Business Ethics and Social Responsibility

NIM
NIGERIAN INSTITUTE
OF MANAGEMENT
(CHARTERED)
NIGERIAN INSTITUTE OF MANAGEMENT

(CHARTERED)
BUSINESS ETHICS AND

SOCIAL RESPONSIBILITY
(SMPE 203)
NIM VISION: To be The Source and Symbol of Management Excellence

NIGERIAN INSTITUTE OF MANAGEMENT
(CHARTERED)
STUDY PACK
NIM / NYSC PROGRAMME
BUSINESS ETHICS
AND SOCIAL RESPONSIBILITY
(SMPE 203)
STAGE II
For more information, please contact:

Management House
Plot 22, Idowu Taylor Street
Victoria Island Lagos
P.O. Box 2557
Lagos
Tel. 01 2701017, 2705928
Website: www.managmentnigeria.org
E-mail: mgtedu@managementnigeria.org
BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

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FOREWORD
This study pack covers all the topics and all the basic materials necessary for adequate grasp of the
subject for the Proficiency Certificate in Management Examination of Nigerian Institute of
Management (Chartered).
While expecting candidates, to read as widely as possible on their courses, the Institute's role in
preparing this study pack, is to treat in one publication all the topics covered by the syllabus for this
particular course.
This will enhance focused study on the part of candidate. This pack is written by an expert on the
subject. The writing is reader-friendly while the issues discussed are current with the general
treatment of topics having a contemporary feel.
The topics are treated in a way not only to provide general and theoretical knowledge but to
enhance practice.
Reviewed questions are provided at the end of each pack.
We wish to express our utmost appreciation to our faculty of experts for their invaluable
development and writing of these study pack series.
We also appreciate the support provided by the Directorate of Capacity Building.
MANAGEMENT

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TABLE OF CONTENTS
Page
FOREWORD 4
TABLE OF CONTENTS 5
Lecture 1 The Concept of Ethics 6
Lecture 2 Tools of Ethics (Values, Rights and Duties) 10
Lecture 3 Moral Rules in Human Relations and Common Morality 13
Lecture 4 Situational Factors in Ethical Behaviours in Business 17
Lecture 5 NIM Code of Conduct 20
Lecture 6 The Concept and Impact of Social Responsibility 22
Lecture 7 Social Audit 25
Lecture 8 Issues in Transparency 28
Lecture 9 Corruption and Integrity of Managers including the ICPC Act.39 30
Appendix 39
References 42

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LECTURE 1
THE CONCEPT OF ETHICS
1.10 Learning Objectives

At the end of this lecture, students should be able to:
i. Describe ethics and its importance in ensuring business success.
ii. Explain some ethical rules.
iii. Identify ethical and unethical behaviours in business
1.20 Introduction
Business is a sequence of economic activities, involving the use and exchange of resources for
money. Firms and corporations operate in a social and natural environment and should be
accountable to the society in which they operate and grow. Irrespective of the demands and
pressures upon it, business is built to be ethical, for at least two reasons. Firstly, whatever business
does affects its stakeholders. Secondly, every business action has ethical as well as unethical paths.
We should endeavour to always follow the ethical way-the better way!
1.21 The Concept of Ethics

A. What Are Ethics? They are:
Moral laws and standards which provide necessary boundaries that will ensure fair practices
and opportunities for individuals as they interact with one another in different organizations
The moral rules and standards which serve as guidelines for a group of people with common
goals
The paths business firms ought to take to ensure that the economy and the larger society get
the greatest benefit from their existence
Moral rules and guidelines which enable business organizations to enrich the capacity of the
system in which they are functioning
B. Business Ethics:
Ethics as practised by business organisations is called business ethics.
Specifically, they are moral rules and standards which guide business actions, decisions and
judgements.
Most business actions and choices, decisions and judgements have ethical aspects since they
specifically involve values that help or harm people and indicate character.
Sternberg (2000) argued that, hiring and firing, choosing suppliers, setting prices, establishing
objectives, allocating resources, determining dividends, disciplining workers, planning schedules,
awarding contracts, all involve ethical choices'. Even the most trivial decisions that appear to be
made on purely technical or economic criteria have ethical aspects.
C. Importance of business ethics.

To show stakeholders the necessary ethical boundaries that will ensure that businesses are
carried out with utmost decency
To establish good corporate and personal image and reputation
To build good interpersonal relationships as people would know when and where to draw
the line in relationships

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To be able to deal with grey areas that may come up in the business
To help entrepreneurs and employees know how to conduct themselves
They form the basis of various business decisions, which is why companies have their own
handbooks which detail how every employee is expected to act and behave.
1.22. Issues in Business Ethics

Generally, business ethics are moral laws that involve a
1. High sense of self awareness and management in:
a. Time Management: Time management deals with the ability to utilize effectively
the period during which an activity begins or ends or the duration to accomplish a
task. Time management is an essential ingredient in business ethics because time is
an asset at the disposal of every manager and employee and if not properly managed
it will make the organization to be irresponsible to all its stakeholders. Time
management tools include day planners, diaries, calendars, to do lists, work
schedules and movement itinerary.
b. Life Goals Programming: This deals with the process whereby a firm sets out all its
activities in line with the objectives of the firm and people in its operational
environment. It also entails ensuring that its activities benefit all stakeholders.
c. Personal Grooming and Consciousness: Personal grooming and consciousness

are issues in ethics which relate to individuals, managers and firms believing in
themselves, setting out patterns for developing themselves and following the normal
growth stages. They support setting standards in line with right values in order to
achieve optimum results, without following short cuts.
d. Human Relations: This relates to the guiding principles of office etiquette,
behaving politely with customers, protecting privacy of employees, avoiding
discriminations and kickbacks etc.
e. Striving for Excellence: This is based on the need for businesses to always aspire
to be the best amidst competition. Business firms should build on their strengths,
overcome weaknesses and utilize effective opportunities within their reach. They
should always pursue goals that will improve their image and create goodwill in their
internal and external environments.
f. Self-Discipline: Keeping moral laws requires a high sense of discipline on the part
of the management and employees.
Self discipline is the oil that lubricates the wheel of all moral laws. Without self
discipline, ethical and moral standards would be meaningless and unattainable.
2. A high sense of responsibility and loyalty to:
a. One's own roles: Ethics involves looking inwards and examining oneself with
respect to the level of commitment to our duty and the level of honesty and integrity
one upholds in executing assigned tasks. It is asking the question how do I conduct
my affairs?
b. Superior Officers and Subordinates: As a manager, you have superior officers
to whom you report and subordinates who report to you. The manager should be
faithful in discharging his duties to both parties. He should give timely reports,
feedback and respect to the superior officers to build good interpersonal
relationships. He should also carry the subordinates along with utmost open
mindedness.
c. Company's Customers and Suppliers: Management and employees should be
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fair in all their dealings with customers and suppliers. This is because they are dealing
with human beings who have feelings which shouldn't be exploited or abused. There
is a need be very careful in our choice of spoken or written word. Expressions that
may hurt people or leave negative indelible marks in the minds of customers and
suppliers should not be used. Courtesy and consideration should be shown at all
times. Additionally, when engaging in business transaction, it is always good to reach
a win-win rather than a win-lose conclusion.
d. Acquisition and Use of Other Resources:
Organizations do not exist in a vacuum. They use resources within and outside their
environment in the course of producing their products or delivering their services. A
proper and effective use of resources will impact positively on the people in the
community and on the natural environment. There is a need to look at your
organization and see how its business operations affect the people and the
environment. In doing this, the following questions need to be asked and answered;
Does the appearance of the organization premises make the area habitable or
inhabitable?
Does our use of roads have a dilapidating effect on them? If yes, How?
Does our organisation play a role at ensuring that the roads are maintained at regular
intervals?
How much waste material is generated by our business? What are we doing to
reduce it?
Does our company cause atmospheric pollution? If yes, what plans are in place to
control or eliminate it?
Have you applied the principles of environmentally sustainable economics to your
organizational plans?
Are there local projects to embark on, possibly with the cooperation of others in the
community?
e. One's own family, community and nation:

Ethics equally takes into consideration the physiological and social needs of all the
stakeholders in the business organization. As a chief executive or manager of a
business organization, whatever actions you take will directly or indirectly impact on
your family, community and the nation at large.
3. A high sense of probity

a. In dealing with confidential matters. As an employee, you owe the
organization a duty of trust and loyalty in handling confidential matters and making
sure they do not leak to unauthorised persons.
b. In resource utilization.
In reporting the financial condition of the organization, information on the prospects
and difficulties of the organization should also be given. We should be prudent and
thorough in handling all transactions.
Fraud and all forms of financial mismanagement should be avoided.
c. At all occasions and situations those in charge of management should apply

probity with respect to changes and challenges they may encounter in exercising
their authority.
d. and accountability for:

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authority assumed and roles played
resource utilization
life spent
1.3. TUTORIAL QUESTIONS.

i. Observe some managers in action for a day. How ethical are they? Why?
ii. Discuss why managers should behave ethically to subordinates. List 4 such ethical
behaviours.
iii. Do you think Nigeria is generally an ethically barren country? Give your answer
considering the ethical rules in this lecture.
iv. Which Nigerian and foreign companies were liquidated because they breached ethical
rules? Give details of the situation that led to their fall.
1.4. REVISION QUESTIONS

i. What business ethics principles are relevant in the 21st century Nigeria?
ii. Various ethical decisions are based on ethical standards. Discuss.
iii Describe the proper attitude and behaviour of managers to customers.
iv. Why is life grooming an important ethical concept?
v. List 3 definitions of ethics. Which of them do you like best? Why?
vi. How can employees learn self discipline and good human relations?

