Proverbs 13:11 reads “Dishonest money dwindles away, but whoever gathers money little by little makes it grow (NLT).”
Dishonest money dwindles…let that resonate for a little bit. Really think of the words and picture the dollar bills shrinking in size to nothingness. Can you see it? Can you feel the panic at the thought of losing money? Now couple that feeling with the guilt of doing something wrong and you get a good lesson on ethics. It is imperative that finance professionals follow strict ethical rules because money or lack thereof can cloud a lot of decisions. This article will discuss some major cases that have fallen into troubles because of personnel or leadership failing to administer funds properly. There are many excuses for an ethical breakdown but being oblivious to the problem, intentionally ignoring the issue and greed are amongst the most popular explanations to describe unethical individuals.
A popular case in ethics occurred a while ago with Ford Motor Company. In the 70’s, Ford produced its compact car, the pinto. The Pintos were produced with faulty fuel tanks and the problem was actually noticed during pre-production crash tests. According to Harvard Business Review, “…Ford had rushed the Pinto into production. Engineers had discovered the potential danger of ruptured fuel tanks in pre-production crash tests, but the assembly line was ready to go, and the company’s leaders decided to proceed (1).” At first glance, it seems that the leaders were being malicious and scandalous in their approach but maybe their business plan and goals clouded their better judgment. Their poor judgment was the cause of many injuries and deaths before they put out a recall on the product but some argue that it was ignorance more than malice in their decision. The employees stated that when any questions arose the leaders would often tell them to review the business objectives and follow them accordingly. There was no active lobbying against the production with the faulty tanks people just followed the rules and did their jobs. In this case, if ethics were a bigger responsibility within companies instead of an afterthought; lives could have been saved.
There is an uncommon term called “willful blindness” that may be used by an organizational leader. This term refers to the leader knowing about information but “intentionally ignoring” said information. This strategy is often used by leaders in an attempt to gain the greatest profit from something that may be risky business but will keep their intentions pure. For example, Richard Fuld, CEO of Lehman Brothers perfected his commute to and from the office to avoid employees.
Lehman was the fourth-largest investment bank in the United States that filed for a Chapter 11 bankruptcy in 2008. So it’s easy to see why the CEO would want to hide; the company is accused of being involved in excessive risk taking along with allegations of negligence and malfeasance. Leaders of the 150 year old company not only ignored signs that affected the company but some think it help to spark the global financial crisis that happened in the later 2000s. This way of thinking has been deterred because legally an executive of a company can be held accountable for things not known but should have been known to him or her.
“For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” This passage found in I Timothy 6:10 (NIV) is quoted often but is shortened to “Money is the root of all evil.” That phrase is often thrown around in the wrong context but it’s definitely relevant when talking about greed. It’s simple that leaders of companies often lose sight of ethics in hopes of obtaining more money. One of the biggest corporate scandals was that of Enron. CEO, Jeffrey Skilling, had a way of hiding financial losses and other operations of the company and CFO, Andrew Fastow came up with a plan to show that the company was in great shape. These leaders knew what they were doing and no other explanation is needed other than their greed influenced their decisions. Not only did they hurt the company but their greed affected other investors and employees connected to the Enron empire. The stock began to decrease and the truth of the opening statement happened to them. Their dishonesty caused their monies to dwindle in the blink of an eye.
Financial freedoms and wealth are priority to many and can absolutely become a way of life but we must remember that anything good is worth working for. Use your knowledge and skills to gain the prosperity you deserve but make sure to include ethics in your accounting practices.