Corporate Governance Ethics And Business Ethics: A Comparison Of American And UAE Companies

Similarities between Ethical Issues of American and UAE Companies

Discuss about the Corporate Governance Ethics or Business Ethics.

Ethical issue can be defined as a problem or situation that makes an individual choose between an alternative that is right or wrong. The aim of this report is to compare and contrast the main ethical issues of UAE companies and those found in America. As the business environment is getting complex, every corporate regardless of its size faces a multitude of ethical issues. Every organization has the responsibility to develop codes of conduct and ethics that every employee must abide and transform into action. Corporate governance ethics or business ethics can be applied to all forms of business where the ethical problems are examined as they arise in the business environment. Business ethics refer to the application of ethical judgment to corporate or business activities (Jeurissen, & Rijst, 2012).

The organizations face fundamental issues that are related to trust and integrity. A high level of trust can be developed between the people and business that leads to organizational success. The organizations may also face diversity related issues where people must be treated with respect. The organizations must conduct ethical practices and maximize the value of every employee. The organizations may face decision making issues where there is question of protecting employee and customer rights. The businesses are expected to comply with federal laws and environmental laws and the overall corporate governance (Jeurissen, & Rijst, 2012).

There are similarities between the main ethical issues faced in America and UAE. This section analyses the similarities between the two nations. Scandals rock the foundation of business community and ethics plays a crucial role in the current corporate culture. The current ethical dilemma in Corporate America is that the top executives of the companies are found to possess unethical and illegal behaviour. Regardless of the size or the nature of company, the American companies are responsible to act ethically and uphold the most fundamental moral standards. According to the 2009 National Business Ethics Survey conducted by the Ethics Resource Centre, the responses of 49% workers out of 3000 of them stated that there was ethical misconduct in the workplace (Ethics.org, 2013). The issues were mainly reported as illegal political contributions, abuses and bribes.

The ethical problems come from workers mistreating and harassing each other or where the business owners mistreat their employees thereby breaking the law. America faces common practices of assault and sexual harassment in the workplace. There has been a case where an ex-American CEO of the company kept sex clips on its server (Cnbc.com, 2015). Further, the immigrant workers face low wages, abuse and excess work with no payment for overtime. This problem is similar to that of UAE where the number of cases of sexual harassment is alarming. There are many cultures, traditions and religions mixing up thereby increasing the cases of sexual harassment by the caregivers, co-workers or friends (Khoori, 2014).

Differences between Ethical Issues of American and UAE Companies

According to the new decree launched by The Ministry of Human Resources and Emiratisation, the firms that do not pay wages to its employees for more than 10 days after the due date shall face punitive actions (Haider, 2016). It has been noted that UAE has been very strict about its wage payment policy because of which there are none or very few cases where the employees are not paid on time. Similarly, America has decree on late-payment or non-payment of wages. This induces both the nations to pay wage on time to its workers.

There are differences between the main ethical issues faced in America and UAE. This section analyses the differences and makes a comparison of the same. The organizations may face decision making issues where there is question of protecting employee and customer rights. Several American companies have been known to mistreat its customers by lying to them or discriminating based on gender, nationality, sexual orientation and others. The employees understand what unacceptable behaviour is. The most common mistreatment faced by employees is that they are required to work even during holidays. The employee satisfaction is low as they need to handle a large amount of customers. There have not been many cases reported in the UAE for mistreating its customers as it is seen in American companies. UAE has worked on reducing waiting times and speeds up the complaints procedure while improving services.

Another aspect where the American and UAE companies are different is in relation with breach of customer privacy. There is increasing concern in the UAE for privacy. In 2014, there was a case where employees were arrested for absence of data protection legislation. The employees were found guilty of breaching privacy of female colleagues for which they were sentenced to jail (Wilkinson, 2016). No such cases have been reported where the American companies have caused data breaches thereby compromising privacy of the colleagues. Therefore, corporate America is different from corporate UAE.

Further, falsifying timesheets is a serious matter and it is a violation of state and federal law. It is argued that UAE corporate devised a technology that cut out the need to fill time sheets. According to Noble (2012), a Metro supervisor falsified timesheets of three employees over a 10-month period and paid $24,514 during that course. Therefore, he was convicted of theft of $10,000 by the falsification (Noble, 2012). Further, in UAE it was seen that Farnek, a facilities management company rolled out a system to track the maintenance and activities of 3,500 employees including cleaners, guards and workers. The company took its inspiration from the US study where 30% employees admitted to falsifying timesheets (Fahy, 2016). Moreover, 80% of the employees admitted that they conducted their personal activities during the working hours (Fahy, 2016). Therefore, there is greater transparency that leads to more accurate billing (Fahy, 2016).

It is argued that the companies listen in the UAE are failing to show potential investors about compliance. The UAE companies have adopted compliance to a certain degree but there is not enough clarity in their roles. According to the report, the family-owned corporations in UAE are greatly prevalent and have the least transparency. There have been corporate scandals in the years between 2008-2013 including the misuse of funds by Dubai jeweller Damas and Shuaa Capital (Kerr, 2013). The local markets in Dubai are less likely to emerge in political interference. Therefore, the companies in UAE have started to take notion of open compliance by responding less reactively to regulatory issues (Kerr, 2013).

