Unit 2.

Ethical Issues and Dilemmas

Course Instructor: Niraj Karki (MBA, MPhil Scholar)

Unit 2 – Ethical Issues and Dilemmas

• The Problems of JUST Wage, Sexual Harassment, Gift-giving and Bribery,

The Morality of Advertising, Office Romance, The Problem of Fair Pricing,
Trade Secrets and Corporate Disclosure, Product Misinterpretation and
Caveat Emptor, The Morality of Labour Strikes, Whistle-blowing, Unfair
Competition, Money Laundering, Conflict of Interest, Inside Trading, Privacy
Issues, Discrimination and Corporate Intelligence. (18 Issues)

LH – 7

2
A problem, situation or opportunity that requires individuals or
group to choose among several courses of actions that must be
evaluated as right or wrong.
 Ethical
issue refers to a questionable or a debatable situation in
business where a moral conflict arises and it needs to be
addressed.
 These moral conflicts can be sometimes legally dangerous as
some of the alternative solutions considered might cause a
breach of law. When they are not illegal, they might still
generate negative reactions from third parties.
 Most large organisations, and also governments, maintain
an ethics committee to deal with such problems.
3
 In addition, many professional bodies, industry associations, government
departments etc. have well formulated code of ethics approved by the
key participants.

 The code of ethics provides a framework or a guideline to deal with

issues such as political campaign donation, how to claim for expenses
for staff, policy on gifts etc.

 Common workplace issues: discrimination & harassment, privacy &

transparency, questionable use of company technology and resources,
conflicting goals, unethical leadership etc.
 In accounting, the practice of ‘cooking the books’.
 In media, infringement on ‘freedom of speech’, ‘freedom of expression’, security of
journalists etc.

4
Gather relevant facts and identify issue

Identify affected parties

Consider the ethical issue involved

Identify which fundamental principles affected

Refer to organisation’s internal procedure

Consider and evaluate alternative course of action

Implement the most suitable and monitor progress

5
 It is a problem in the decision-making process between two or more possible
options, generally neither of which is absolutely acceptable from an ethical
perspective.

 A dilemma is a conflict, problem or situation with two possible solutions.

 When a dilemma occurs, a person has to make the difficult choice between
two desirable options or contrastingly, two undesirable options.

 Necessary conditions for ethical dilemma:

 existence of choice
 need for decision
 any decision made compromises some ethical principles
6
 To perceive an ethical “dilemma” when the issue is clear-cut and there is no
conflict between principles is neither correct nor efficient in practice.

 A dilemma is often used in storytelling (i.e. literature, cinema etc.) to create

conflict which may cause a character to choose one way or the other.

Examples of dilemma:
 Your mother gives you two choices: doing the dishes or cleaning the bathroom. Neither
option sounds like much fun.

 The Prisoner’s Dilemma is a classic conflict and is often depicted in crime stories. It
involves two parties each faced with punishment that will be different based on how the
opposite party behaves.
7
 The situation must be carefully analyzed. In some cases, the
Negate the existence of the dilemma can be logically refuted. E.g. medical
dilemma care Vs. religious beliefs, political belief Vs. professional career
prospects etc.

Value Theory Choose the alternative that offers the greater good
approach and the lesser evil.

Find In some cases, the problem can be reconsidered,

alternative and the new alternative solutions may arise.
solution(s)
8
Ethical issues require a choice among several actions that must be evaluated as right
or wrong, ethical or unethical. (choosing between right and wrong)
E.g. stealing for personal gain, lying to promote oneself etc.
Ethical issues are generally possible to resolve by simply adhering to a clear-cut
guideline in the Code of Ethics.

An ethical dilemma (ethical paradox or moral dilemma) is a problem in the decision-

making process between two possible options, neither of which is absolutely
acceptable from an ethical perspective. (choosing between right and right)
E.g. stealing to feed your hungry family, killing in self defense etc.
Ethical dilemmas are extremely complicated challenges that cannot be easily solved.
Therefore, the ability to find the optimal solution in such situations is critical to
everyone.
9
10
 Just, as in fair, wage reasonable wage for labour provided.

 A just wage refers to an income level determined by market dynamics, work

experience, education and skill.

 It is the wage level that is high enough to attract workers but low enough
to enable employers to offer employment.

