Business Ethics By A V Raghu Vamshi 08IT-001 Aseem Sidhu 08IT-009 G Lakshmanan 08IT-012 Praveen Sebastian 08IT-021 Puneet Kukreja 08IT-022 Rishabh Garg 08IT-025 A Lacuna at some Companies

ENRON & WORLDCOM PROBLEMS FRAUDULENT ACCOUNTING PRACTICES MANIPULATION OF FINANCIAL STATEMENTS FAILURE OF BOARD OF DIRECTORS Sarbanes – Oxley Act Chapter 11

Enron…The Scandal Mark-to-Market Accounting – Once a contract is signed income is estimated as a net present value of future cash flows. (The viability of such contracts was doubted) Inflated Earnings – Used off balance sheet items Board of Directors – Inefficient

ImClone Systems & Qwest & Global Crossing PROBLEMS INSIDER TRADING

ImClone Systems Martha Stewart – Head of ImClone Systems Denial by the FDA – A drug ‘Erbitux’ manufactured by ImClone Systems was denied FDA approval Insider Trading – Martha Stewart was accused of ‘Insider Trading’ as she sold a majority portion of the stock before the news of ‘Erbitux’ being denied FDA permission broke out

Global Crossing..something different?? Inflated Stock Value – The then president ‘Clinton’ awarding a lucrative contract to the tune of 450 million $ South heading Stock – The contract was cancelled under the orders of the new administration and the stock tumbled Different case of Insider Trading – Winnick sold off many shares before the stock plummeted

Stakeholders Affected Company SuppliersCustomersEmployeesSocietyCreditorsDistributors Shareholders Regulators

How were the stakeholders affected? Shareholders – Their personal wealth had evaporated Employees – Their jobs had been confiscated Creditors – Their trust and money had been nullified Regulators – Their job had become much more tougher

Thank You..!