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LECTURE 2
TOOLS OF ETHICS

At the end of the lecture, students should be able to:
i. Identify at least four tools of ethics
ii. Explain the application of these tools to business
iii. Explain the importance of values in organisations
iv. Differentiate between values and objectives
2.21 Introduction
Tools of ethics are the components or measures adopted to ensure ethical conduct in business. They
include:
1. Values
2. Right
3. Loyalty
4. Fairness
5. Principled behaviour
6. Confidentiality
2.22. Values
A. Definitions of values:
The virtues promoted by an organization.
The primary points of reference which guide the conduct of business in doing the right thing
in order to achieve business goals
Beliefs about what is right and wrong and what is important in life
Values spell out in clear terms what a group of people uphold (whether good or bad)
They are the principles, way of life and beliefs which a group of people abide by in order to
achieve an objective or set of objectives.
A set of principles or standards of behaviour acceptable among all the stakeholders in
business irrespective of the differences in ethnic background, culture, and religion.
B. Examples of values:
An organization's core values e.g. we are committed to providing superior service to our
customers'
Educational institutions are promoted on the basis of the values they espouse. Various
professional bodies espouse different values in line with their practice. For instance, the
medical profession has a set of primary values such as:
Non malfeasance (Do no harm)

Beneficence (Do good)
Autonomy (Respect the dignity of human life)
Justice (seek the common good)

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The 1994 code of values for International Christian, Muslim and Jewish businesses include
Justice (fairness),Mutual respect (love and consideration) Stewardship (trusteeship)
Honesty (truthfulness).
C. Values and Objectives

Values and objectives are closely knit together. They are two sides of the same coin. This is
because
All objectives are value laden.
Values therefore are entrenched in objectives.
As we pursue the objectives of profit maximization, cost minimization and business continuity, it is
equally important to emphasise the values of creativity, personal satisfaction, employee- welfare
and development.
D. Why do we Need Values?

To:
a. help an organization to identify and focus on areas within it that need attention
b. create unity, competitiveness and value maximisation for shareholders
c. help organisations do the right things like obeying laws, providing a high quality work
environment life for people and satisfying customers
d. positively change peoples' attitude and aspirations
e. give positive encouragement to people rather than negative prohibition.
2.23 Right
A. Definitions:
Something that is morally good or correct
To have a moral claim
to get or have something/someone behave in a particular way
The authority to perform or carry out an act
The authority/ claim that people have towards the responsibility and accountability of
organizations to them
2.24. Duties: Duties are the tasks assigned to people. Duties spell out responsibilities of
individuals in the organization. Many such duties form a job.
2.25 Loyalty: This implies an allegiance/commitment of employees to a set of

objectives/management/policies of the organisation.
2.26 Fairness: It is the avoidance of discrimination in dealing with people of diverse

backgrounds, endeavouring to treat all human beings equally and giving each person equal
opportunities notwithstanding cultural, socio-economic and educational backgrounds.
2.27 Principled Behaviour: This is the demonstration of a consistent behaviour in similar

situations that makes one's behaviour predictable. It ensures that the same decision is made
in similar situations.
2.28 Confidentiality: this involves being discreet in dealing with the organisation's publics and
a refusal to divulge official information even in the face of financial inducement or threats.
For example, a refusal of a secretary to divulge names of those to be retrenched before they

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are officially published or to give unauthorised persons the personal information of
managers shows a high sense of confidentiality.
2.3 Tutorial questions.

Visit any organisation of your choice to record the tools of ethics applied in its day to
day operation. Which of the tools is not properly utilised? Why?
Discuss how ethics can help to achieve corporate goals.
With relevant examples, differentiate between i. loyalty and principled behaviour ii.
Duties and values.
2.4 REVISION QUESTIONS

i. Differentiate between values and ethics
ii. List and explain four tools of ethics
iii. Why do we need confidentiality in organizations?
iv. Explain the importance of fairness in conducting business in Nigeria
v. How are values and objectives related?

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LECTURE 3
MORAL RULES IN HUMAN RELATIONS AND COMMON MORALITY

At the end of the lecture the students should be able to:
i. Identify the need for good relationship among employees in organizations
ii. Explain the need for moral rules in organizations
iii. Apply the principles of human relations in enforcing moral rules in organizations
iv. Identify and describe some theories of human relations
v. Assess the effectiveness of human relations in organizations.
3.20 Introduction
The manager often experiences his most uncomfortable moments when he has to deal with
differences among people.
The best possible way to deal with these differences is to build good human relations with the
employees. When good human relationships are entrenched, conflicts hardly arise, and if they do,
they do not get out of hand and are easily resolved
3.21 What are human relations?

A body of knowledge through which workers and management get things done
cooperatively.
According to Halloran (1978) human relations involve all the interactions that occur among
people, whether they are conflicts or cooperative behaviours.
The study of how people can work effectively in groups in order to satisfy both
organizational goals and personal needs.
Stan (1978) observed that, human relations are concerned with the 'why' of the people and
their groups.
Human relations are also concerned with what can be done to anticipate, prevent, or
resolve conflicts among organization members''.
They are all about building good interpersonal relations between management and
employees and among employees of an organization.
3.22 Philosophy of Human Relations

Human relations ensure that people with whom we work are treated importantly, responsibly and
sympathetically whenever they come up with any complaints. John Adair believed that if groups of
people are to have cohesion, morale and motivation, they must seek each other's cooperation.
Douglas McGregor (1960) listed the following as the basis of human relations:
i. The loyalty and cooperation of individual in an organization must be earned, won and
supported.
ii. The individual employee with his status, rights, prospects for advancement and economic
well-being, is linked with the success of the enterprise to which he is employed
iii. The basic relationship of the individual should not be jeopardized by government, union
and management activities.
iv. Personnel policies and practices must be designed and implemented in such a manner as to
promote and safeguard the rights and well being of the workers.

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v. Organizations must strive to provide for the economic and social security of their employees
vi. The society must be free and ready to safeguard its own rights and privileges.
Building or creating good interpersonal relationship should not be limited to management and
employees, but spread through all the persons the organization carries out transactions with and
those who have interest in the organization such as the customers, suppliers, competitors and the
general public.
3.23 Human Relations Effectiveness

A. One way to measure Human relations effectiveness is our thoughtfulness in interpersonal
communication.
As a professional, bear in mind that those you are dealing with are human beings with
feelings. Therefore, utmost care should be taken in our choice and use of words in order to
avoid ethical scandals in which people frequently feel attacked, insulted, and demeaned.
Even when we are upset or displeased, we should be very careful about our choice and use
of words.
B. Other issues that border on human relations effectiveness are motivation, leadership and
empathy. Kossen, (1978) gave the following rules on the use of words in promoting human
relations:
1. The least important word is I
2. the most important word is we
3. The two most important words are thank you
4. The three most important words are if you please
5. The four most important words are what is your opinion
6. The five most important words are you did a good job
7. The six most important words are I admit I made a mistake
3.24 Steps in Re-Establishing Long-Term Relationships between Organization and

Employees:
Step One Re-establish code and policies for sustainability
Step Two Re-establish justice
Step Three Re-establish fairness
Step Four Re-establish practices of honesty
3.25 Common Morality

1. Dignity
Apologize for delay
Extend personal restitution to the victim
2. Honesty
Stop the spiral of lies and denials
Implement full and immediate disclosure of relevant information
Facilitate access to information and persons.
Respond openly and promptly to all queries

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3. Fairness
Ensure compensation is commensurate with any loss
Accelerate reconciliation as much as possible and as quickly as possible
Encode and practice lessons in fairness to benefit future transactions
4. Auditing
Establish formal framework for monitoring ethical orientation
Report ethical progress alongside financial progress
Report progress of plans to employees, industry association, and the community.
5 Updating
Begin planning for ethical mandate beyond resolution of the present issue
Report ethical progress and plans to the community, employees and industry
association.
3.26 Some examples of ethical rules.