 Most modern states and governments have devised various laws pertaining
to labour and wage that are aimed at creating and maintaining sensible pay
to job markets relationship. Also, to negate exploitation and malpractice.

 For instance, setting of minimum wage is one of the ways to address the
income inequality in society. Just wage tend to be higher than minimum
wage.

11
 Labour unrest in Europe and Karl Marx and the founding of International
Workingmen’s Association (IWA) in 1864. International Labour Organisation (ILO)
was founded in 1919, a UN agency mandated to advance social and
economic justice through international labour standards.
 Just wage is linked with the industrial revolution and the different phases of
industrialisation.
 Middle of 20th century witnessed the issue of equal pay for equal work among
genders in the workplace.
 Globalisation and rise of MNCs have exacerbated or worsened this situation.
In general, manual or factory jobs from developed nations get outsourced
to third world economies simply due to abundance of cheap labour.
However, many MNCs have been criticized of exploiting “cheap labour’ for
economic gains.

12
 Socialist or communist Vs capitalist – (In the 21st century, it’s largely
Conservatives Vs Progressives in the West.)
 Laissez-faire theory – the idea that free market through supply and
demand will resolve the issue of just wage. However, minimum
wage is also a significant variable in that equation.
 Relative bargaining power of the parties – unions, political affiliation.
 A living wage, a concept of wage, in theory, that allows
individuals/families to afford adequate food, shelter and other
necessities (healthcare…). (3rd world Vs. developed nations)
Overall, things have been getting better since the early days. Various compensation plans
to support the idea of just wage. E.g. Bonus, paid holiday, stock options, overtime pay etc.

13
14
 Romance among co-workers is a common workplace phenomenon across
the globe. The conditions allow attraction to flourish between co-
workers leading into relationships.

 Today’s societal factors and hectic lifestyle may have contributed to

workplaces replacing some of the traditional places for meeting
people as in the past.

 Also, it’s more comfortable establishing relationships with people

you know and spend considerable amount of time with. (proximity)

15
 • Office romance going well can be positive in
terms of motivation, time spend at work,
Positive
improved coordination, teamwork and
productivity.
• On the contrary, it can also lead to emotional
pain for parties involved, increased gossip,
Negative complaints, hostility, low morale, low
productivity, favoritism etc. and even charges
of sexual harassment.
16
 Relationship
Long-term Extra-marital between Relationship
Flings
relationships affairs managers and between peers
subordinates
Hierarchical
When
relationship It can be
discovered, they
often leads to between partners
dissolution of e.g. entry-level
Power imbalance
marriages, coworkers,
adverse
Short lived
Can lead to relationships with Perception of
romantic
marriage children, favouritism
entanglements
compromised
living those who are on
arrangements Exploitation
the same
and general state grade/pay/status
of mind of the etc.
involved party Manipulation

17
No action

Punitive action

• (e.g. warning, transfer to a different

department/division/office, termination)

Positive action

• (e.g. open discussion, guidance, advice)

18
Lead with example by practicing ethical behaviour. Use good judgment and
practice self-discipline.

Establish basic parameter of behaviour through written policy guidelines.

Outline negative consequences.

Provide training to managers/supervisors/staff members on sexual harassment

in all its forms.

Act promptly in situations where a workplace relationship, either in full bloom

or on the rocks, is having a detrimental effect on performance and productivity.
19
20
 Unwelcome human behaviour of a sexual nature.

 Unwanted conduct of sexual nature or other conduct based on sex

affecting the dignity of women and men at work.
European Commission Code of Practice

A sex-based behaviour that is unwelcome and offensive to its recipient.

International Labour Organisation

 Organisationsare very particular and specific to define and

include sexual harassment in their code of ethics.
21
 Physical
harassment
Verbal
harassment
Gestural
harassment
Written or graphic
harassment
Psychological/emotional
harassment
22
 Hostile work environment
Sharing of inappropriate contents, use of certain language, ragging and initiation
rituals etc.

 Quid Pro Quo

Culture of sexual favours for promotion, practice of casting cough etc.

23
 Thereis a difference between sexual harassment and flirting
which is based on mutual consent.

 For example
Complimenting is not sexual harassment. Neither is flirtatious interactions.
It entirely depends on individuals.

 Unfortunately,
sometimes an unfair accusation of sexual
harassment can cause great deal of harm to the accused.
Judgment on the court of public opinion.

