Report on Ethics in MNEs

8/2/2019 Report on Ethics in MNEs

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RESEARCH REPORT

Subject: BUSINESS ETHICS

Research Topic:

BUSINESS ETHICS AND MNES

SUBMITTED TO: MAM MEHREEN

Group Members: Roll#

Wajahat Saeed MBE-10-07

Amir Saleem MBE-10-21

Tahir Bilal MBE-10-29

Abdul Shakoor MBE-10-51

Hafiz Awais Ahmad MBE-10-06


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ACKNOWLEDGEMENTS

A work is never a work of an individual. We owe a deep sense of gratitude to the

intelligence and co-operation of those people, who have been so helpful, to let us

understand what we needed, from time to time for the completion of this exclusive

project report.

We want to express our gratitude towards MAM MEHREEN, our beloved

teacher for having permitted us to carry out this project work. Words are

inadequate in offering our thanks to beloved teacher for her encouragement and

cooperation in carrying out the project work.

Finally, yet importantly, I would like to express our heartfelt thanks to our

beloved parents for their blessings, our friends/classmates for their help and wishes

for the successful completion of this project.

Group members


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Part 1

o Introduction o Four Views of Ethicso Business Ethics.o Overview of issues in business ethics..o General Business Ethics

Part 2o Introduction to Multinational Enterpriseso Company profile of motorola n samsung

Part3

o Ethics Management at MOTOROLA ..Part 4

o Ethics Management at SAMSUNGPart 5

o Benefits of Managing Ethics at Workplace o Conclusion.


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INTRODUCTION

The corporate worldan integral part of our lives, the soul of a countrys economic growth, a

world filled with hustlebustle, a world that generates employment for every second person youmeet... But, sadly, it is also the domicile of power games and foul play and this is the reason why

a look at ETHICS AND VALUES IN BUSNIESS is critical and relevant.

Ethics is not an exact science. People define Ethics in accordance with their own set of values

which differ depending on time, place and culture. Webster's defines Ethics as "the discipline

dealing with what is good and bad or right and wrong or with moral duty and obligation." The

word derives from the Greek word meaning "moral," a Latin word with roots in "mores" or

"customs"in other words the values held by society.

The simplest definition of ethics and moral values would be to not distinguish between the two

and say that they describe what is right and what is wrong in human behavior and what ought tobe. Business ethics are the desired norms of behavior exclusively dealing with commercial

transactions. Moral values are deep seated ideas and feelings that manifest themselves as

behavior or conduct. If we know the consequences of our actions we can convert values into

rules of behavior that can then be described as ethics, i.e.,

Values + Knowledge = Ethics

FOUR VIEWS OF ETHICS

1. UTILITARIAN VIEW of ethics says that: Ethical decisions are made solely on the basis of their outcomes or consequences. Greatest good is provided for the greatest number Encourages efficiency and productivity and is consistent with the goal of profit

maximization

2. RIGHTS VIEW of ethics is concerned with respecting and protecting individualliberties and privileges such as the rights to privacy, free speech, and due process.

Respecting and protecting individual liberties and privileges Seeks to protect individual rights of conscience, free speech, life and safety, and

due process

To make ethical decisions, managers need to avoid interfering with thefundamental rights of others


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3. Theory of Justice Viewof ethics is where managers impose and enforce rules fairlyand impartially and do so by following all legal rules and regulations.

Organizational rules are enforced fairly and impartially and follow all legal rulesand regulations

Protects the interests of underrepresented stakeholders and the rights ofemployees

4. Integrative Social Contracts theory proposes that ethical decisions be based onexisting ethical norms in industries and communities in determining what constitutes

right and wrong.

Acts are moral when they promote the individuals best long-term interests, whichultimately leads to the greater good

Individualism is believed to lead to honesty and integrity because that works bestin the long run

Of the Institutions that have contributed to the quality of human life, business ranks with science,

art, and education. Business has created the wealth that has given unprecedented numbers of

individuals financial control of their lives. It has expanded immeasurably the range of goods and

services available to individuals. It has broken down countless centuries-old barriers of racial,

religious, and ethnic prejudice. And it has been the vehicle for countless numbers of individuals


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to develop their fullest potentials in achieving their dreams. In short, business has been a prime

mover in making it possible for millions to pursue their lives in a wealthy, healthy, rational and

exciting world.

