Sarah Danckert, a business courts reporter based in Melbourne, published an article on the online newspaper of ‘The Sydney Morning Herald’ titled “’Bankers need to look in the mirror’ on 15th November 2018 (Danckert, 2018). Sims slams bankers’ ethics”. In this article, Danckert outlines the key ethical challenges in the banking sector of Australia which are highlighted by the launch of the Banking Royal Commission. In this article, Danckert quoted the statements made by Rod Sims who is correcting acting as the Chairman of the Australian Competition and Consumer Commission (ACCC). This article also highlights the relationship between banks and their senior executives and how they engage in unethical practices for personal gains. Various fines and penalties which are imposed on banking corporations in Australia are discussed in this article to understand the actions taken by the ACCC to ensure that integrity is maintained in the banking sector of Australia. The statements made by Sims in order to warn banking enterprises in Australia to ensure that they conduct their operations in ethical manner are including in this article which shows the role of ACCC in order to protect the interest of customers which is violating by major banking organisations in Australia (Danckert, 2018).
There are several ethical issues which are raised in this article which include lack of ethics in the banking sectors in Australia. The illegal operations conducted by banking companies in Australia in order to ensure that they maintain their market share even if they engage in unethical practices. The role of ACCC in monitoring and punishing these corporations is also discussed in this article to understand that challenges faced by the organisation to protect the interest of customers.
Banking corporations are the key pillars which support the economy of Australia; these banking corporations influence the lives of many individuals, and they focus on providing support the businesses operating in the country. However, the banking enterprises operating in Australia have failed to ensure that they comply with business ethics policies while conducting their business operations. The decisions taken by the senior level executives of these corporations are influenced by the fact regarding whether or not they are able to sustain and expand their market share in the country (Frost, 2018). These organisations focus on increasing their customer base through any medium possible to ensure that they are able to increase their profitability. The competition between major banking institutions in Australia has increased, and they are focused on increasing their customer base without considering the impact of their operations. These issues are highlighted in the article published by Danckert in which she highlighted the challenges which ACCC faced regarding ensuring that the banks in Australia conduct their operations in an ethical manner (Danckert, 2018). In this article, the statements made by Rod Sims are included along with his concerns regarding the unethical practices of Australian banking institutes. Sims provided that bankers need to have a good look in the mirror to understand their ethical practices. Danckert highlighted that only two months after the launch of the banking royal commission in the country, it is shown that the banking and finance sector is driven by greed. In the inquiry, some of the statements made by the bankers showed that they could not do away with ethically dubious practices because they would lose market share.
These statements are made by current and former senior bankers who accept that they are ready to engage in unethical practices in order to maintain their profitability in the market. In this article, Mr Sims criticised the regulators for their failure to govern the conduct of major banking corporations in Australia. He further provided that the regulators should continue to do their job by calling out companies in front to give answers for their failure to comply with ethical duties (Head Topics, 2018). He added that if the banking corporations and their executives think profits before ethics, then they are in the wrong game. He provided that as far as ACCC is concerned, it will continue to focus on doing its job. It will focus on highlighting the unethical conduct of banking corporations in Australia. The article also highlighted the two key instances in which both National Australia Bank and AMP were involved. Both the parties allegedly mislead ASIC (the Australian Securities and Investments Commission) in order to avoid legal regulation compliances. Current regulations are considered as too “soft” which are not suitable to ensure that the banking organisations are enforced to comply with relevant legal regulations (Letts, 2018). Mr Sims provided that the strike rate was 100 percent when he joined ACCC since then the rate has been reduced to 85 percent. It shows that the regulators have continuously failed to bring major corporations in the courts for their failure to comply with ethical principles and legal guidelines.
The key ethical theory which applies to this scenario is the Deontology ethical theory. This theory is a part of normative ethical theories which argue that compliance with duties is a major element without which ethical decision cannot be made by parties. This theory uses rules in order to distinguish right from wrong. This theory was developed by philosopher Immanuel Kant who argued that ethical actions follow universal moral laws (Yazdani & Murad, 2015). This theory provided that people should follow the rules in order to comply with their duties to ensure that they take ethical actions. This theory emphasis on the maxim of the parties while judging the morality of their actions. The maxim is referred to an expression of fundamental moral rule or principle which can be considered as objective or subjective on a person’s philosophy. The maxim guides the actions of parties based on which their morality can be judgement.
