Please provide a short answer for each question.
Joseph was taking the Economics 101 course with his friend, Allison. Joseph was struggling with the material, and he explained to Allison, “This just doesn’t make much sense to me. I know that once I get into my management major I can do it. I just have to get through this course because all the other courses I have been able to handle. Could you just let me see your answers for the online questions on the reading?” Explain what type of ethical dilemma Allison is facing in this situation.
Refer back to the Joseph and Allison situation, and add the following facts. Allison is nervous about allowing Joseph to have her answers. Joseph tells Allison, “Look, how many people on this campus do you think have helped people with their homework? It’s not a big deal. Nobody will know about it.” What tools is Joseph using to convince Allison?
Refer back to the Joseph and Allison situation, and suppose that Allison agrees to let Joseph have her answers. List who is affected by their actions.
Refer back to the Joseph and Allison situation, and add these facts. Allison allows Joseph to use her homework, and then Joseph says, “Allison, I am really going to need some help studying for the exam, and it would be better if we sat close during the exam so that when I get into hard areas, I can look over for some help. I will make sure no one sees me. Can you help me?” What is happening between Joseph and Allison?
In May 2010, Martha Stewart gave an interview to the New York Times magazine in which she was asked, “Do you find it odd that the SEC investigated you for insider trading, which resulted in your conviction in 2004, while letting a sociopath like Bernie Madoff run unchecked?” (Mr. Madoff ran a $50 billion Ponzi scheme). Ms. Stewart responded, “Let me just say one thing. They should have been paying closer attention to other things.” She then added that she never stole anyone’s money like Madoff did.
Evaluate Ms. Stewart’s comments in the context of ethical analysis, a credo, and her attitude about ethics in business.
Leslie Fay Companies was a clothing conglomerate that produced lines of women’s clothing and lingerie under the brand names Leslie Fay, Joan Leslie, Albert Nipon, Theo Miles, Kasper, Le Suit, Nolan Miller, Castleberry, and Castlebrook. In early 1993, it was discovered that senior Leslie Fay executives, in an effort to inflate profits and to mask an actual loss of $13.7 million, had perpetrated an accounting fraud. Paul Polishan, Leslie Fay’s chief operating officer, was placed on leave without pay in January 1993, along with Donald F. Kenia, the corporate controller. Mr. Kenia had first alerted the company to the accounting manipulations and worked with auditors to untangle the books.
By April 1993, Leslie Fay, under intense pressure from creditors, filed for Chapter 11 bankruptcy (reorganization) in Manhattan. Both Mr. Polishan and Mr. Kenia were fired. Mr. Kenia, charged with two counts of filing false statements with the SEC, has entered into a plea bargain with the U.S. Attorney in exchange for his cooperation in the continuing investigation of the Leslie Fay accounting improprieties.
Also in April 1993, two new outside directors were named to the Leslie Fay board. The audit committee of the board discovered, through continuing investigation, that accounting irregularities had inflated the company’s profits for at least five quarters beginning in the fall of 1990.
As Leslie Fay continued its climb from bankruptcy, it was discovered that its law firm, Weil Gotshall & Manges, had failed to disclose its close ties to two board audit committee members. A federal bankruptcy judge ordered the law firm to pay fines totaling $800,000, which was the cost of having an independent review of the law firm’s representation and conduct in the case.
In March 1995, Leslie Fay placed its flagship dress and retail business up for sale and offered its CEO a success fee of $1.5 million if those businesses were sold.
Also in March 1995, a report detailing accounting improprieties was released by the audit committee of the Leslie Fay board. The board found that when executives realized they would not meet pre-established goals, they would ship goods out to a Wilkes-Barre, Pennsylvania, facility to inflate sales. The executives also forged inventory tags, multiplied the value of inventory, developed phantom inventory and altered records to meet sales target. Some goods were invoiced to be shipped in the final day of a quarter even though they were not actually shipped until the next quarter. Numerous shareholders have filed suit against the Leslie Fay board and BDO Seidman, the company’s auditor during this period.
John Pomerantz continued as CEO from 1993 onward. The company has tried to find a buyer but has remained unsuccessful in doing so.
a. What signals about the importance of earnings at Leslie Fay were sent to the officers who committed the accounting improprieties?
b. Wouldn’t employees have been aware of the financial fraud? Why didn’t they speak up? Why didn’t they tell someone?
c. How might Leslie Fay have prevented what happened?
d. If you were the new chief financial officer, what message would you most want to impress upon all Leslie Fay employees?
e. Of what significance are the law firm’s ties to the board’s audit committee members? Did these ties set a poor tone at the top?
Applying ethical theories, discuss why you would not take food out in your pockets from an all-you-can-eat buffet.
Discuss the following statement:
“There’s a difference between being very competitive and can-do, and winning at all costs. All costs is costly.”