Rob Sandall's Blog

Whatever the Greeks are doing, let’s do the opposite. The country notoriously close to economic failure doesn’t appear to be making a recovery any time soon. The draft budget was submitted to the Greek Parliament on Monday shows that the economy is predicted to contract a further 3.8% and unemployment expected to rise to an extremely high 24,7%. Despite Greece’s massive budget cuts, the country is expected to continue to run on a deficit budget, which is more bad news for the country, and the whole Eurozone.

The unbelievably large unemployment rate is contributing to this downward spiral, as people who have no income pay no taxes, therefore the Greek government is consistently short on money to aid the country through their economic troubles. This is extremely taxing on other countries in the Eurozone, particularly Germany and France who will be forced yet again to bail out their Greek counterparts to keep the Eurozone afloat, which will lead to further devaluation of the Euro and further troubles for the continent.  Time will show how the European financial catastrophe will respond to further bad news from their friends in the Aegean, and hopefully Greece will be on the road to recovery on the 2014 financial report, because 2013 appears to be another write-off.

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The massive credit card company American Express has been fined 112 million dollars to settle accusations from regulators that it was charging its customers with unlawful and unethical late fees and deceived them into paying off debts unnecessarily and buying new lines of credit without being obligated to do so.

These fines for unethical proceedings were imposed upon the company following an enquiry from numerous regulatory forces, including the Consumer Financial Protection Bureau and the Federal Reserve.  The company is being forced to pay around 85 million dollars to approximately 250000 customers, and 27 million in civil fines. The enquirers discovered that the company had been cheating customers from 2003 onwards to this spring. One of the deceptive scams used frequently by AmEx was to falsely tell customers that if they paid off a portion of their debt immediately, the remainder of their debt would be forgiven, as well as charging late fees on some credit cards based on a percentage of their debt, a practice outlawed by a 2009 law prohibiting some unfair credit card practices.

This case is a clear violation of Business Ethics as the company was earning a great deal of money by taking advantage of vulnerable customers who don’t know any better. This is yet another case of companies choosing to business the wrong way until they are caught and fined by regulatory forces. It showcases that if there weren’t regulatory forces such as the Federal Reserve there would be nothing keeping businesses to go about in an ethical manner other than their own conscience, which we have seen is a rare commodity in the corporate world.

Ethics is something that is taught in EVERY business school, so why do these things continue to happen? There are many cases to back up a train of thought that states that people simply do not care about doing the right thing, or just prefer to look the other way. Perhaps it will just be a problem that will always be present in the corporate world, and consumers, regulators, and other businesses will have to be aware of these issues, and strive to correct them.

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In 2010, many safety overlooks and missteps made by the Canadian oil company Enbridge regarding the security of their pipelines led to disaster. One pipeline in Michigan ruptured and unleashed over 800000 gallons of crude bitumen from the Athabasca Tar Sands into a tributary of the Kalamazoo River. Oil was found over 35 miles downstream from the point of rupture, and the cleanup has been very costly and ongoing until recently. The NTSB deemed that the oil giant had knowledge of the security shortcomings over 5 years before Kalamazoo, but simply did nothing to rectify them. The final cleanup has been completed and Enbridge has been hit with a 3.7 million dollar fine for the work, the most expensive in US history. This begs the question: If Enbridge had known about this faulty pipeline 5 years in advance, wouldn’t it be cheaper to simply fix the problem than wait for a catastrophe? If Enbridge had been more ethical in their proceedings, this environmental scandal could’ve been avoided, and their reputation wouldn’t have suffered a massive blow. Hopefully Enbridge will have learned a lesson not to cut corners in their safety procedures, and will carry themselves in a more ethical manner in the future to prevent this from happening again.

Sources:

Klug, Fritz. “NTSB Report: Enbridge, Federal Regulators Missed Numerous Opportunities to Prevent or Lessen Impact of Kalamazoo River Oil Spill | MLive.com.” The Kalamazoo Gazette. N.p., 10 July 2012. Web. 12 Sept. 2012. <http://www.mlive.com/news/kalamazoo/index.ssf/2012/07/enbridge_did_not.html>.

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