ASSIGNMENT ON Ethical and Unethical Business Practices

Subject-Business Ethics

Submitted To Prof Gauri

SYMMS

Roll No-27

Efforts By- Pooja Lilani

Ethical and Unethical Business Practices

Business ethics is the most debated topic of our times. The difference is between doing the right thing and the wrong thing. Business ethics are the philosophical core of any business and their outcome is crucial for economic development.

Peter Cooper – the great American Investor says "I have always recognized that the object of business is to make money in an honorable manner. I have endeavored to remember that the object of life is to do good."

Business ethics are more than moral values and principles that determine our conduct in the business world. It refers to the commercial activities, either with other business houses or with a single customer. They can be applied to all aspects of business; from generation of an idea to its sale. Business uses the society for its resources and functioning, thereby obligating it to the welfare of the society. While the objective of all business is to make profits, it should contribute to the interest of the society by ensuring fair practices. However, greed has led the present business scenario towards unethical business practices, legal complications and general mistrust.

Code of Ethics

Lot of organizations implement the code of ethics in their company polices, which they implement during induction and regular training. A Code of Ethics is generally a more blanket statement of values and beliefs that defines the organization.

So what is it for?

Company's assets, funds and records Conflict of interest Management and employee practices Information on competition

Ethical Business Practices

Here are a few ethical business practices that should be followed to build a honest reputation and ensure smooth running of any organization.

Investors: Ensuring safety of their money and timely payment of interest. Employees: Provision of fair opportunities in promotions and training, good

working environment and timely payment of salaries. Customer: Complete information of the service and product should be made

available. Personal information of the customers should not be used for personal gain.

Competition: Unscrupulous tactics, competitor bashing and wrong methods should be avoided while handling competitors.

Government: Rules and regulations regarding taxes, duties, restrictive and monopolistic trade practices and unlawful activities like corruption and bribing should be adhered to.

Environment: Polluting industries should ensure compliance with the government norms regarding air, water and noise pollution.

Unethical Business Practices

You might find many companies who blatantly thrive on unethical behavior and practices. A free environment is present or promoted where acts of violation of norms to amass wealth in an unethical manner is followed.

Following are some of the activities that come under the ambit of unethical practice.

Resorting to dishonesty, trickery or deception. Distortion of facts to mislead or confuse. Manipulating people emotionally by exploiting their vulnerabilities. Greed to amass excessive profit. Creation of false documents to show increased profits. Avoiding penalty or compensation for unlawful act. Lack of transparency and resistance to investigation.

Harming the environment by exceeding the government prescribed norms for pollution.

Invasion of privacy used as leverage, for obtaining personal or professional gains.

Sexual discrimination

Business houses that comply with ethics to determine their conduct are shrinking in number. The lack of business ethics in the market, is the reason the world economy is presently in crisis. Organizations now recognize the positive effects and outcomes of being ethical, humane and considerate. They have a competitive edge in the market, because of the honesty they show in their services. Their morally upright reputation attracts better staff and helps in retention. Though ethics are legally binding in most cases, self-monitoring, transparency and accountability will go a long way in establishing trust of the people. Besides this, it makes sense to change, before you are penalized.

When would we as Indians observe ethical business practices in totality? It is a big question but it has a straight simple answer. Each one of us should be accountable and responsible to stop unethical business practices.

We must create an environment which adheres to strictest philosophies of clean, transparent, honest business.

Integrity is most wanted.

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

FAIR/ETHICAL PRACTICES CODE

Intent and Content

This Code has been formulated by Housing Development Finance Corporation Limited (the Corporation) pursuant to the Guidelines issued by the National Housing Bank on Fair Practices Code for Housing Finance Companies vide its circular bearing No. NHB(ND)/DRS/POL- No. 16/2006 dated September 05, 2006. This Code has come into force from 19th October, 2006 which has been modified pursuant to the Guidelines issued by the National Housing Bank on Fair Practices Code for Housing Finance Companies vide its circular bearing No. NHB(ND)/DRS/POL- No. 34/2010-11 dated October 11, 2010 and has been effective from December 23, 2010 . The said Guidelines has been further modified by the National Housing Bank on Fair Practices Code for Housing Finance Companies vide its circular bearing No. NHB(ND)/DRS/POL- No. 38/2010-11 dated April 25, 2011. This Code has come into force from May 10, 2011.