This theory applies to the issues discussed in the article since the banking corporations have violated their duties. There are a set of rules which guides the actions of banking corporations to ensure that they did not misuse their power, position, and resources to engage in unethical practices. In this article, Mr Sims provided that banking corporations are openly stating that they will not comply with the regulations to ensure that their operations are ethical because it resulted in reducing their market share. The top-level management in these corporations is focused on profits rather than complying with ethical duties. The example of National Australia Bank and AMP are evaluated in this article both of which mislead ASIC in order to avoid legal charges and penalties (Han, 2018). It shows that the banking corporations and their executives have violated their duties to ensure that they comply with the guidelines issued by the government to govern their operations. These actions resulted in adversely affecting many stakeholders.
The key stakeholders in this scenario include the banking corporations in Australia, ACCC, government and the public who uses the services of banks. The unethical practices of banks resulted in creating challenges for the economy of the country which makes it difficult for the government is able to sustain the economic growth of the nation. The ACCC has also failed as a regulator which is shown after the launch of the banking royal commission which highlighted the unethical issues in the banking sector (Sweeney, 2018). All these factors resulted in adversely affecting the public since they are the ones who rely on banking corporations and their services to conduct their operations. The failure of banking organisations to comply with business ethics principles resulted in adversely affecting the interest of people in Australia.
Although the banking organisations have positively affected by these incidents since they are able to increase their market share which resulted in increasing their profitability. However, in the future, they will suffer significant loss since legal fines and penalties will be imposed on them for their failure to ensure that the interests of key stakeholders are protected. People who use banking services have negatively affected through these actions since these corporations use unethical practices to gain unfair advantage (Hogan & Menzies, 2018). In the long run, these unethical practices will result in the collapse of the banking sector of Australia. The government might not be able to ensure that the economy of the country remains stable and did not collapse if the trust of people is removed from the banking sector. ASIC has also failed to ensure that it brings those institutes to the courts who have engaged and unethical practices. There are only some examples in which the senior level executive of banking corporations are charged for violating their duties. All these elements are highlighted through the investigation conducted by the banking royal commission which shows the lack of suitable guidelines to ensure that the interest of stakeholders who are affected by the operations of banking organisations is protected.
These actions will continue to adversely affect the stakeholders; therefore, it is important the strict actions are taken to stop these unethical practices. It is recommended that the government should play a major role in addressing the ethical issues which are highlighted in this article. The government should focus on introducing reforms in the current regulations which guide the operations of banking corporations in Australia (Bell, 2017). These reforms should introduce new and stricter policies which are targeted towards governing the operations of banking organisations in Australia. Currently, the policies which guide the operations of banking corporations are not suitable to ensure that the interest of key stakeholders is protected. Therefore, the government should impose mandatory disclosure requirements on these companies which should enforce them to make periodic announcements regarding the actions. These disclosures should directly be approved by the senior executives of the banking institutions which will result in increasing their accountability in the operations. Currently, the management is able to get away from personal legal penalties based on the concept of separate legal entity, however, if they will approve disclosures which are false or mislead, then a legal penalty will be imposed on them as well.
Key regulators such as ASIC and ACCC should also focus on doing their job right by bringing those organisations to the courts who have indulged in unethical practices. Currently, the corporations are able to protect themselves through ways such as arbitration and payment of penalties, however, the court should impose strict legal penalties on them for failing to comply with key regulations. Self-regulatory policies should also be implemented by the banking corporations in order to govern their operations in ethical manner (Pearson, 2018). Compliance with the provisions of corporate governance policies is necessary to ensure that the management of banking institutes are obligated to comply with ethical principles while forming business strategies. Under these self-regulatory policies, the provisions regarding mandatory disclosures should also be included in which the banking organisations should make disclosures to key regulators such as ASIC and ACCC regarding the actions which they took to address ethical dilemmas. Moreover, thorough investigations should also be conducted by ASIC and ACCC to ensure that they did not miss any key factors regarding banking organisation in which they misuse their powers and position to adversely affect the interest of key stakeholders.
In conclusion, the lack of compliance with ethical policies is the key issue which arises in this article which shows that the banking organisations in Australia are focused on expanding their customer base rather than complying with ethical policies. The senior-level executives in these corporations are focused on increasing the profitability of the corporation rather than conducting their operations in ethical manner while ensuring that a balance is maintained in the operations of the stakeholders. The article highlighted that the senior level executives of banking organisations in Australia are ready to violate ethical duties in order to avoid reducing their market share in the country. It shows that these companies are relying on unethical practices while conducting their business operations which adversely affect the interest of stakeholders such as the government, ACCC, and the public. In the short run, it will benefit these institutions; however, in the long run, it will create challenges for them as well. As per the application of the deontology ethical theory, the actions of these banking corporations are unethical since they fail to comply with the rules and policies issued by the government. Recommendations are included which can assist these organisations in addressing the key ethical dilemma faced by them such as compliance with corporate governance policies, stricter mandatory disclosure requirements, and others.
