ETHICS IN BUSINESS
THE FOUNDATION FOR FUTURE SUCCESS
IMA STATEMENT OF
ETHICAL PROFESSIONAL PRACTICE
Members of IMA shall behave ethically.
A commitment to ethical practice includes overarching principles that express our
values, and standards that guide our conduct.
PRINCIPLES
Honesty
Fairness
Objectivity
Responsibility
STANDARDS
Competence
Confidentiality
Integrity
Credibility
INDIANA RULES OF PROFESSIONAL
CONDUCT
COMPETENCE
INRPC Rule 1.1
CONFIDENTIALITY
INPRC Rule 1.6
INTEGRITY
INPRC Rules 1.7-9; 8.4
CREDIBILITY
INPRC Rules 1.4; 3.3
National Business Ethics Survey. Digital image. www.ethics.org/nbes. Ethics Resource Center, 2014. Web. 13 Mar. 2015.
A recent MBA Jungle magazine survey about the business
ethics of MBA students reveals . . .
52% would buy
stock on inside
information
received from a
friend
13% would pay
someone off to
close a business
deal
50% would reveal
corporate secrets to
a spouse or family
member
26% would let a gift
sway a company
purchasing decision
Source: USA Today, citing MBA Jungle survey of 445 students
CREATIVE
ACCOUNTING: ENRON & WORLDCOM
Accounting Degree Review. Digital image. www.accounting-degree.org/scandals. Web. 13 Mar. 2015.
Accounting Degree Review. Digital image. www.accounting-degree.org/scandals. Web. 13 Mar. 2015.
Above the Lawyer. Digital image. www.abovethelawyer.com/overview-and-impact-of-the-sarbanes-oxley-act. Web. 13
Mar. 2015
GENERAL MOTORS IGNITION SWITCH RECALL
5 Critical Points in Cobalt Timeline
(Information acquired from TIME website)
Ray DeGiorgio
the GM engineer in charge of the prototype ignition
switch knew by early 2002 that the part didn’t meet
specifications. Delphi, the company testing the
switch, told DeGiorgio repeated tests had failed,
marking each test result in a January report with
“Not OK.”
DeGiorgio had a choice: fix the switch, or ignore the
problem. Knowing that fixing the switch would
delay production, DeGiorgio told Delphi in email to
“maintain present course;” in other words, ignore
the problem. He signed his email “Ray (tired of the
switch from hell) DeGiorgio.” DeGiorgio, who was
fired this year, couldn’t be reached for comment.
Reviews in the middle of 2005 of GM’s Cobalt
which contained the below-spec ignition switch, were not good. For
months, GM employees had exchanged emails noting that a slight
graze of the key fob would move the key out of run, shutting off the
vehicle. Media reports were vitriolic. “I never encountered anything
like this in 37 years of driving and I hope I never do again,” said a
reviewer for the Sunbury Daily Item said of his Cobalt’s repeated
engine shutdowns, and the New York Times noted Chevrolet dealers
were telling Cobalt owners to remove items from heavy key rings.
“This is a safety/recall issue if ever there was one,” a customer wrote
GM.
Yet despite the obvious dangers of ones car shutting off mid-drive,
GM continued to classify the faulty ignition switch as a convenience
issue—not a safety one. A team of GM engineers met in September
2005 to consider whether to replace the switch. The answer was a
fatal “no.”
5 Critical Points in Cobalt Timeline
(Information acquired from TIME website)
GM LAWYERS REVIEWED A
CASE IN 2006
IN WHICH A WOMAN DIED AFTER HER COBALT
STRUCK SEVERAL TREES AND HER AIRBAG DID
NOT DEPLOY. FIELD REPORTS NOTED THAT THE
IGNITION WAS ODDLY IN THE ACCESSORY
POWER MODE, BUT A GM ENGINEER, KATHY
ANDERSON ARGUED THAT THE AIRBAG WAS
NOT EXPECTED TO DEPLOY ANYWAY. THE CASE
WAS SETTLED, EFFECTIVELY QUELLING A
DEEPER INVESTIGATION INTO THE DEATH, AND
THE POSSIBILITY OF DISCOVERING THE REAL
SOURCE OF THE PROBLEM.