According to the results of five biggest corporate scandals of 2016, it was reported that Wells Fargo, an American multinational company had employees who created fake accounts in the names of real customers (Matthews, & Matthews, 2015). Further, Roger Ailes was found guilty of sexually harassing the former news anchor of Fox News. Moreover, Mylan’s Epipen duped its customers by raising the price on drugs (Matthews, & Matthews, 2015). As Mylan had monopoly over life saving drugs, there were investigations and antitrust violations in the pricing model of drug-maker (Matthews, & Matthews, 2015). Contrarily, no huge corporate scandals have been listed or accounted for UAE. This suggests that the corporate governance and business practices in UAE are more ethical than that in America.

According to Worstall (2014), on measuring the share of corporate profits in the US profit, it is argued that the corporate tax payments are not made by several organizations. It has been found that over 90% of the US businesses do not pay corporate income tax (Worstall, 2014). The scenario is different from that of UAE as the nation does not plan to impose income tax on individuals. Introducing corporate income taxes is still in its first stages and that there are consultations between local governments in this respect (Emirates247.com, 2015).

According to Sengupta (2015), a Dubai based firm duped its customers of their belongings and money by using different names at different times. The most common victims were the Europeans who reported that the companies cheated with two floating companies Sovereign Relocation and British Budget Removals (BBR). The money was also duped n the name of Marine Registration Services LLC. Another case was reported in America where the largest loan company in US, Navient was found cheating millions (Foxnews.com, 2017). The student loan debt was the most prominent issue in the presidential elections. The people faced issues in repaying federal and private student loans serviced by Navient (Foxnews.com, 2017).

Conclusion

Conclusively, the American and UAE companies have ethical issues in its corporate world. From the above report and findings, greater cases of unethical practices have been reported in America than in UAE. Both the countries mainly face the issue of illegal political contributions, abuses and bribes. The number of cases of sexual harassment is alarming in both America and UAE. The most common mistreatment faced by employees is that they are required to work even during holidays. The organizations may face decision making issues where there is question of protecting employee and customer rights.

References

Cnbc.com,. (2015). Ex-American Apparel CEO kept sex clips on its server. CNBC. Retrieved 26 March 2017, from https://www.cnbc.com/2015/06/24/american-apparel-details-allegations-of-sexual-misconduct-by-ousted-ceo.html

Emirates247.com,. (2015). UAE says ‘no’ to tax on your personal income; corporate tax under study. Emirates 24|7. Retrieved 27 March 2017, from https://www.emirates247.com/news/emirates/uae-says-no-to-tax-on-your-personal-income-corporate-tax-under-study-2015-12-23-1.614871

Ethics.org,. (2013). National Business Ethics Survey® (NBES®) 2013 – Ethics & Compliance Initiative (ECI). Ethics.org. Retrieved 27 March 2017, from https://www.ethics.org/ecihome/research/nbes/nbes-reports/nbes-2013

Fahy, M. (2016). Farnek to roll out system for tracking staff through smartphones and watches | The National. Thenational.ae. Retrieved 26 March 2017, from https://www.thenational.ae/business/property/farnek-to-roll-out-system-for-tracking-staff-through-smartphones-and-watches

Foxnews.com,. (2017). US’ largest student loan company, Navient, cheated millions, suit alleges. Fox News. Retrieved 27 March 2017, from https://www.foxnews.com/politics/2017/01/19/feds-sue-largest-us-student-loan-company-over-repayments.html

Haider, H. (2016). UAE decree: UAE to act tough on firms that delay wages – Khaleej Times. Khaleejtimes.com. Retrieved 27 March 2017, from https://www.khaleejtimes.com/nation/new-uae-decree-employee-wages-paid-within-10-days-of-due-date

Jeurissen, R., & Rijst, M. (2012). Ethics & business (1st ed.). Assen: Koninklijke Van Gorcum.

Kerr, S. (2013). UAE corporate governance falls short. Ft.com. Retrieved 26 March 2017, from https://www.ft.com/content/53b79214-a5ab-11e2-9b77-00144feabdc0

Khoori, A. (2014). Alarming rise in sexual harassment cases in UAE, lawyers say | The National. Thenational.ae. Retrieved 26 March 2017, from https://www.thenational.ae/uae/courts/alarming-rise-in-sexual-harassment-cases-in-uae-lawyers-say

Matthews, C., & Matthews, S. (2015). The 5 Biggest Corporate Scandals of 2015. Fortune.com. Retrieved 27 March 2017, from https://fortune.com/2015/12/27/biggest-corporate-scandals-2015/

Noble, A. (2012). Metro supervisor convicted of falsifying time sheets. The Washington Times. Retrieved 26 March 2017, from https://www.washingtontimes.com/news/2012/mar/14/metro-supervisor-convicted-falsifying-time-sheets/

Sengupta, A. (2015). Dubai-based relocation firm ‘duped hundreds of people’. GulfNews. Retrieved 27 March 2017, from https://gulfnews.com/xpress/dubai-based-relocation-firm-duped-hundreds-of-people-1.1448321

Wilkinson, D. (2016). UAE Employees Jailed for Privacy Breach Before Ultimately Being Acquitted – Data Protection Report. Data Protection Report. Retrieved 26 March 2017, from https://www.dataprotectionreport.com/2016/06/uae-employees-jailed-for-privacy-breach-before-ultimately-being-acquitted/

Worstall, T. (2014). More Than 90% Of US Businesses Don’t Pay The Corporate Income Tax. Forbes.com. Retrieved 27 March 2017, from https://www.forbes.com/sites/timworstall/2014/12/23/more-than-90-of-us-businesses-dont-pay-the-corporate-income-tax/#2d02525f5e48