Case study on NORWOOD LLP

DAVID

David works as a financial advisor at a UK-based financial services firm, Norwood LLP (Norwood). One of Norwoods main competitors is Quigley LLP (Quigley). David has recently been trying to win new business for Norwood but he has not had any success. In all his recent tender processes, David has been unsuccessful and Quigley has been awarded the contracts.

Quigley has recently appeared in the news headlines in relation to the alleged internal accounting fraud of one of its client companies, Yazoo Plc. An independent review body will now investigate both Yazoo Plc and its external auditor, Quigley. David is delighted by the news; he uses his personal Twitter account to post several tweets relating to the new story:

Tweet 1: Is anyone surprised by this news?! Surely everyone knows that Quigley has been doing this sort of thing for years?

Tweet 2: Quigley is being investigated in the Yazoo Plc scandal. Quigley staff are un-qualified and unprofessional, so I doubt this is the only scandal they are involved with.

One of Davids colleagues, Rachel, has seen Davids tweets and decides to question him:

Rachel: Do you think it was sensible to post those comments online? David: Its my personal opinion. I am allowed to say whatever I want on Twitter. Rachel: Well, yes, I suppose people can post their opinions freely...thats what Twitter is there for. Im just not sure whether its good for our firm

STANTON PLC

One of Davids clients is Stanton Plc, a global textile manufacturer. Elsa is the UK production manager at Stanton Plc. She has recently visited Stanton Plcs subsidiary, Womak FA, in Tascadia. Tascadia is a developing country with a new, progressive government. The government is trying to encourage and promote any companies who invest in the environment, education and health. Womak FA recently won a government award for its efforts to minimise water wastage and water pollution in its textile factories.

Elsa is aware of Womaks recent government awards. On visiting Womak, Elsa is surprised at what she discovers. During her factory tours and discussions with workers, Elsa discovers poor manufacturing practices which waste significant volumes of water and which produce excessive levels of dangerous waste water; most of this waste water is washed into local rivers and streams. Elsa speaks to the production manager at Womak:

Elsa: Your production processes are damaging the environment. I cant understand how you won the government award.

Production manager: We made a huge effort and spent a lot of money to try to make our practices environmentally-friendly. Thats when we won the award. But unfortunately it was just too expensive to sustain. The business was losing money because of the high costs; so we had no choice but to switch to cheaper practices. We havent informed the government we dont want to lose our award.

On her return to the UK, Elsa is unsure whether to disclose her findings...

Q-1 What ethical issues can you identify here?

Q-2 What do you think David and Elsa ought to do in light of these the ethical issues you have identified? Justify your answer.