Ethics is the discipline dealing with what is right and wrong and about moral duty and obligation. The word ethics and morality are intertwined, all depending on the perspective and the context in which they are used. Accounting ethics is predominantly a field of applied ethics and is part of human ethics and business ethics . The accounting ethics is determined by the simple, but essential accounting practices that are put into play by various schools of thought to avert any emergence of fraudulent cases or integrity issues. It studies and defines the judgments and moral values as they apply to accountancy, majorly according to the internationally accepted accounting principles (IAAP). Accounting process was first was introduced by Luca Pacioli, who is known to be the pioneer of the accounting process in the global economics ( Zadek, Evans & Pruzan, 2015). It was later expounded on by professional organizations, governments, and independent companies. The importance of accounting cannot, therefore, be downplayed at any cost owing to the relevance to which it comes to play in the world over.
In the case of Hollinger International Inc (HII), upper management of both HII and it's subsequent holding companies and management boards set the ball rolling for unethical movement and governance by just not putting in place and following rules that govern the use of company funds and the related/expected duties, qualifications, and behavior of top management. As is understood in many organizations, the head always gives the direction for the subsequent followers to trail. As per the case study, Lord Black liked and surrounded himself with famous people. He enjoyed basking in the atmosphere of relevance and keeping the company of prominence. To this effect, Lord Black included on the board of directors of HII Henry Kissinger, Former Secretary of State of the US. And Nobel Peace Prize recipient, James R. Thompson, Former Illinois Governor and Richard Burt, former ambassador to Germany. These were referred to as ‘grey directors.’ In accounting, the term independent director usually refers to non-executive directors (NEDs) who are free from economic or personal ties with the firm they’re managing and its management. NEDs who have such ties are classified as non-independent NEDs and are also known as “grey” directors. This, however, was not the case of HII. There was a lot of conflict of interest in the top management, starting with the directors.
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The board of directors of HII was not selected for their business acumen but rather for their status and relation to Lord Black. This thus gave the management of HII weak standing. He was dealing with friends, not independent executives who would steer the company towards new heights of success in its operations. As the leadership of the parent company (HII) was weak and unfounded, the administration of holding companies was not to be any better. This, in turn, gave Lord Black an ‘open book’ as far as his expectations as the owner of HII was concerned. No one would question his methods, even if it was stealing a 54 Million dollar pension from one of the companies he acquired through Argus.
Lord Back’s behavior and character are merely baffling but not uncommon in today’s world. Persons of relevance and dominance dominate Today's economy and business. These are feared people who can influence tenders and gain favors from the government. This is seemingly what Lord Back wanted; people who could get government backing on his company’s behalf. The only ethical theory that could explain his behavior is ‘reversed utilitarian ethics.’ Under utilitarian ethics, it is expected that one’s actions or the actions one aims to engage in, should benefit the maximum amount of people possible. On the flip side, his associates were there to benefit themselves and fulfill their interest at eh expense of the company. In some sense, utilitarian ethics can be considered communist, as one has to factor in the majority before carrying out any action, as in the case of communism (Klein, 2015). However, Lord Black’s behavior of greed and cutting corners is deeply capitalistic, hence the ‘reverse utilitarian’ explanation. As per the case study, Lord Black was known not to be afraid of cutting corners as long as the outcome benefited him. His behavior can be said to be intensely capitalistic as capitalism is the economic system based upon private ownership of the means of production and their operat ion for profit. He wanted to benefit himself at all cost, and nothing would come between his interests and work. He seems to have no overpowering emotion, other than the drive for profit. As per the case study, his remarks to Vanity Fair about greed were that he considers it a primarily misunderstood feeling and that it has driven/motivated him from time to time.
A standard duty of operation would operate in a Black-owned company as-far-as it does not criticize or reprimand Lord Black or any of his cohorts. This is because, as per the case study, we learn that Lord Black, through HII, owned several newspapers in America, England and beyond. Despite these organizations being news organizations and being expected to be the ‘fourth estate’ and look out for the ordinary citizen, they did not; they were corrupt and highly compromised. This was as a result of Lord Black’s form of leadership. If the board of directors of the holding company were his close friends and posse, no one would dare reprimand him, or if they did, maybe at the cost of their jobs/positions in any of his companies. However, explicitly speaking, a standard duty of operation would not operate in a Black-owned company.
There is a myriad of ethical theories, and probably all could be applied in the controlling of Lord Black and his behavior. But the most applicable would be Utilitarianism. It is a normative ethical theory that places the center of right and wrong solely on the outcomes or consequences of choosing one action/policy over other actions/policies (Ketz, 2006). With this regard, it moves past the latitude of one's interests and takes into account the interests of others. Notably, rule utilitarianism states that the best action is that which benefits the most significant number of people (Ketz, 2006). Thus Black’s actions and behavior, especially with regards to spending and greed, would be significantly controlled. Also, with utilitarian rules in place, he is likely to engage in actions that will grow the employees of his companies, as well as the general public amongst other parties.
My actions if I was working for a company under Black’s ownership would largely depend on the position I’m in. Would it be a position with the power to influence change or would it be a position in which my voice would not count for much? However, the ethical theory I’m likely to employ is virtue ethics. This theory of ethics states that one should do right because it is the right thing to do and thus should be done. Black’s behavior would promote greed and corruption from the board of directors down to the support staff. This ripple effect from the oversight in leadership will or is likely to get to my position. Thus, I will employ virtue ethics, doing the right thing(s) irrespective of consequence or influence.
References
Ketz, J. E. (2006), Accounting Ethics: Theories of accounting ethics (Volume 2), USA, Routledge Publishing.
Klein, G. (2015), Ethics in Accounting: A Decision-Making Approach, USA, John Wiley and Sons Publishers.
Zadek, S., Evans, R., & Pruzan, P. (2015) Building Corporate Accountability: Emerging Practice in Social and Ethical Accounting, Auditing and Reporting, USA, Taylor and Francis Publishers.