Objectives

Follow good, fair and transparent business practices by setting reasonable standards;

Encourage market forces, through fair competition, to achieve higher operating standards;

Relate to the customer in such manner so as to promote a fair and cordial relationship;

Set such standards and practices so as to foster confidence in the housing finance system.

Application

To be applicable to all persons offering the Products and Services of the

Corporation as an employee or otherwise in any manner and/or by any mode.

The Code is applicable under normal operating environment except in the event of any force majeure.

The Code is based on ethical principles of integrity and transparency and all actions and dealings shall follow the spirit of the Code.

Commitment

The Corporation shall at all times do its best to act fairly, reasonably and meet the standard practices prevalent in the housing industry.

The Corporation shall abide by all the relevant laws, regulations and meet with the ethical principles of integrity and transparency during its interaction with customers.

While interacting with customers, the Corporation may take all steps as may be required to provide clear information either in English or Hindi or the appropriate local language regarding:

o its various products and services;o the terms and conditions, the interest rates/service charges;o benefits available to customers and the implications, if any;o contact persons for addressing the queries, if any;

The Corporation will provide a copy of this Code, at request, to the customer. The Code will also be made available on its Website and at every branch/ office.

The Corporation would not discriminate on grounds of sex, caste and religion in the matter of lending. However this does not preclude the Corporation from participating in credit-linked schemes for the weaker sections of society and in respect of schemes formulated by NHB/ other Government Agencies, implemented through the Corporation.

The Corporation shall treat the information relating to customers as strictly confidential and shall not share any information, unless required under law or waived or permitted by the customer.

The Corporation shall take necessary steps to inform its customers of their right to information regarding their account and the facilities available to them.

The Corporation shall be clear and not misleading in any of its advertising and promotional materials.

The Corporation shall inform its customers of all financial information such as rates of interest, charges, method of calculation etc through brochures, posters or during the course of meeting with the customers etc prior to entering into any transaction.

The Corporation shall endeavor to keep its customers informed of any change in interest rates / charges etc through letters or any other form of general or public announcement or displays, from time to time.

The Corporation shall disclose, by such mode and in such manner as deemed fit, to ensure transparency, all information affecting the interest of the borrower including but not limited to :

o fees/charges payable for processing loan application;o the amount of fee refundable, if any, if the loan amount is not

sanctioned;o Prepayment options and charges, if any;o Penalty for delayed payment, if any;o Conversion charges (Switching loan from fixed to floating rate or vice

–versa);o Existence of interest re-set clause, if any.

The disclosure shall be done so as to ensure that the borrower is aware of “all in cost” parameters involved in processing and sanctioning of loan. The Corporation shall not indulge in any act which is discriminatory among equals.

The Corporation will review the compliance of this Code and a consolidated report of such review may be submitted to the Board.

Loans

The Corporation in the normal course of its business shall endeavour at all times to guide its customers about the process and procedure to be followed for availing a loan.

Each application shall be considered independently on merit, upon scrutiny of all the information, documents required for verifying the title of the property, identity of the person, entity and the security to be offered, including

guarantees. The letter of guarantees to be executed by the guarantors would cover their

obligations, liabilities and circumstances in which they can be called upon to pay the dues of the customer/borrower.

The Corporation shall communicate in writing to the customer whose application has been reject Collection of Dues

The Corporation shall provide the customers with all the information regarding their dues and provide reasonable time for payment of the same.

The Corporation shall while protecting its interest adopt reasonable and lawful measures to recover its dues from defaulting customers, including use of persuasive methods for the purpose of collection of its dues.

Complaints and Grievances

The Corporation shall endeavour to address/respond to all complaints and grievances within a reasonable time and keep the customers informed about the status of their complaints.

The Corporation shall make available facilities at each of its branches and offices for the customers to lodge and/or submit their complaints or grievances, if any.

The Corporation will ensure that its grievance redressal procedure is made available on its website.

