Overview of Article 1
The first article which is selected is posted by The Guardian titled ‘Facebook to lodge appeal against ICO’s £500,000 fine (Hern, 2018).’ This article was posted on 21 November 2018, and it is obtained from the website of The Guardian. This article is written by Alex Hern, and it contains 607 words excluding the title of the article. The key issue highlighted in this article is relating to the recent Cambridge Analytica scandal in which private data of 87 million Facebook users were breached. A fine of £500,000 was imposed by Facebook, and the company has lodged an appeal regarding this fine arguing that the penalty challenges basic principles of how people should be allowed to share information online (Osborne, 2018). The ethical issue raised in this scenario was relating to failure of Facebook to ensure that the privacy of its users is protected and they are not used for illegal purposes.
Due to the unethical actions of Facebook, the private data of more than 87 million users were violated after which Facebook failed to ensure that security of its users which resulted in violation of data of 50 million users (Statt, 2018). This report will identify the key ethical issues raised in this article and evaluate the key stakeholders who are affected by these actions. This report will discuss the ethical issues by linking them to relevant ethical theory to determine whether the key ethical challenges in this case. Lastly, recommendations will be given which can assist Facebook in addressing the key ethical issues raised in the scenario.
The key ethical issues raised in this article are violation of private data of more than 87 million users and failure of Facebook to protect the privacy of its users (Hern, 2018). The key stakeholders who were affected in this scenario include Facebook, shareholder of Facebook, government, and people who used Facebook. The issues started in 2010 when Facebook launched a program for its developers called Open Graph. This program allowed the developers to collect the private data of Facebook users along with their friends. The developers were allowed to access the data of people who were added in the friend list of a person who has given permission to the developer to access his/her data. In 2013, an application was launched by Global Science Research called ‘thisisyourdigitallife.’ This application allowed Facebook users to create their psychological profile by asking many psychology-related questions from them. Around 300,000 users played the game. In 2014, the privacy policies of Facebook were revamped, and the company discontinued its Open Graph platform (Hern, 2018). In 2016, it was reported in news that the private data of Facebook users were collected and used in order to support the presidential campaign of Ted Cruz.
The major issues arose in 2017 when it was reported in the news that private data of 50 million users were affected and their data was used to find potential voters to support the presidential campaign of Donald Trump (Kozlowska, Gershgorn & Todd, 2018). Later, the number was revised, and it was reported that 87 million users were affected in the breach. It was found that users who give permission in ‘thisisyourdigitallife’ application were affected in this breach. Due to the availability of the Open Graph platform, the company was able to collect the data of 87 million users by gaining access to permission from only 300,000 users. This shocked the internet and investigations started against Facebook since the company failed to ensure that the data privacy of its users is protected. The inability of Facebook to ensure that the private and data of its users is protected raised many questions against the social media giant. This also raises many ethical concerns because there are over 2.27 billion active users who share their personal data on the website (Statista, 2018).
Identification of ethical issues and stakeholders
The CEO of the company, Mark Zuckerberg, appeared before a committee in which he admitted that it was a mistake made by Facebook for which he is liable. He also provided that Facebook will change its privacy policies, however, the company did not stop the collection of private data of users (Lin, 2018). The corporation only sent a notification to its users regarding the applications which were collecting their data and made it easier for them to stop any applications from accessing their data. However, it did not stop third-party developers from accessing the private data of users. Moreover, due to the lack of strict privacy protection measures, login details of more than 50 million Facebook users were stolen by hackers (Statt, 2018). This incident shows that the private data of Facebook users are not protected, and they are vulnerable to cyber attacks. It raises key ethical issues regarding the governance of Facebook which is focused on increasing the profitability of the company rather than protecting the privacy of its users.