"One should not tell lies,"
"One should keep all expressed and implied promises,"
"One should respect bosses, elders and parents",
"One should help people in distress" etc
3.27 A commentary on lying and ethics.

Many ethical rules are controversial. For example, while some people would agree that in most
situations, one should not tell lies; there may be exceptions to the rule.
Assume for instance that a very angry man brandishing a cutlass asked you whether your sister was
in the house. You would reasonably fear for the life of your sister and tell a lie to protect her. Does
the rule that you should not lie cover this situation?
Thus for example, in the case of the angry man with the cutlass, one could reason that one should
tell no lie, because (i). Telling lies is a way of harming the people one deceives, and (ii) it tends to
undermine mutual trust among people. If these were the complete justification of the rule against
telling lies (which is not the case), it would follow that the rule did not apply in this case. By telling
the madman that your sister was not at home, you would not be harming him in anyway. On the
contrary, you would be preventing him from doing something that, once he recovers his sanity, he
would greatly regret. In addition you will not undermine trust among people by lying to him.
3.28 Principles of business ethics.

According to Elegido (1996) the following are independent and ultimate principles of business
ethics.
i. Principle of Solidarity: We must be concerned with promoting the wellbeing of all human
beings, not only our own. In so far as we fail to do so, we undermine our own fulfilment.
ii Principle of Rationality: One should always strive to act intelligently.
iii. Principle of Fairness or Impartiality: We should apply the same standards in judging our own
actions, those of people who are dear to us and those of strangers
iv. Principle of Efficiency: In trying to promote human fulfilment, good intentions are not
enough: one must endeavour to use effective and efficient means.
v Principle of Refraining from willingly harming other human being: One should never
choose to harm another human being directly or indirectly.

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vi. Principle of Role Responsibility: One does not have responsibility for all the aspects of the
well-being of all human beings. One's special circumstance, capacities, roles and
commitments give one a priority
responsibility for only certain aspects of the well being of certain people.
3.3 Tutorial questions.

i. Assess the practical benefits of McGregor's view of human relations to the Nigerian manager.
ii. According to Koseen (1978) what key words should all good human relations practitioners
learn and apply?
iii. What steps would you take to re-establish good relationship with others?
iv. Why should we admit and apologise when we are wrong?
v. Should we apologise to customers for situations we didn't cause personally?
i. What is the study of Human Relations?

ii. Good human relations in organizations assist in ensuring that rules are obeyed in
organizations. To what extent is this true?
iii. Human relationship is all about ensuring that people with whom we work are
treated well. Explain.
I Identify four elements of common morality

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LECTURE 4
SITUATIONAL FACTORS IN ETHICAL BUSINESS BEHAVIOURS

i. Identify situational factors in unethical behaviour.
ii. Explain the meaning of ethical audit
iii Identify ways in conducting ethical audit in organization
iv identify tempting situations in organisations.
4.20 Introduction.
Ethical issues vary from person to person, from time to time and from organization to organization.
The method of tackling them should also vary.
The fact that so many notable corporate bodies and individuals in Nigeria are repeat offenders is
due to the fact that ethics is viewed narrowly as a one time problem rather than in the context of the
national psyche. Many organizations hire sound individuals to manage their affairs without giving
them the required training and exposure. Managers need to understand the dynamics that
contribute to an error of ethical judgement. One of them is the situational factor in ethical
behaviour.
4.21 Situational factors.

Situation factors that need to be considered with respect to ethical behaviour in business are stated
below:
1. An understanding of the scope and scale of temptations to be unethical. In doing this, the
following questions need to be answered:
a. What moral or legal issues have raised ethical concerns in the past?
b. How can these issues change and test the behaviour of business organizations and
individual employees?
c. What are the new pressure points created by changes in technology or global
competition?
d. How well equipped are organisations for dealing constructively with new
temptations created by the new technology?
2. The moral strength and weaknesses of the business organization for withstanding and
overcoming the temptations. These entail an audit of past ethical performance and an
evaluation of the ethical concerns of the employees.
4.23 Ethical Auditing

Ethical audit is a powerful technique used in recent years to give detailed reports to ethical
stakeholders or the general public on the ethical performance of an organization over a period of
time. Ethical audit is usually carried out by independent external auditors. According to Murray
(1997) the following points are considered in carrying out ethical audit.
1. Clarity of purpose: The reason for embarking on the audit should be spelt out e.g. Do you
want to audit in order to obtain information which will help you steer the ethical
development of the organization? Or to persuade critics that, you are not as bad as they say?
Or to follow a current fashion in management (sadly not uncommon with new
methodology)? Or to meet demands from a customer or client?

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2. Type of topic: What kind of audit do you want to carry out?
Varieties of Ethical Audit
Audit of the existence of policies and procedures.

Audit of compliance with policies and procedures.
Audit of actual performance (external impact)
Audit of staff perceptions
Audit of staff aspirations and concerns
Audit of customer and other stakeholder perceptions
Audit of customer and other stakeholders aspirations/concerns
Audit of specific issues or problem areas
Audit of legislative/regulatory compliance
Audit comparison with reference scales, peers or benchmarks
You have to choose. How will you determine what topics to include or whether to start with a
small subset? Will you keep to auditing compliance with the rule book or attitudes towards
corporate environmental impact, or understanding of health hazards? Or do you w a n t t o
explore in depth the values of your people relative to all major categories of stakeholders?
3. Context: In what managerial context is the audit being carried out? Is the organization
accustomed to audits for other purposes? Is there commitment from the top to act on the
findings? What pressures are there and will there be, to do so?
4. Process: What process will you use? Will it be paper based questionnaires? If so, do you
have access to expert questionnaire design skills? Will it include technical assessments, and
do you have access to the skills and equipment needed? Will it include face-to-face
interviews? Do you have experienced interviewers for sensitive topics and areas?
5. People: Be careful not to use only specialists in ethics. You need people who can
communicate intelligently with the people they are working with.
6. Analysis and reporting: Do you have the capacity to process the data yourselves? Or will
you use an outside agency? How will the various levels of report be produced, approved and
published?
7. Follow-Up: What follow-up do you intend? Clearly, you can't know exactly what will be
required, but do you have at least outline plans for discussion and developing action
programmes? To conduct an audit raises expectations. If you have accepted people's
cooperation in the conduct of the audit you will be betraying a trust if you subsequently do
nothing about the findings.

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4.3 TUTORIAL QUESTIONS.
What situational factors should reduce the punishment for corruption in organisations?
Are corrupt government officials in Nigeria and the United Kingdom equally guilty? Explain
your answer.
Study the ethical audit report of any organisation.. How did it explain and reduce unethical
behaviours in the organisation?

i. What constitutes unethical conduct in the oil business?
ii. Explain the salient features of an ethical audit.
iii. How can ethical auditing be conducted in an organization?
Iv What methods can be used to ensure the accuracy of ethical audits?
iv. Ethical issues vary from time to time and from one organization to another. Discuss

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LECTURE 5
NIM CODE OF CONDUCT

i. State the meaning of code of conduct
ii. Recite from memory, the NIM code of conduct
iii Mention some benefits of a Code of Conduct
iv Explain the criteria of a good code of conduct
v. Design a code of conduct for their organisation.
5.21 Introduction
A code of conduct is
A list of ethical principles and moral rules for members of an organisation
The set of dos and don'ts of workers\professionals
A set of guiding principles which puts a manager's action in a moral perspective.
A brake, a control that prevents employees from unethical behaviour.
5.22 IMPORTANCE OF A CODE OF CONDUCT.

It communicates corporate purposes explicitly.
It expressly identifies corporate policy about controversial matters.
It clarifies which stakeholder expectations are legitimate.
It eliminates ignorance as an excuse for unethical behaviour.
It is an effective tool for sharpening business accountability and improving corporate
governance.
It attracts customers and gives them the confidence to patronize the organisation
It enhances corporate goal attainment and employee job satisfaction
5.23 CRITERIA/ CONDITIONS OF A GOOD CODE OF CONDUCT.

