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154 Part One Organizations, Management, and the Networked Enterprise

TABLE 4.1 RECENT EXAMPLES OF FAILED ETHICAL JUDGMENT BY SENIOR MANAGERS

Barclays Bank PLC (2012) One of the world’s largest banks admitted to manipulating its submissions for the LIBOR benchmark interest
rates in order to benefit its trading positions and the media’s perception of the bank’s financial health. Fined
$160 million.
GlaxoSmithKline LLC The global health care giant admitted to unlawful and criminal promotion of certain prescription drugs, its
(2012) failure to report certain safety data, and its civil liability for alleged false price reporting practices. Fined $3
billion, the largest health care fraud settlement in U.S. history and the largest payment ever by a drug
company.
Walmart Inc. (2012) Walmart executives in Mexico accused of paying millions in bribes to Mexican officials in order to receive
building permits. Under investigation by the Department of Justice.
Minerals Management Government managers accused of accepting gifts and other favors from oil companies, letting oil company
Service (U.S. Department rig employees write up inspection reports, and failing to enforce existing regulations on offshore Gulf
of the Interior) (2010) drilling rigs. Employees systematically falsified information record systems.

Pfizer, Eli Lilly, and Major pharmaceutical firms paid billions of dollars to settle U.S. federal charges that executives fixed clinical
AstraZeneca (2009) trials for antipsychotic and pain killer drugs, marketed them inappropriately to children, and claimed
unsubstantiated benefits while covering up negative outcomes. Firms falsified information in reports and
systems.
Galleon Group (2011) Founder of the Galleon Group sentenced to 11 years in prison for trading on insider information. Found
guilty of paying $250 million to Wall Street banks, and in return received market information that other
investors did not get.
Siemens (2009) The world’s largest engineering firm paid over $4 billion to German and U.S. authorities for a decades-long,
worldwide bribery scheme approved by corporate executives to influence potential customers and
governments. Payments concealed from normal reporting accounting systems.
IBM (2011) IBM settled SEC charges that it paid off South Korean and Chinese government officials with bags of cash
over a 10-year period.
McKinsey & Company CEO Rajat Gupta heard on tapes leaking insider information. The former CEO of prestigious management
(2011) consulting firm McKinsey & Company was found guilty in 2012 and sentenced to two years in prison.
Tyson Foods (2011) World’s largest producer of poultry, beef, and pork agreed to pay $5 million in fines for bribing Mexican
officials to ignore health violations.

on business executives based on the monetary value of the crime, the presence
of a conspiracy to prevent discovery of the crime, the use of structured financial
transactions to hide the crime, and failure to cooperate with prosecutors (U.S.
Sentencing Commission, 2004).
Although business firms would, in the past, often pay for the legal defense of
their employees enmeshed in civil charges and criminal investigations, firms
are now encouraged to cooperate with prosecutors to reduce charges against
the entire firm for obstructing investigations. These developments mean that,
more than ever, as a manager or an employee, you will have to decide for
yourself what constitutes proper legal and ethical conduct.
Although these major instances of failed ethical and legal judgment were
not masterminded by information systems departments, information systems
were instrumental in many of these frauds. In many cases, the perpetrators of
these crimes artfully used financial reporting information systems to bury their
decisions from public scrutiny in the vain hope they would never be caught.
We deal with the issue of control in information systems in Chapter 8. In this
chapter, we talk about the ethical dimensions of these and other actions based
on the use of information systems.

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