24
25
 Giving gift is universal practiced as a show of appreciation or expression of
gratitude without expecting anything in return. Gifts are legal.
 Bribe is similar, however with a hope of getting something in return as in
benefits, influence or other favours. Bribe is universally considered
unacceptable and illegal.

• For instance, between greeting a neighbour with a cake (gift) to giving a

police warden money to let you off without a parking ticket (bribe), lies a
huge area of ambiguity where it is difficult to draw a line between a gift
and a bribe.
 Although, it is generally acceptable to send complementary promotional items
or gifts for festivals and other occasions. However, not expensive items such
as all inclusive foreign holidays to potential clients or trading partners.

26
 On institutional level, governments have been found demanding
for incentives (or bribe) in exchange of favourable rights and
contracts and business entities are pleased to oblige.

 However, this practice are also found to be prevalent in private

sector as well as among professionals and individuals. Perhaps the
existing environment encourages people to act this way.

27
 Policies and practices on handling gifts and invitations to special events
vary from company to company. E.g.

• Don’t accept it all

• Accept it but donate it to non-profit
• Declare gifts received and record them.

 Political parties during election campaigns put a limit on how much donation
they can receive and also publically declare them for transparency purposes.

 Match fixing scandals at sporting events.

Therefore, if one wishes to give a gift in B2B situation, it is better to find out what the
policies of his/her targeted company(s) is on gifts.
28
29
 Advertising is necessary to inform, to promote, to attract and to
convince.

 Basically, it is a communication between a buyer and a seller.

Advertising constitute a huge part of any promotional campaign.

 However, the focus here is of false and misleading advertisements,

adverts for children, use of potentially harmful / unfair tactics,
psychological and subliminal messaging etc.

30
 Pharmaceutical Advertising: Just including the positives and never talking about
side-effects.

 Children: How children are used in the adverts? What is being advertised?

 Alcohol: Not shown anyone using the product, advertised subtly, after children’s bed-
time etc.

 Cigarette and tobacco: Not allowed to advertise at all, strict regulations for pack
designs and procedure of sales.

31
 Sometimes advertisements can be unethical but not illegal. Advertisers are
under immense pressure to grab attention and be effective in a very crowded
marketplace.

 The main area of interest for advertisers is to increase their sales, gain more
and more customers, and increase the demand for the product by presenting
a well decorated, puffed and colorful advert.

 Generally, big companies never blatantly lie as they are being watched by
regulating bodies as well as independent watchdogs. However, the
advertisers perform a balancing act of telling the truth but not completely.

 Sometimes, it’s better not to reveal the whole truth in the advert but at times
truth has to be shown for betterment.

32
Puffery

• Consists of hyperbole, sensationalism. Words such as

best, fastest, greatest etc. Not illegal if not proven
otherwise.

Implied falsity

• Message is ambiguous with a tendency to mislead,

confuse or deceive. Message that is literally true, but
imply another message that is false.
• E.g. Gillette shave, twice better than competitors’ or
detergents etc.

Literal falsity

• Message imparted factually untrue and is deceiving the

customers.
33
 Promoting negative behaviour to youth and children and
glamourising them.

 Portrayal of negative stereotype of ethic minorities.

 Subliminal messaging i.e. targeting the subconscious mind.

34
35
 Fairprice generally denotes a selling price that fair to both
parties considering quality, performance, supply situation, delivery
time, payment option and after sales service.

 However, the market price and fair value of product/services are

debatable issues.

36
 Many factors influences in fixing prices.
 Pricing objective
 Market share leadership (high), survival in competitive market (low) or quality
leadership (high)
 Product cost
 Elasticity of demand
 Government rules and regulations

 Price is also about perception of value in products. There can be a

huge cultural influence.

 Example: branded products charge astronomical amount for the

status symbol they can bring to someone’s lifestyle.
37
 Price gouging
Raising prices to unreasonable levels due to shortage or sudden rise in
demand.

 Price-fixing
Colluding with competitors in terms of price, offers, discount offers etc.
This practice is illegal if proven.

 Predatory pricing
Price war to kill off competitors to seek monopoly.

38
 A pricing strategy that charges different customers different prices for the
same product/services.

 1st degree
Maximum price customers are willing to pay

 2nd degree
Different prices for quantity consumed. E.g. discounts for bulk
purchase.