BUSINESS ETHICS

Business ethics are likely as old as business itself, but only recently has the implementation of

ethical codes of conduct in businesses become of major importance on many companies

agendas. This is primarily due to the passing of the Sarbanes-Oxley Act of 2002, which was

enacted in response to the Enron and WorldCom collapses, and designed to restore confidence

and maintain integrity in businesses.

The concept of Business Ethics has come to mean various things to various people, but generally

it's coming to know what it right or wrong in the workplace and doing what's right -- this is in

regard to effects of products/services and in relationships with stakeholders.

Caveat emptor: This ancient Latin proverb let the buyer beware, tells us that business ethics has

been a societal concern going back a long ways indeed

Business Ethics is a form of the art of applied ethics that examines ethical principles and moral

or ethical problems that can arise in a business environment. In the increasingly conscience-

focused marketplaces of the 21st century, the demand for more ethical business processes andactions ~ Ethicism, is increasing. Simultaneously, pressure is applied on industry to improve

business ethics through new public initiatives and laws.


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OVERVIEW OF ISSUES IN BUSINESS ETHICS

GENERAL BUSINESS ETHICS

This part of business ethics overlaps with the philosophy of business, one of the aims ofwhich is to determine the fundamental purposes of a company. If a company's main

purpose is to maximize the returns to its shareholders, then it could be seen as unethical

for a company to consider the interests and rights of anyone else.

Corporate social responsibility or CSR: an umbrella term under which the ethical rights

and duties existing between companies and society is debated.

Issues regarding the moral rights and duties between a company and its shareholders:

fiduciary responsibility, stakeholder concept v. shareholder concept.

Ethical issues concerning relations between different companies: e.g. hostile takeovers,

industrial espionage.

Leadership issues: corporate governance.


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Political contributions made by corporations.

Law reform, such as the ethical debate over introducing a crime of corporate

manslaughter.

The misuse of corporate ethics policies as marketing instruments.

Benefits of Managing Ethics in the Workplace

Many people are used to reading or hearing of the moral benefits of attention to business ethics.

However, there are other types of benefits, as well. The following list describes various types of

benefits from managing ethics in the workplace.

Attention to business ethics has substantially improved society.A matter of decades ago, children in our country worked 16-hour days. Workers limbs

were torn off and disabled workers were condemned to poverty and often to starvation.

Trusts controlled some markets to the extent that prices were fixed and small businesses

choked out. Price fixing crippled normal market forces. Employees were terminated

based on personalities. Influence was applied through intimidation and harassment. Then

society reacted and demanded that businesses place high value on fairness and equal

rights. Anti-trust laws were instituted. Government agencies were established. Unions

were organized. Laws and regulations were established.

Ethics programs help maintain a moral course in turbulent times.Attention to business ethics is critical during times of fundamental change -- times much

like those faced now by businesses, both nonprofit and for-profit. During times of

change, there is often no clear moral compass to guide leaders through complex conflicts

about what is right or wrong. Continuing attention to ethics in the workplace sensitizes

leaders and staff to how they want to act -- consistently.

Ethics programs cultivate strong teamwork and productivity.Ethics programs align employee behaviors with those top priority ethical values preferred

by leaders of the organization. Usually, an organization finds surprising disparity

between its preferred values and the values actually reflected by behaviors in the

workplace. Ongoing attention and dialogue regarding values in the workplace builds

openness, integrity and community -- critical ingredients of strong teams in the


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workplace. Employees feel strong alignment between their values and those of the

organization. They react with strong motivation and performance.

Ethics programs support employee growth and meaning.Attention to ethics in the workplace helps employees face reality, both good and bad -- in

the organization and themselves. Employees feel full confidence they can admit and deal

with whatever comes their way.

Ethics programs are an insurance policy -- they help ensure that policies

are legal.There are an increasing number of lawsuits in regard to personnel matters and to effects

of an organizations services or products on stakeholders. Ethical principles are often

state-of-the-art legal matters. These principles are often applied to current, major ethical

issues to become legislation. Attention to ethics ensures highly ethical policies and

procedures in the workplace. Its far better to incur the cost of mechanisms to ensure

ethical practices now than to incur costs of litigation later. A major intent of well-

designed personnel policies is to ensure ethical treatment of employees, e.g., in matters of

hiring, evaluating, disciplining, firing, etc.

Ethics programs help avoid criminal acts of omission and can lower

fines.Ethics programs tend to detect ethical issues and violations early on so they can be

reported or addressed. In some cases, when an organization is aware of an actual or

potential violation and does not report it to the appropriate authorities, this can beconsidered a criminal act, e.g., in business dealings with certain government agencies,

such as the Defense Department.

