Introduction In July 1991, the largest scandal in the financial history exploded when the branch offices of the Bank of Credit and Commerce (BCCI) has been seized by regulators in seven countries. The closure of the bank is mainly due to massive fraud and corruption that happened at the heart of the bank. BCCI also involved in other illegal activities such as money laundering, dubious lending, fraudulent record-keeping and support in terrorism. The BCCI was a supranational bank founded in London in 1972 by a Pakistani financier, Agha Hasan Abedi. Overall, BCCI was expanded from 19 branches in five countries in 1973 to 108 branches in 78 countries in 1976 with excess assets of around US$20 billions at its peak. BCCI has been …show more content…
Thus, the Basle Committee on Banking Supervision has been set up in July 1992 and issued a new standard for the supervision of international banks. The underlying principles were that any international banking group must agreed to be governed by the central bank in the home country which taking into account the bank’s worldwide activities. However, the recommendations proposed by Basle Committee is viewed to be a bit loose, thus another reform of Banking Act was proposed by the UK government and BOE which provided BOE with more supervisory powers. The proposals placed legal responsibility on the auditors to provide information of the banks whenever it is requested by BOE for monitoring purposes. This proposal also attempted to close the regulation gap between countries where the bank was chartered and where it was operated, which was found to be the main reason why BCCI’s fraud went undetected for so long. Issues of Accounting, Auditing and Governance Involved There were 3 parties involved extensively in BCCI crisis: senior management, external auditors and regulator were accountable to the interest of depositors and creditors. Roles of each party will be examined below. Leaders play significant role in embedding ethical norms and values into organizational culture. Longnecker (cited in Gottlieb & Sanzgiri 1996, p. 1278) organizational leaders should articulate ethical policy, communicate ethical statements and codes, and provide
This paper will first discuss briefly what ethics are and provide the definition for an ethical issue. An ethical leadership issue is identified and explained for this author’s practice area. We will then identify and discuss key strategies for leadership that are pertinent to the ethical issue. Next, empirical evidence which supports the strategies discussed will be analyzed. Then, the impact and importance of the strategies will be stated. The final step will be to provide a conclusion to the reader that summarizes the content and strategies.
In order to meet formal expectations set by the Federal Reserve Board (FRB) and the Office of the Comptroller of the Currency (OCC), banks must elevate their standards for governance and enterprise risk management to meet increased and heightened expectations to include Enhanced Internal Audit Practices.
There are several steps corporate and governmental leaders can take to promote ethical behavior to include developing a code of ethics and implementing ethical policies. Maintaining and supporting open communication with stakeholders and employees builds trust so that concerns are brought forward without fear of retaliation. Establishing systems and processes that support and do not sabotage ethical practices is significant to safeguarding against fraudulent and unethical behavior. However, even with the proper policies and reporting mechanisms, companies are not guaranteed that unethical behavior will not occur. With systems in place, a company is able to address issues and take action to discontinue the behavior. The most effective way to promote ethical behavior is through leadership commitment, training and demonstrating appropriate behavior. (Center for Ethical Business Cultures, 2008)
Leaders that demonstrate a commitment to behaving in an ethical manner are viewed as trustworthy and subordinates gravitate toward them. Ethical leaders have a foundational belief in honesty and trustworthiness and disseminating these principles throughout the organization. This paper will present ethical leadership models as tools for merging diverse cultures into the existing organizational culture. An overview of which leadership models, styles, and traits are most commonly accepted as ethical across the greatest array of social cultures will be discussed. The paper will culminate with a selection of a particular leadership model as a tool for shaping organizational culture and the rationale for selecting that model.
I agree with what the videos say that ethical leaders have both individual as well as organizational responsibilities. As to individual responsibility, if an ethical leader acts ethically, he will inspirit other people to follow him as an example. If leaders act unethically, subordinates will copy these unethical actions. The videos show that personal examples set by firm leaders is the single factor that has the biggest impact on ethical culture of a firm. As to organizational responsibility, leaders should organize and manage the culture of their companies so that they can urge their subordinates to act ethically.
