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Like it or not, business ethics are violated on a daily basis.
Business ethics cases such as the Barings Bank’s collapse, Enron and Arthur Anderson cases, are just tips of the iceberg. Perhaps the most famous would be the Ponzi Scheme, as the most recent business ethics cases with Bernie Madoff. |
Why are there so many business ethics cases ?
Business ethics cases happens for quite a number of reasons and under many different circumstances. However, the root of all evil? GREED.
Let’s look at 2 famous business ethics cases in general and how it affects the public.
Business Ethics Cases : The Ponzi Scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or to be paid by subsequent investors, rather than from any actual business profit earned.
The Ponzi scheme is a robbing Peter to pay Paul” system (as it was then known), and it usually entices new investors by offering return other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent.
If you could see through the strategy behind, you will notice that such abnormally high or unusually consistent returns are definitely not being able to be generated through a solid conventional business.
The system is destined to collapse because the earnings, if any, are less than the payments at the end of the day.
When will the system collapse ? When there are no more new money coming in from new investors to support the payments to earlier joined investors.
Click here to view the full image of Ponzi-Scheme-Pyramid
Business Ethics Cases
If the rich, famous and sophisticated can get bilked (and the Madoff scandal makes it clear they can), how can you know whom to trust?
Below are some of the questions you should ask yourself before doing any investment into any business:
1. Do you check out the background?
2. Do you understand the business strategy behind?
3. Does your manager makes a bundle even if you don’t?
4. Is there anyone watching the books?
5. Does your fund manager invest alongside you? (i.e. Does your fund manager eat his own cooking?)
- It doesn’t hurt if your fund manager stands to make a lot of money when you do — aside from the fees he or she charges
The main reason to come up with such article is to raise awareness of unethical business practices and how to be aware of them. Of course, even though everybody has a definition for business ethics, some generally accepted guidelines and rules do exist.
As a conclusion, being well educated financially and be good morally (don’t be greedy), will definitely reduce the chances of getting involved in business ethics cases or being victims to these business ethics cases.
More info on :
Is Your Money Manager Crook ?
Chinese article: 庞氏骗局 (Ponzischeme)
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