Implementation of the code of conduct at ECG has been a success. Employees are engaged in the training sessions and have been carefully reviewing the detailed code of conduct available on the ECG intranet. Furthermore, various individuals regarding situations that represent or could potentially have ethical implications. Now the Ethics Review Committee has convened another meeting to discuss two matters that have been reported, as defined in the following:
The intended acquisition of Government Allies, Inc. after the IPO represents a tremendous growth opportunity for ECG. As the company completes due diligence on the acquisition candidate, it is discovered that a senior executive at ECG and her spouse have a previously undisclosed financial interest in Government Allies. This executive will notably profit from the acquisition because all investors in Government Allies will receive shares of ECG stock proportionate to their investment upon successful completion of the IPO and of the acquisition. The ECG executive had been a member of a task force charged with determining acquisition candidates, and she was a strong advocate for moving forward with the effort.
ECG is participating in a competitive bid on a lucrative IT consulting contract for X TelCo, a key player in the communications industry. A team of industry and practice leaders is formed to develop the proposal and give the presentation to X TelCo. Securing the contract would boost sales and positively influence the IPO. One team member previously worked in the industry with two current executives at X TelCo who are among those to review bids. Initially unknown to the ECG team, this employee maintains occasional contact with the former coworkers. He recently contacted the executives, securing additional information about the bid process and promoting the firm's capabilities.
What ethical standards might be violated in these two situations and why? How should each one be addressed by leadership and the Ethics Review Committee? Support points with ethical and business reasoning.© BrainMass Inc. brainmass.com October 10, 2019, 4:48 am ad1c9bdddf
The violation took place when the evaluation of Government Allies Inc was done for acquisition by ECG. One senior executive at ECG along with her spouse had an undisclosed financial interest in Government Allies. If the acquisition is made then the executive and her spouse will make a financial gain. The ECG executive had been a member of the task force given the charge of determining and evaluating acquisitions candidates. There are several ethical violations. First, when ECG considered Government Allies Inc for acquisition, the executive should have disclosed her interest in Government Allies Inc. From the deontological ethical perspective it was her duty to disclose her interest in Government Allies Inc. Her action is of low moral worth. It is unethical. Further the executive also is likely to gain financially if the acquisition of Government Allies Inc takes place. From the virtue ethics perspective it is not an act of good character to personally gain financially from the acquisition of Government Allies Inc. From this point of view the action of the executive is unethical. The senior executive herself was a member of the task force that selected Government Allies Inc. She was a strong advocate of acquiring Government Allies Inc. From the virtue ethics perspective this was an act of poor character to become a member of the task force that evaluated the acquisition of Government Allies Inc. The direct consequence of the action of the executive is not just limited to the gain that the executive makes because of her shareholding in Government Allies Inc. The real consequences are that the selection of Government Allies Inc may not be appropriate for ECG. The consequences of acquiring an inappropriate company may lead to a large loss for ECG. Further if ECG goes in for an IPO it means that the interests of the shareholders of the company may be compromised because of the actions of the senior executive. ...
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