JULY 08, 2018: DAILY SUN
Ethics in business or any other financial activities is more necessary than any other practices as business involves money, social responsibilities, social justice, humanity, environmental safety, effects personal income and savings, creates impacts on social security and even physical health. Just a few decades ago, business ethics would receive far less attention and scrutiny than they do today. Some questionable practices in business were considered as simply the price of doing business and remaining competitive in a busy marketplace. As the consumers are becoming very much conscious gradually and demanding greater transparency, both small and large businesses entity must understand and honour ethical boundaries.
In today’s world ethical base of businessmen is becoming vulnerable day by day. The capitalistic motto of maximisation of profit has made businessmen blind. In maximisation of profit, many of them do not tolerate morality, honesty, social responsibilities, international rules, agreements and norms. Some unethical activities in business are – cheating customers, dumping, violating copyrights, cyber theft or hacking, illegal and unfair tariff barrier, presenting wrong financial statement, violating labour laws, squeezing out business competitors unfairly etc. All of those are committed violating minimum ethical boundaries, international laws and rules or signed agreements.
A business entity and its financial activities become unethical or dishonour ethical boundaries when they defraud customers by selling inferior products or services fraudulently taking customers’ money and potentially placing them at risk, especially if the products are dangerous in consumption or do not function as promised.
This scenario is found more or less same worldwide. If we look into the practices of business ethics among Bangladeshi businessmen, we will not find any satisfactory result. Extreme greediness and tendency for maximisation of profit in many businesses is a big threat for the consumers’ right. Bangladesh is a densely populated country with 160 million people. Recently it has got a clearance to achieve a formal recognition by 2024 to become a fully-fledged developing country. This recognition has been creating a huge demand in the economy and consequently emerging as a big market. From a small self-proprietorship to big corporation a significant portion of them are engaged in various misconducts, such as lying, cheating, hiding, covering up, using defective scale in measuring weight of goods, violation of copyrights and intellectual property rights, contamination of food and drug and many more.
Such a type of misconducts starts from the procurement of raw materials up to reaching the finished goods to the hands of consumers. Price is hiked through syndication during the festival period, true quality of goods is kept hidden and illegal stockpiling or hoarding is made during the crisis moment. Practice of morality and truthfulness are not encouraged among salesman. Many owners of the retail shops prefer those salesmen who are expert in cheating buyers or customers by various means. Bangladesh is also the world’s largest copyright violating country. Implementation of law favouring copyright and intellectual property rights is very limited. Preserving intellectual property rights is very tough here. In many cases artistes do not get minimum royalty for their performance or works.
Many companies evaluate bids from several suppliers and accept gifts from one candidate in exchange for the contract. This constitutes a bribe and unfairly eliminates other applicants from the bidding process. On the other hand, many professionals use insider knowledge to dump stock they know is about to take a significant hit which is the clear violation of ethical standards and could be considered as a criminal offence.
As an outcome of such type of manipulation we witness serious fall in the indices of share market worldwide. The 2010-11 Bangladesh share market scam was a period of instability stock market from 2009 to 2011; the turmoil was in the two Bangladeshi stock exchanges, DSE and CSE. The market went up 62 per cent in 2009, and 83 per cent in 2010, but then went down 10 per cent in January 2011, and a further 30 per cent in February 2011. The causes include over exposure of banks and financial institutions, poor monitoring of regulators, corrupted employees of regulatory organisations, margin loan, direct listing, insider trading, book building, lack of general investors’ knowledge and many other unethical practices and negligence.
Accounting scandal is one of the big unethical practices in business. In this mechanism declared asset, profitability and liability position of a business entity does not reflect the actual financial condition which is a violation of financial honesty and transparency. Consequently investors, clients, regulatory authorities, government agencies and all other stakeholders get the wrong message, might fall in a risk and eventually might be a big looser. For example, we could mention some big accounting scandals at the beginning of 21st century, such as Enron scandal in 2001 that kept huge debts off balance sheets and shareholders lost $74 billion, thousands of employees and investors lost their retirement accounts, and many employees lost their jobs. Worldcom scandal in 2002 that underreported line costs by capitalising rather than expensing and inflated revenues with fake accounting entries and inflated assets by as much as $11 billion, leading to 30,000 job loss and $180 billion in losses for investors. Another was the Lehman Brothers Scandal in 2008 that allegedly sold toxic assets to Cayman Island banks with the understanding that they would be bought back eventually. It created the impression Lehman had $50 billion more cash and $50 billion less in toxic assets than it really did and hid over $50 billion in loans disguised as sales.
In many organisations employers show undue discrimination among employees at the time of recruitment as well as the day-to-day treatment of employees, such as, employees requiring to work exceedingly long hours or in inhospitable conditions, and paying workers below minimum wage or less than the standard industry wages. These are clear violation of human rights and big obstacle to establishing justice. Many RMG factories in Bangladesh are not compliant in terms of safety, security, labour laws and hygienic working environment. Similar scenario is also found in many small and cottage industries, engineering workshops in the country.
Some ethical violations are not immediately obvious but gradually cause damage to the community. For example, many companies use unethical business practices to squeeze out their competitors that could shut down businesses in the community and threaten the economy and people’s livelihoods. On the other hand many companies do not assess the environmental footprint they leave behind, environmental safety code of conduct, waste management that are causing irreparable ecological damage threatening the health and safety of residents in the community. Most of the factories in Bangladesh, especially the dyeing factories do not maintain environmental safety code which are polluting our rivers and its biodiversity severely.
If we go through a recent report of the Office of the US Trade Representative to Congress on China’s compliance with global trading rules, we would find many ways through which it has managed to block or curb the world’s most advanced and successful technology companies, from Google to Facebook to Amazon. Foreign banks often have to operate with local partners who add zero value – essentially a tax on foreign companies. Foreign manufacturers are forced to share their technology with local partners who then systematically reverse engineer some of the same products and compete against their partners. And then there is cyber theft. The most extensive cyber warfare is being waged by a foreign power against the United States. The targets are American companies, whose secrets and intellectual property are then shared with other competitors.
This particular foreign power is not alone. Some other big countries are also trade cheats. In fact, the last series of world trade talks, the Doha Round, was killed by obstructionism from these countries, in line with the policy of another country. Today the greatest threat to the open world economy comes from these large countries that have chosen to maintain mixed economies, refuse to liberalise much more and have enough power to hold firm.
So, upholding ethics in business is crucial for balanced growth and for establishing financial justice, transparency in the society. Strict application of existing laws by the regulatory bodies, exemplary punishment against violation of copyright laws, hacking or cyber theft and above all encouraging practice of morality among manufacturers, distributors and retailers could revive ethical values among all businessmen. Morality has to be applied in transparent accounting practices, in obligation to deliver what was promised to the customers, in customer service or fair employment policies, in leading a lifestyle of honesty and integrity and high ethical standards, in responding social responsibilities, in maintaining environmental safety. Strict internal policies could also do some damage control over unethical business practices. Above all consciousness among ordinary people, raising of conscience in the minds of businessmen and concerted efforts of all stakeholders could bring unethical practices in business down to a tolerable level.
© Copyright: Reserved by the writer (Noore Alam Siddiqui)