A personal definition of ethical leadership is “deliberate behavior that is consistent with organizational values and expectations, which in turn builds trust and maintains a leader’s moral authority to hold the organization or individual followers accountable.” Although morality and ethics are different, they are closely connected. A dictionary definition for moral authority is, “trustworthiness to make decisions that are right and good” (Moral authority, 2016). One can expect a workforce or unit that perceives their leader to retain moral authority will respect that leader’s decisions and demands because of an alignment of values. Whereas ethics
When leading other individuals, it is imperative that one be ethical themselves, in order to lead ethically. A person, who is unethical, is going to inspire unethical behaviors in others. When members of an organization see that nothing happens to their leaders, others will fall into the same unethical behavior and rationalize that what they are doing is ok as well (Mallor et al., 1966/2010, p. 119). Leaders must set the example of ethical behavior for others.
Ethical leaders embody the purpose, vision, and values of the organization and of the constituents, within an understanding of ethical ideals. They connect the goals of the organization with that of the internal employees and external stakeholders. Leaders work to create an open, two-way conversation, thereby maintaining a charitable understanding of different views, values, and constituents’ opinions. They are open to others’ opinions and ideas because they know those ideas make the organization they are leading better. (Edward & Steward,
By incorporating the principles of ethical leadership it provides the foundation for the development of a ethical organization which will help with decision making. Ethical leaders need to respect others, service others, show justice, manifest honesty, and builds the community. In an organization I believe all leaders should be required to go through a training to teach the development of ethical leadership. I believe we must start with the leaders in order to get others to follow along with the right behavior. Mangers in an organization should also be required to attend a program and training to become more ethically effective at work and in life and to help make ethical decisions. Managers and leaders can benefit and use the information to have a better understanding of themselves and strengthen their own leadership skills. Leaders must understand that to be an ethical leader, they must be sensitive to the needs of others, treat others in ways that are just, and care for
According to Thornton (2009), leadership ethics issues are difficult to solve for many different reasons, including the fact that there isn’t a clear explanation of leadership ethics. The boundaries of leadership ethics are also expanding which makes it difficult to keep up with. Not to mention that many leaders find it difficult to discuss the topic of leadership ethics. Furthermore, programs that are created to assist in combating the issues associated with leadership ethics are created specifically based on the culture of each business, and therefore cannot fix the generalized problem of leadership ethics (p. 59).
Leaders that demonstrate a commitment to behaving in an ethical manner are viewed as trustworthy and subordinates gravitate toward them. Ethical leaders have a solid foundational belief in honesty and trustworthiness and disseminate these principles throughout the organization. This paper will present ethical leadership models as tools for shaping organizational culture. An overview of which leadership models, styles, and traits are most commonly accepted as ethical across the greatest array of social cultures. This document will culminate with a selection of a particular
• Governance and oversight: Assessing business model and strategy changes and reinforcing the importance of sound corporate governance appropriate for the size and complexity of the individual bank. A specific focus will be on determining the adequacy of strategic, capital, and succession planning. Examiners will assess whether the plan is appropriate in light of the risks in new products or services. If applicable, examiners will assess the bank’s merger and acquisition processes and procedures.
•Insufficient policy review and approval processes could lead to publishing availability policy and applying business practices inconsistent with Regulation CC
This broader concept of ethical leadership empowers leaders to incorporate and be explicit about their own values and ethics. The following list provides a framework for developing ethical leadership. It is based on the observations of and conversations with a host of executives and students over the past 25 years, and on readings of both popular and scholarly business literature. Written from the perspective of the leader, these ten facets of ethical leaders offer a way to understand ethical leadership that is more complex and more useful than just a matter of “good character and values.”
In order to be a successful ethical leader there are many activities that can be promoted to encourage ethical behavior in one’s organization. An ethical leader will create programs that endorse integrity in business. Programs can include setting guidelines for dealing with ethical issues, open discussion on ethical issues, and establish a protocol for people to get advice (Yukl, 2010). By establishing programs an ethical leader is really changing and encouraging moral behavior which can affect an organizations work environment and improve moral. By empowering your employees to know how to handle ethical dilemmas you create a new found trust.