It must be properly structured and outlined.
It may not reflect the prevailing values or culture of the organization. When the existing
culture is less than perfect, enshrining it in a code merely reinforces bad practice. For a code
of conduct to improve organizational conduct; what it prescribes must be better than the
existing norm.
It is necessary to consult shareholders, especially employees to determine what situations
are genuinely problematic and the stringency of the standards.
Employees should be involved in the code-making process to improve understanding of
and compliance with the code.
There must be active support of business directors and senior executives.
5.24 The Nigerian Institute of Management Code of Conduct is as follows:

1. That I, as a professional manager will put service above self and will ever seek to find and
employ more efficient and more economical ways of getting things done.
2. That I, as a professional manager, accept the most scrupulous and transparently honest and
ethical process of thought for all decisions in my daily work and be myself free of any
fraudulent and/or corrupt practices and within my scope of authority treat all persons as
being equal and refuse to give special favours or privileges to anyone.

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5.25 Summary of a general code of conduct for managers.
A manager should:
Create a clear, simple, reality-based customer-focused vision, and be able to communicate it
straight forwardly to all constituencies.
Understand accountability and commitment and be decisive. He should set and meet
aggressive targets with unyielding integrity.
Love excellence, hate bureaucratic red tape and all its deficiencies.
Have the self-confidence to empower others, love team work and be committed to efficient
work-output.
Stimulate and relish change as an opportunity, not a threat. He should not be frightened and
paralyzed by it.
Have enormous energy, the ability to energise and invigorate others and understand that
speed is a competitive advantage.
5.3 TUTORIAL QUESTIONS

i. What gap did you notice in the NIM Code of Conduct? Suggest appropriate provisions to
make it more comprehensive.
ii Assess the effectiveness of a code of conduct in corruption prevention.
iii. Design a code of conduct for corps members on primary assignment. Suggest strategies for
enforcing it.
iv Recite the NIM Code of Conduct. Compare it with the code of conduct of another
professional body. Which of them will encourage better conduct and behaviour? Why?
i. What is a code of conduct? Why do you think all professional bodies should have a
code of conduct for members?
ii. List 5 features of a good code of conduct.
Iii Why do you think managers should consult with employees when designing a code of
conduct?

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LECTURE 6
THE CONCEPT AND IMPACT OF SOCIAL RESPONSIBILITY

i. Define the concept of Corporate Social Responsibility.
ii. Highlight the ways organizations can be socially responsible
iii. State the impact of corporate social responsibility on different stakeholders.
iv. Explain the case some people have against corporate social responsibility.
6.20 Definitions of Corporate Social Responsibility.

A process through which business organizations deploy their resources to uplift the general
welfare of the residents in the community in which they carry out their activities.
It is the private sector's way of integrating the economic, social and environmental
imperatives of their activities.
It is about an organization caring for the community in which it operates.
An intelligent management of the expectations and needs of the community
6.21 Socially Responsibility strategies

Initiating/supporting worthy community initiatives like building and equipping schools,
universities, hospitals, museums and sports centres
Helping to protect the environment by ensuring all manner of pollution is reduced.
Creation of employment
Making provisions for employment of physically challenged persons.
Fairness, equity, justice in all its employment and other policies.
Working towards the common good of all the residents of the community
Obeying relevant rules and regulations e.g. paying taxes.
6.22 Impact of Corporate Social Responsibility on Business

i. Increased profitability ratio
ii. Promotion of organizational goodwill
iii. Increased corporate patronage
iv. The company's product can become a household name
v. Enhanced business sustainability
vi. Improved competitiveness in every area of business.
Vii Corporate peace and tranquillity.
6.23 Impact of Corporate Social Responsibility on Society

i. Increased physical and mental development e.g. more asphalt- roads, pipe borne water,
education etc.
ii. Builds corporate goodwill in the society
iii. Reduces crime, promotes sports, arts and culture, cares for the disadvantaged and the
forgotten etc.
iv. Helps in discovering new talents in music etc e.g. the Maltina Dance Show, the Peak Talent
Hunt
vii. Increases maintenance culture and life span of a lot of infrastructural facilities such as roads,
drainages hospitals etc.

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viii. Helps to increase social welfare
ix. Increases community health and life expectancy ratio
6.24 Professor Friedman's Position

Prof. Friedman, the famous monetary economist argued in favour of the thesis that an
organization has only one responsibility: maximizing profits for its shareholders while operating
within the limits set by the law. He set out his main arguments for this position in a famous and
often quoted article entitled: The Social Responsibility of Business is to Increase its Profits.
In Friedman's view, it is certainly a responsibility of organizations to respect all the laws which
protect the public interest. But going beyond this would amount to having socially responsible
executives functioning as redistributors who would take other people's money and spend it on what
these executives themselves defined as the general social interest, as if they were some sort of self
appointed tax collectors.
It is Friedman's contention that it will be better for everybody if business executives concentrated on
maximizing profit, for in this way, they will more effectively be led by an invisible hand to promote
the good of the society.
In fairness to Friedman, it should be emphasized that he was in no way against charity and giving to
the needy. He was against giving other people's money to the needy. His view was that if an
organization spent money supporting worthy causes instead of redistributing that money among its
shareholders, it would prevent the latter from supporting the causes they prefer.
6.25 Some limitations of Social Responsibility (CSR)

Indiscriminate use of corporate resources in CSR may reduce investment funds and
shareholders' gain.
Government may offload its responsibilities on the private sector. CRS should complement
and not replace government.
Corruption in the public service will thrive if public duties are performed by private
organisations.
The limited ability of the private sector in social welfare.
CSR can also be diversionary; managers may lose focus from fundamental business goals.
6.3 TUTORIAL QUESTIONS.

1. Evaluate the CSR of any organisation you are familiar with. What activities did they
undertake? How were they selected?
2. Do you believe there can be too much CSR? What does it mean?
3. Do you think it is fair for corporate Nigeria to provide social amenities in their host
communities after paying taxes?
4. Imagine a Nigeria without CSR. How will things look like?
5. Learn from your community elders about on-going and completed CSR projects in your
area.
How were they selected?
Are they what the community required?
How have the sponsors benefitted from each project?

23
i. An organization's corporate social responsibility is important for its survival and

success. Discuss
ii. What is corporate social responsibility?
iii. Why should organizations embrace corporate social responsibility?
i. Why do some firms reject social responsibility?
ii. Suggest 10ways the NIM can show greater social responsibility in Nigeria.

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LECTURE 7
SOCIAL AUDIT

i. Define the term social audit
ii. State the objectives of social audit
iii. Identify the challenges of social audit and how to resolve them.
iv. Describe the methodology of social audit
7.21 Introduction
Social audit as a term was first used in the 1950s. Social audit is similar to financial audit in many
ways except that it is about everything else that an organization does apart from money.
In our own case we are dealing with auditing a social 'system' which survives in the long term only
through being alive to feedback from both the internal (sub-system) and external (super-system)
environments.
7.22 A. Definitional Issues

Below are some definitions of social audit.
According to Bateman (2005), Social audit is a process which enables organizations and
agencies to assess and demonstrate their social, community and environmental benefits a n d
limitations. It is a way to measure the extent to which an organization lives up to the
shared values and objectives it has committed itself to promote.
It is the process whereby an organization accounts for its social performance, reports on
and improves that performance.
It assesses the social impact and ethical behaviour of an organization in relation to its aims
and those of its stakeholders.
Social audit is an organizational strategy of planning, managing and measuring non-
financial activities and monitoring both the internal and external consequences of the
organization's social and commercial operations.
A social audit is a way of measuring, understanding, reporting and ultimately improving an
organization's social and ethical performance.
It is a technique used to understand, measure, verify, report and improve on the social
performance of the organization.
Social auditing is a multi-stakeholder-driven, participatory evaluation process that tracks a
number of different impacts and outcomes. It is a multi-stakeholder process because it
begins by identifying the organization's stakeholder groups those involved in, or affected
by the organization such as service recipients, suppliers, volunteers, employees, funders and
the community (Rittenberg and Schweiger, 2005)
B. Advantages of Social Audit:

Trains the community on participatory local planning
Encourages local democracy and accountability.
Encourages community participation
Benefits disadvantaged groups
Promotes collective decision making and sharing responsibilities

25
Develops human resources and social capital.
Promotes corporate ethics and values.
7.23 Requisites of Social Audit

Before a social audit can take place, the following have to be in place:
Clear organizational objectives.
Clear action plans
Clear mode of recording and measuring performance.
Involvement of stakeholders
Intermittent but clear time commitment from top management.
Information sharing among different stakeholders.
7.24 Objectives of Social Audit

Assessing the physical and financial gaps between needs and resources available for local
development
Creating awareness among beneficiaries and providers of local, social and productive
services
Increasing the efficiency and the effectiveness of local development programmes
Scrutiny of various policy decisions, keeping in view stakeholder interests and priorities
Estimation of the opportunity cost for stakeholders of not getting timely access to public
service
7.25 Challenges of Social Audit

i. It is difficult to prepare a social audit report which will be simultaneously fair and objective to
the society, the implementers of the programme and its designers.
ii. Not all social welfare programmes are well designed or based on valid assumptions
iii. An absence of a well conceived information system as part and parcel of a social welfare
programme
iv. Individual programmes pose their own specific problems to the social auditor.
7.26 The Way Out

Seek clarifications from the implementing agency about any decision-making activity,
scheme, income and expenditure incurred by the agency.
Clearly consider and scrutinize existing schemes and local activities of the agency
Access registers and documents relating to all development activities undertaken by the
implementing agency or by other government departments
Sell the programme to all stakeholders to ensure their cooperation and participation.
7.27 Social Audit Methodology

Gather background information about the organisational activities
Use social indicators to measure social effectiveness of corporate activities However
excessive reliance on social indicators can lead to a mechanical report
Check compliance with safety and statutory provisions
Prepare a social accounting document
7.28 Conclusion and Recommendations

Social audit is predicated on the principle that it should be carried out as far as possible with
the consent and understanding of all concerned.