ETHICAL PRACTICES BY HDFC BANK

HDFC only Indian bank in global list of ethical companyPosted: Thu, March 17, 2011 | 12 PM IST

Mumbai, March 17: HDFC Bank, second largest private sector bank, is the only Indian organization got listed in the world's most ethical companies' list this year. As per the list prepared by the Ethisphere Institute, only one Indian firm HDFC has made a place in the 110 world's most ethical companies.

HDFC is one of the most trusted brands in the India and for a financial services company it is quite noticeable that people should perceive that it as ethical as well. Commenting on the attainment HDFC Vice-Chairman and CEO Keki Mistry said: "It obviously feels nice to be one of the world's most ethical company and the only one from India." The new achievement of HDFC will help to inhance the brand equity of the company going forward.

Among the list of companies online market portal eBay, Ford Motor Company, banking giant Standard Chartered Bank, Accenture, Adobe Systems, software giant Microsoft and food and beverage firm PepsiCo found in top position.

Reliance Unethical Practices

Complaints India enables consumers and users of services and products to post their common complaints and suggestions regarding airline, bank, business, companies and Government and non Government organizations in India and abroad. Track your car complaints, mobile phone complaints, bank complaints, credit card complaints etc at this website. It's a consumer forum, board or bureau for consumers to redress their complaints.

Consumer Courts in India now gives the power to consumers to fight for their consumer rights at district level consumer forums. However consumers can proceed to confront companies and try to get quicker responses through the website. For companies its important to quickly address consumer complaints to

protect their product or service brand image. Consumer-India web site has a number of resources for your assistance. Separate new product complaint and NRI complaint sections help in easier posting and tracking of complaints.

With online internet scams proliferating, its easy to get cheated by fraud companies. Consumers need to protect themselves from online scams, email scams, phishing etc.

Complaints can be posted on all products and services. You can post complaints Mobile Services (Airtel, BSNL, Idea, Reliance, Docomo, Unior, Aircel etc), Mobile Phones (Nokia, LG, Samsung, Sony Ericsson, Blackberry, MicromaKarbonn etc), Home Appliances like TVs, Refrigerators, ACs, Cooking Ovens etc.

Unethical Practices

Infosys Employee Testifies on Alleged Visa Fraud

By Megha Bahree and Miriam Jordan

An Infosys employee, who has alleged that Indian tech giant, Infosys Technologies Ltd., engages in visa fraud,  provided more details to a U.S. Senate subcommittee this week.

Tony Avelar/Bloomberg News

In a testimony, an Infosys employee provided more details about alleged visa fraud at Infosys.

In a statement to the Senate Judiciary Subcommittee on Immigration, Refugees and Border Security on Tuesday, Jay Palmer, the whistleblower at Infosys, said the company “intentionally violated our visa and tax laws for the purpose of increasing revenues.” Mr. Palmer accused Infosys of frequently violating U.S. visa laws and of staffing multiple client projects with illegal employees, including at Goldman Sachs, American Express, Wal-Mart and Johnson Control, among others.

Mr. Palmer filed a lawsuit against the company in February in Circuit Court in Alabama, alleging the company sought his help to circumvent U.S. law. The lawsuit has led to a probe by U.S. authorities.

Infosys, which is cooperating with the inquiry, denied the allegations. Paul N. Gottsegen, chief marketing officer for Infosys, said in a statement Wednesday that Mr. Palmer’s remarks were “full of inaccuracies, exaggerations and falsehoods.”

“There is not, nor was there ever a strategy, scheme, or policy by the company to use the B-1 visa program to circumvent the H-1B visa program,” he said. “The company did not have a practice of sending unskilled employees to the United States on B-1 visas to do the work expected of skilled individuals in the U.S. on H-1B visas.”

Mr. Palmer disagreed. This is how, he says, it was done.

During a March 2010 visit to Bangalore headquarters he says he heard several conversations between Indian managers and U.S.-based managers where it was made clear that Infosys was going to increase the use of the B1 visa program to get around tough new restrictions the U. S. had placed on the H-1B program. Infosys, he says, decided to flood the local Indian consulate with visa applications in order to get as many approved as possible no matter the level of an individual’s skill. He says that in many cases the company sent relatively inexperienced workers to the U.S. for projects.

