Introduction The purpose of this paper is to discuss how Adelphia Communications’ leadership, particularly the Rigas family, violated the trust of the public and its investors through unethical and illegal business practices. First, a synopsis of the Adelphia scandal will be presented. Next, a brief overview of ethics and how they apply to maintaining good business and public trust will be discussed. Following the ethics overview, an outline of deontology and Kant’s Categorical Imperative will be covered. Finally, the business practices and ethical issues with the Adelphia scandal will be analyzed using the deontological framework and Kant’s Categorical Imperative.
Adelphia Scandal Adelphia Communications is a company that specializes
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According to James Brown, a former Adelphia executive, “it became a part of the corporate culture of Adelphia to conceal information that might be disadvantageous for the company” (Barlaup, 2009). Records falsification was not the only illegal activity the Rigas family was wrapped up in. The family used company funds, unbeknownst to their investors, to finance personal endevours and interests. Examples include using corporate money to build a $12.8 million golf course on the Rigas property, using the company plane for personal vacation trips including a safari to Africa, and funding for two Manhattan apartments for his family (Markon, 2014). Not only this, but John Rigas purportedly used the company jet to fly a Christmas tree two times to his daughter in New York (Barlaup, 2009)! All of these incidents are just brief excerpts of the fraud and misuse of company funds that John Rigas and his family committed without any intention of ever paying back into the company. These actions, namely lying and stealing, prove to be the heart of the two moral issues that will be further analyzed.
Ethical Issues and Morality The major ethical question that the Adelphia Communications case raises is: by lying and stealing, did the Rigas family act in a morally despicable way that caused public distrust or were their actions morally acceptable in order to prevent
An implicit theme of this case that I want students to recognize is the contrast between the persistent and vigorous efforts of David Sokol to “get to the bottom” of the suspicious items he uncovered in JWP’s accounting records versus what Judge William Conner referred to as the “spinelessness” of JWP’s auditors. The JWP audits were similar to most problem audits in that the auditors encountered numerous red flags and questionable entries in the client’s accounting records but, for whatever reason, apparently failed to thoroughly investigate those items. On the other hand, Sokol refused to be deterred in his investigation of the troubling accounting issues that he discovered. The relationships that existed between members of JWP’s accounting staff and the Ernst & Young audit team apparently influenced the outcome of the JWP audits. Of course, the Sarbanes-Oxley Act of 2002
In the March of the early 2000s, Adelphia officials was charged with stealing on what could be classified as a “grand scale” event. Around that same time, the company
The Enron and WorldCom scandals were arguably the incidents that permanently changed the procedures for accounting controls. In response to these incidents, the Sarbanes-Oxley Act (SOX) of 2002 was passed. Once the knowledge of these scandals was made public, a number of subsequent accounting scandals were discovered in public companies such as Tyco International, HealthSouth, and American Insurance Group. In addition, a then-employee-owned company, Post, Buckley, Schuh & Jernigan, Inc. (dba PBS&J, now known as “Atkins North America, Inc.”), was also hit by a similar accounting scandal. Henceforth, a case study of PBS&J is presented where we will examine the fraudulent transactions that
The second ethical problem in this case relates to the Rigas family’s use of publicly-held corporate funds as a personal “piggy bank.” The Rigases used the company jet for personal reasons “without approval of the Board of Directors”, on one occasion flying to Africa for a safari (Markon & Frank, 2002). On another, one of John Rigas’ sons used a corporate jet to pick up an actress friend of his (Grant, Young, & Nuzum, 2004). The former CFO claimed that Adelphia’s funds were used by one of Rigas’ sons to buy a condominium, and to build a $13M golf course (Grant, Young, & Nuzum,
Ethics and moral obligations are issues we all encounter at one time or another. In the professional setting, all people should act in a manner that would uphold the good of society. To be ethical, one has to determine their obligations, moral ideas, and moral philosophy (Boatright, p. 19, 2009). The case analysis involving Jacob Franklin was a perfect example of how an individual can face the dilemma of doing what is right or wrong. Businesses have their own code of ethics, and the employees within the business have to determine whether or not they will follow the company’s code of conduct. I will discuss several ethical issues in the case analysis including; failure to report information, remaining silent regarding faulty equipment,
Between the years 2000 and 2002 there were over a dozen corporate scandals involving unethical corporate governance practices. The allegations ranged from faulty revenue reporting and falsifying financial records, to the shredding and destruction of financial documents (Patsuris, 2002). Most notably, are the cases involving Enron and Arthur Andersen. The allegations of the Enron scandal went public in October 2001. They included, hiding debt and boosting profits to the tune of more than one billion dollars. They were also accused of bribing foreign governments to win contacts and manipulating both the California and Texas power markets (Patsuris, 2002). Following these allegations, Arthur Andersen was investigated for, allegedly,
The concept of business ethics has tried to change the way businesses operate over the years. Business ethics is a form of ethics that governs the actions of businesses to circumvent the affects business has on every day society. But some question its effectiveness in the application of capitalism. Several case studies have shown that this is the case; many companies place the pursuit of money in front of the pursuit of virtue. Although, the majority of companies are not in the spotlight of acting unethically, can we conclude that they follow the ethical norms? It is natural for normal human beings to act ethical but businesses are on a completely different playing field. But could business ethics be clearly possible in capitalism?