Ethics programs help manage values associated with quality

management, strategic planning and diversity management -- this

benefit needs far more attention.Ethics programs identify preferred values and ensuring organizational behaviors are

aligned with those values. This effort includes recording the values, developing policies

and procedures to align behaviors with preferred values, and then training all personnelabout the policies and procedures. This overall effort is very useful for several other

programs in the workplace that require behaviors to be aligned with values, including

quality management, strategic planning and diversity management. Total Quality

Management includes high priority on certain operating values, e.g., trust among

stakeholders, performance, reliability, measurement, and feedback. Eastman and

Polaroid use ethics tools in their quality programs to ensure integrity in their


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relationships with stakeholders. Ethics management techniques are highly useful for

managing strategic values, e.g., expand marketshare, reduce costs, etc.

Ethics programs promote a strong public image.Attention to ethics is also strong public relations -- admittedly, managing ethics should

not be done primarily for reasons of public relations. The fact that an organization

regularly gives attention to its ethics can portray a strong positive to the public. People

see those organizations as valuing people more than profit, as striving to operate with the

utmost of integrity and honor. Aligning behavior with values is critical to effective

marketing and public relations programs.

Overall benefits of ethics programs:Managing ethical values in the workplace legitimizes managerial actions, strengthens the

coherence and balance of the organizations culture, improves trust in relationships

between individuals and groups, supports greater consistency in standards and qualities ofproducts, and cultivates greater sensitivity to the impact of the enterprises values and

messages.

INTRODUCTION TO MULTINATIONAL

ENTERPRISES:

A multinational enterprises (MNE) or transnational corporation (TNC) is a corporation or

enterprise that manages production or delivers services in more than one country. It can also be

referred to as an international corporation. Their aim is the global profit maximization

Three Stages of Evolution of MNEs

The majority of multinational companies follow the three stages below:

1. Export stage. This stage includes initial inquiries and the firms rely on export agents. Also,

the corporations use the expansion of export sales and the further expansion. With that the

companies want to aim foreign sales branch or assembly operations (save transport cost).

2. Foreign production stage. There is a limit to foreign sales. Wages and land rents might be

lower in the foreign countries.

FDI versus licensing, When the firm chooses a foreign production and they use it as a method of

delivering goods to foreign markets. It must be decided whether to establish a foreign production

subsidiary or with giving a license to a foreign firm.


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License .Licensing is easy to be given and that is the reason for being the first experience. For

example, Kentucky Fried Chicken in U.S.A. It doesnt require any capital expenditure. Secondly,

it isnt risky and lastly the payment is equal with a fixed percentage of sales.

Problem: the mother firm cannot any managerial control over the license and it is independent.

The license may transfer industrial secrets to another independent firm, thereby creating a rival.

3. Direct investment. This requires the decision of the top management, because it is a critical

step. It is a risky decision, because there is lack of information. An example, which can be given,

is that US firms tend to establish subsidiaries in Canada first. The Singer Manufacturing

Company established its foreign plants in Scotland and in Australia in the 1850s. Those plants

are being established in several countries. After that, licensing is switched from independent

producers to its subsidiaries. Lastly, the export is being continued


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Selected MNEs

MOTOROLA

Motorola is known around the world for innovation and leadership in wireless and broadband

communications. Inspired by its vision of Seamless Mobility, the people of Motorola are

committed to helping people get and stay connected simply and seamlessly to information, and

entertainment that you want and need. Motorola does this by designing and delivering the "must

have" products, "must do" experiences and powerful networksalong with a full complement

of support services. A Fortune 100 company with global presence and impact, Motorola had

sales of US$35.3 billion in 2005.

KEY BELIEFS - THE WAY MOTOROLA WILL

ALWAYS ACTMotorola's Key Beliefs have been in existence for decades, and Motorola continues to have a

strong culture of corporate ethics and citizenship since its original establishment in the 1970s. itsCode of Business Conduct has provided Motorola employees guidance for their business

activities, placing a priority on establishing trust with its stakeholders. However, it is not enough

to declare its good values. Motorola is committed to acting on them--through the potential of its

technology and the way they conduct their business. The Ethics Line offers information, advice

and suggestions. Use it to discuss any concern or problem - not just for emergencies. The Ethics

Line strives to make sure that all questions or concerns are handled fairly, discreetly and

thoroughly.

ETHICAL PRACTICES IN MOTOROLA

Times will change. Our products will change. Our people will change. Our customers will

change. What will not change is our commitment to our key beliefs.

