Student :Minh, Nghiem Van
MA1N0234
Problems with ethics
 Problems with ethics can be found throughout the
business world. Its can be resulted in the devastating effect
to company and company’s investers.
 According to CFO magazine, 41% of surveyed chief
financial officers admitted ethical problems in their
organization, 48% of surveyed employees admitted
engaging in unethical practices : cheating on expense
accounts for forging signature. In the 2004 survey, 47% of
CFOS said that they felt pressure from CEOs to use
aggressive accounting to “Make the numbers work” or “
Hit the numbers”.
Baring Bank Bankruptcy
 Barings Bank (1762 to 1995) was
the oldest merchant
bank in London , founded and
owned by the Germanorigined Baring family. The bank
collapsed in 1995 after one of the
bank's employees, Nick Leeson,
lost £827 million ($1.3 billion) due
to speculative investing, primarily
in futures contracts, at the
bank's Singapore office.
The reason of bankruptcy
 Because of the absence of oversight, Leeson was able to make
seemingly small gambles in the futures arbitrage market at Barings
Futures Singapore and cover for his shortfalls by reporting losses as
gains to Barings in London. Specifically, Leeson altered the branch's
error account, subsequently known by its account number 88888 as
the "five-eights account", to prevent the London office from
receiving the standard daily reports on trading, price, and status.
Leeson claims the losses started when one of his colleagues bought
20 contracts when she should have sold them, costing Barings
£20,000.
 By December 1994, Leeson had cost Barings £200 million. He
reported to British tax authorities a £102 million profit. If the
company had uncovered his true financial dealings then, collapse
might have been avoided as Barings still had £350 million of capital.
What can be done to minimize
moral risk?
 To build awareness through a code of ethics that spells
out general principles of right and wrong conduct.
 Provide whistle- blower protection for employees with
ethics-related concerns.
 Establish an ethics director.
 Evaluate manager’s ethics in performance reviews