Ethics and corporate governance: banking on scandal
by Justin O'Brien
International Journal of Business Governance and Ethics (IJBGE), Vol. 2, No. 1/2, 2006

Abstract: The forced introduction of compliance programmes has become an integral component of regulatory enforcement strategies in the United States. They are designed to limit corporate malfeasance and misfeasance. Their use has been extended far beyond generic codes of conduct introduced to minimise corporate liability from punitive federal sentencing guidelines. It is now a federal requirement for publicly listed corporations to have a code of ethics. Any derogation must be reported to the Securities and Exchange Commission. This paper suggests that the institutionalisation of compliance in itself represents a major problem. This is because it privileges a transactional approach to ethics in which form replaces substance. The argument is developed by examining the ethical problems facing Citigroup, one of the largest financial conglomerates in the world. Despite having a code that far exceeds the industry standard, it has failed to protect the corporation from major ethical failures.

Online publication date: Thu, 30-Mar-2006

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