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Consequences of Unethical Leadership

Consequences of Unethical Leadership. Leslie Burgy Brook Grzadzinski October 23 rd , 2012. Definition of Ethics:. The study of moral obligation or of separating right from wrong. The accepted guidelines of behavior for groups or institutions.

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Consequences of Unethical Leadership

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  1. Consequences of Unethical Leadership Leslie Burgy Brook Grzadzinski October 23rd, 2012

  2. Definition of Ethics: • The study of moral obligation or of separating right from wrong. • The accepted guidelines of behavior for groups or institutions. • Edwin H. Locke, a goal theorist states that “ethics is the center of leadership because the goal of a rational leader is to merge the interests of all parties so that everyone benefits and the organization prospers.” • Dubrin, A. J. (2010). Leadership. Research Findings, Practice, and Skills. Mason, OH: Jack Calhoun,p.167.

  3. Chung Mong-Koo • Current Demographics: • Age: 74 • Residence: Seoul, South Korea • Education: Bachelor of Art/Science Hanyang University • Occupation: Chairman and CEO of Hyundai-KIA automotive group • Net worth: 6.6 Billion • Recognition: July 2012 named the best CEO of an automobile company in Asia by US Weekly Automotive News

  4. Evidence of Unethical Behavior and Consequences • On April 28th, 2006, Chung Mong-Koo was arrested for embezzlement and breach of trust (Onishi, 2006). Chung Mong-Koo had set up a $105 million dollar slush fund to bribe government officials and politicians. Prosecutors also accused Chung Mong-Koo of illegally transferring assets to his son Chung Eui-Sun who is president of KIA Motors (Fackler, 2006, para. 11). • Chung Mong-Koo was convicted of embezzlement and breach of trust in February 2007 and sentenced to three years in jail but Chung Mong-Koo did not serve any time. (Onishi, 2006) • On September 6th, 2007, the Chief judge Lee-Jae Hong ruled to suspend the sentence due to the huge economic impact of imprisonment and instead ordered Chung Mong-Koo to perform community service and to donate $1.1 billion dollars of his personal asset to charity (Onishi, 2006). • On August 15th, 2008, Chung Mong-Koo received a full pardon from South Korean president, Lee Myung-Bak ("Amnesty Clears The Way," 2009).

  5. Martha Stewart • Current Demographics: • Age: 71 • Residence: New York and Maine • Education: Bachelor of Art and Architectural History • Occupation: Chairman of Martha Stewart Living Omnimedia • Net worth: estimated $650 million • Recognition: Inducted into New Jersey Hall of Fall 2011

  6. Evidence of Unethical Behavior and Consequences • Dec. 27, 2001: Martha Stewart sells all 3,928 shares of ImClone that she owns. Prosecutors later contend she was tipped. • June 4, 2003: Stewart is indicted on nine federal counts. Stewart resigns as chairwoman and CEO of her company but remains chief creative officer and a board member. • Jan. 27, 2004: Prosecutor claims in opening statements that Stewart sold ImClone stock based on a "secret tip," then lied to cover it up (Grigoriadis, 2012, para. 2). • Feb. 27: Judge throws out securities fraud count against Stewart. • March 5: Stewart convicted for lying to investigators • March 15: Stewart resigns from board of Martha Stewart Living Omnimedia Inc. but retains the title of founding editorial director ("Academy of Achievement," 2010, para. 5). • July 16: Martha Stewart sentenced to five months in prison and five months of home confinement for lying about a stock sale (Grigoriadis, 2012, para. 3).

  7. PATRICIA DUNN • Current Demographics: • Age:58, deceased December 2011 • Residence: Orinda, California • Occupation: Chairwoman of Hewlett-Packard in 2005 • Education: B.A. in Journalism • Net Worth: n/a • Recognition: Financial Woman of the Year award 2001

  8. EVIDENCE OF UNETHICAL BEHAVIOR AND CONSEQUENCES • 2005: Dunn was accused of hiring five investigators to spy on fellow directors and journalists by illegally obtaining their personal phone records using false identities. • Sept. 22, 2006: Dunn resigns her chair position at the request of the board. • Oct. 4, 2006: Dunn was charged with four felony counts, fraudulent use of wire transmissions, using computer data without authorization, identity theft and conspiracy. Also was diagnosed with reoccurrence of ovarian cancer and metastasis to the liver. • Mar. 14, 2007: The judge in the case dropped all criminal charges against her. “Her dismissal was much more on the merits than it was on her health” (Richtel, 2007, para. 13). • Dec. 4, 2011: Dunn passed away in her home from ovarian cancer.