He says Infosys sent employees on B1 visas to the U.S. for specific full-time jobs at client sites but instead of paying them U.S. salaries, it would pay them much lower Indian salaries, calling it a stipend. Infosys, however, charged its clients U.S. rates for the employees, thus getting full reimbursement from their American clients for Infosys’ labor costs. He also says Infosys paid no taxes on payments to these workers.

According to Mr. Palmer, Infosys created an internal website of “do’s and don’ts” with tips including: “Do not mention activities like implementation, design & testing, consulting etc., which sound like work. Also do not use words like, work, activity, etc., in the invitation letter. Please do not mention anything about the contract rates as you’re on a B-1 Visa.”

He says that in order for this to work, the U.S. contracts had to be written as “Fixed Price” contracts and not as “Time and Material” contracts. On a Fixed Price contract a customer is charged a lump sum for labor, and the people doing the work do not need to be identified to the client. But on a T&M contract, on the other hand, the people doing the actual work had to be named along with their hourly rate. In August 2010 Mr. Palmer says he received emails and requests to rewrite T & M contracts to FP contracts.

Describing a specific instance, he says that in December 2010 an Infosys employee showed him a spreadsheet with a list of B1 visa workers on a project at Johnson Control, who should not have been doing such work. He said that these workers were working full-time testing software code and writing scripts but were paid their salaries by Infosys depositing money into the cash card accounts without withholding any income tax.

Mr. Palmer’s testimony comes as the Indian IT industry finds itself facing more scrutiny than ever. Outsourcing has always been a hot-button issue in the U.S., but with a stubbornly high unemployment rate in the U.S., the offshoring of what are perceived to be American jobs has become an increasingly sensitive political issue. Last year the U.S. passed legislation that raised fees for skilled visas, particularly affecting Indian IT firms. IT firms based in India generate 60% of their revenue from the U.S.

On their part, Indian firms have seen the increased visa fees as well as delays in getting approvals and much tougher interviews as part of a concerted campaign against them. Some Indian officials have even labeled the U.S. moves unfair trade practices.

In his testimony Mr. Palmer, says he and his attorney have received over 40 communications from individuals at other Indian companies stating that the same type of H-1B and B1 visa fraud is being committed there as well.

Infosys said it would not rebut Mr. Palmer’s remarks point-by-point at this time because of its ongoing litigation with him.

“We take very seriously our obligations under the law and specifically our responsibilities to comply with the immigration laws and visa requirements in all jurisdictions where we have clients,” said Infosys’s Mr. Gottsegen. “Mr. Palmer is obviously intent on spreading his falsehoods about Infosys and our business practices as broadly as possible in order to advance his objective of getting as big of a payout as he can from the Company.”

In his testimony, Mr. Palmer also lobbied for more restrictions on work visas to foreign companies.

“My real life experiences have educated me to the point that if Congress decides that an increase of Green Cards or legal work visas in the U.S. is a must, then there should be limitations or ratios,” he said. “For example, for every H-1B visa issued to foreign national company they should have to hire an American worker.”

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He also said Indian companies were benefiting at the expense of the American economy, a charge the Indian IT industry disagrees with. Indian software and

services industry body NASSCOM has said in the past that the cost savings they provide help make U.S. firms more competitive.

“I have read statements from NASSCOM stating that not increasing Green Card numbers and with the current visa restrictions, the Indian economy would suffer,” said Mr. Palmer. “Let me ask the committee, what about our economy? What about the years and years of ignoring the laws. These companies maliciously do not hire Americans and look at ways to circumvent policy and law instead of working with it. Look at the stock and growth of these large foreign companies in a down environment — they are not suffering.”

ndian financial industry has always been successfully able to trace every prospect offered by the India's fiscal policy both in terms of alteration and expansion. In spite of all the endeavors implemented to develop the financial market, it still remains fatally faulted due to lack of three major key elements namely inadequate management, stringent accountability, and proper punishment.

As a result, the capital market of India has remained one-dimensional and has staggered from one investment scandal to another. A straightforward listing of the top 10 investment scams narrates the account of why Indian investors were left annoyed by the scamsters.

