Ethics Exposure Slides
Ethics Exposure
CORPORATE SCANDALS & THE COST OF CORRUPTION
High School Introduction to Business
The Moral Compass
01 // DEFINITION
Business Ethics
The study of appropriate business policies and practices regarding potentially controversial subjects.
- Governed by law and social responsibility.
- Distinguishes between "legal" and "ethical."
- Impacts brand reputation and long-term profit.
"Relativity applies to physics, not ethics."
— Albert Einstein
Cooking the Books
02 // ACCOUNTING FRAUD
Enron (2001)
Energy giant used "off-the-books" partnerships to hide billions in debt while inflating profits.
Outcome:
Bankruptcy, 20,000 jobs lost, $74 billion lost by shareholders.
WorldCom (2002)
Telecommunications giant inflated assets by $11 billion through fraudulent accounting entries.
Outcome:
Largest bankruptcy in US history at the time; CEO Bernard Ebbers sentenced to 25 years.
The Law: Sarbanes-Oxley
03 // LEGISLATION
SOX Act of 2002
A federal law that established sweeping auditing and financial regulations for public companies.
CEO Accountability
CEOs must personally certify accuracy of financial reports.
Internal Audits
Strict rules for checking records and reporting fraud.
Whistleblowers
New protections for employees who report illegal acts.
The Cost of a Life
04 // PRODUCT SAFETY
Ford Pinto (1970s)
A design flaw caused the fuel tank to rupture and explode in rear-end collisions.
The Unethical Math:
Ford calculated it was cheaper to pay out wrongful death lawsuits ($200k/life) than to fix the cars ($11/car).
Hidden Labor
05 // LABOR PRACTICES
The Nike Crisis (1990s)
Nike faced global backlash over reports of child labor, low wages, and dangerous conditions in overseas factories.
The Defense:
"We don't own the factories; we just buy the shoes."
The Shift
Today, corporations are held ethically responsible for their entire supply chain, not just their direct employees.
Systemic Greed
06 // FINANCIAL CRISIS
The Subprime Meltdown
Banks gave "predatory loans" to people who couldn't afford them, then sold these risky loans as "safe" investments.
- Hidden fees and variable interest rates.
- Millions of foreclosures and lost homes.
- Global recession triggered.
Wells Fargo (2016)
Under intense sales pressure, employees created millions of fake bank accounts in customers' names without their knowledge.
Ethical Lesson:
Toxic company culture and impossible quotas lead to widespread fraud.
Modern Fraud
07 // TECH SCANDALS
Theranos
Elizabeth Holmes
Claimed a tiny device could run hundreds of blood tests with one drop. The technology didn't work.
Endangered patient health to maintain investor hype and personal status.
FTX
Sam Bankman-Fried
A crypto exchange that used customer funds to make risky bets through a sister company (Alameda Research).
$8 billion in customer money "vanished" overnight due to total lack of oversight.
The Ethics of Data
08 // PRIVACY
Modern ethical debates aren't just about money—they're about information.
Privacy Rights
Who owns your browsing history? Your location? Your face data?
The "Free" Trap
If you aren't paying for the product, you are the product.
DATA = CURRENCY
Does Ethics Matter?
"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."
— Warren Buffett
Long-term Profit
Employee Trust
Legal Safety
Ethics Exposure Guided Notes
Ethics Exposure
Guided Note-Taking Guide
Name:
Date:
Part 1: Defining the Moral Compass
1. Business Ethics: The study of appropriate business ___________________________________ and practices regarding potentially ___________________________________ subjects.
2. Legal vs. Ethical: Just because something is ___________________________________ does not necessarily mean it is ___________________________________.
Part 2: Accounting Scandals
| Case | The Unethical Behavior | The Impact |
|---|
| Enron (2001) | Hiding ___________________________________ and inflating ___________________________________. | Loss of $74 billion for shareholders; 20,000 jobs lost. |
| WorldCom (2002) | Inflated assets by $11 billion through ______________________________________________________. | Largest ___________________________________ in US history. |
The Regulatory Fix: Sarbanes-Oxley Act (SOX)
A federal law passed in 2002 to prevent accounting fraud. Key features include:
- CEOs must personally certify the ___________________________________ of financial reports.
- Public companies must perform strict internal ___________________________________.
- Increased protection for ___________________________________ (employees who report illegal acts).
Part 3: Product Safety & Labor
Ford Pinto (1970s)
The ethical dilemma was a "Cost-Benefit Analysis" where Ford decided it was cheaper to _________________________________________________ than to _________________________________________________.
Nike (1990s)
Nike was criticized for ___________________________________ and poor conditions. They initially argued they weren't responsible because they didn't __________________________ the factories.
Part 4: Financial Predation
3. 2008 Housing Crisis: Banks sold ___________________________________ loans (high-risk) to people who couldn't afford them, then repackaged them as safe investments.
4. Wells Fargo (2016): Employees created millions of ___________________________________ accounts to meet impossible sales ___________________________________.
Part 5: Silicon Valley & Data
Theranos
Founder: Elizabeth Holmes
Ethical failure: Lying about ___________________________________ to investors and patients.
Ethics Investigator Guide Worksheet
Investigator’s Guide
Case Study Analysis Framework
Name:
Subject:
Company/Case Name
Year(s)
1. The Ethical Breach
What specifically happened? Describe the core unethical action.
2. The Stakeholders
Who was harmed? (Employees, customers, public, investors).
3. Motivation (The "Why")
What drove this? Stock price, quotas, competition, or greed?
4. Consequences & Laws
Legal penalties, bankruptcies, or new regulations created.
Ethical Verdict
Was this a "few bad apples" (individual greed) or a "rotten tree" (toxic culture)? Suggest one change to prevent this from happening again.
CONFIDENTIAL ANALYSIS // DO NOT DISCLOSE