26
In summary, the following recommendations will make social audit a regular and effective strategy
to promote the culture of transparency and accountability:
Clarity of purpose and goal.
Identification of stakeholders with a focus on their specific roles and duties
Definition of performance indicators
Regular meetings of stakeholders to review and discuss data/information on performance
indicators
Follow-up on social audit meetings
Establishment of a partnership with trusted local people
Findings of the social audit should be shared with all local stakeholders

i. Why do you think social audit is not popular in Nigeria?
ii. Select an organisation of your choice and answer the following questions:
How many social audits did they conduct in the past 5 years?
What were the findings of their most recent social audit?
How did the audit benefit the organisation and other stake holders?
What problems were encountered in the audit process? How were they solved?
i. What is a social audit?

ii. List four objectives of social audit?
iii. What are the problems that may be encountered in carrying out social audit in
an organization?
iv. Describe the methodology of social audit

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LECTURE 8
ISSUES IN TRANSPARENCY

List and discuss salient issues in transparency in Nigeria
Explain Transparency International Standards of Conduct.
8.20 Introduction
Transparency International Standards of Conduct reflect the conviction that large scale corruption
subverts economic and social development. Transparency International is a coalition of
governments, private sector participants and international aid and financing agencies, designed to
counter corruption in international business transactions. Their standards apply to the coalition
partners and take account of past initiatives by such organizations as the International Chamber of
Commerce and the United Nations. The issues discussed here though from Transparency
International (TI) are very relevant to Nigeria, one of its coalition partners.
8.21 THE STANDARDS.

Article I: Respect for Laws and Standards.
All parties to international business transactions should respect and conform to all
relevant laws and regulations and observe their letter and spirit.
Article II: Improper Inducements

1. No party to an international business transaction should request, demand, offer, or take a gift
in any form, or extend any other advantage to or for the benefit of any public official or as he
or she may direct (and whether directly or indirectly) as an inducement for action or inaction
by the official.
2. All parties should take measures reasonably within their power to ensure that no part of any
payment made in connection with an international business transaction is received directly
or indirectly by or for the benefit of a public official with decision making responsibility or
influence or by their relatives or business associates.
3. All parties should take measures reasonably within their power to ensure that subcontracts
and purchase orders relating to international business transactions are not used to channel
payments or other benefits directly or indirectly to or for the personal benefit of public
officials with decision making responsibility or influence, or to their relatives, or business
associates.
Article III: Agents & Consultants

1. All parties should take measures reasonably within their power to ensure that any
commission or remuneration paid to any agent, consultant, intermediary, represents no
more than appropriate compensation for legitimate service; and that no part of any such
payment is passed on by an agent, consultant or others
2. All parties should take appropriate measures to ensure that agents, consultants, and other
intermediaries are not employed to gain any improper influence in connection with
obtaining or retaining any business.
Article IV: Financial Disclosure

All parties should maintain accounting systems in accordance with best international accounting

28
practices under which all financial transactions should be properly and fairly recorded in
appropriate books of accounts which should be available for inspection by boards of directors,
auditors and other authorized persons. In this context there should be no off the book or secret
accounts or any documents issued which do not properly and fairly record the transactions to which
they relate.
Article V: Political Contributions

Contributions to political parties or committees or to individual politicians (or to other persons or
entities at their direction), should only be made or solicited in accordance with applicable national
laws, and all requirements for public disclosure of such contributions should be complied with fully
and promptly. Even when permitted, they should not be made in circumstances, where given their
magnitude or timing, they could reasonably be constituted as exercising influence aimed at
securing a special advantage with respect to an international business transaction.
Article VI: Definition

These standards should be construed widely and in accordance with their spirit. In particular, the
expressions of all parties include national government, national and international agencies
involved in international lending and aid-granting activities; corporations and other enterprises
involved in international business transactions of all kinds, agents, marketing consultants and other
consultants, individuals or firms providing service, or goods in connection with international
business transaction.
8.22. SOME IMPORTANT COMMENTS.

We should do more to monitor, resist and reject corruption.
Nigerian businesses need to increase their transparency skills
Professional institutes should do more to regulate the ethical performance of their members.
Givers and takers of bribes and other illegal inducements are equally guilty. The government
says 'don't give, don't receive '.
Unless corruption is stoutly tackled, Nigeria might become a failed state or an economic
pariah nation.

i. Why are we using TI standards in this lecture and in Nigeria?
ii. Besides the ones mentioned in the lecture, what other transparency issues are relevant in
Nigeria?
iii. Rate the transparency level of any organisation of your choice on the basis of the issues
listed in the lecture.
iv. Which of the transparency issues raised in this lecture do you find most difficult to accept?
Why?
v. Do you think our accounting and auditing practices meet TI standards? Give reasons for

i Is the bank manager who allowed his wife to bid for a contract in his bank
guilty of any ethical malfeasance?
ii Why is advance-fee fraud an offence in Nigeria and abroad?
iii. Advise business consultants on how to remain ethical and transparent
iv Mention 10 salient issues in transparency in Nigeria.

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LECTURE 9
CORRUPTION, INTEGRITY OF MANAGERS INCLUDING
THE ICPC ACT

i. Define the concept of corruption
ii. Discuss the elements of corrupt practices
iii. Explain some punitive measures for corruption
iv. State the meaning of Integrity
v. Discuss the need for managers to possess integrity
vi. Discuss Business Integrity with respect to the Nigerian society
vii. Identify various offences and penalties as stated in the ICPC Act 1999
viii. State the causes of corruption in Nigeria
ix. Identify the negative effects of corruption
9.20 What is Corruption?

Gray and Kaufman define corruption as the abuse of public office for private gain. Thus it
refers to the use of position of power to seek personal advantage either by performing an act
or omission of the expected performance or duty.
Corruption could also be seen as various offences by public officials or corporate executives,
such as receiving gifts from suppliers or any other form of gratification before or after
carrying out assigned task and responsibility, sale of office equipment or granting of
contracts to favoured firms and individuals and granting of land or franchise in return for
monetary reward.
Corruption also entails diversion of funds and resources to other personal uses outside the
original purpose for which such funds are allocated.
9.21 SOME FACTS ON CORRUPTION

Corrupt uneconomic practices are referred to as the underground economy and in 1982,
accounted for about 14% of the global Gross Domestic Product.
A Global Financial Integrity (GFI) report revealed that Africa lost $854bn. ( N128.27trn) to
illicit financial outflows during the last 38 years.
The report further showed that illicit capital outflows, including proceeds from bribery, theft,
human trafficking, drugs and tax evasion grew at an average of 11.9 percent between 1970
and 2008.
It also showed that illicit financial outflows from the entire region outpaced official
development assistance going into the region at a ratio of at least 2:1. The hundreds of
billions lost through the process, according to G.F.I., could have been used for poverty
alleviation and economic development.
More recently, corrupt practices bordering on crime have been uncovered in large
corporations like Enron, World Com. and Halliburton.