The ethical issues arise in this case regarding incapability of Facebook to protect the private data of its users and failure to take appropriate measures which are required to ensure that the privacy of users is maintained. Facebook was affected by this incident, and it suffered substantial loss because its share prices dropped rapidly. The shareholder of Facebook also affected after this incident as well. The incapability of the government to stop and regulate these issues is shown in this incident as well. The Information Commissioner’s Office (ICO) in the United Kingdom imposed a fine of £500,000 on Facebook which is the highest fine which it can impose. However, Facebook generates more revenue than £500,000 in less than 18 minutes (Ghosh, 2018). Facebook has also lodged an appeal against this order to terminate the fine based on the claim that it challenges the way people are allowed to share their information online. Lastly, people who used Facebook were the key stakeholders who were affected in this case. The private data of these users were breached by cyber criminals who used them for illegal purposes. This incident shows that even the social media giant such as Facebook that has appropriate resources is not able to ensure that the private data of its users is secured (Corfield, 2018). They also lack the will to implement strict policies to protect the data of their users because they focus on increasing the profitability of the company through the private data of users.
The key ethical theories which apply in this scenario include Utilitarianism and Deontology ethical theory. The Utilitarianism ethical framework focuses on evaluating the morality of a situation based on evaluating the consequences of actions taken by parties rather than actions themselves (Bose, 2012). As per this theory, if the consequences of a situation are positive, then it is considered ethical. According to this theory, greater happiness of a greater number of people should be achieved based on the actions of the parties. As per this theory, the actions of Facebook in this scenario are considered as unethical. The consequences of the actions of Facebook resulted in adversely affected 87 million people. The corporation decided to launch Open Graph platform in order to increase its profitability by expanding its user base (Lin, 2018). The company also wanted to attract more developers to its platform through this program; however, it did not consider the negative consequence of this decision. After this incident, the corporation still failed to ensure that corrective measures are taken by the company to protect the privacy of its users.
Discussion of the ethical issues and linked to ethical theory
After this incident, the company continued to collect the private data of its users which was breached in another attack in which the login details of 50 million users were collected by hackers (Statt, 2018). The actions of the company adversely affected a large number of people due to which happiness of a greater number of people was not achieved. In the beginning, happiness of a small number of people was achieved; however, the consequences of this decision resulted in creating challenges for a large number of people. The utilitarianism approach provides that actions should focus on achieving happiness of a greater number of people, however, in this scenario; this was not achieved as more than 87 million users were affected by this incident. The article shows that Facebook has not learned its mistake and it has filed a claim against the penalty to ensure that it continues to collect the private data of its users (Hern, 2018). Therefore, the actions taken by the senior level executives of Facebook are considered as unethical since the company violated the privacy of its users.
In the case of Deontology ethical framework, the ethical consequences of a situation are not evaluated rather this theory emphasis on actions of the parties. As per this theory, the parties must avoid violating their duties in any scenario even if the consequences of these actions are positive (Dion, 2012). This theory provides that ethical approach cannot be achieved if the parties continue to violate their duties. This theory evaluates the maxim of the party which has taken the decision to understand whether it is ethical or not. This theory is opposed to utilitarianism ethical approach since it did not focus on the consequences of a situation (Yazdani & Murad, 2015). As per this theory, the actions taken by Facebook and its senior-level executives are considered as unethical. The management of Facebook violated its duties towards its users by failing to ensure that it takes appropriate measures to protect their private data. Facebook owes a duty of care towards its users to protect their data since it collects such data and uses it to generate profits. The maxim of Facebook was to expand its profits by increasing the number of developers on the platform when it decided to launch the Open Graph platform.
This decision shows that the management of Facebook has violated its duties towards its users. They allowed third-party developers to violate the data of those users who have not given their consent or permission to the developers to collect their data. It is a breach of their privacy since they did not allow the third parties developers to collect their private data which was used by them to find potential votes to support the campaign of President Donald Trump (Meredith, 2018). After the violation of the privacy of users, Facebook did not learn its lesson. The corporation did not take any drastic steps which were focused on ensuring that the privacy of its user remains secured from unauthorised access. Due to the failure of the senior executives to comply with their duties, no actions were taken by Facebook which resulted in violating the privacy of another 50 million users (Statt, 2018). Therefore, the actions of Facebook are considered as unethical as per Deontology ethical framework.
