Choose an article relating to a current business ethics issue being faced by a business or industry and attach it in your discussion. 1. Identify and analyze the issue. 2. Describe if management handled the situation appropriately, and if not, what could have been done differently? 3. What policies and best practices apply to the ethics issue? 4. What is the strength of the company’s ethical culture? 5. How effective are the policies that are in place to manage the risk to the company? 6. How would this issue have been addressed if it occurred in a European country?
In 2017, KPMG was forced to clear out the entire management of her South Africa branch because the firm was implicated in corruption scandals associated with the Gupta family (Burton, 2018). South Africa’s investigative bodies reported that the firm had handled several businesses for the controversial family without upholding KPMG’s standards. KPMG served as Gupta’s auditors for 15 years (Sweney, 2017). As such, KPMG was accused of allegedly failing to report the tax evasion, money laundering, and corrupt dealings of the Gupta family (Zalk, 2018).
After the initial allegations, the management failed to handle the issue appropriately given that they issued rebuttals claiming that the company had never engaged in malpractices when working for the Gupta family. The company took a public relations stance by donating all earnings received from the Gupta family to the NGOs (Sweney, 2017). In doing so, KPMG appeared to confirm the theory that the management was implicated in the scandal. The company should have opened their books to the South African investigators, who could have cleared the management and the firm of any alleged wrongdoing.
At the international level, KPMG’s status as a Big Four accountant is based on the company’s solid ethical culture (Withers, 2017). The company has formulated and enacted a robust code of conduct that should manage risks by promoting ethical behavior at all times. Unfortunately, it seems like the management was corrupted by greed to earn big bucks from the Gupta family. It is important to note that KPMG would most likely have handled the issue differently if the scandal happened in a European country. The company would have reported all illegal deals to the authorities to avoid huge fines or closure from the government.
Burton, L. (2018, June 4). KPMG to cut 400 jobs after the South Africa scandal. The Telegraph. Retrieved from https://www.telegraph.co.uk/business/2018/06/04/kpmg-cut-400-jobs-south-africa-scandals/
Sweney, M. (2017, September 15). KPMG chiefs in South Africa quit amid the Bell Pottinger scandal. The Guardian.
Withers, I. (2017, September 15). KPMG South Africa managers resign over the Gupta scandal. The Telegraph.
Zalk, N. (2018, March 27). Investigating South Africa's mire of Gupta-linked corruption. Al Jazeera.
by EssayRoyal, Dec. 7, 2019, 6:55 p.m.