Unethical Practices

A brief about Top 10 Investment Scams in India

1. The Securities ScamThe capital market witnessed its foremost investment scandal in the form of securities scandal in the year 1992. It revealed the utter anarchy and lack of administration in the prevailing fiscal market. The money market at that time permitted funds to be relocated with impunity from financial institution and

corporates into equity and consequently witnessed crores of bank's capital to transfer into brokers' account. This illegal market practice was later asserted as "legal and acknowledged".

In an attempt to punish the tricksters, a special court was initiated and scrutinized around 70 cases registered by CBI. Surprisingly, not even a single trickster was found guilty by the dreadfully sluggish judicial system. As a matter of fact, the scamsters made frequent attempts to re-enter the market with same set of traps and resulted in losses to investors.

2. The IPO scamSoon after the entry of international organizational investors, the Control over Capital Issues was banned as the market saw heavy bull trend resulting in the revitalization of the secondary market from the previous scandals. The ban of Control over Capital Issues unlocked the prospects of massive scandal in Initial Public Offerings (IPO). The scam was executed in two parts; the first part was carried out by the firms that increased their market costs to incur profits in order to sponsor lucrative projects. The second part saw the unison of small time merchants, CAs, investment bankers and traders to hoist new firms and heave public capitals.

The IPO scam prevailed for three long years from 1993-1996 and finally saw its downfall when the costs of the registered firm started deteriorating.

3. Favored share scamThe scandal was an outcome of the extensive cost fixing on the derivative market. Besides increasing fresh capital, advocates of Indian firms promptly coordinated general body authorizations to transfer shares to themselves on a privileged basis and at a considerable reduction to the market, thinking that the share prices would never see the ground. Conglomerates started this trend and accrued profits of nearly 55o crores until Securities and Exchange Board of India (SEBI) formulated strict guidelines to abandon the market practice.

4. CRB's cardboard scamThe ` 1000 crore finacial multinational named as Chain Roop Bhansali (CRB) was the only biggest firm and most impudent of all to benefit and disappear in the loosened market ambiance of mid-1990s. The services offered by his firm entailed FC collection, mutual fund, banking, etc. The clearances obtained by the firm for the trading of these services required sufficient inspection by SEBI and the RBI and the fact that they managed to qualify shows the supervisory weariness of the regulators. Facilitated by the clearances and profitable credit ranking, CRB accrued greater profits based on high value financing. The CRB collapse not only affected the investors but also the other finance firms.

5. Plantation firms' scamSince few firms in mid-90s were subject to no guidelines, the plantation companies during that time also got away with profit protrusions. The plantation firms projected themselves as a part of IPO and assured massive returns. The investors were lured and the companies accrued profits from fake campaigns of around ` 8000 crores plus.

6. Mutual Funds scamAfter several mutual fund scams, the UTI bailout reflected the lack of proper guidelines in the Indian capital market. Since UTI was initiated under its own regulations, it was the tax payers who suffered the loss of ` 4800 crore in the process. After three years, the company was back purchasing Ketan Parekh's controlled scrips and incurring massive losses in the process. The evidence of the private mutual funds performance has also been inconsistent after hitting the downfall in 1999 and 2000. It took a considerable amount of time for capital market to win back the trust of mutual fund investors.

7. The 1998 scamThe scamster of 1992 scam, Harshad Mehta came back with a bag of tricks again in 1998. This time he lured investors through a website by trading stock tips. His unremitting manipulation of several shares resulted in the much expected collapse of Bombay Stock Exchange.

8. Home Trade scamInitiated in 2000, Home trade invested rs 24 crore in promotional campaigns to attract investors. The scam affected 8 co-operative banks that lost ` 82 Crore in EPF scheme. The Chief Executive of Hometrade, Mr. Sanjay Aggarwal was convicted by Nagpur Police later.

9. DSQ Software ScamIn the year 2000 and 2001, the Managing Director of DSQ Software, Mr. Dinesh Dalmia, was held responsible for ambiguous mergers and prejudiced allocation of the amount of upto ` 595 Crores. He was later convicted in the year 2006.

10.Satyam ScamAfter manipulating the firm's documents for several financial years, the former Chairman and Chief Executive of Satyam Computers, Mr.Ramalinga Raju, was arrested for committing scam, following unethical practice and forgery. He showed greater profits and committed fraud of ` 700 crores.