Probable Remedies for the Ethical Processes in the Corporate Organization - Assignment Example

In the discourse of legal proceedings, the aspect of ethics comes into focus. Insurance firms, for instance, are obliged to take care of their clients who are policy holders as per the financial obligation that they have through remittances of premiums. When an insurance company denies any claims irrespective of the legal correctness or legitimacy of the claim, such an act is akin to a renege on the fundamentals of ethics as defined within legal scope. This is what is highlighted in the movie christened Rainmaker which is an adaptation from John Grisham’s novel. The movie is thematically centered on the legal proceedings that followed Rudy Baylor’s lawsuit against Great Benefit. Great Benefit, from the movie, is a fictional insurance company which denied the claims of its policy holders irrespective of their legitimacy. In this case, the client represented by Rudy Baylor was not able to get a bone marrow transplant because the company as was the case denied his claim. The transplant could have saved the clients life. Great Benefit, as it were, had instructed its employees to deny claims that were brought to it by its policy holders irrespective of their legitimacy. This just highlights how fraudulent the company’s dealings were. The breach of ethics in this case comes from the fact that the company continued accepting premiums from its clients in spite of the fact that the company’s financial credibility was in jeopardy because of the massive debt that it kept on accumulating. Therefore, the debts compromised their financial ability to settle claims brought forward by policy holders. In respect to the highlighted case of the insurance company and Rudy Baylor, the implications is that the occurrence of unethical practices within organizations is not limited to corporate affairs only but to other parties including customers. It is unacceptable that such corporate organizations, for instance insurance firms, continue to make huge profits at the expense of the persons they should be serving. The issue of life insurance has serious ramifications on the customer and as such it is immoral for companies to compromise the legitimacy of the policy for the sake of making profit. The initial ethical review incident in this case is where the management of the aforementioned organization has compromised on its duty and instead has shown selfishness by not mitigating the probable drawbacks imminent in its ethical policy. This step brings to focus the factors behind the company’s undesired conduct. The net review highlights by giving probable solutions to the existing shortfalls witnessed in the ethical prospects of the company. Ultimately, this is objectively aimed at sealing any probable drawback in the system that might be exploited by the management team. It should be noted that fraudulence in this case would be taken as an illegal move irrespective of the objective of the person who commits it. In view of the above mentioned company, it is clearly evident that the insurance company was engaged in fraudulent acts with the fundamental reason of attaining optimum profits to salvage it from its financial position. Therefore, it would be imperative to make changes to the company’s policies to ensure that the weaknesses in the system are not exploited by the management to deny policy holders their legally entitled rights to legitimate claims. It is imperative that the policies in the insurance company be subjected too periodic reviews constantly. The implication would be that the probable shortfalls in the process would be mitigated before the whole process in the organization is compromised. In addition, a deliberate move to encourage transparency and diligence on the part of the committee members should be instigated. The ultimate concern in this case is to prevent the likelihood of the members of the committee from being victims of circumstances in reference to ethical practices. In addition, the remedies should guarantee the independence of the committees to ensure that in the course of execution of their duty there is no conflict of interest of unethical conduct. On the occurrence of an ethical conduct, the organization should have a clearly defined path in terms of what should be done in handling such cases. The fundamental objective in this case should be aimed at promoting fairness at all levels within the managerial structures of the company in view of establishing fair ethical practices. It is also important that records kept in the corporate organization should have clear stipulations on how long they should be kept be confidential. From a personal opinion, most insurance companies are formed from inceptions of noble ideas ultimately aimed at improving the quality of human life. Great Benefit as an insurance firm was also probably founded on such tenets of altruistic sense of nobility. In view of that, it is imperative that such companies do not renege on their obligations to policy holders which is a mandate they bear based on their acceptance of premium from the policy holders. In the case where a company is not able to guarantee such a responsibility based on its financial position, fraudulent actions would be deemed unethical. In as much as Great Benefit’s had a policy of denying claims from policy holders to sustain it financially, such a move was illegitimate. In view of the company’s predicament, the first review would subjectively aim at instigating a benchmark in terms of the financial position of the company based on its liquidity. In such a case, the company should be financially capable of taking care of the financial needs of its clients if legitimate claims are filed by policy holders against coverage. In addition, the stipulations of the company should imply that it has specified number of clients having a given ration of money equivalent to the policy they hold. Such a move would guarantee financial ability in case claims are filed. The essence of such a policy is to ensure that the company would be financially able to safeguard the welfare of its policy holders in cases where legitimate claims are lodged against coverage. This would bar the company from engaging in fraudulent acts because it would have liquid assets to compensate its policy holders with in case o legitimate claims. An additional policy that would give strength to the first policy is that the company should regulate the number of clients it accepts as policy holders. This should be done in tandem with its ability financially and in view of the resources availed to it and within