On November 20, 2018, Salvador Rodriguez published an article titled “Here are the scandals and other incidents that have sent Facebook’s share price tanking in 2018” on the website of ‘CNBC’ in which he discussed regarding the challenges faced by Facebook in terms of protecting the privacy of its users (Rodriguez, 2018). This article covers a range of incidents relating to violation of data privacy of Facebook users in which the company has failed to provide security to its users. The key ethical issue is relating to the lack of ability of Facebook to protect the data of its users. The corporation collected the private data of its users without their valid consent, and it also discloses such data to third-party developers. This article also highlighted the loss suffered by Facebook due to its own mistakes. The share price of the company plummeted substantially due to a threat of incidents which resulted in adversely reflecting on the brand image of Facebook. This article is posted after the Cambridge Analytica scandal which is considered as one of the biggest scandals in relations to violation of privacy of social media users (Rodriguez, 2018). In this incident, the private data of more than 87 million users were collected by third parties in order to find potential Trump supporters which influenced the results of the 2016 US Presidential elections. This article also highlights the negative impact which social media giant, Facebook, has on people across the globe. It also shows the negative implications of the use of online data of users.
Many ethical issues arise in this article; Facebook collected private data of its users without their consent and shared it with third parties without considering its consequences. Another issue is failure of the management of Facebook to act ethically when it comes to protection of data of its users. The issue of lack of compliance with the regulations is also arisen which are implemented by the government to ensure that Facebook takes active participation in protecting the data of its users.
In this article, Rodriguez (2018) includes a number of incidents which resulted in negatively affecting the share price of Facebook. The share of Facebook reached $132.43 when it was down nearly 40 percent from its peak in July. The share price of the company reached $131.55 which was its lowest closing price in a period of nearly 22 months (Rodriguez, 2018). This fluctuation is a result of a number of scandals in which the company was involved. The article first evaluated the changes brought by Facebook in its News Feed which were focused on prioritising the content for its users in order to promote friends and family over brand contents. These changes were not accepted by the users of Facebook which resulted in reducing the time spent by users on the website (Finn, 2018). It resulted in slashing the market value of Facebook by $24.5 billion in January 2018. The Cambridge Analytica scandal is another key issue which was faced by Facebook in March in which it was reported by the New York Times and the Guardian that a British political consulting firm, Cambridge Analytica, exploited the private data of Facebook users in order to support the Trump campaign in 2016 in order to target potential voters.
In this scandal, it was first reported that the data of 50 million users were violated; however, it was later revealed that more than 87 million people were affected by this breach (Chang, 2018). After this incident, the market value of Facebook fell down by $36 billion. In this scandal, the data was exploited through a quiz application called thisisyourdigitallife in which the users were asked many questions, and they answer them to create their psychological profile. Facebook has launched a program called Open Graph in 2010 which allowed its users to collect the data of users along with their friends without getting their permission. Due to this program, the corporation was able to collect the private data of 87 million people from getting permission from only 300,000 people. It shows that lack of compliance with ethical principles by the management of Facebook who focused on increasing profitability of the company rather than taking appropriate measures to protect their privacy of their users. After this scandal, Mark Zuckerberg, CEO of Facebook, decided to testify before Congress due to which the shares of Facebook fell almost 5 percent (Rodriguez, 2018).
The Federal Trade Commission provided that it would investigate into the data practice operations of Facebook in order to determine why it has failed to ensure the privacy of its users. After this incident, Facebook reveals community standards in April which were focused on cleaning up its services to avoid harmful content such as hate speech, spam, and misinformation. After launch of these standards, the market value of Facebook dropped by $18 billion in a single day. Moreover, the corporation has also failed to comply with GDPR (the General Data Protection Regulation) which are data protection and privacy regulations implemented in EU law. Based on implementation of these policies, it was estimated by experts that revenue of the company would be reduced in the future. After implementation of these policies, it was reported that major corporations such as Facebook, Amazon, and Google are not ready to comply with these policies (Hern, 2018). Many other smaller incidents also resulted in reducing the market value of Facebook by reducing its share prices.