  9. STEVE JOBS • Current Demographics: • Age: 56, deceased October 2011 • Residence: Palo Alto, California • Occupation: Co-founder, chairman, and CEO of Apple Inc. • Education: Attended one semester at Reed College then dropped out. • Net Worth: $11 Billion • Recognition: National Medal of Technology • Entrepreneur of the Decade • World’s Most Powerful People

  10. EVIDENCE OF UNETHICAL BEHAVIOR AND CONSEQUENCES • 2001: Jobs was involved with allegations of accounting fraud by improperly backdating stock options and “the neglect from the financial chief and general counsel to report the expense to the Securities & Exchange Commission and stockholders” (Modine, 2009). • Jobs was facing a number of criminal charges and civil penalties related to the incident. • Dec. 29, 2006: Jobs was found not guilty as he was not involved directly with the accounting and backdating of the options. It was also in Jobs favor that he didn’t receive the financial gain when the fraud was first brought to light. • Jobs continued his work in Apple, but on and off throughout the remaining years due to being diagnosed with pancreatic cancer. • Jobs resigned his CEO position in August 2011 and passed away from his complications with cancer in October 2011.

  11. Conclusion • The four leaders described underwent intensive investigations due to their unethical behaviors. While most would think that such personal leadership scandals would affect the companies it was found that they really all did end up successfully. Even Martha Stewart ended up successful and she served time in prison. Apparently providing a material service goes a long way in society as their unethical behaviors were overlooked. For these leaders it was more about the product then the integrity of the leader.

  12. REFERENCES • Amnesty clears the way for Lee’s comeback to Samsung top job. (2009, December 30). Korea Herald. Retrieved from view.koreaherald.com/kh/view.php?ud=200912300000J1&cpv=0 • Darlin, D. (2011, December 5). Patricia C. Dunn dies at 58; led H.P. during spying case. New York Times. Retrieved from http://www.nytimes.com/2011/12/06/business/patricia-c-dunn-dies-at-58-led-hewlett-packard-during-spying-case.html?_r=0 • Dubrin, A. J. (2010). Leadership. Research Findings, Practice, and Skills. Mason, OH: Jack • Calhoun. • Fackler, M. (2006, May 17). Chairman of Hyundai is charged with theft. The New York Times. Retrieved from www.nytimes.com/2006/05/17/business/worldbusiness/17 hyundai.html? • Grigoriadis, V. (2012, April). I just want to focus on my salad: Insider trading-not a good thing. New York Magazine. Retrieved from nymag.com/news/features/scandals/martha-stewart/2012-4 • Martha Stewart biography. (2010). Retrieved from www.achievement.org/autodoc/page/ste0bio-1 • Modine, A. (2009, April 24). Steve Jobs: I wanted respect, not backdated options. Financial News. Retrieved from http://www.theregister.co.uk/2009/04/24/jobs_sec_backdating_interview/ • Onishi, N. (2006, April 29). Hyundai chairman accused of embezzling. The New York Times. Retrieved from http://wwwnytimes.com/2006/04/29/business/worldbusiness/29hyundai.html • Reuters (2007, May 31). Settlement for Martha Stewart Investos. The New York Times. Retrieved from http://www.nytimes.com/2007/05/31/business/media/31martha.html • Richtel, M. (2007, March 15). Charges dismissed in Hewlett-Packard spying case. The New York Times. Retrieved from http://www.nytimes.com/2007/03/15/technology/15dunn.html?adxnnl=1&ref=patriciacdunn&adxnnlx=1349825611-pzhimLwslf7eo6HkhuPoEA

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