Within Milton Freidman’s text, The Social Responsibility of Business Is to Increase Its Profits, it is clear that the author believes in a number of fundamental principles to accommodate the long term success, profitability and to maximize benefit to all stakeholders in one’s business model. These include, but are not limited to, maximizing profit, conforming to the changing environment of society, maintaining the laws of the land and demonstrating ethical conduct.
To the latter point, I make note of the recent case in which a mining company named Southwestern Resources clearly crossed the line of ethical conduct. Southwestern Resources is a public company headed by John Paterson, it’s former CEO. Mr. Patterson released fraudulent data regarding the test results of a gold mine located in China. As a result, it is estimated that investors lost more than $260 million due to his unethical conduct. The company’s stock increased to more than $40 per share from 15 cents after issuing deceptive results.
From my perspective, the damage caused as a result of this dishonest conduct exemplifies a number of wrongs to many stakeholders who are innocently associated with the company. Firstly, the shareholders who lost money. Secondly, employees who potentially lost their jobs and their personal reputations by their association with Southwestern Resources. Thirdly, it speaks to the core of one’s confidence in public companies. Incidents like this injure ethical companies from conducting business and raising capital in the public forum.
http://www.cbc.ca/news/canada/british-columbia/former-mining-exec-gets-6-years-in-jail-for-faking-test-results-1.1401431