ETHICS IN BUSINESSTHE FOUNDATION FOR FUTURE SUCCESS

IMA STATEMENT OF ETHICAL PROFESSIONAL PRACTICE

Members of IMA shall behave ethically.

A commitment to ethical practice includes overarching principles that express our values, and standards that guide our

conduct.PRINCIPLES STANDARDS

HonestyFairnessObjectivityResponsibility

CompetenceConfidentialityIntegrityCredibility

INDIANA RULES OF PROFESSIONAL CONDUCT

COMPETENCEINRPC Rule 1.1

CONFIDENTIALITYINPRC Rule 1.6

INTEGRITYINPRC Rules 1.7-9; 8.4

CREDIBILITYINPRC Rules 1.4; 3.3

National Business Ethics Survey. Digital image. www.ethics.org/nbes. Ethics Resource Center, 2014. Web. 13 Mar. 2015.

A recent MBA Jungle magazine survey about the business ethics of MBA students reveals . . .

52% would buy stock on inside information received from a friend

50% would reveal corporate secrets to a spouse or family member

13% would pay someone off to close a business deal

26% would let a gift sway a company purchasing decision

Source: USA Today, citing MBA Jungle survey of 445 students

CREATIVE ACCOUNTING: ENRON & WORLDCOM

Accounting Degree Review. Digital image. www.accounting-degree.org/scandals. Web. 13 Mar. 2015.

Accounting Degree Review. Digital image. www.accounting-degree.org/scandals. Web. 13 Mar. 2015.

Above the Lawyer. Digital image. www.abovethelawyer.com/overview-and-impact-of-the-sarbanes-oxley-act. Web. 13 Mar. 2015

GENERAL MOTORS IGNITION SWITCH RECALL

5 Critical Points in Cobalt Timeline(Information acquired from TIME website)

Ray DeGiorgiothe GM engineer in charge of the prototype ignition

switch knew by early 2002 that the part didn’t meet specifications. Delphi, the company testing the switch, told DeGiorgio repeated tests had failed, marking each test result in a January report with “Not OK.”

DeGiorgio had a choice: fix the switch, or ignore the problem. Knowing that fixing the switch would delay production, DeGiorgio told Delphi in email to “maintain present course;” in other words, ignore the problem. He signed his email “Ray (tired of the switch from hell) DeGiorgio.” DeGiorgio, who was fired this year, couldn’t be reached for comment.

Reviews in the middle of 2005 of GM’s Cobalt

which contained the below-spec ignition switch, were not good. For months, GM employees had exchanged emails noting that a slight graze of the key fob would move the key out of run, shutting off the vehicle. Media reports were vitriolic. “I never encountered anything like this in 37 years of driving and I hope I never do again,” said a reviewer for the Sunbury Daily Item said of his Cobalt’s repeated engine shutdowns, and the New York Times noted Chevrolet dealers were telling Cobalt owners to remove items from heavy key rings. “This is a safety/recall issue if ever there was one,” a customer wrote GM.

Yet despite the obvious dangers of ones car shutting off mid-drive, GM continued to classify the faulty ignition switch as a convenience issue—not a safety one. A team of GM engineers met in September 2005 to consider whether to replace the switch. The answer was a fatal “no.”

5 Critical Points in Cobalt Timeline(Information acquired from TIME website)

GM LAWYERS REVIEWED A CASE IN 2006

IN WHICH A WOMAN DIED AFTER HER COBALT STRUCK SEVERAL TREES AND HER AIRBAG DID NOT DEPLOY. FIELD REPORTS NOTED THAT THE

IGNITION WAS ODDLY IN THE ACCESSORY POWER MODE, BUT A GM ENGINEER, KATHY ANDERSON ARGUED THAT THE AIRBAG WAS

NOT EXPECTED TO DEPLOY ANYWAY. THE CASE WAS SETTLED, EFFECTIVELY QUELLING A

DEEPER INVESTIGATION INTO THE DEATH, AND THE POSSIBILITY OF DISCOVERING THE REAL

SOURCE OF THE PROBLEM.

A 2007 report by Wisconsin State Trooper Keith Young

said that the ignition switch jostling may have caused a fatal crash. “The two front seat airbags did not deploy,” said Young. “It appears the ignition switch had somehow been turned from the run position to accessory prior to the collision with the trees.” GM received the report, but according to the Valukas investigation, no GM engineer read it for seven years.

DeGiorgio quietly fixed the ignition switch problem in 2006but didn’t tell anyone at GM. Nor did

he switch the part number in GM records. That meant that all future cars would be safe, but it would be nearly impossible to trace the cause of crashes on old models to the ignition switch—preventing a recall that would have saved lives.

Valukas Report

NHTSA $35 Million Fine

2008 Training SessionGM Lawyers to Engineers

Rules of Professional Conduct

1.2 Scope of Representation

(d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent . . .

1.6. Confidentiality of Information

(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:◦ (1) to prevent reasonably certain death or substantial bodily injury;◦ * * * ◦ (5) to establish a claim or defense on behalf of the lawyer in a

controversy [with] the client, to establish a defense to a criminal charge or civil claim again the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer’s representation of the client.

1.13 Organization as Client

(b) If a lawyer for an organization knows that an officer, employee or other person . . . with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation . . . of law which reasonably might be imputed to the organization, and . . . is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes . . . that it is not necessary in the best interest of the organization . . . , the lawyer shall refer the matter to higher authority . . .

Rules of Professional Conduct

Rules of Professional Conduct3.4. Fairness to Opposing Party and Counsel

A lawyer shall not:

(a) unlawfully obstruct . . . access to evidence or unlawfully . . . conceal . . . material having potentially evidentiary value . . . ;

(b) . . . counsel or assist a witness to testify falsely . . .

4.1 Truthfulness in Statements to OthersIn the course of representing a client a lawyer shall not knowingly:(a) make a false statement of material fact or law to a third person; or(b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.

REPORTING UNETHICAL BEHAVIOR

REPORTING

1. Women tend to report more than men

2. Managers report more than nonmanagement employees

3. Reporting rates rise along with management level

4. Reporting rates are similar in public and private companies

5. Most employees contact a supervisor rather than a third-party or hotline

WHY DON’T WE REPORT?

Calculations based on the Bureau of Labor Statistics Employment Situation as reported in November 2013, and considers only those: 18 years or older, currently employed in the agricultural and private workforces (not government) and not selfemployed or in private households. http://www.bls.gov/news.release/empsit.t08.htm

HOW TO REPORT

1. Compile evidence

2. Understand your internal rules and policies

3. Maintain confidentiality as appropriate

4. Determine whether the matter can be remediated through in-house reporting

5. If necessary, look outside of the workplace for a reporting solution

IMA ETHICS CENTER

Online at: http://www.imanet.org/resources-publications/ethics-

center

IMA Ethics Helpline:(800) 245-1383