The key beliefs define who they are as individuals and as a company - to each other, its

customers, its shareholders, its suppliers, its competitors and its communities. Uncompromising

integrity means staying true to what they believe. Motorola adheres to honesty, fairness and


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doing the right thing without compromise, even when circumstances make it difficult. Constant

respect for people means how Motorola treats everyone with dignity. Constant respect applies

to every individual they interact with around the world.

The Code of Business Conduct is a guide to help Motorolans live up to Motorola's high ethical

standards -- and their own. It summarizes many of the laws that Motorola and all Motorolans are

required to live by. The Code goes beyond the legal minimums, however, by describing the

ethical values we share as Motorolans. The Code is neither a contract nor a comprehensive

manual that covers every situation Motorolans throughout the world might encounter. It

highlights key issues and identifies policies and resources to help Motorolans reach decisions

that will make Motorola proud.

MOTOROLAs RESPONSIBILITY TO MOTOROLANSWe respect the dignity of each Motorolan.

Motorolans will treat each other with respect and fairness at all times. They will value the

difference of diverse individuals from around the world. Employment decisions will be based on

business reasons, such as qualifications, talents and achievements, and will comply with local

and national employment laws. Abusive, harassing or offensive conduct is unacceptable, whether

verbal, physical or visual. Examples include derogatory comments based on racial or ethnic

characteristics and unwelcome sexual advances. The Motorolans are encouraged to speak out if a

co-worker's conduct makes them uncomfortable and to report harassment if it occurs.

They are all responsible for maintaining a safe workplace by following safety and health rules

and practices. They are responsible for immediately reporting accidents, injuries and unsafe

equipment, practices or conditions to a supervisor or other designated person. Motorola is

committed to keeping its workplaces free from hazards. To protect the safety of all employees,

each of them must report to work free from the influence of any substance that could prevent

them from conducting work activities safely and effectively. Threats or acts of violence or

physical intimidation are prohibited.

MOTOROLAs RESPONSIBILITY TO CUSTOMERS ANDCONSUMERS

We earn customer loyalty by delivering on our promises.

Maintaining Motorola's valuable reputation requires complying with its quality processes and

safety requirements. Motorola builds long-term relationships with its customers by

demonstrating honesty and integrity. Its marketing and advertising will be accurate and truthful.


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Deliberately misleading messages, omissions of important facts or false claims about its

competitors' offerings are unacceptable. They obtain business legally and ethically. Bribes or

kickbacks are unacceptable. Guidance on customer gifts, travel and entertainment is in the

Conflicts of Interest section of this Code. Motorola protects its customer information that is

sensitive, private or confidential - just as carefully as they protect their own. Only those who

have a need to know, have access to confidential information.

MOTOROLAs RESPONSIBILITY TOCOMMUNITIESAs a global corporate citizen, Motorola creates products and provides services that benefit

people around the world.

Motorola serves society by providing life-enhancing products and services at a fair price, and by

actively supporting the communities in which they operate. Motorola, the Motorola Foundation

and Motorolans throughout the world provide generous financial and voluntary support to

thousands of worthwhile community programs. Motorolans are free to support community,charity and political organizations and causes of their choice, as long as they make it clear that

their views and actions are not those of Motorola. Employees' outside activities must not

interfere with job performance. No Motorolan may pressure another employee to express a view

that is contrary to a personal belief, or to contribute to or support political, religious or charitable

causes.

Motorola respects the environment by complying with all applicable environmental laws in all

countries in which they conduct operations. Motorola is committed to protecting the environment

by minimizing the environmental impact of its operations and operating its businesses in ways

that foster sustainable use of the world's natural resources. Motorolans must comply with

Motorola's environmental policies and programs. Notify management if hazardous materials

come into contact with the environment or are improperly handled or discarded.

Motorola provides fair, accurate, timely and easy to understand information to the public. To

ensure professional and consistent handling, requests from the media are forwarded to the local

communications group or Corporate Communications. Requests from financial analysts and

shareholders are forwarded to Investor Relations.