 3rd degree
Different prices for different market segments i.e. age, income ground,
time of use etc.
39
 row seats at a theatre are charged different prices.
 Different
Opening night may cost more if in high demand.

 Offtime Vs. peak time usage of facilities at a gym, matinee price

Vs. full price at cinemas etc.

• Flight tickets for peak seasons tend to be much higher. If booked early,
might make some saving.

• Hotel rooms during holiday season Vs. off season.

 Discounted travel prices for students and old age retirees.

40
41
 A trade secrets are intellectual property rights on confidential
information (any practice or process) that is generally not known
outside the company.

 It is a confidential and commercially valuable information that helps

to generate enormous benefit to a company with a competitive
advantages. It includes:

• Technical information (ingredients or recipes, chemical composition, source

code etc.)

• Business plan, method of calculating costs and pricing, internal marketing

data, distribution methods, list of suppliers and clients etc.
42
 Basically, any information used to conduct business that is unique to a company
but not used by others. For instance, Coke formula, KFC herbs, search algorithm of
Google etc.

 A company must make a reasonable effort in concealing the information from

the public.

 Unlike “patent”, “trade secret” is an intellectual property that is not shared with
anyone or any government agency. No application(s) to file to obtain trade
secret.

 Best practice is for companies to write down policies regarding “trade secrets”
and to brief staff members periodically.

43
 Internal security measure recommended to follow:

• Store in secured location

• Put password encryption or keep locked away

• Being diligent at logging visitors in and out without fail

• Only selected few who have signed NDA allowed to handle such confidential
information etc.

44
Owners of trade secret cannot stop others from using the same technical or commercial information. If
they acquired or developed such information by themselves through their own R&D, reverse engineering
or marketing analysis etc.

Whether trade secret protection is violated or not will be determined depending on the circumstances of
each individual case.

The legal protection of trade secrets is part of the general concept of protection against unfair
competition or it is based on specific provisions or law on the protection of confidential information.
For instance, industrial or commercial espionage, breach of contract and breach of confidence.

USA has Economic Espionage Act 1996 and Uniform Trade Secret Act 1979 for protection against
sharing Trade Secrets with foreign countries.

45
46
 Corporate Disclosure is relevant information public companies, mutual funds and
corporate insiders must disclose to the investing public.

 Relevant information about a business refers to any and every piece of

information which including facts, figures, data, procedures, innovations, future
prospects and so on, that can potentially influence an investor’s decision.

• For instance, company P&L accounts, balance sheets, annual reports, prospectuses, social and
environmental policies and performances…

 It is a strategic act to release only relevant information which may influence

investment decisions.

 Ways of dissemination – press conference, information on website, industry magazines etc.

47
 Industries obligated to corporate disclosure:
• Financial Services Sector
• Legal Sector
• Corporate Sector
• Accounting Sector
• Investment Sector
• Government or Public Sector

 Beneficial for industry benchmarking, investor relations (mergers,

acquisitions etc.), client services (reports, contracts, agreements), legal
precedents etc.
48
49
 Mandatory
Stipulated by regulations, especially for public ltd companies, mainly financial
statements and audit report.

 Voluntary
Additional information that support mandatory, about the company, their strategy,
R&D, CSR, their industry analysis, risk factor, share prices etc.

50
 Value of disclosure largely depends on transparency, however disclosure is
the necessary condition for transparency and often a source of ethical
dilemma.

 Information asymmetry
“How much to disclose” is a constant ethical issue for businesses. Bigger the gap in
information, more skeptical investors and customers are of the business.

 How to boost up transparency?

Mandatory disclosure, monitoring of their social activities, independent watchdogs,
regulations for certain sectors etc.

51
52
 Product misinterpretation is a condition for misunderstanding about the
product or interpreting the message incorrectly.

 CaveatEmptor is a Latin term (meaning – let the buyer beware) which

implies that when buyers buy goods, it is up to them to examine
what they are buying and ensure that the goods bought is of the
required quality or standard and has a correct price.

 Uponbuying the product the buyer assumes the risk that the product
may fail to meet expectations or is defective.

53
 The assumption is that buyers will inspect and otherwise ensure that
they are confident with the integrity of the product (or land, to which it
often refers) before completing a transaction.

 However,the seller is not allowed to be blatantly fraudulent about the

product being sold.

 The reason it can be an ethical issue is that beyond the disclosure of

bare minimum information required by the law, no institutionalized
rules can ensure the upper limit of disclosure.