its disposal. This policy and procedural practice would ensure that the company would not be overburdened by financial constraints in circumstances where a considerable number of its policy holders would be filing claims which are legitimate at around the same time. Thirdly, the employees of the company should undergo an informal training that would be like an orientation on legal matters top enable them be aware in case their company is engaged in fraudulent practices. Such training would enlighten them on the legal protection they have under the law in case where they do their job rightly even if goes against the instructions of their employer. Legally, there are federal as well as state laws which protect the welfare of employees as long as they in accordance with legal stipulations. In reference to the Great Benefits example, in case of any legal proceedings, the persons who would be held responsible legally would be the employer, whether as an individual or collectively through the its board. Ethical Problems Read In Wall Street Journal and Their Applications In This Case Lying is an ethical problem. Martha Stewart who was an employee of Omnimedia lied to the prosecution regarding her sale of ImClone Systems stock (Ovide ‘Wall Street Journa’l). She had traded as an insider. Her false recounts in court interfered with the due course of justice. Just like her, Great Benefits lied to its clients by entering into a business deal to provide insurance cover to them yet the company would later deny their claims irrespective of their legitimacy. Price fixing qualifies as an ethical problem. Companies or corporate organizations might be compelled to engage in unethical practices such as price fixing to fight competition. For instance, the act of Panasonic and Whirlpool engaging in regulation of prices of generators was unethical (Kendall). Conspiracy is an unethical act seen in Kenneth Lay who was the CEO of the renowned Enron Corporation. He intentionally misinformed investors in his company about the financial position of the organization portraying it as credible yet it was in a crisis (Emshwiller and Solomon 1). Great Benefit also misinformed its clients on its true position portraying the image that it could fend for their interests in covering their claims yet the reality was that it was in a crisis financially. The case of the Enron Company also presented a breach of the organization’s act which is unethical. The staff went against the company’s act by delving into the company’s financial statements with the intention of committing fraudulent acts. Breach of intellectual property rights is unethical. If another corporate organization intentionally uses knowledge which it has no right over just to promote its interest is unacceptable. Merck, a pharmaceutical company breached this when they wanted to produce in mass generic versions of a drug which was patented under Pfizer’s name. This amounted to fraud (Loftus). Bribery is an act which is unethical. Corporate organizations engage in acts of bribery to promote their interest and make them have preference in awarding of contracts or tenders. In the clean up of the World Trade Centre, some companies were awarded the tender after issuance of bribes (Peltz). Conflict of interest is an ethical problem which occurs when an employee of an organization knowingly influence a procedural practice in the organization to favor personal interests. For instance, AOL portrayed an unethical act akin to conflict of interest when in its venture of news delivery (Crovitz). In Stocks Company, trading of stocks of stakeholders with insider knowledge is considered unethical. For instance, Brien Santarlas who was the attorney of Ropes and Gray was involved in unethical act in scandal reminiscent of insider training (Bray). Rogue working habits are unethical. Kweku Aduboli worked for Swiss Bank and he was considered rogue based on his traits (Needleman WSJ). Likewise, Great Benefits had rogue employee who colluded with their employer to swindle policy holders. Environmental pollution is unethical. Organizations should strive to uphold moral integrity in reference to sustainable environmental practices. The oil producing companies which are based off shore of Texas are engaged in unethical acts since they promote environmental pollution through waste products from their mining activities (Camploy and Gold). Works Cited Ackerman, A. SEC Discipline Over Madoff : Agency's Action Follows Report Questioning Staff Conduct Over Ponzi Scheme. Wall Street Journal 12 November 2011. Bray, C. Ex-Lawyer Gets 6 Month Prison Term In Insider Case. Wall Street Journal 30 November 2011. Campoy, A. & Gold, R. Hearing Focuses on Air Quality at Wells. Wall Street Journal 30 September 2011. Chasan, E. "Accounting Fraud Falling Thanks to Faltering Economy." The Wall Street Journal 29 November 2011. Crovitz , Gordon. A Business Model Based on Conflict of Interest: On TechCrunch it's hard to tell where news ends and investing begin. Wall Street Journal 12 September 2011. EMSHWILLER, J and D SOLOMON. "Major Players in the Enron Trial." THE WALL STREET JOURNAL 8 July 2004: 1. Kendall , B. Trio Charged in Price Fixing: U.S. Indicts Executives of Compressor Makers Following Long-Running Probe . Wall Street Journal 28 September 2011. Lipschutz, Neal. Ten Years Later, Enron Pales in Comparison. Wall Street Journal 30 November 2011. Loftus, Peter. Pfizer Tries to Block Merck Lipitor-Zetia Pill. Wall Street Journal 11 October 2011. Moyer, L. "Goldman Continues to Fight $20.5 Million Award in Pivotal Case." The Wall Street Journal 14 October 2011. Needleman, S. "A Rogue Employee May Be on Your Payroll, Too." The Wall Streer Journal 22 September 2011. Ordonez, Isabel. Ex-Enron Executive Returns to Energy Sector. Wall Street Journal 8 November 2011. Ovide, S. "A Diva's Empire in Play: Martha Stewart Living Hires Blackstone to Explore Offers, Looking to Revive Brand." THE WALL STREET JOURNAL 26 May 2011. Peltz, Jennifer. One-time 9/11 hero gets prison in NYC bribe case. Wall Street Journal 16 September 2011.   Satter, R. "Murdoch aide quits." The Wall Street Journal 13 October 2011. The Economic Times. "2G scam: Corporates tried to influence govt formation, says PAC." The Wall Street Journal 28 April 2011. WSJ. "The Inglorious History of Japanese Accounting Frauds ." The Wall Street Journal 8 November 2011. —. "The stress tests were essentially a fraud – revelation sends bond spreads to new records." The Wall Street Jall 9 August 2009. Young, S. and D Solomon. "WorldCom Backs Chief Executive For $340 Million." Wall Street Journa 8 February 2002. Read More