The article highlighted that the private data of Facebook users are not protected, and they are under threat based on which their privacy can be violated (Hern, 2018). This is a major issue which is affecting millions of people; yet, no actions are taken by Facebook to ensure that its users are protected from data breaches. Due to these ethical concerns, Facebook is suffering loss as well which negatively reflect on the profitability of the enterprise. Therefore, following actions can be taken by Facebook which can assist the company in ensuring that it ethical comply with its duties and protect the privacy of its user.
Facebook should implement an ethics committee which should be focused on evaluating the actions of the company to ensure whether or not they are ethical or not (Hedgecoe, 2014). Discussing the business strategies with an ethics committee would have assisted Facebook in ensuring that it would have never launched the Open Graph platform. This program was focused on allowing developers to gain access to users’ data even if they have not given their express consent. It shows that there is a lack of ethics committee in the company which governs its operations. The ethics committee can also evaluate the actions of the company with ethical theories to ensure that they did not take an unethical action.
Although Facebook has implemented a CSR model, however, the company is required to make changes in its policies to improve its effectiveness. Changes are necessary to increase transparency in the operations of the company to ensure that the management cannot misuse its position to violate the privacy of users (Bondy, Moon & Matten, 2012). The company should also increase its accountability towards its stakeholder which will assist it in ensuring that the data of its users is protected.
Conclusion of Article 1
Based on the evaluation of the article, it can be concluded that Facebook has acted unethically by launching a program which allowed developers to gain unauthorised access to users’ data without their consent. It affected more than 87 million users; however, the company is stilling failing to take appropriate steps towards protecting the data of its users. It has made a claim against the penalty of ICO to ensure that it keeps collecting the private data of uses. The actions of Facebook are unethical as per Utilitarianism and Deontology ethical theory. Recommendations are included for Facebook to ensure that it conducts its operations in ethical manner which include implementation of an ethics committee and improvements in the CSR structure of the company.
The second article which is selected for this report is posted by The Sydney Morning Herald titled ‘Businessman Peter Gregg found guilty of falsifying records (Baker & McKenzie, 2018).’ This article is written by Richard Baker and Nick McKenzie, and it is obtained from the online website of the Sydney Morning Herald. This article was posted on 11 December 2018, and there are around 1,000 words in this article. The article has reported the recent arrest of Peter Gregg who has found guilty for falsifying records in which he allegedly transferred $15 million to a UAE based company. He violated his duties while working in the construction giant Leighton Holdings. The investigation against Peter Gregg was brought forward by the Australian Securities and Investments Commission (ASIC) who alleged him for misusing his powers to falsify the records of the company (Janda & Letts, 2018). The key ethical issue, in this case, is relating to failure to comply with moral duties by Peter Gregg and the fact that he acted unethically for personal gain without focusing on the interest of stakeholders of the firm. This report will evaluate this case to identify the main ethical challenges in this scenario along with their impact on the stakeholders who were affected in this case. This report will evaluate key ethical theories which apply on this case to link the article with them. Lastly, recommendations will be given in the report in order to address the ethical issues raised in this scenario.
The article posted by The Sydney Morning Herald highlighted a key ethical issue relating to the governance of Leighton Holdings and failure of Peter Gregg to ensure that he complies with his duties (Baker & McKenzie, 2018). Mr Gregg violated his duties in order to falsify the records of the company in order to conduct a fraud. Peter Gregg is a former chief financial executive (CFO) of Leighton Holdings who faced a five-week trial in the New South Wales District Court. In this case, a jury found him guilty of violating section 1307 (1) of the Corporations Act 2001 (Cth) (Janda & Letts, 2018). While acting as a director of Leighton Holdings, Mr Gregg misused his powers for falsification of the books of accounts of the company. A suit was filed against Mr Gregg by the ASIC who conducted a multi-year investigation and a federal parliamentary inquiry to collect evidence against Mr Gregg (Baker & McKenzie, 2018). The allegations made by the ASIC were made regarding the operations of Leighton Holdings in the Middle East and Iraqi oil industry which was made almost a decade ago.