A 2007 report by Wisconsin
State Trooper Keith Young
said that the ignition switch jostling may
have caused a fatal crash. “The two
front seat airbags did not deploy,” said
Young. “It appears the ignition switch
had somehow been turned from the run
position to accessory prior to the
collision with the trees.” GM received
the report, but according to the Valukas
investigation, no GM engineer read it
for seven years.
DeGiorgio quietly fixed
the ignition switch
problem in 2006
but didn’t tell anyone at GM. Nor did
he switch the part number in GM
records. That meant that all
future cars would be safe, but it
would be nearly impossible to
trace the cause of crashes on old
models to the ignition switch—
preventing a recall that would
have saved lives.
Valukas Report
NHTSA $35 Million Fine
2008 Training Session
GM Lawyers to Engineers
Rules of Professional Conduct
1.2 Scope of
Representation
(d) A lawyer shall not
counsel a client to engage,
or assist a client, in
conduct that the lawyer
knows is criminal or
fraudulent . . .
1.6. Confidentiality of Information
(b) A lawyer may reveal information relating to the representation
of a client to the extent the lawyer reasonably believes necessary:
◦ (1) to prevent reasonably certain death or substantial bodily injury;
◦ ***
◦ (5) to establish a claim or defense on behalf of the lawyer in a
controversy [with] the client, to establish a defense to a criminal charge
or civil claim again the lawyer based upon conduct in which the client
was involved, or to respond to allegations in any proceeding concerning
the lawyer’s representation of the client.
Rules of Professional Conduct
1.13 Organization as Client
(b) If a lawyer for an organization knows that an officer, employee
or other person . . . with the organization is engaged in action,
intends to act or refuses to act in a matter related to the
representation that is a violation . . . of law which reasonably
might be imputed to the organization, and . . . is likely to result in
substantial injury to the organization, then the lawyer shall
proceed as is reasonably necessary in the best interest of the
organization. Unless the lawyer reasonably believes . . . that it is
not necessary in the best interest of the organization . . . , the
lawyer shall refer the matter to higher authority . . .
Rules of Professional Conduct
3.4. Fairness to
Opposing Party and
Counsel
A lawyer shall not:
(a) unlawfully obstruct . . . access
to evidence or unlawfully . . .
conceal . . . material having
potentially evidentiary value . . . ;
(b) . . . counsel or assist a witness
to testify falsely . . .
4.1 Truthfulness in
Statements to Others
In the course of representing a client a
lawyer shall not knowingly:
(a) make a false statement of material fact
or law to a third person; or
(b) fail to disclose a material fact to a third
person when disclosure is necessary to
avoid assisting a criminal or fraudulent act
by a client, unless disclosure is prohibited
by Rule 1.6.
REPORTING UNETHICAL BEHAVIOR
REPORTING
1.
Women tend to report more than men
2.
Managers report more than nonmanagement employees
3.
Reporting rates rise along with management level
4.
Reporting rates are similar in public and private companies
5.
Most employees contact a supervisor rather than a third-party or hotline
WHY DON’T WE REPORT?
Calculations based on the Bureau of Labor Statistics Employment
Situation as reported in November 2013, and considers only those: 18
years or older, currently employed in the agricultural and private
workforces (not government) and not selfemployed or in private
households. http://www.bls.gov/news.release/empsit.t08.htm
HOW TO REPORT
1.
Compile evidence
2.
Understand your internal rules and policies
3.
Maintain confidentiality as appropriate
4.
Determine whether the matter can be remediated through in-house reporting
5.
If necessary, look outside of the workplace for a reporting solution
IMA ETHICS CENTER
Online at:
http://www.imanet.org/resources-publications/ethics-center
IMA Ethics Helpline:
(800) 245-1383