Issues Faced by Motorola

Motorola to Pay $16 Million for Overcharging the Navy


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By JOHN H. CUSHMAN Jr., Special to the New York Times

Published: March 25, 1988

Motorola Inc. has agreed to plead guilty to criminal charges of overcharging on military

contracts and to repay $16 million to the Pentagon, the Justice Department announced today. The

company's Government Electronics Group was accused of mischarging for labor on three Navy

contracts beginning in 1983. Theodore S. Greenberg, a Justice Department prosecutor, called the

settlement with Motorola ''one of the largest criminal settlements we have had in the military

procurement area.'' He said the department viewed it as important not only because of the

amount of money involved, but also as a sign that ''the Department of Justice is not shirking its

responsibilities in these matters.'' The department has been criticized for mismanaging the

prosecution of military contract fraud, after abandoning a major case against General Dynamics

Corporation last year. Motorola, which disclosed several weeks ago in its annual report that it

had reached an agreement in principle with the Government, cooperated extensively in the

investigation and had previously voluntarily reimbursed the Defense Department for $6 millionof the overcharges, according to the company and the Justice Department. Thus the settlement

calls for an additional $10 million

Motorola fined in conspiracy scandalKIND-HEARTED mobile phone outfit Motorola has been fined $729,000 for helping three other

companies get an order for a police radio system. According toAP, South Korea's Fair Trade

Commission said Motorola Korea helped three South Korean companies get orders from

government agencies. Leenos and two other South Korean companies were fined $295,000

between then for their antics. It seemed that the three co-ordinated their bidding prices during around of contract bids. Ironically the bidding was to provide coppers with nice new shiny police

radios. The three other companies were Motorola's sales agents for its trunked radio system.

Motorola Korea has called a foul over the ruling although it has not said if it will appeal yet. It

looks like the lawyers are searching the ruling for a get-out clause.

Adelphia sues Motorola for more than $1 billionThe bankrupt Adelphia Communications Corp filed a suit against Motorola in 2006, asking for

damages of over 1 billion USD. In the case, Adelphia alleged that Motorola knowingly partook

in the practices that led to the imprisonment of Adelphia's founder John Rigas (who was

convicted of conspiracy, bank fraud and securities fraud in 2004). Motorola claimed its

accounting practices followed GAAP
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MOTOROLAs CSR

Human Rights

Motorola Publicly Renounces Involvement in Antipersonnel MineProductionMotorola was the first to publicly renounce its involvement in theproduction of antipersonnel mines during a mid-1990'sHuman Rights Watchcampaign.

Of 37 companies identified, only 17 replied to a letter from the Human Rights Watch

organization.

Environmental Concerns

Motorola Calls Schools to Join Race to Recycle ProgramMotorola renewedits call on US schools to join its Race to Recycleprogram. The program, which allowsschools to earn up to 21,000 USD per calendar year, helps reduce e-waste while

promoting philanthropy within the US education system.

Workers Rights

Motorola Receives Perfect Score on Human RightsFor the sixth year in arow, Motorola has received a perfect score in the Corporate Equality Index administered

by theHuman Rights Campaign(not to be confused withHuman Rights Watch). To

quote a Motorola representative, Motorola is honored to be recognized for the sixth

consecutive year by the Human Rights Campaign as a company that promotes and

supports initiatives for our gay, lesbian, bisexual and transgender employees."
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Samsung mobile co., Ltd

INTRODUCTION

One of the world's largest semiconductor manufacturers, Samsung Electronics is also SouthKorea's top electronics company. It makes many kinds of consumer devices, including DVDplayers, big-screen televisions, and digital still cameras; computers, color monitors, LCD panels,and printers; semiconductors such as DRAMs, SRAMs, and flash memory; and communicationsdevices ranging from wireless phones to networking switches. The company, which is theflagship member of Samsung Group, also makes microwave ovens, refrigerators, airconditioners, and washing machines

Samsung mobile History

Unlike other electronic companies Samsung origins were not involving electronics but otherproducts.

In 1938 the Samsung's founder Byung-Chull Lee set up a trade export company in Korea, sellingfish, vegetables, and fruit to China. Within a decade Samusng had flour mills and confectionarymachines and became a co-operation in 1951. Humble beginnings.

From 1958 onwards Samsung began to expand into other industries such as financial, media,

chemicals and ship building throughout the 1970's. In 1969, Samsung Electronics wasestablished producing what Samsung is most famous for, Televisions, Mobile Phones(throughout 90's), Radio's, Computer components and other electronics devices.

1987 founder and chairman, Byung-Chull Lee passed away and Kun-Hee Lee took over aschairman. In the 1990's Samsung began to expand globally building factories in the US, Britain,Germany, Thailand, Mexico, Spain and China until 1997.In 1997 nearly all Korean businessesshrunk in size and Samsung was no exception. They sold businesses to relieve debt and cutemployees down lowering personnel by 50,000. But thanks to the electronic industry theymanaged to curb this and continue to grow.