 Hence, the question arises, “can anyone definitely say how the complete
information is imparted to customers?”
54
 Buying a set of crockery
Under the principle of caveat emptor, the buyer buying a set crockery need to
inspect it carefully to see if it has any cracks or damages before purchasing. If
found something wrong at home, it will be difficult to get them replaced.

 Buying second hand cars

The buyer must take on the responsibility of thoroughly researching and inspecting
the car, perhaps taking it to a mechanic for a closer look, before finalizing the sale.

If something comes up after the sale, maybe a transmission failure, it is not the
seller's responsibility.

55
 One party (seller) of the transaction has more information than the
other (buyer), hence enjoys competitive advantage or gain a better
bargaining position. (Information imbalance)

 Under the doctrine of Caveat Emptor, seller is under no obligation to

tell the defects or liable for the loss faced by the buyer.

 Ethical dilemma maybe faced by salesmen due to divided loyalty

(stemming from individual morality) towards:
• The employers (protecting the bosses’ interest and their job)
• The customers (being honest about the product).

56
 Sellers take on a lot more responsibility about the integrity of products
nowadays compared to before. Unless otherwise advertised “sold as
is”, most products today are covered by implied warranty.

 Warranties on products provide some sort of

assurances for customers. i.e. if the product
breaks down within a certain amount of time,
the seller is obligated to fixed or replace it.

 Government regulations and Consumer Rights Act

on disclosure in certain sectors (financial services
industry) where buyers are entitled to clear
information products.
57
58
 Labour strike means stoppage of work due to mass refusal employees
to work generally to make employers comply with their demands.

 Typically, the issues tend about:

 Higher wages and benefits
 Better working conditions
 Shorter working days, longer breaks, flexible hours etc.
 Unfair treatment and redundancies

 Labour strike is generally the last step in a labour-management or

employer-employee dispute.

59
 Historically, the balance of power has tilted towards company
management enabling them to pressurize their employees to adhere to
their wishes.
An individual worker, on his own, would never be able to resist against
a formidable management with influence and resources at their
disposal.
 However, workers coming together can all counter their management.
(Collective Bargaining)
This makes the management also aware that a labour strike could
result in a costly disruption of operations, loss in revenue and even
negatively publicity.

60
 Trade unions use labour strikes for collective bargaining against the
management to level the playing field for workers.

 Trade unions are membership based organisations where they advocate and
negotiate on behalf of their members on issues of their concern such as wages
& benefits, working conditions, redundancies, better labour-management relationship and
settling grievances.

 However, labour strikes must always be used as a last resort due to

widespread repercussions to not just the parties involved but also to society
as a whole. E.g. transport strike and its impact on city’s commuters etc.

 When conducted, strike must be orderly and peaceful for maximum impact
and legal validity.
61
 In our Labour Act 2017 (Chapter 19 – Settlement of Collective Disputes), it
highlights in detail various provisions pertaining to strike

 Initial 21 days to mediate a solution before peaceful strike

 When mediation and arbitration failed, 30 day written notice (with their demands and
claims) to the management and other government agencies.
 Strike must be peaceful and may not obstruct the entrance to the premises.
 Lock-out provisions for employer in anticipation of rioting
 Pay during lawful strike is half of their wages and so forth.

 Also, freedom of association and collective bargaining are among the

founding principles of ILO with respect to the law of the land and to be
exercised reasonably.
62
 A legitimate reason to strike, a justified cause.
 Proper authorization and prior notice is essential.
 A voluntary action on workers’ part, not out of coercion.
 Non-striking workers have the freedom to work if they wish.
 Strike should be a last resort as a result of all other options have been
exhausted.
 Attempt to attain union backing.
 Strikes should be non violent, non coercive and non destructive.
 Compliance with safety requirements, prevention of accidents.
63
64
 It’s an act of releasing information by existing or former employees of an
organisation about illegal and/or unethical activity or other wrongdoing of their
associated organisation.

 It is an ethical dilemma faced by an employee having to make such a

choice.

A classic case of the difference between ethics versus morality.

 It’s an act not accepted by all. The argument being such information
should go to proper channel within the organisation.

65
It is a highly risky act, on the whistle-blower’s part, which may have negative
consequences in terms of gaining notoriety, decrease in employability, possible
litigation and even prosecution.