The investigation was started by the ASIC after allegations were made against Leighton Holdings that it had bribed foreign officials between 2009 and 2011. The main issue arose when the company itself reported its concerns to the ASIC regarding alleged corruption in 2012. These allegations were centered on a payment for US$15 million ($21 million) which was made to a company that was operating out of the UAE (Wiggins, 2018). ASIS alleged against a 2011 deal in which it was held that the payment made by Leighton Holdings for buy and sell of steel was “never a genuine agreement”. In this transaction, the former CFO of the company, Peter Gregg, agreed to make a payment for $21 million for securing a steal deal, however, the steal was never delivered to the company. It shows that Mr Gregg had misused his position in order to falsify the accounts of the company for personal gains. It was told by Mr Gregg to the NSW District Court that the first payment of $12.5 million was made for “marketing and advisory” services. Another payment of $12.5 million which was made by the company was described as a loan (Janda & Letts, 2018).
The books of Leighton Holdings were falsified by the parties in order to justify these payments which were made and approved by Mr Gregg while he was acting as the CFO of the company. During this trial, the former managing director of Leighton Welspun Contractors Pvt Ltd, Russell John Waugh, was not found guilty of aiding and abetting the offense of Mr Gregg (Janda & Letts, 2018). In 2015, Leighton Holdings changed its name to CIMIC. The key stakeholders, in this case, include Peter Gregg, Leighton Holdings, shareholders of the company and ASIC. Mr Gregg failed to comply with his duties while acting as the CFO of the company. Leighton Holdings suffered a loss and a negative brand reputation due to its failure to conduct its operations in an ethical manner. The falsification of books affected the shareholders because their money was used by Mr Gregg in order to make a payment to the UAE based company (Baker & McKenzie, 2018). Lastly, it is the duty of ASIC to monitor and ensure that incidents such as this did not occur and parties who are responsible for these illegal and unethical actions are punished accordingly.
Failure to comply with ethical duties and misusing of position in the company are the key ethical issues which arise in this article. Mr Gregg was acting as the CFO of the company, and he owed many duties towards the company and its stakeholders. He violated such duties when he falsifies the accounts of the company. ASIC conducted an investigation against him in which it was found out that the charges made against him are correct (Greenwood, 2018). Even Leighton Holdings was concerned regarding this breach which was conducted by its former CFO based on which it made an appeal to the ASIC. ASIC was also facing pressure after the introduction of the Banking Royal Commission for its inability to act as a sole regulatory in the country for ensuring that integrity is maintained in the financial industry of Australia. This investigation showed that ASIC has the ability to conduct a thorough investigation against those individuals who have violated their duties while taking decisions in the organisation. The shareholders of the company suffered a loss as well because their money was misused and misappropriated by Mr Gregg when he made a false payment of $21 million to a UAE based company for personal benefits (Janda & Letts, 2018). Leighton Holdings also faced negative publicity due to its failure to govern its operations to ensure that transparency is maintained when it comes to keeping the books of accounts in the company.
The key ethical theories which apply in this scenario include Virtues ethical theory and Deontology ethical theory. The Deontology ethical theory, as discussed above, focuses on the duties of the parties while determining whether they have taken ethical action or not. This theory provides that parties must comply with their duties even if the consequences are not positive to ensure that they conduct their operations in ethical manner (Shafer-Landau, 2012). In this article, it was seen that Mr Gregg violated his duties towards Leighton Holdings while conducting its operations as the CFO of the company. He owed a duty to ensure that he complies with appropriate accounting standards and avoid taking any actions which could be detrimental for the company or its stakeholders. Various duties are given in the Corporations Act which executives have to comply with in order to ensure that integrity is maintained by they are taking business decisions.