The history of Samsung and mobile phones stretches back to over 10 years. In 1993 Samsungdeveloped the 'lightest' mobile phone of its era. The SCH-800 and it was available on CDMAnetworks.Then they developed smart phones and a phone combined mp3 player towards the endof the 20th century. To this date Samsung are dedicated to the 3G industry. Making video,cameraphones at a speed to keep up with consumer demand. Samsung has made steady growth in themobile industry and are currently second but competitor Nokia is ahead with more than 100%increase in shares.


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Ethics management in samsung

Through managerial practices based on ethical discipline and integrity, Samsung Electronics isable to return greater benefits and values to its shareholders, customers, employees, partnercompanies, and people in the community.

Samsung Electronics has increased the number of outside directors in the BOD, restructured theaudit committee, and opened business results to the public. To achieve a level of ethics whichadheres to a higher standard than that required by laws and regulations, the Company follows theguidelines in the Ethics for Employees and the Code for Procurement. To prevent any illegalities,all employees periodically take an anticorruption class. The cyber audit team receives acorruption report around the clock from inside the company and outside. Any employeeconnected with corruption is punished by proper measures regardless of his or her position.

Samsung Electronics global code of conduct

Samsung Electronics continuously focus on the whole prohibition of injustice behavior such asbribery, corruption and non participation in politics under the code of conduct based on the 5management principles in Sep. 2005. Through this, it became obligatory that employees makehealthy organization culture and observes the obeying the law consciousness.

Samsung Electronics management principles

We comply with laws and ethical standards We maintain a clean organizational culture We respect customers, shareholders and employees We care for the environment, health and safety We are a socially responsible corporate citizen

Samsung Electronics management principles

The code of conduct is composed of 59 items in 17 clauses based on the 5 managementprinciples and defines the practical performance measurements about conducts and judgment ofvalue such as prohibition of discrimination against nationality and gender, etc. transparentopening of business information, protection of customers privacy and searching for mutual

living with cooperative corporations to step toward the global company.

abiding laws and fair competition - ethical code 12

political activities of employees - ethical code 14

clean corporate structure - ethical code 21

co-existence and co-prosperity - ethical code 53


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Audit committee

The Audit Committee controls and assists the performance of employees from top to bottom.The audit office was restructured in 2000. The committee has a broad range of audit rights.These include the right to audit performance and work tasks (the committee can audit overall

performance and work tasks of the BOD, CEO and other employees from top to bottom); theright to inquire about financial reports and to audit corporate assets (the committee can inquireabout a financial report from the BOD and employees any time and audit the Companys

financial status and assets); the right to receive reports from the BOD (the BOD must reportimmediately if the directors discover a fact that will adversely affect the Company); the right toclaim to suspend illegal activity of a company BOD member (when the activity of the BODmember violates the law or the Company articles and may cause irrecoverable damage to theCompany; the committee has the right to claim to suspend the activity); and the right to call ageneral shareholders meeting (with the submission of a letter stipulating the purpose of the

meeting to the BOD, the committee can call a special general shareholders meeting). TheCompany also runs a separate audit team under the direct control of the CEO, to encourage

employees to adhere to the practice of management by ethics. The audit team is composed of 22experts with ten or more years of experience. Recently, the team has begun empowering anetwork and an online audit to increase efficiency in inspecting a large organization.

Criticism SOUTH KOREA: "A Corruption scandal snowballs at Samsung Group

in South Korea

November 6th, 2007

A corruption scandal at Samsung Group, the South Korean conglomerate, snowballed Tuesdayas prosecutors vowed to open a formal investigation into allegations that its chairman hadmasterminded a massive scheme of bribery and illegal transactions. Prosecutors were asked bycivic groups to investigate three major allegations of criminal behavior: the creation of a slush

fund; bribing prosecutors and government officials; and an effort by the chairman, Lee Kun Hee,and his aide to help his son take over control of Samsung illegally. In previous scandals that haveplagued Samsung, several executives have been convicted of illegally trying to help Lee's son,Jae Yong, take control of management or of providing illegal election campaign funds forpoliticians.