These decisions tend to be emotionally and psychologically detrimental which

affect their personal lives.

However, society as a whole in recent times, recognises whistle-blower’s contribution

in exposing illegal or unethical activities.

A company’s wrongdoing could be in the form of fraud, deceiving employees,

corruptions, cover-ups or any other act which misleads people and causes harm to
society.
66
 There are Acts to protect whistle-blowers in the West.
Whistleblower Protection Enhancement Act 2012 in the US.

 Whistleblowers are consequentialist in nature. They take into

consideration the greatest good for the greatest number i.e.
society before company.

 Example: Edward Snowden Vs US government.

He was a former CIA employee who leaked classified and restricted information to the
public from the United States National Security Agency in 2013.

67
 Whistle-blowing is a extremely difficult decision to make for any
individual, having to go against their own company challenging their
sense of loyalty.

 It comes at a great price professionally; from the financial loss, future

employability, bad publicity and multiple lawsuits.

 Also, the consequences of whistleblowing can spill over in personal life

with mental heath problem, stress, depression and overall degradation
of emotional wellbeing.

68
69
 A competitive market is one in which large numbers of producers compete
with each other to satisfy the wants and needs of the consumers.

 Hence, it is in everyone’s interest to ensure an environment conducive for

competition for a successful economy. In practical terms it means:

 better quality of products & services

 larger range of choice
 accessibility & availability
 innovation
 lower prices for customers, generally
 However, deceptive business practice and unethical and sometimes even
illegal conducts can harm this effort.
70
 Predatory pricing
Lowering price to kill off competition, create entry barrier, seeking monopoly.

 Trademark infringement
Trying to benefit from other’s goodwill and reputation e.g. using similar looking logo
of other more successful products, name or any identifying character.

71
 Misappropriation of trade secrets
E.g. by commercial espionage, bribery, poaching, hacking etc.

 Trade libel
Defamation, attack on reputation, character assassination for individual,
misinformation, propaganda.

 Tortuous interference
Sabotaging deals between 2 parties, use of blackmail and threat to do so etc.

72
 Itis the government’s responsibility to remove or at least reduce
imperfections and unfair elements in the marketplace.

 Therefore,most governments around the world have devised laws of

some kind against unfair competitive practices.

 For instance:
 Anti-trust or monopoly laws (USA/EU)
 Competition Promotion and Market Protection Act 2007 (Nepal)

73
 Money Laundering

74
 The process of laundering is cleaning illegal money, turning black to
white.
 Itinvolves concealment of the origins of illegally obtained money,
typically by means of transfers involving foreign banks or legitimate
businesses.
 Money laundering is a process that criminals use in an attempt to
hide the illegal source of their income.
 It is done by passing money through complex transfers and
transactions or through a series of businesses, the money is cleaned
of its illegitimate origin and made to appear as legitimate business
profits.
75
Proceeds from tax crime
Fraud
Embezzlement
Drug trafficking
Terrorism
Bribery
Theft
Corruption
Gambling and
Other white collar crimes
76
 Money laundering operations negatively impact the global economy
and is worth trillions of dollars worldwide.

 Major international banks have been involved in money laundering.

 Forexample:
 HSBC was found to have facilitated the laundering of almost $1 billion in 2012.

 Danske Bank branches were accused of having taken in $200 million in Russian
mob money between 2007 to 2015.

77
 Money laundering is a serious financial crime that is employed by
white collar and street-level criminals alike.

 Inthe light of that, most financial companies have anti-money-

laundering (AML) policies in place to detect and prevent this activity.

 Thescale and seriousness of it have forced authorities to initiate

several international accords. E.g.

 Financial Action Task Force (FATF) was created by G-7 to develop more effective
financial standards and anti-laundering legislation. FATF also monitors terror
funding.
78
Trade-based Laundering (disguising black money as profit)

Cash-based Laundering (show profit through cash in hand businesses like carwash, pubs,
bars etc.)

Bank Capture (launderers themselves own a financial institution and move the money
around)

Casino Business Laundering (buying chips at a casino, gambling a bit and converting it
into cash later. Casino winnings are legal)

Real Estate Laundering (quick buy and sell of real estate for profit)
79
Placement

• Deposit the fund in a legitimate financial institution i.e. domestic/foreign bank.

