Corporate Misconduct

economics, period 3
March 27,2004
While American society rewards ambition and hard work, it also loves
the media play surrounding ken lay, Martha Stewart, and world com’s Bernard
Ebbers is as rampart as the hype over celebrity marriages, break up’s, or
high -profile criminal cases. Recent financial scandals, however, is very
real, very serious effect that corporate misconduct has on the lives of
American employees and investors. “The loss of jobs, retirement funds and
confidence in the integrity of the nations financial stars are all
manifestation of basic problems.”(Santorum pg1). In this loss there is
nothing love but to be angry and demand justice.

“corporate misconduct is unacceptable. It can wreck companies,
destroy jobs and pensions, undermine confidence in business and stifle
economic growth.” Say ICC leaders. The convergence of computing and
communications technologies has changed dramatically the nature of
corporate life. Digital technologies are presented through all aspects of
business activity. Many stock exchanges can have trading systems which
enables securities to be bought and sold on-line. People are able to
communicate more effectively and at lower cost than in the past. It has
aslo meant that geographical boundaries are able to be crossed more easily
which has enhanced the process of globalization of economic and social life
enormously. These technologies provide so many benefits can be easily be
made as a nightmare an easy road to corporate misconduct.

In order to understand the nature of the crime risks that corporate
face in the digital age, it is worth considering some specific instances of
crimes that have been reported in rect times. “In a recent Australian
prosecution the share price of an American company by posting information
on the internet and send e-mail messages around the globe that contained
false and misleading information about the company.”(tomazin pg2). The
message contained a statement that shared value of the company would
increase for the then current price of us .33 to us $3.00. The effect of
the information was that company’s share on the NASDAQ double, with trading
value increasing. The offender was prosecuted by the Australian Securities
and investments commission for distrubuting false and misleading
information with the intention of inducing injectors to purchase the
company’s stock. He pleaded guilty and was sentence two years in jail.

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One of the most frequent used strategies to prepare crime is the
creation of false documents use to misrepresent one’s identity. In the
past, forgery of documents used to provide evidence of identity was highly
skilled task which criminal were able to undertake convincingly. Since,
technologie this is made easy to scan an official document electronically,
alter the image as it appears on a screen, and print a counterfeit using
high quality laser, color printers. For example in victoria, between August
and march 1996, an offender used desk top publishing equipment to create
forty-one birth certificates, forty-one student identification cars, some
containing photographs, each in separate names and a counterfeit driver’s
licence. These were used to open forty-two separate bank accounts through
the Melbourne Metropolitan region, to pay checks into accounts as wages and
make immediate withdrawal before they had cleared, to registered a business
name, to obtain sells tax refund ,and to defraud various retailers. ” The
offender was charged with variety of state and federal offences and
sentence to five years in jail with non-parole to the commonwealth of
$458,383″(zehir pg 12)
In too many realms of American life, we’ve seen a dangerous drift
away from fundamental values of honesty, equity, and charitable toward a
single-minded devotion to maximizing profit. For example, in Hollywood,
where higher ticket counts are used to rationalize mounting body counts. “
If it is legal and makes money, then we say it’s okay, even when we know
it’s wrong.”(Liberman pg1). Market are moral by nature they power to
maximize efficiency, variety, and quality and to minimize prices but market
values does not mean it moral. As we saw with Enron- a company that
literally built part of it’s false fortune on valueless markets– the drive
for earnings, unchecked by other values, usually ends in disaster. Those
who idealize the government’s role and suggest heaping so many new
regulations on businesses may stifle the American spirits of enterprise.

The Enron’s scandal cries out for governmental action , but we must
acknowledge before we act that there are twin dangers- of doing too little
or too much. Government has to develop better tools to fight corporate
misconduct. What makes Enron’s collapse so bad at the core in that those
who broke the rules made out like well, bandits, while those who played
fairly lost everything. We must clear to corporate America that the same
law will govern the chief executive officer and the mail room worker, and
that it will enforce with equal vigor for all.

We need to make sure that credit rating companies are using the
inside information they have access to more aggressively to anticipate and
protect the markets, not just react to them. We need to increase the
independence of wall street analyst, whose incentives too often seem to
make them into stock salespeople rather than stock watchers. “People who
have 401(k) plans deserve more control over their money and more freedom to
buy and sell their stocks. They shouldn’t be locked in by age restrictions
or together unnecessary barriers while highly compensated executives are
free to sell their stock whenever they see fit. Enron also clearly
demonstrated that a corporation’s culture can be at least half the problem.

Checks and balances need to be strong enough to assess the ethical
consequences of corporate action on an ongoing basis. Post-Enron, the
American people won’t tolerate another ,passive, amoral maze of finger
pointing and blame-shifting when everyone can seem something went terribly
wrong .