Unethical Behaviorby

Business Leaders

ByCatherine Alvarez, Gina Fiorello,

Thomas Keith, Barbara Lee,Rebecca Nicholson, and Amy Toman

Unethical Behaviors of Business Leaders

• Leaders who are in the executive office have more freedom to make chooses and are under increased pressure to succeed

• Most executives probably do not plan on making unethical decisions but get tempted along the way either by greed or power

• It can take a life time for someone to build a reputation of good character, but a short time to destroy it if you go down the wrong path.

Catherine Alvarez

Example of a leaders who have lost their way • That person has lost their ability to be trusted, which is the

most valuable quality anyone can have

• Profit in dollars or power is fleeting, but profit in people who trust you as a person of integrity is forever

• The consequences of unethical leaders can cause companies to go bankrupt or employees to be laid off

• Unethical behavior can result in legal consequences or embarrassing press such as the following executives who have been in the media for unethical behavior

Patricia Dunn • Former Hewlett-Packard (HP) chairwoman

• Dunn concentrated her efforts to investigate a leak of internal information

• Without the knowledge or consent of the rest of HP board of directors, Dunn hired a private investigation

• Wrong means to find the leak source to the media. Pretexting attempts to access phone records by false pretense without obtaining consent and knowledge.

Patricia Dunn

• California's attorney general Bill Lockyer on October 4, 2006, filed felony, criminal, charges against former Hewlett Packard chairwoman Dunn

• In March 2007, a California State judge dismissed the charges against Dunn

• Dunn did step down in January, but remained on the board for a short time.

• Dunn is an example how decisions that are not based on good ethics can have significant consequences

Bernie Ebbers• Born in Canada, Ebbers lived most of his adult life in

Mississippi where he began a small hotel chain.• Highly regarded and respected for being deeply religious and

active in his church and community.• Ebbers was an initial investor in Long Distance Discount

Service (LDDS), later known as WorldCom, which became the second largest telecommunications company in the nation.

• As LDDS was on the brink of collapse, Ebbers personally bailed out the company, landing him the CEO spot.

Bernie Ebbers • Ebbers grew other personal financial investments through loans obtained

using WorldCom stock as collateral.• As the telecommunications industry declined in early 2000, WorldCom

stock price dipped and Ebbers could not make the margin calls from his personal bankers.

• In order to keep stock price high, Ebbers mandated fraudulent accounting practices by misrepresenting expenses and reporting revenue increases, although it was steadily decreasing.

• The SEC began an investigation and the board of directors called for Ebbers’ resignation.

• WorldCom filed for bankruptcy in 2002.• Ebbers was convicted of securities fraud and sentenced to 25 years.

Chung Mong-Koo

The Kingdom of Chung Mong-KooChung Mong-Koo succeeded his father Chun Ju-Yung, founder of the Hyundai Conglomerate.

Chung Mong-Koo is credited with the improving the reputation and sales of Hyundai vehicles by shifting the automakers emphasis from being only on production to being about quality.

Chung Mong-Koo

• Chung Mong-Koo was born on March 19, 1938 in Ganguron Province, South Korea.

• His college education was obtained at Hangang University.

• His net worth is $ 5.4 Billion. • CEO, Hyundai Precision and industry

1997,• CEO, Hyundai Pipe 1986• CEO Hyundai Motor Service 1987• Chairman and CEO of Hyundai 1996-1998• Chairman and CEO of Hyundai Motor Co.

and Kia Motors Corp. 2000-2006 Chung Mong-Koo has sold 7.1 million Kia Hyundai's and Kia’s in 2012, and his company is currently ranking fourth in the world In sales, despite his 2006 conviction and overturn of all charges.

Chung Mong-Koo

Dennis Kozlowski• Grew up in a poor New Jersey neighborhood• Attended Seton Hall University and paid his way through college.• Once even quit a job because of unfair practices that he considered

not fair.• Started working for SCM Corporation in 1970• Known as an expert in mergers and acquisitions• Started working for Tyco, International in 1976• Held various positions of increasing responsibility• Became CEO and president of Tyco International from 1992 to

2002• As CEO Tyco grew significantly and so did Kozlowski’s paycheck

Dennis Kozlowski• In 2002 Tyco was being investigated for tax evasion and money

laundering• Kozlowski and his CFO had sold a large amount of stock back to the

company without shareholder knowledge• He resigned form Tyco amidst these accusations• In 2002 Kozlowski was charged with tax evasion for failure to pay

sales tax on fine art• Later in 2002 he was indicted for racketeering schemes, grand larceny,

conspiracy, securities fraud, and falsification of records• In 2005 he was convicted of misappropriation of more than $400

million in Tyco corporate funds.• Kozlowski is currently serving a 8 year and 4 month sentence in prison

Steve Jobs

• The founder of Apple and Pixar Pictures• Known for hiring the right people and firing

them up.• Jobs was forced out of Apple in 1985, but

returned in 1996 to help a failing company.

Steve Jobs

• Between 1997 and 2002 Apple admitted they backdated stock options.

• In 5 years Apple admitted to 6428 incidents.• Jobs may have even suggested good dates

for backdating.• Jobs was eventually acquitted by an internal

probe.

Martha Stewart• Started a home catering business which became a million

dollar business within 10yrs.• Expanded into magazines, TV and book writing with main

focus on the home and entertaining category(crafts, cooking and remodeling furniture)

• Continued growth allowed Martha to expand into Martha Stewart Omnimedia Inc. where she reached billionaire status

• Seen mostly as an autocratic and participative leader depending on the task; Martha continues to gain fan support and loyalty

Martha Stewart• Indicted on charges of conspiracy, obstruction of justice

and securities fraud in 2001• Found guilty and sentenced to five months prison time

which she asked to start serving immediately• Stock prices rose during the time Martha went to jail and

was released, but have declined over the past eight years• Martha still highly popular with fans• Martha and her executive leaders need to refocus and

strategize for a more successful financial future

Conclusion• Leaders are faced with many decisions that affect their companies and those

who work for them

• When a leader makes unethical decision is affects everyone

• Unethical behaviors will eventually catch up to those leaders who do not use sound judgment

• Unethical decisions can lead to jail time, fines, penalties, loss of employment, or even embarrassment or negative publicity

• Leaders should always use good judgment and follow ethical standards when making decisions to preserve the integrity of the company