Layering

• Continue transfer of funds electronically through multiple transactions, investments or enterprises

to even multiple countries if possible, make it almost impossible to detect the source.

Integration

• Reuniting of the funds with the criminal after 2 successful stages, now it can be used for
anything.

80
81
 It can distort demand for money on a macroeconomic level and affect
international flow of capital and exchange rate.

 It is an international problem and with integration of global

economies, countries like Nepal can be affected disproportionately.

 Increase in crime as international cartels use laundering to transfer

funds. This puts pressure on governments on national security front.

 Nepal has Asset (Money) Laundering Prevention Act 2008 to counter

such activities.

82
83
 It’s a situation in which an individual or organisation must choose whether
to promote own interest or obligation to those of the working
organisation/ profession or clients.
(Own Interest Vs. Client’s Interest)

 COI occurs when multiple interests of an individual where one

contradicts/interferes with another.

 In modern societies, it often is the source of many scandals and

misbehaviours.

 For instance: professionals such as a lawyer, an accountant or business adviser

cannot represent two parties in a dispute and must avoid even the appearance of
conflict.
84
85
 Public duty and private interest of a public official where the official’s
private capacity interest could improperly influence the performance
of their official duties and responsibilities.

 Examples:
i. A politician advocating for a private company
ii. A consultant working for rival companies
iii.Government doctors referring patients to their private practice etc.

 If there could be a case of COI, sometimes a full disclosure by the

person involved (from the beginning) can resolve this issue. However, it
may not work in every case.

86
 An organization needs to establish clear policies about what constitutes a conflict of interest and in which
cases these need to be disclosed.

 By identifying objectivity clearly in the professional codes.

 Making mandatory to disclose classified matters periodically.
 Through priority rules and polices.
 By classifying the nature and seriousness of COI. (e.g. how your organisation defines
potential financial interest.)
 Establishing independent complaint management cell. (Outline your organization’s
procedure for handling, addressing, and recording conflicts of interest)
 Establishing reward, punishment and norms of competition. (i.e. what happens if you
break in case of policy violation)
 Through ethical training.
87
88
 The buying and selling of a PLC’s stock or other securities by individuals
with an access to confidential or non-public information about the
company.

 For instance: announcement of tender offers, pending mergers, positive earnings

report, pending launch of new product etc.

 When key employees and executives have such privileged information

which the public don’t and use that information for personal gains.

 Insider trading can be an example of COI.

(a corporate insider with access to confidential information can use it for trading in
company’s stocks)

89
 However, if an insider is trading on the information that is publically available,
then no laws are broken. This ties into the corporate disclosure issue.

 But in the real world, insider trading is incredibly hard to prove. Often, it is
not obvious how the information flows as not much can be done in the way
of tracking them.

 On some occasions, an insider could share certain material with someone,

who then uses that information to benefit in the trading process. A tipper
and a tippee.

 Also, it becomes even more complex when multiple tippers/tippees are

involved.
90
 Insider trading practice is unfair ordinary investors and it can financially
hurt them.

 But it will make a few investors exceedingly wealthy at the cost of many
other investors.

 This practice can disrupt the financial market (stock exchange) and can
even affect the economy of the country.

 Therefore, insider trading is considered a crime globally. There are many

regulatory bodies around the world established to monitor and to prevent
such practice.

 In Nepal, SEBON as per Security Act 2007 deals with this issue.
91
92
 Privacyrefers to the state of being apart from other people or the
state of being free from unwanted or undue intrusion or disturbance
in one’s private life or affairs.

 In
other words, privacy is right to freedom from damaging publicity,
public scrutiny, secret surveillance or unauthorised disclosure of
personal data etc.

 Privacyrights help an individual limit who has access to their bodies,

places and things as well as their communication and information or
data.

93
 Simply put, privacy is a “right to be let alone”.

 Privacy a fundamental right declared by UN’s Universal Declaration of

Human Rights (1948).

“ No one shall be subjected to arbitrary interference with his privacy, family, home or
correspondence, nor to attacks upon his honour and reputation. Everyone has the right
to the protection of the law against such interference or attacks.”

 Individuals and organisations alike are susceptible to breach of their

right to privacy; especially in the age of information, this issue has only
become more complex than before.

94
 However, there is a perennial debate on privacy against security.
How much of privacy to give up for security reasons?
The opinions on this tend to skew one way or another depending on
circumstances.