The notion of ethics deals with people’s behaviors within a company. Social responsibility involves a company’s moral obligations and the manner in which the organization makes its decisions. Although ethics and social responsibility are similar on a conceptual basis, each has its own unique characteristics that express their differences and its independence of the other. Ethics and social responsibility have to be present and coincide with one another for a business to be ethically sound.
2. Ethical Issues in Business. It seems that every day in the news we are hearing of new company that has acted at least unethically and possibly illegally in the operation and financial reporting of their company's business dealings. There are many ethical issues in business. One major issue that we see is over and under reporting net income. Companies like to show that every quarter the net income of the business has an increase or profit. In order to show this they adopt unethical or illegal means in the operation and financial reporting. One such method is the indiscriminate use of stock options for employees that enable companies to take employment costs off balance sheet and inflate earnings. With the recent ethical issues we have
This paper relies on secondary data on a past phenomenon. It combines data from journal and other internet sources to bring out aspects of unethical behavior by Adelphia's top executive. The analysis of data takes two ethical frameworks.
Samuel Waksal’s actions were unethical because he was acting with information his staff, board of directors, and stock holders were unaware of. Samuel took advantage of confidential information provided to him and used it for personal financial gain and for the financial gain of his family. His actions were deliberate and taken with the clear knowledge that what he was doing was ethically and morally wrong.
In December 2011 the board of directors of Montreal-based SNC-Lavalin, the largest engineering and construction company in Canada, received a whistleblower letter that alleging Riadh Ben Aissa, an executive vice-president, had secretly funneled money to members of Libya’s Gaddafi family.
As the turn of the 21st Century evolved, it appeared as if Adelphia Communications Corporation was on a direct path of success; unbeknownst to their investors and the public, they were in reality on a direct path of destruction instead. Unfortunately, Adelphia is not the first major company in the history of the United States’ business world to lose the trust of the American public, but it is certainly one of the most notable ones to do so. As the events surrounding the Adelphia scandal unfolded in full view of the public eye, a multitude of media outlets were there to broadcast the destruction and distrust to the masses leaving many wondering if the term “business ethics” was actually nothing more than just an oxymoron. Throughout this
160). The question of whether Correia is correct to think that his former criminal past does not have to be disclosed when advising others on investment decisions is an important factor worth considering. While Correia’s “fidelity” to himself promotes his “autonomy,” “confidentiality,” “privacy,” and “conservatism,” it also seems to conflict with the moral obligations of “duty” and “justice”( Pfeiffer & Forsberg, 2014, p. Inside front cover -161). In other words, Correia’s loyalty to himself is in direct opposition to the virtual business community’s “network of ethical value” that includes the principles/rights of “honesty,” “do no harm,” “due process,” “free expression” (e.g., Correia’s criminal past tarnishing company image), “safety,” and the shareholder’s/business partner’s “right to know” (Pfeiffer & Forsberg, 2014, p. Inside front cover -161). Hence, a deeper examination is needed into the tension within this ethical
Important Note: This sample essay mainly illustrates the structure of your assignment on ethical issues of a company selected by you. You may first identify two or three ethical problems and then discuss how to solve them. Remember including relevant citations to support your evidences and viewpoints.