A number of corporate scandals have been exposed around the globe in recent times, affecting several industries. German car manufacturer Volkswagen was shamed for deliberately installing ‘defeat devices’, software that altered the running of diesel engines and ensured it passed emissions tests. Eleven million cars were equipped with the software over a period of seven years. German public prosecutors and United States attorneys are undertaking criminal investigations. The company’s CEO, Martin Winterkorn, resigned as a result of the revelations but could still face criminal charges if implicated in the program.

Predatory pricing was exposed when Turing Pharmaceuticals acquired the drug Daraprim and quickly raised the price from $13.50 to $750 per tablet. The medication is used to treat infections that can cause complications in people with weakened immune systems, including HIV and AIDS patients. The move was met with widespread public vilification. The company attempted to win back some respect by lowering the price by up to 50 per cent for hospitals and ensuring outpatients with health insurance are only out‐of‐pocket $10 per prescription. The company’s chief executive officer, Martin Shrekli, has since resigned after being arrested on unrelated fraud charges.

Closer to home, a joint investigation by Fairfax and ABC’s Four Corners into convenience store chain 7‐Eleven shocked the nation, with evidence of exploitative practices within the company’s stores. Franchisees paid many of their staff as little as $10 an hour before tax, less than half the legal minimum wage of $24 an hour — not including penalty rates for working nights, weekends or public holidays. Young, foreign workers on restricted visas were especially targeted. Forced to work longer hours to earn enough money to survive, if workers complained about their salary or conditions, managers threated to tell authorities that they were working in breach of their visa entitlements. The scandal saw the resignations of chairman, Russ Withers, and chief executive officer, Warren Wilmot.

The ethical issues outlined above relate to cheating, lying, deception, lawbreaking, exploitation and merciless profiteering. As far as any common understanding of ethics is concerned, these things are on the far side of the thick and grey line that separates right from wrong. What do the cases have in common? Each suggests there was an ethos in place that held that ‘bad ethics is good business’.

Seven years of highly orchestrated cheating at VW meant increased sales — in 2009 VW became the world’s biggest car manufacturer. Institutionalised wage fraud and labour exploitation at 7‐Eleven kept store costs down, increasing profits for franchisees and the parent company. 7‐Eleven has twice been named Australia’s ‘franchisor of the year’. Price gouging at Turing meant a drug listed on the World Health Organization’s essential medicines list could bolster the company’s profits by exploiting the sick and vulnerable.

QUESTIONS

1. Many victims of the 7‐Eleven fraud were university students. What would you have done if a victim confided in you about their situation?

2. Do you think these companies can regain public support and rebuild their brand?