In this article, the utilitarianism ethical theory can be applied in order to understand the unethical actions taken by Facebook which resulted in negatively affecting its users. The utilitarianism ethical framework is also a part of the normative ethical theory which focuses on the consequences of actions while determining whether they are ethical or not (Wagner & Dahnke, 2015). It is a form of consequentialism which provides that most ethical choices resulted in producing the greater good for the greater number of people. This theory did not focus on the actions of parties while determining whether they are ethical or not. Instead, it focuses on the consequences of the actions of the parties to determine whether their actions are ethical or not. Based on this theory, the actions taken by Facebook and its senior-level executives are unethical. These unethical practices show that the management of Facebook is focused on increasing the profitability of the enterprise rather than ensuring that the private data of its users is protected (Rodriguez, 2018). The corporation collects private data of its users which include personal details such as political preferences of users in order to show them relevant advertisements. The consequences of the actions taken by the management of Facebook resulted in adversely affecting millions of people who use the services of the company.
The management failed to consider the negative impact of the decisions taken by them on the stakeholders. For example, the decision to launch Open Graph platform resulted in allowing third-party developers to collect the private data of those users who have not given their specific consent to the organisation to use their data. This decision was taken by Facebook in order to ensure that it is able to expand its customer base along with the number of advertisement clients and developers who choose Facebook to create new applications (Rodriguez, 2018). It shows that the corporation focuses more on profitability rather than compliance with ethical policies. The decision taken by Facebook resulted in violating the privacy of more than 87 million people which shows that the consequences of the decisions taken by the management of Facebook did not achieve greater good for a greater number of people. Therefore, the corporation has violated ethical principles while taking business decisions. The lack of compliance with GDPR also shows that the corporation did not prefer to be regulated through governmental regulations. It did not want to reduce its profits by complying with these guidelines which resulted in making it difficult for Facebook to collect the private data of its users. In order to understand the negative impact of the actions taken by Facebook, the evaluation of the stakeholders of the company is important.
The stakeholders that are affected by the actions of Facebook include Facebook users, shareholders, government and the company itself. The corporation was collecting private data of its users without their permission, and it was also allowing developers to access such data as well. Due to this decision, Cambridge Analytica was able to get access to private data of more than 87 million people (Martin, 2018). They use this data to find potential voters who support the presidential campaign of Donald Trump in order to support his win in the 2016 US Presidential Elections (Rodriguez, 2018). It shows how data privacy breach resulted in affecting the whole society. Moreover, the shareholders of Facebook suffered significant loss after this news was published. The share prices of the company started to go down, and it resulted in reducing the shareholders of the company. Other incidents such as decision to change the news feed, and testimony of Mark Zuckerberg before the congress also adversely affected the share price of Facebook which resulted in adversely affecting its shareholders. The government was also affected due to its inability to ensure that its property regulate giant social media websites from misuse the data of users. Lastly, Facebook also suffered loss due to which incident which will negatively reflect on current and future profits of the company. These are the key stakeholders that are affected by the actions of the management of Facebook.
Various actions can be taken by the management of Facebook in order to address this ethical dilemma and ensure that they conduct their operations in an ethical manner. They should improve the Corporate Social Responsibility (CSR) structure of the company to introduce new policies which are focused on preventing the company from accessing the data of its users without their permission. Currently, the company has implemented a code of conduct which provides that it will prioritise data security to ensure the security of its users. However, incidents have shown that the security infrastructure of Facebook is not appropriate to ensure that the privacy of its users is maintained. Therefore, the corporation should introduce new CSR policies which are focused on promoting transparency in its operations in order to ensure that the company did not collect private data of its users without their express consent (Ho, Ang & Tee, 2015). The corporation should also focus on complying with GDPR which will assist it in ensuring that the private data of users is not misused for illegal purposes. These guidelines ensure that the management did not misuse their power to collect the private data of users and use it any way they want in order to increase the profitability of the company. Therefore, compliance with these policies is crucial for Facebook to ensure that it is able to address the ethical dilemma faced by the enterprise.
To conclude, this article highlighted a number of ethical issues which arise due to the decisions made by the management of Facebook in order to increase the profitability of the company. The article provided how the share prices of Facebook are plummeted due to many incidents involving ethical issues. The failure of Facebook to ensure the privacy of its users resulted in violating the privacy of more than 87 million users. Many stakeholders were affected by the actions of Facebook which include shareholders, users, government and the company itself. As per the Utilitarianism ethical theory, the decisions taken by the management of Facebook in order to launch Open Graph platform is considered as unethical. Various recommendations are included which can assist the company in addressing this ethical dilemma. These recommendations include implementation of an effective CSR model to promote the privacy of users and increase the security of private details of users. Compliance with GDPR will also ensure that the company is not able to collect private data of its users without their permission and they will guide the actions of the management to ensure that they did not act unethically. Based on compliance with these provisions, the company will be able to improve its brand image and sustain its growth in the market.
References
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