US: NY AG Sues Chip Makers Over Price Fixing


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July 14th, 2006

New York's attorney general sued leading makers of memory chips Thursday, claiming theymade secret price-fixing arrangements that inflated the cost of personal computers and otherelectronic devices. He claims the companies colluded to fix prices on dynamic random access

memory, or DRAM, chips from 1998 until 2002. , The defendants are Micron, Samsung,Infineon, Elpida, Hynix, Mosel-Vitelic Corp., Nanya Technology Corp. and NEC ElectronicsAmerica Inc. Computer makers such as Dell Inc., Hewlett-Packard Co., Apple Computer Inc.,International Business Machines Corp. and Gateway Inc. had to raise PC prices or reduce theamount of memory installed on their systems to compensate for the higher costs. More than 30other states were expected to file a separate but similar lawsuit against chip makers in SanFrancisco federal court.

The lawsuits follow a long-running U.S. Justice Department investigation that has resulted inmore than $730 million in fines and guilty pleas from four companies -- Samsung ElectronicsCo., Elpida Memory Inc., Infineon Technologies AG and Hynix Semiconductor Inc. The latest

lawsuits will ask the companies to compensate consumers who paid higher prices and demandthat the companies not collude in the future. Worldwide sales of dynamic random accessmemory chips alone totaled more than $24 billion in 2005, according to separate reports from theresearch companies iSuppli Corp. and Semico Research Corp.

Indicted Samsung Chairman ResignsSamsung Group Chairman Lee Kun-Lee, who took control of Samsung after the death of hisfather in 1987, was also indicted for tax evasion and breach of public trust. Those charges focuson Lee's apparent efforts to keep the company in the family for a third generation. He allegedlyarranged sweetheart stock purchases so that his son could control Samsung Group. He resigned

in disgrace after apologizing to South Koreans for causing "much grief." His wife is alsoresigning as head of a Samsung art gallery and cultural foundation. And his son -- long regardedas heir-apparent to the Samsung throne -- was pushed out of his senior management position andwill be sent into exile as a manager in a yet-to-be-named emerging market.

The Lee family, for all its public-relations woes and legal entanglements, remains the dominantshareholder in Samsung. History suggests that Lee Kun-lee's chances of going to jail -- oncharges that include evading about $120 million in taxes -- are slim.

"The power of the Lee family over succession at Samsung will remain," said Kim, who is alsothe executive director of Solidarity for Economic Reform, a group that for 18 years has been

lobbying for corporate and legal reform. In 2006, in the denouement to an earlier Samsungscandal, that office voluntarily gave $800 million to the government to be distributed inscholarships to deserving South Koreans.

In what he described as his "sincere apology" to the nation, Lee, said he accepted "all legal andethical responsibility" for "mistakes" made in the past. According to an indictment last week, thelargest of those mistakes was hiding about $4.5 billion worth of Samsung stock in accounts thatused "borrowed names." Lee hid the money from the government in order to preserve his


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management control over Samsung's various companies, the company acknowledged Tuesday.Lee was charged with evading about $120 million in taxes on those hidden accounts. Samsungofficials said Lee would pay the back taxes and donate an additional $2 billion to "good causes"in South Korea.

Parliament appointed a special prosecutor, Cho Joon-woong, and gave him three months toinvestigate. Authorities soon raided Samsung offices and found $4.5 billion worth of hiddenstock. Cho said last week, that his investigators did not find sufficient evidence of bribery or ofthe alleged slush fund. The prosecutor also declined to arrest Lee -- or any of nine indictedSamsung executives -- on the grounds that they had admitted to the charges against them andbecause their arrest could harm the South Korean economy.

Allegedly formed a global cartel involved in price fixing CRT monitorsA class action lawsuit has been filed against six monitor manufacturers for allegedly forming aglobal cartel involved in price fixing CRT monitors. The lawsuit was filed in the US District

Court for the Northern District of California and claims Chunghwa, LG Electronics, Matsushita,Philips Electronics, Samsung, and Toshiba artificially inflated the prices of CRT products toremain stable despite a rapid decline in demand.

The class action claims the prices of CRT monitors should have fallen as technologicallysuperior products were introduced. Instead there have been periods of unnatural and sustainedprice stability, as well as inexplicable increases in the prices of CRTs.

Samsung Group use toxin component:Consumers interested in buying toxin-free electronics should consider purchasing products free

of toxin, says the environmental group Greenpeace in its new "Guide to Greener Electronics,"which ranks companies on their use of harmful chemicals and electronic waste recycling.

Illinois-based Motorola was deemed the most environmentally destructive, while computermakers Acer and Apple also scored near the bottom of the list. "Only Dell and Nokia scraped abarely respectable score while Motorola flunked the test," Greenpeace said in a statementmarking the guide's release.

Greenpeace's Zeina al-Hajj was especially critical of Motorola.

