hari prasath — Sino-Forest Company

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Business Ethics : Sino – Forest Company

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Sino-Forest Corporation

The Company Sino-Forest claimed to be one of the largest tree plantations in China. The nature of the business is growing large number of tree plantations, processing and selling wood related products which where used in industrial, commercial and Residential products.

 

Sino – Forest Company was founded in 1994 and they started growing trees in large quantity with the money invested by potential investors. They generate revenue from sale of these products.

In 2nd June 2011, it was found that the company was fraudulently inflating its assets and earnings to boost its share price. Its share prices fell and lots of people lost their investment in this company. Since the farm was in China, most of the backend business work was happening in China. The company was listed in Toronto stock Exchange and it was believed that the company really has its huge farm and products are manufactured in a large scale in China. But that was not true.

Finally one fine day, Muddy waters Research Company found and published that the details proposed by the company are fake. The share prices fell immediately and the company tried to file a lawsuit against Muddy waters Research. But nothing helped. Finally in March 30, 2012 Sino-Forest Company filed for bankruptcy.

Even-though lots of companies get caught every year; there are still few companies that find loop – holes in the industry and misuse them to grow bigger. The business owners must practice a common business ethics. They should also think in the shoes of the investors to know the real pain which will be a consequence of their scandal.

 

References:

http://en.wikipedia.org/wiki/Sino-Forest_Corporation

http://www.bloomberg.com/news/2011-08-26/sino-forest-executives-ordered-to-resign.html

http://www.sinoforest.com/Uploads%5CSF%20-%20Press%20Release%20-%20Sanction%20Order%20%5BFinal%5D.pdf

http://d.muddywatersresearch.com/wp-content/uploads/2011/06/MW_TRE_060211.pdf

Nabeela Ladha — Tim Horton’s Workers

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Nabeela

 

In December of 2012, CBC News highlighted the story of Erik Flores, a 21-year-old that left Mexico to pursue greater work opportunities in Canada. Flores was hired as a Temporary Foreign Worker (TFW) through a recruitment agency by the ubiquitous Canadian quick-service restaurant, Tim Hortons. Upon arrival, Flores discovered his accommodations were sub-standard, as he was expected to share a small basement suite with five other TFWs. There was a discrepancy in projected salary, holiday pay and overtime hours expected between Flores and the franchisee.

 

The article draws attention to the growing need for workers in the fast food and other service industries and the difficulty in securing Canadian workers. The number of TFWs in Canada has grown from 101,098 in 2002 to 300,211 in 2011. Employers pay a fee to a recruitment agency to attract foreign workers, who then are offered work contracts, airfare, initial accommodation, transportation and the hope of greater earning opportunity in Canada.

 

Ethical Analysis:

 

Flores’ story emphasizes that migrant workers can assume a vulnerable position when entering into a work contract. The lack of information or awareness of the work practices of the country they are travelling to or the possibility that conditions may change upon arrival places TFWs in a precarious position.

 

This lack of knowledge of Canadian work practices or industry norms and isolation from known support systems may lead to violations in employer power. These may include the enforcement of unfavourable working conditions, unpaid overtime or sub-standard housing.

 

The growing need for service-level positions coupled with the above practices raises alarm for the notion of a “disposable workforce” to be reinforced.  With less access to information, questions regarding the protection of these workers could include:

 

What are the monitoring regulations for TFWs as they continue to work in Canada?

What is the nature of the agreement recruiters are offering to attract workers?

 

The story leads me to underline the need for consistent liberty and equal opportunity in appropriate working/living conditions extended to all workers. Employers should show consistent regard for the wellbeing and fairness extended to their workers.

http://www.cbc.ca/news/canada/story/2012/12/11/f-temporary-foreign-worker-program-tim-hortons-canada.html

Pawanjot Bajwa — Victoria Secret’s business ethics

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Around 3 weeks ago, a story featured the life of a 13-year-old Clarisse Kambire which made an insight of the working of the brand Victoria Secret.

The lingerie company buys all of the cotton from Burkina Faso, under a deal that features a 3rd party monitoring that ensure that the company gets a fair deal and pure organic cotton. The root cause for this was that the 3rd party monitoring was not efficient and the cotton that was supposed to be a produced without the use of child labour. Burkina Faso is a desperately poor country and the farmers who produce cotton are too poor to afford a better life for their children. Under these circumstances Victoria Secret is equally responsible to ensure that right practices are followed throughout business chain.

One possible explanation by Victoria secret is that they shall pass some profits onto the farmers through the supply chain. But again the fundamental question is whether giving more money through supply chain will make cotton industry more competitive, even worsening the condition Burkina Faso farmers or will it actually improve the conditions of children in cotton farms? Victoria secret should understand that what management and shareholders are obliged to do for sustainable practices is not always a good thing to do.

The idea to promise the customer to have fair trade cotton, but to do fair on the promise is altogether different scenario. Victoria secret should learn from the initiatives of Nestle to dive deep into the supply chain to monitor and remediation of its plan to eradicate child labour at the farm level in West Africa.

Chris de Eyre — Best Buy

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Background:
Brian Dunn resigned from his position as CEO of Best Buy in April 2012 following the launch of an investigation into his personal conduct by the company’s audit committee. The resignation was mutually agreed upon by Dunn and the board, after the board had announced “certain issues were brought to the board’s attention regarding Mr. Dunn’s personal conduct.” Later, Dunn was found to have violated company policy by having an inappropriate relationship with a female employee. There was also speculation concerning related violations of Best Buy’s financial policies, but nothing was ever proven.

Ethical Analysis:
Best Buy’s board likely sought to preserve the company’s reputation by coming to an agreement with Dunn regarding his resignation. In recent years, more and more of a company’s reputation is becoming tied to the personal reuptations of its leadership. Personal behaviour for CEOs is thus becoming an increasingly relevant area of business ethics.
Leaders need to set an example for the employees of their company, and their boards need to be able to trust their judgement. In the case of Brian Dunn, his questionable relationship with the female employee was a breach of this trust.

http://online.wsj.com/article/SB10001424052702303815404577335551794808074.html
http://www.theverge.com/2012/4/10/2938311/best-buy-ceo-brian-dunn-resigns
http://minnesota.publicradio.org/display/web/2012/04/11/best-buy-dunn-investigation