• For instance, US govt. after the 9/11 attacks, proposed to pass the Patriot Act
which allowed the government to conduct surveillance on people at large in order
to intercept potential terrorists communications/operations.

The US citizens, who normally oppose such infringements, agreed to give up a

certain amount of privacy for security reasons for a certain period of time.

 Nevertheless, issue of privacy is taken very seriously and any attempt to access
and misuse of personal information such as bank details, medical records,
personal communications etc. is not allowed.
95
 Data mining by social media corporations
i.e. extrapolating relevant data and selling
them to other companies.

 Cambridge Analytica

o In early 2018, Facebook and a political data-

analytics firm named Cambridge Analytica were
implicated in a massive data breach.

o Personal data from over 87 million Facebook

users had been improperly obtained by the
political data-analytics firm.
96
 The right to be forgotten i.e. amendments made by search engines
in search pages.

o Also known as the "right to erasure", the rule gives EU citizens the power to
demand data about them be deleted.

o In the case of search engines, Europeans have had the right to request links to
pages containing sensitive personal information about them be removed since
2014.

97
98
 Discrimination is unfair or unequal treatment of an individual or
group based on certain characteristics including ethnicity, gender, race,
religion, age, disability, sexual orientation and political allegiance.

 Discrimination is widely rejected as an idea and practice around the

world, considered unethical and even illegal behaviour.

 No law in any civilized democratic country supports it and also,

UNHRC says it’s a violation of human rights.

99
 If an individual is not treated on the basis of merit, it becomes a case of
discrimination.

 However, sometimes discrimination can take various forms from overt to

subtle.

 In order to resolve some of the discrimination issues for job seekers, for
instance, many European countries recommend not to include photos on
CVs.

 Choice given to applicants to not ticking certain boxes in job application

forms (sexual orientation, religion etc.) so that the employers focus on the
qualification and skills, not on personal details whilst considering
candidates for interviews.
100
On the basis of gender
• Glass ceiling – obstacle for women to reach the top of their profession.

On marital status
• Using stereotypes for married/single people at workplace in terms of job
offers etc.
On sexual orientation

On religion
• Prayer rooms and prayer breaks, food at served at canteen.
101
On national origin
• Bamboo ceiling – obstacle for Asian Americans to reach the top of their careers.

On age
• Job opportunities that prefer youth, general stigma on too young/old to do something.

On disability
• Limited opportunities for employment and also to live an independent life, i.e.
disability friendly infrastructure etc.
On political affiliation
• Cancel culture

102
103
 Corporate intelligence is broadly defined as the collection,
integration, analysis and presentation of information that supports a
company’s decision making on critical matters ranging from
operations to strategies.

• Decisions such as investment or acquisition, internal inquiry or

consideration of risk factors or suitable future course of action etc.

 The information consists of patterns, relationships and trends about

customers, suppliers, business partners, competition etc.

 In the modern era, corporate intelligence tend to be technology

driven.
104
 Public records, open sources and proprietary databases.

 It can also be developed through primary sources such as

interviews, networking and conversation with experts on the subject matter.

 Also known as “business intelligence” and sometimes “competitive

intelligence”.

 So, corporate intelligence is a data-driven decision support

system.

105
A company can develop intelligence in-house or can outsource the
task to another company that specializes in such matters.

 These specialised corporate intelligence companies provide

investigative and crisis management services when commercial
ventures don’t go to plan.

 Theycan address the challenges of intellectual property theft,

counterfeit goods and protecting brand-holders’ supply chains.

106
 Corporate intelligence companies at the high-end (and price-range)
differentiate themselves based on their access to non-public
information, including valuable insights and scoops from their
networks of human sources which they recruit and maintain.

 Overall, corporate intelligence is an ongoing and evolving process and

can be most effective when internal and external data are combined.

107
108
 The increased level of competition in the marketplace sometimes
drives companies to suffer ethical lapses in the process of
gathering corporate intelligence.

 Unethical and illegal ways of collecting information on competitors

such as:

Hacking, poaching employees, product disassembly, dumpster diving

(digging through company’s dustbin) etc.

109
 However, involving in corporate espionage which is out of the domain
of ethical practice and also illegal.

 Other examples of espionage, illegal or unethical competitive intelligence

include:

 Hence, companies need to abide by the prevailing legal guidelines and

ethical norms.
110