30
In the former Soviet Union, corruption was referred to as 'na levo, meaning 'on the left'
(OLE) economy.
Transparency International, a Berlin Based International non-governmental organization

(NGO), has been measuring corruption as seen by business people, risk analysts and the
general public. The Transparency International Corruption Index (TICI) ranges from one to
ten, with ten reflecting highly corrupt'.
In 2003, Nigeria was rated the second most corrupt country after Bangladesh, while Finland
was the most incorrupt country followed by Singapore, Britain, Hong-Kong, Germany and
United States.
Between 1998 and 2001, TICI, focusing on African countries showed that corruption
tended to be less in Botswana, Namibia and South Africa while it was consistently high in
Nigeria, Uganda, Kenya and Cameroon (Umo J.U. 2007).
9.22 Net Gains from Corruption

Umo (2007) defined net gains from corruption as the difference between the benefits and
direct cost of corruption. If the net gain is positive, corruption will take place. The higher the
net gain, the higher the degree of corruption in any given society. It should be noted that net
gains from corruption may be monetary, non-monetary or psychological. Thus some of the
gains can be quantified but a good number of them cannot.
Nigeria
Uganda
Kenya
Cameroon
Tanzania
Cote dIvoire
Zimbabwe
Senegal
Ghana
Egypt
Mauritius
South Africa
Namibia
Botswana
0
1 2 3 4 5 6 7
Figure 9.1: Net Gains from Corruption

Source: Transparency International, cited by OECD, African Economic
Outlook 2001/2002 Abidjan in Umo 2007. p. 259.

31
9.23 Causes of Corruption
1. Inequitable distribution of income
2. Low level of individual income
3. Poor level of education
4. Misguided social values
5 Greed
6 Weak law enforcement
7 Ignorance of the effects of corruption.
9.24 Negative Effects of Corruption

Aina (2007) listed eight ways in which corruption is harmful to societies. They are as follows:
Corruption causes lowering of the quality of the goods and services available to the public
Corruption tends to discourage honest efforts; the rush for easy money makes fools of those
who do honest work,
Corruption tends to discourage economic initiative. The tangle of red tape strangles would-
be entrepreneurs and the economy suffers
The more corruption becomes common, the more people tend to mistrust the motive of
others and resistance to authority becomes inevitable
As corruption becomes prevalent, those in positions of responsibility lose the ability to
implement policies
A generalized climate of corruption encourages officials to misdirect scarce resources
Corruption tends to discourage investment
Sm
P
Price Sc
Pm M1
P0 M0
Pe M2 e
Dm
Q
Qc Qe (Stockfish)
Fig. 10.2: Economic incentives for corruption: case of allocation

of import licences for stockfish
Source: J.U. Umo (2007): Economics an Africa Perspective. Pg. 262
9.25 Demand for Corruption

Demand for corruption is a direct function of net gains. As net gains from corruption increase, more
of it will be demanded by individuals in a given society, all things being equal.

32
Dc
Quantity
of
Corruption
O Net gains (benefits cost)
Figure 10.2: Demand for Corruption and net gains

Source: J.U. Umo (2007): Economics an Africa Perspective. Pg. 261
9.26 Punitive Measures for Corruption

Since corruption is often a criminal act, it is punishable directly by law. Corruption could also
attract indirect punishment such as heavenly disapproval, social disapproval and disgrace.
A rational corrupt official will, therefore, assess the potential punishment, if and when
apprehended, on the following bases
i. The severity
ii. The probability
Thus, the higher the severity and probability of punishment, the lower the incentive to be corrupt.
For example, financial corruption including tax illegal deals is punishable by death in China. This
does not absolutely eliminate this type of corruption but the probability of its occurrence has
reduced drastically. The implication of the above hypothesis is that corrupt officials are often
tempted to carry out other illegal acts as a means to cover up and eliminate the probability of
punishment or at least minimize its severity. Such illegal acts include attempts to bribe law
enforcement agents.
A weak law enforcement agency in a state promotes corruption because the severity and
probability of punishment are low. There is serious need to fight against unethical business practices
in Nigeria- the giant of Africa.
9.27 Integrity of Managers

A What is integrity?
The will and willingness to do what one knows/ought to do (Solomon 1993)
The will and willingness to stand openly against what one believes to be wrong.
Observing the ethics of an organisation or profession.
According to Solomon
When one willingly joins an organization, agrees to act on its behalf and in its
interests, and agrees with its aims and values, obedience and loyalty are part and
parcel of integrity.

33
But when one comes to disagree with those aims and values, integrity requires
disobedience and disloyalty, at least in the form of resignation
B Effects of Poor Integrity

Poor international/corporate image and relations.
An unhealthy economy
Increased unemployment and social vices
Brain drain to developed economies
Misapplied and misappropriated funds
Poor industrial utilisation
Lack of confidence of the citizens/ employees/in leaders and managers.
C. The Way Out

Everyone should be involved in the battle against corruption
The productive sector of the economy should be strengthened
Upholding new standards of truth, civility and accountability
Monitoring and reporting on integrity in business and public entities.
Researching and consulting on integrity-enhancement procedures
Conducting the integrity rating of entities and rewarding integrity heroes.
Training entities on integrity-enhancement via workshops, seminars and other
enlightenment media
Ensuring that a comprehensive Code of Ethics for business and public entities is researched,
developed and adopted a standard.
D. Virtues in Business Integrity.

Managers should display the following virtues to all stake holders:
Fairness. Honesty, Trust, Toughness in competition. Loyalty to stake holders. Care and
compassion, Openness and transparency, justice.
9.28 A SUMMARY OF THE ICPC ACT 1999

A Offences and penalties
1 (1) Any public officer who:
a. Corruptly asks for, receives or obtains any property or benefit of any
kind for himself or for any other person: or
b. Corruptly agrees or attempts to receive or obtain any property or benefit of any kind for
himself or for any other person, on account of;
i. any job already done or omitted to be done, or for any favour or disfavour already
shown to any person by himself in the discharge of his official duties, in relation to
any matter connected with the functions, affairs or business of a government
department, public body or other organization or institution in which he is serving as
a public officer, or
ii. anything to be afterwards done or omitted to be done, or any favour or disfavour
to be afterwards shown to any person, by himself in the discharge of his duties or in
relation to any such matter aforesaid, is guilty of the felony of official
corruption and is liable to imprisonment for seven years.
2. If in any proceedings for an offence under this section, it is proved that any property or
benefit of any kind, or any promised thereof, was received by a public officer, or by some

34
other person at the instance of a public officer from a person
a. holding or seeking to obtain a contract, licence, permit, employment or anything
whatsoever from a government department, public body or other organisation or
institution in which that public officer is serving as such;
b. concerned; or likely to be concerned, in any proceeding or business transacted
before or by that public officer or a government department, public body or other
organisation or institution in which that public officer is serving as such.
c. Acting on behalf or related to such a person,

the property, benefit or promise shall, unless the contrary is proved, be
presumed to have been received corruptly on account of such a past or
future act, omission, favour or disfavour as is mentioned in subsection (1)
(a) or (b).
3. In any proceedings for an offence to which subsection (1) (b) is relevant, it shall not be a
defence to show that the accused;
a. Did not subsequently do, make the act, omission; favour or disfavour in question; or
b. never intended to do, make or show the act, omission, favour or disfavour
4. Without prejudice to section (3), where a Police Officer or other public officers whose official
duties include the prosecution, detection or punishment of offenders is charged with an
offence under this section arising from
a. the arrest, detention or prosecution of any person for an alleged offence; or
b. an omission to arrest, detain or prosecute a person for an alleged offence or
c. the investigation of an alleged offence.
It shall not be necessary to prove that the accused believed that the offence mention in
paragraph (a), (b) or (c), or any other offences had been committed.
5 (1) Any person who

a. corruptly gives, confesses to or procures any property or benefit of any kind to, on or for a
public officer or to, on or for any other person, or
b. corruptly promises or offers to give, confer, procure or attempt to procure any property or
benefit of any kind to, on or for a public officer or any other person, on account of any such
act, omission, favour or disfavour to be done shall on
6. Any person who

a. Corruptly asks for, receives or obtains any property or benefit of any kind for himself or for
any other person; or corruptly agrees or attempts to receive or obtain any property or benefit
of any kind for himself or for any other person, on account of;
i. anything already done or omitted to be done, or for any favour or disfavour already shown
to any person by a Public Officer in the discharge of his official duties or in relation to any
matter connected with the functions, affairs or business of a government department, public
body or other organization or institution in which the public officer is serving as such; or
ii. anything to be afterwards done or omitted, or any favour or disfavour to be afterwards
shown to any such person; and person by a public officer in the discharge or his official
duties or in relation to any such matter aforesaid, is guilty of the felony of official
corruption and shall on conviction be liable to imprisonment for (7) seven years.

