of Religion (Articles 25 – 28)
This indicates the secular nature of Indian polity. There is equal respect given to all religions. There is
freedom of conscience, profession, practice and propagation of religion. The State has no official religion.
Every person has the right to freely practice his or her faith, establish and maintain religious and
charitable institutions.
5. Cultural and Educational Rights (Articles 29 – 30)
These rights protect the rights of religious, cultural and linguistic minorities, by facilitating them to
preserve their heritage and culture. Educational rights are for ensuring education for everyone without any
discrimination.
6. Right to Constitutional Remedies (32 – 35)
The Constitution guarantees remedies if citizens’ fundamental rights are violated. The government cannot
infringe upon or curb anyone’s rights. When these rights are violated, the aggrieved party can approach
the courts. Citizens can even go directly to the Supreme Court which can issue writs for enforcing
fundamental rights.

Q5. Illustrate various types of White Collar Crimes or Organized Crimes.

Ans) Not every crime involves a smoking gun. Some crimes are committed right under the targeted
person's nose without a single shot fired! White collar crimes are criminal acts that are performed by
people in the course of business committed for financial gain. These types of crimes can cost citizens
millions of dollars!
These crimes are difficult to prosecute because they often involve sophisticated systems and even many
different people. Frauds typically committed are:
Bribery
Extortion
Fraud
Embezzlement
Cybercrime
Government can prosecute both the individual committing the crime and the corporation for which they
work.
them a portion of the winning proceeds in exchange for the ticket.
While most people would run from someone with a story as full of holes as this, the defendant explains
further that they cannot cash in the ticket because of an immigration issue or a tax lien. Once they gain the
trust of the targeted person, money is exchanged. All along, the defendant knows the ticket is worthless.
The targeted person, however, believes differently. By the time that person reaches the lottery center to
find out the ticket is worthless, the defendant is miles away!
Forgery is a crime in where someone falsely alters or changes a document or creates a document or
signature that is not their own with the intent to fraud another person. This sounds confusing, but it is
really as simple as signing a check with the name of someone else with the intent of cashing it.

Bribery

We explored several ways to commit non-violent crimes for financial gain. Now we will investigate some
other common ones. Bribery involves using something of value, like money, to influence the decisions of
others, and this is common in deals that offer high stakes, like contracts for products or services.
To understand this better, suppose a project manager is in charge of making major purchasing decisions
for a building project. The proper procedure may involve soliciting several bids for parts of the project
and choosing the lowest priced bid for services. However, if one bidder offers the project manager a
Caribbean cruise in exchange for the business, they are bribing the project manager in order to get the
business. In most cases, it is illegal to accept such a favor in exchange for accepting a bid for services.
This is especially true of government agencies.

Q6. Scams occured in India with its outcome.

Ans) Harshad Mehta Scam

Facts
The Harshad Mehta scam alone brought down the entire stock market, done on a huge scale this securities
scam was all about government bonds, loopholes in the financial system and manipulation of the market.
An authenticated stockbroker of the Bombay stock exchange, Harshad Mehta utilised the concept of
ready forward deals where the government issues securities for big projects, while the government raises
finances from investors it also has interest charged on the same.
These short term loans of 15 days involve securities being transferred to one bank from another by the
way of bank receipts and then brought back by the lending bank at a higher rate.
Mehta, acted as a broker between the lending and the borrowing banks, misappropriating funds to invest
them in the stock market and utilising them for his gain. Since there was no actual transfer of securities
from one bank to another the borrower bank would issue bank receipts for the securities being transferred
to the lender bank.
Fake bank receipts, influential connections of banks, bureaucrats, politicians, brokerage agencies and
several bank employees led to a scam that was reported by senior journalist Sucheta Dalal.

Consequences
CBI probe followed by Mehta and his brother spending three months in jail, after which Mehta and his
family’s assets were attached and were charged with 76 criminal cases, 600 civil suits and various tax
irregularities.
Dated back to 1992, the effect of this scam was 4000 crores and called for restructuring of the entire
banking system in India. It tightened the involvement and powers of the Reserve Bank of India bringing
in a separate audio system and a new committee to overlook SEBI

Vijay Mallya Scam

Facts
The infamous case of money laundering of Rs. 9081 crores (estimated amount including interest) of bank
loans were executed by famous liquor baron Vijay Mallya.
Tagged as ”the first businessman to be pronounced as a Fugitive Economic Offender(FEO) under Section
12 of Fugitive Economic Offenders Act of 2018.
From taking over his father’s business to expanding it in the airlines and liquor sectors. A young 28 year
old was seeing the success of his company’s fast-paced growth.
During the downfall of the global aviation industry in 2012, Mallya acquired Air Deccan which resulted
in him taking loans from 17 banks.
These loans were never repaid and he escaped arrest by leaving the country. To the State Bank of India
alone he owed Rs. 1600 crores.
All this money was allegedly invested in shell companies and was laundered overseas. There were
speculations that the money was utilised in transactions related to the IPL team The Royal Challengers
Bangalore and the F1 racing team Force India.

Consequences
While he escaped to Britain before his arrest in 2016, a warrant was issued against him under The Prevent
of Money Laundering Act of 2002. He was imprisoned following the same only to be given bail which
cost 65,000 pounds along with having to hand over his documents.

Q7.