In the case of Mr Gregg, he misused his position and violated his duties given in the Corporations Act. He violated section 1307 (1) which provides that an officer or former officer or employee of a company who engaged in any conduct which resulted in causing destruction mutilation, concealment or falsification of the books of the company or its affairs can be held liable for those actions (Austlii, 2018). Under this section, falsification of books of a company is considered as an offense based on which Mr Gregg was held liable by the NSW District Court (Wiggins, 2018). From an ethical perspective, the actions of Mr Gregg are considered as unethical since he violated the duties given in the Corporations Act.
Virtue ethical theory is different from the deontology and utilitarianism ethical theory since it focused on virtues of the party who has taken action rather than the action itself. This theory focuses on the characteristics of mind and character of a person who has taken a decision to determine whether it is considered as ethical or not (Broad, 2014). This theory focuses on how the virtues are acquired and how they apply to different real-life situations. Based on this ethical theory, the actions taken by Mr Gregg are considered as unethical. Mr Gregg failed to show positive virtues which resulted in considering that the actions of a party are ethical. As per this theory, the parties have to show key virtues relating to mind and character which are necessary to determine whether their actions are ethical or not (Audi, 2012). In this article, it is shown that Mr Gregg clearly violated his duties which were given in the Corporations Act.
The objective of violating these duties is to gain personal benefits which Mr Gregg wanted to get through illegal methods. Mr Gregg was in the position to invest the money of the company into different projects, and he misused such position to conduct fraud against the company. He failed to take into consider the interest of key stakeholders of the corporation who were affected by his decision. He falsifies the books of accounts of Leighton Holdings in order to hide his illegal actions to gain unfair advantage. He did not reflect any positive virtues such as integrity, honesty, dedication towards duties, truthfulness, modesty, righteous indignation and others (Wilson, 2014). He filed a defamation suit against The Age who made allegations against him for falsifying the books of the company (Baker & McKenzie, 2018). This defamation suit was dropped by the court based on the fact that Mr Gregg was found guilty of violating his duties towards the organisation. Based on these factors, it can be considered that the actions by Mr Gregg are considered as unethical based on Deontology and Virtues ethical theory.
Following recommendations can assist in addressing the key ethical issue raised in the article.
Currently, CIMIC has implemented a corporate governance structure in which the company focuses on managing its risks to ensure that a balance is maintained between the interests of stakeholders (Seidl, Sanderson & Roberts, 2013). However, it should implement new corporate governance policies which are targeted towards increasing transparency in the operations of the company. The actions taken by Mr Gregg were a result of lack of transparency in the operations of the company which allowed him to misuse the money for illegal purposes. He did not have to answer to anyone, and he had the authority to transfer the money to third parties. Effective corporate governance principles would have enforced Mr Gregg to maintain transparency in his actions, and he would have to disclose this amount as well which would have prevented this incident.
The accounting standards implemented by Leighton Holdings are not suitable to ensure that it is able to detect falsification in the accounts. The corporation should establish or improve its accounting committee which is focused on ensuring that the employees and officers are complying with relevant accounting standards while taking business decisions (Bayerlein & Al Farooque, 2012). Strict compliance with these policies would have assisted Leighton Holdings in avoiding the ethical issue raised by the actions of Mr Gregg which resulted in adversely affecting the company and its stakeholders. Based on strict accounting policies, the company would have avoided ensured that Mr Gregg was not able to falsify the books which would have prevented this incident.
Conclusion of Article 2
To conclude, the second article highlighted that illegal action taken by Mr Gregg while acting as the CFO of Leighton Holdings to falsify the books of the organisation. He misused his position in order to pay a payment of $21 million from the company to a UAE based company, and he falsifies the books to hide this action. Based on both deontology and virtue ethical theory, the actions of Mr Gregg are illegal since he violated his duties given under the Corporations Act and failed to comply with positive virtues. He wanted to gain personal profits based on these actions which adversely affected the company and its stakeholders. Recommendations for addressing this issue are given in the report which includes compliance with effective corporate governance policies for improving transparency in the operations and introduction of stricter accounting policies to avoid falsification of books of the organisation.
References
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