35
7. Any person who being employed in the public service, knowingly acquires or holds, directly
or indirectly, otherwise than as a member of a registered joint stock company consisting of
more than twenty (20) persons, a private interest in any contract, agreement or investment
emanating from or connected with the department or office in which he is employed or
which is made on account of the public service, is guilty of a felony, and shall on
conviction be liable to imprisonment for three years.
8. Any person who receives anything which has been obtained by means of any felony or
misdemeanour, or by means of any act done at a place outside Nigeria, which if it had been
done in Nigeria would have constituted a felony or misdemeanour, and which is an offence
under the laws in force in the place where it was done, knowing the same to have been so
obtained, is guilty of felony.
9. If the offence by means of which the thing was obtained is a felony, the offender shall on
conviction be liable to imprisonment for three (3) years, except the thing so obtained was
a postal matter, or any chattel, money or valuable security contained therein, in which case
the offender shall on conviction be liable to imprisonment for seven (7) years.
10. Any person who, with intent to defraud or conceal a crime or frustrate the commission in its
investigation of any suspected crime of corruption under this Act or under any other law;
a. destroys, alters. mutilates, or falsifies any book document,
valuable security, account, computer system, diskette, computer printout or other
electronic device, or is privy to any such act; or
b. Omits, or is privy to omitting, any material particular from any such book,
document, account or electronic record; is guilty of felony, and shall on
conviction be liable to seven (7) years imprisonment.
11. Any person who, being an officer charged with the receipt, custody or use of money or
property received by him or entrusted to his care, or of any balance of money or property in
his possession or under his control, misapplies, misuses or steals it, is guilty of an offence, and
shall on conviction be liable to two (2) years imprisonment.
12. Any person who:

a. as agent corruptly accepts, obtains or agrees to accept or obtain or attempts to obtain from
any person for himself or for any other person, any gift or consideration as an inducement or
reward for doing, forbearing to do or for having done or forborne to do, any act or thing;
b. Corruptly gives or agrees to give or offers any gift or consideration to any agent as an
inducement or reward for doing or forbearing to do, or for having done, or forborne to do,
any act or thing in relation to his principal's affairs or business;
c. Knowingly gives to any agent, or being an agent knowingly uses with
intent to deceive his principal, any receipt, account or other document in respect of which
the principal is interested and which contains any statement which is false or erroneous or
defective in any material particular, and which, to his knowledge, is intended to
mislead his principal or any other person, is guilty of a misdemeanour and shall
on conviction be liable to two (2) years imprisonment or to a fine of ten
thousand naira or to both such imprisonment and fine.
For the purposes of this section, the expression "consideration" includes valuable consideration of
any kind; the expression -"principal" includes an employer.

36
13. Any person who offers to any public officer. or being a public officer solicits, counsels or
accepts any gratification as an inducement or a reward for:
a. Voting or abstaining from voting at any meeting of the public body in favour of or
against any measure, resolution or question submitted to the public body;
b. Performing or abstaining from performing or aiding in procuring, expediting,
delaying, hindering or preventing the performance of any official act;
c. Aiding in procuring or preventing the passage of any vote or granting of any
contract, award, recognition or advantage in favour of any person; or
d. Showing or forbearing to show any favour or disfavour in his capacity as such officer
shall, notwithstanding that the officer did not have the power, right or opportunity so
to do, or that the inducement or reward was not in relation to the affairs of the public
body, shall be guilty of an offence and shall on conviction be liable to three
(3) years imprisonment with hard labour.
14 (i) Any person who makes or causes any other person to make to an officer of the
commission or to any other Public Officer, in the course of the exercise by such Public
officer of the duties of his office, any statement which to the knowledge of the person
making the statement, or causing the statement to be made.
a. is false, or intended to mislead or is untrue in any material particularly; or
b. is not consistent with any other statement previously made by
such person to any other person having authority or power under any law to receive,
or require to be made such other statement is not under any legal or other obligation
to tell the truth, shall be guilty of an offence and shall on conviction be liable
to fine not exceeding one hundred thousand naira or to imprisonment for
a term not exceeding two (2) years or to both such fine and imprisonment.
ii. When any person who has made a statement to an officer of the Commission or to the
Attorney-General exercising any power conferred by this Act, subsequently thereto makes
any other statement to any person having authority or power under any law to receive or
require to be made such other statement, regardless of whether or not the person making
the statement under a legal or other obligation to tell the truth: he shall if such other
statement is inconsistent with any statement previously made to an officer of the
commission or such other public officer, he is guilty of an offence and shall on conviction be
liable to a fine not exceeding ten thousand naira or to imprisonment for a term not
exceeding two years or both
iii. For the avoidance of any doubt, it is declared that for the purpose of
subsection (i) and (ii), any statement made in the course of any legal proceedings before any
court, whether civil or criminal, or any statement made by any person in the course of any
disciplinary proceedings, whether such legal proceedings or disciplinary proceedings are
against the person making the statement or against any other person having authority or
power under the law to receive the statement so made.
15. (1) Any person who
a. attempts to commit any offence under this act;
b. does any act preparatory to or in furtherance of the commission of any offence under this
act or
c. abets or is engaged in a criminal conspiracy to commit an offence under this Act
d. commits any offence under this Act shall be guilty of an offence and shall, on conviction, be
liable to the punishment provided for such offence.

37
2. Prosecution for an offence under this Act shall be initiated by the Federal
Attorney-General or any person or authority to whom he shall delegate his authority, in any
superior court of record so designated by the Chief Judge of a state or the Chief Judge of the
Federal Capital Territory, Abuja under section 60(3) of this Act. Every prosecution for an
offence under this Act or any, other law prohibiting bribery, corruption, fraud or any of their
related offence shall be deemed to be initiated by the Attorney-General-of the Federation.
3. A prosecution for an offence shall be concluded and judgement delivered within ninety
(90) working days of its commencement save that the jurisdiction of the court to continue to
hear and determine the case shall not be affected where good grounds exist for the delay.

1. Get and study a copy of the ICPC Act. Did it put you off corruption? Give reasons for
your answer.
1. If you have the opportunity to be on a panel reviewing the ICPC Act, what
amendments will you suggest? Why?
2. Under the ICPC ACT,
Can a private legal practitioner initiate a case against a corrupt public officer?
Is a person who saw but didn't partake in a corrupt act liable to prosecution?
If a person refuses a gift of a house in Abuja to favour a contractor, must he report
the 'offerer' to the police?
Is planning a corrupt act without actually carrying it out, wrong?
What is wrong with perjury and false 'witnessing' ?
3. Attempt to calculate the financial and non financial effect of corruption in any
organisation you are familiar with.
i. What is corruption?
ii. List four elements of corrupt practices in Nigeria
iii. What is integrity? How can you tell if your boss has integrity?
iv. Why should we strive to be people of integrity?
v. State and explain five causes of corruption in universities.
vi. How is Nigeria suffering from the corruption of some public officials?
vii. What creative strategies can eliminate corruption in the country?

38
APPENDIX
A. General Questions.
1. What are values?
2. How can an organization communicate values and standards?
3. What are ethics?
4. What do you understand by the concept business ethics?
5. Why do we need to adopt business ethics in management?
6. List and explain two tools of ethics
7. Why do organizations need to uphold Corporate Social Responsibility?
8. What is Corporate Social Responsibility?
9. As a manager, how do you handle difficult decisions when none of the possible ways
forward seems morally ideal?
B. Marking Guide.
1. Values could be defined as primary points of reference which guide the conduct of
management and employees of a particular firm, profession or organization. Values could
also be defined as principles, ways of life and beliefs which a group of people abide by in
order to achieve an objective or a set of objectives.
2. How can an organization communicate values and standards?

An organization can communicate values and standards by writing out their values in clear
terms and aligning them with the objectives of the organization. Values can also be
communicate by ensuring that all staff understand the values they espouse and are capable
of handling significant challenges which they may encounter in pursuing these values.
Other means of communicating values and standards include good examples by
management, the company handbook or policy guidelines, seminars, performance
appraisal and reward systems, employment policy and all other policies.
3. What are ethics?

Ethics are the moral rules and standards which serve as guidelines for a group of people with
common goals.
4. The concept business ethics could be referred to as applied ethics which examine moral
problems that arise in the business environment. It could also be referred to as the
application of ethics to the conduct of individuals in business and business organizations
5. Why do we need to adopt business ethics in management?

To show stakeholder the necessary ethical boundaries that will ensure that
businesses are carried out with utmost decency
To establish good image and reputation.
To build good interpersonal relationships as they would know when to draw the line
in relationships.
To be able to deal with grey areas that may come up in the business.
To help entrepreneurs and employees know how to conduct themselves in ethical
standards.

