2. Emerging ethical issues in organizations (Connect) Use your knowledge of the sources of ethical issues facing management to answer the questions below. Corporate leaders may face a variety of ethical dilemmas. Which ethical concern is addressed by the Sarbanes-Oxley Act? O The reporting of dividends paid to investors O The accuracy of corporate financial disclosures The compliance of a corporation with environmental standards O The price-fixing of products Management in the News Management in the News In January of 2012, Yahoo! hired Scott Thompson, the former President of PayPal, as CEO. Just a few months later, Thompson stepped down amid allegations that he falsified his education on his rsum and bio. Thompson graduated from Stonehill College in Massachusetts with a degree in accounting, but he also claimed he had a degree in computer science. How did Thompson get away with it? Melinda Blackman, a professor of psychology at California State University in Fullerton, said "since he was a well-known and successful executive, a background check was probably put on the back burner." Yahoo! shareholder, Daniel S. Loeb, exposed Thompson's misrepresentation. (Source: Stewart, J. In the Undoing of a CEO, A Puzzle. (2012, May 18). New York Times. Retrieved from http://www.nytimes.com/2012/05/19/business/the-undoing-of-scott-thompson-at-yahoo-common-sense.html) Why is good ethical conduct by leaders like Scott Thompson so critical for organizations? Check all that apply. O Companies want to avoid bad press. It's easy to conduct background checks. Leaders serve as role models for others. Management in the News Adam Vitale was sentenced to 30 months in prison and ordered to pay $180,000 in restitution to AOL after he found a way to spam 1.2 million AOL users without being caught by AOL's spam filter. He made a deal with a government informant, who sent spam e-mails advertising a computer security program in return for 50% of the product's profits. According to prosecutors, Vitale defeated AOL's filter system by using several different computer servers to relay the e-mails, and changed the e-mail header information to ensure the spam e-mails could not be traced back to him. Vitale reportedly made $40,000 a month from spam e-mails promoting stocks. (Source: Reuters. NY Man Pleads Guilty to Spamming AOL Subscribers. Retrieved from http://www.reuters.com/article/2007/06/11/us-crime- spam-idUSN1120537620070611) What measure did AOL have to mitigate the risk to individual rights stemming from this ethical issue in information technology? Check all that apply. AOL's anti-spam filter OAOL's privacy policy Sarbanes-Oxley Act Management in the News Environment Siemens, the German manufacturer of industrial and consumer products, violated the Foreign Corrupt Practices Act (FCPA) by engaging in a systematic practice of paying bribes to foreign government officials to obtain business. Allegations by the Securities Exchange Commission claimed Siemens paid bribes on a variety of contracts, including the design and construction of metro transit lines in Venezuela, power plants in Israel, and refineries in Mexico. Siemens also used bribes to obtain such business as developing mobile telephone networks in Bangladesh, national identity cards in Argentina, and medical devices in Vietnam, China, and Russia. Siemens earned more than $1.1 billion in profits on these and several other transactions. Siemens agreed to pay $350 million in disgorgement to settle the SEC's charges, and a $450 million fine to the U.S. Department of Justice to settle criminal charges. Siemens also paid a fine of approximately $569 million to the Office of the Prosecutor General in Munich. Reportedly, the misconduct involved employees at all levels, including former senior management, and revealed a corporate culture in which bribery was tolerated, and even rewarded, at the highest levels of the company. (Source: SEC. (2008, December 15). SEC Charges Siemens AG for Engaging in Worldwide Bribery. Retrieved from https://www.sec.gov/news/press/2008/2008-294.htm) The pervasiveness of corrupt practices in the Siemens story can be explained in part by the discrepancies between the two responsibilities boards of directors are expected to fulfil: 1) The board of directors is expected to ensure that the business is being properly managed, and 2) The board of directors is expected to ensure that the decisions of senior management are in the best interest of shareholders. What conclusions can be drawn about the role the board played in the Siemens scandal? Check all that apply. The board behaved unethically because it has an obligation to ensure that Siemens was being properly managed. The board behaved ethically because, though Siemens won contracts using corrupt business practices, the billions of dollars in revenue that resulted benefited the interests of shareholders. Because the board did not engage directly in the illegal activities, it has no accountability in the ethical issues portrayed in the story