"Motorola was the only mobile phone company we looked at that doesn't have a plan for future

change of the use of chemicals," she said. "Motorola's competitors--Nokia, LG, Sony Ericsson--have made a commitment and are starting to move. Motorola doesn't even have a policy toeventually stop using hazardous chemicals."

The wireless company replied in a statement. "Motorola's policy is to meet or exceed allapplicable environmental, health, safety, legal, and other requirements in the countries in whichwe do business," it said. "We believe the [Greenpeace] evaluation provides an incomplete pictureof the company's true environmental performance."


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The Greenpeace report also raised concerns about the recycling of used components. Mostmanufacturers contract with third parties in China or India, which dump the often toxic e-wastein the ground with little or no safety precautions. "Only HP has made its recycling plan public,"al-Hajj said. "And they are only recycling 10 percent of their waste."

-Samsung SDI - Business Ethics Grand Prize Winner

Wednesday, April 18th, 2007Samsung SDI, a digital display and energy specialist, has recently announced that it has beenawarded the Business Ethics Grand Prize, which is hosted by the Korean Association of BusinessEthics (KABE).Samsung SDI is the first recipient of the business ethics grand prize in theelectronics and electric industry in Korea. Starting from 2003, the KABE, which is composed ofprofessors of many universities specializing in business management, is giving the BusinessEthics Grand Prize to a company that has achieved a high level of corporate ethics and socialresponsibility.

In 2006, Samsung SDI has been selected as a member of the Dow Jones Sustainability Index(DJSI) for three years consecutively. Being a member of the DJSI and being an awardee of theprize shows at home and abroad that Samsung SDI is truly a leading company that is faithfullyobserving and fulfilling its social responsibility and operating according to corporate ethics.There are three criteria in selecting winners of the prize -- fair management, corporate ethicsmanagement, and management officers -- and 19 detailed items to be taken into consideration.

In 2003, Samsung SDI published a sustainable management report for the first time in Korea,and prepared an ethics management site for both senior management and employees. In April2006, the company had a companywide meeting to present the implementation strategy of ethicsmanagement.

Because of all these efforts, it is reported that Samsung SDI has received a nearly perfect mark inevery criteria. In addition, in order to fulfill social responsibility, the company has included thecode of ethics in its management courses, educating their personnel, and harmonizing both profitseeking and business ethics.Moreover, for the sake of transparent management, this company hasmore outside directors than inside directors. It has tried to build decision-making systems thatcan properly pursue shareholder profits and social responsibility at the same time. For thecreation of environmental value, it has prepared five strategies and built an econetwork.

As for social contribution activities for the community, Samsung SDI is operating a guide andassistance dog center, giving free eyesight recovery operations, and practicing a matching grant

system. In the review comments, KABE said: "Samsung SDI has tried to practice systematic andsustainable ethics management, and succeeded in showing a model corporate image as a globalenterprise."Meanwhile, Samsung SDI President Kim said: "Our Company will continue to makeefforts to fulfill not only our business goals, but also social and ethical responsibility so that wemay receive trust and respect from people all over the world."


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CONCLUSION

Whenever and wherever there are meaningful discussions to create better socio-economic

conditions in the society or to make the world a better place to live in, the discussions invariably

touch Business and Industry or Trade and Commerce also besides other areas of human

activities. Those who run their business or industry on principles of honesty, integrity and justice

are the ones who raise the prestige of their nation and are inspiring examples unto others. In

organization strong ethical culture should be maintained and employees must be given the

appropriate tools and models to align their behavior with company culture and engage in ethical

decision-making.

By comparing these two MNEs we came to know that samsung is practicing more business

ethical behavior than motorola as our this argument is supported by greenpeace ratting as

samsung is ratted at no 5 while Illinois-based Motorola and Hong Kong's Lenovo (which makesthe IBM Thinkpad) were deemed the most environmentally destructive and according to

greenpeace "Motorola was the only mobile phone company we looked at that doesn't have a plan

for future change of the use of chemicals," so we got to know that samsung is producing

environmentally friendly products than motorola.while both the companies are trying to conduct

ethical behavior inside and outside the organization.Thus it can be concluded that, Ethics are

important not only in business but in all aspects of life because it is an essential part of the

foundation on which of a civilized society is build. A business or society that lacks ethical

principles is bound to fail sooner or later.

Live in such a way that you would not be

Ashamed to sell your parrot to the town gossip. ~ Will Rogers


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Documents

Report on Ethics in MNEs