39
6. Some tools of ethics are
(i) Values (ii) Rights (iii) Loyalty (iv) Fairness
i. Values are principles or standards of acceptable behaviour among all the stakeholders in
business irrespective of ethnic, cultural and religious differences
ii. Rights: The authority or claim that people have towards the responsibility and
accountability of the business organization to them
iii. Loyalty: This could be defined as the steadfastness or allegiance to the management of
business enterprises. It is the commitment of the employees with respect to the set objectives
of the business organization.
iv. Fairness: Avoiding preferential treatment by being objective in making decisions affecting
two parties or more. It is considering the interest of all parties concerned and treating
people or cases equally.
7. Why do organizations need to uphold Corporate Social Responsibility?

It is a survival tool
It helps to complement government effort in promoting social welfare
It promotes economic and national development
Builds goodwill for the organization
To fulfil a moral and spiritual duty to fellow human beings
8. Corporate Social Responsibility is the process whereby business and other organisations
integrate the economic, social and environmental imperatives of their activities into the
communities in which they operate.
9. A manager handles difficult decision when none of the possible ways forward seems
morally ideal by structuring his thoughts and judgements so that his eventual decisions are
at the very least explicable, even if not justifiable to everyone.
C. CASE STUDIES
1. ROGBITAN MSHELIA'S DILEMMA
Mrs Rogbitan Mshelia is the Executive Director of an oil servicing company in Nigeria. There has
been such a lull in the company's business activities in the past 10 months that they had to embark
on some form of downsizing by laying off 230 employees. Without a big new contract, the
company stands the risk of winding up. There is this large prospective N50 billion naira contract
from a government agency. It was made clear to her that the contract would be awarded to the
company if she agreed to pay a commission of N2 billion naira to the brother of a former minister
who facilitated the negotiations and another N5 billion to 5 persons whose names will be given to
her when the contract papers are signed. This contract is fat enough to keep the company afloat for
years. Advise Mrs Mshelia on what to do. Give reasons for your advice.
Suggested Solution to Case Study ( ROGBITAN MSHELIA'S Dilemma)

The above is a situation that requires one to analyse a predicament that seemingly defies a
satisfactory solution and choose between two equally balanced and often unpleasant alternatives.
Considering the hardship to be imposed on the redundant workforce as unfortunate as it is, one
should realize that a wrong act carries a greater wrongness than wrong outcomes from a good
act.

40
Here creativity is needed to generate more possible ways forward. Remember it is always good to
take decisions that are defensible even when they are not ideal. However, the following needs to be
considered before taking any decision on the above issue.
What are the causes?
What are the risks and opportunities?
Who will be affected by the decisions?
Is the decision in line with your organization's vital values?
Are you clear in your mind whether you are judging on the basis of rightness of the act or the
desirability of the outcomes?
2. AN UNTITLED CASE.
The Sunday Punch of April 18, 2010 reported an alleged case of forgery and uncompleted
contract by a Chinese National. He was said to have swindled the Federal Government of
Nigeria of billions of Naira in respect of a N3bn road contract awarded to his company in
July 6, 2001 in Niger State. The scope of the contract was reduced and yet the project cost
kept increasing annually and payments were regularly made to the company even though
the contract was not executed.
You are required to:

1. Provide an appropriate title for the above case.
2. As an investigator working for the ICPC, give an outline of the case against the
Chinese.
3. Tools of Ethics:
Mr Mailafia Osawe is the Human Resource Manager of a multinational company. At the
mid-year management meeting, a decision was reached to downsize the number of
employees in some departments due to structural reorganization and a fall in consumer
demand. During one of his dates with Miss Asana Buky a 'corper' in the finance department,
Mr Mailafia told her the management decision and the names of some people on the
retrenchment list.
Questions:
1. Comment on the behaviour of Mr. Mailafia Osawe.
2. How can it affect the organisation?
4. Transparency
Mr. Okoroigwe Tariere is the Chief Executive of an international construction company. His
organization won a contract for 5 NYSC projects. The company sub-contracted some of its
work to others. One of the sub contractors brought 2 hampers, a bag of rice and a live turkey
to Mr. Okoroigwe as a sign of appreciation. According to article II of the Transparency
International code of conduct no party to an international business transaction should give,
request, demand, offer, or make available a gift in a any form, or extend any other advantage
to or for the benefit of any public official or as he or she may direct (and whether directly or
indirectly) as an inducement for action or inaction by the official.
If you were Mr Okoroigwe Tariere, what would you have done? Why?
What will the ICPC Act want him to do?

41
1. CORPORATE SOCIAL RESPONSIBILITY.
Imenu Imena Bank Ltd is located in a high brow area of Abakaliki, Ebonyi State. There are
two roads leading to the bank from the Abakpa and Alaneme ends. Both roads have been
in a dilapidated state for the past five years. During the last rainy season, it was difficult to
access the bank. This caused many of the bank customers to reduce their patronage. Some
opened new accounts with other banks. The points of argument put up by management for
not maintaining the road were that the bank pays both legal and not so- legal taxes and
levies to all tiers of government and that it was not the only business organization located on
that street.
Questions
i.. How justifiable is the argument put up by the management of the bank?
iii. Relate Professor Freidman's argument that the social responsibility of business is to
increase its profits to the above case.

42
REFERENCES
A. TEXTBOOKS.
Bateman, T.S. & Snell, S.A. (2002): Management Competing in the New Era, Boston: McGraw-
Hill.
Godwin O. Effiong (1999). Work Ethics: Issues and Perspectives. Lagos: Longman
Godwin O. Effiong (1997) De Investment Truth. Lagos: Way Publishers.
Murray, O. (1997). Ethics in Organizations London Kogan page.
Rittenberg, L.E. & Schweiger (2005): Auditing: Concepts for A Changing
Environment; Thomson, Ohio
Umo J.U. (2007). Economics: An African Perspective. Lagos: Millennium
Text Publishers Limited
B. JOURNAL
Aina, S. (2007). Fighting the Corruption Menace in the Nigerian Bureaucracy.
ASCON Journal of Management, Administrative Staff College of Nigeria, Topo,
Lagos, Nigeria, Vol. 27, Nos. 1 2, pages 77 87.
C. NEWSPAPER.
The Punch Newspaper, March 31, 2010. Pages 3 and 27.
D. INTERNET.
http://www.the learning initiative.com /nbio/ module./.htm
http:///www.fao.org/POCREL/006/AP3464/ad
org/eng/funding/financialguide/doc7.cfm
http://www.vsi_islc.org/eng/funding/financialguide/doc17.cfm

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NIM

NIGERIAN INSTITUTE OF MANAGEMENT

BUSINESS ETHICS AND

NIM VISION: To be The Source and Symbol of Management Excellence

NIM / NYSC PROGRAMME

For more information, please contact:

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

Reviewed questions are provided at the end of each pack.

We also appreciate the support provided by the Directorate of Capacity Building.

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

Lecture 1 The Concept of Ethics 6

Lecture 2 Tools of Ethics (Values, Rights and Duties) 10

Lecture 3 Moral Rules in Human Relations and Common Morality 13

Lecture 4 Situational Factors in Ethical Behaviours in Business 17

Lecture 5 NIM Code of Conduct 20

Lecture 6 The Concept and Impact of Social Responsibility 22

Lecture 7 Social Audit 25

Lecture 8 Issues in Transparency 28

Lecture 9 Corruption and Integrity of Managers including the ICPC Act.39 30

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

THE CONCEPT OF ETHICS

1.10 Learning Objectives

1.21 The Concept of Ethics

C. Importance of business ethics.

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

1.22. Issues in Business Ethics

c. Personal Grooming and Consciousness: Personal grooming and consciousness

e. One's own family, community and nation:

3. A high sense of probity

c. At all occasions and situations those in charge of management should apply

d. and accountability for:

1.3. TUTORIAL QUESTIONS.

1.4. REVISION QUESTIONS

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

2.1 Learning Objectives

Non malfeasance (Do no harm)

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

C. Values and Objectives

D. Why do we Need Values?

2.25 Loyalty: This implies an allegiance/commitment of employees to a set of

2.26 Fairness: It is the avoidance of discrimination in dealing with people of diverse

2.27 Principled Behaviour: This is the demonstration of a consistent behaviour in similar

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

2.3 Tutorial questions.

2.4 REVISION QUESTIONS

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

MORAL RULES IN HUMAN RELATIONS AND COMMON MORALITY

3.1 Learning Objectives

3.21 What are human relations?

3.22 Philosophy of Human Relations

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

3.23 Human Relations Effectiveness

3.24 Steps in Re-Establishing Long-Term Relationships between Organization and

3.25 Common Morality

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE

3.26 Some examples of ethical rules.

3.27 A commentary on lying and ethics.

3.28 Principles of business ethics.

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY PAGE