Corporate Law Ethics Business Organizations

Question: Discuss about the Corporate Law Ethicsfor Business Organizations. Answer: Introduction Business organizations are run to make profits. But the enterprise should carry out the business activities without breaking any law. In certain cases the company has not only to respect the law but also certain business ethics. There are certain activities which are not debarred by law but are unethical. If the business engages in such activities, the enterprise would lose the support of people. In this case people start to boycott the goods of the company. The unethical activity could be that the suppliers of the company face charges of human rights abuse. People are becoming more ethical. They believe in certain good principles according to which a business must be done. What Joanna Should do in the Given Situation In the given case, Joanna faces a dilemma. She has come to know how the company Orange Coffee Supplies has been importing coffee from North Musoria and showing to everyone that the coffee beans were produced in South Musoria. If Joanna reveals this to everybody, the company of which she is a company secretary and legal counsel would suffer. There would be public outrage against Orange and there would be a dip in its sales. Moreover government which has given the company grant to set up a factory in Latrobe Valley region would be angry and take some adverse action against the company. It might cease any future grants. Joanna as a company secretary of Orange Coffee Supplies Ltd has the right to communicate with the directors of the company. She has come to know about the e mail from Simone regarding import of coffee beans made in North Musoria. If she reveals this information to everybody, Simone would be unhappy with her. But it is Joannas duty to reveal this information to directors of the company as a company secretary. She is supposed to report to the directors the risks that the company faces in business. The company would lose a lot of goodwill with the people because it has all along been projecting itself as ethical coffee importer. The directors would be able to handle the issue better. There can be a change in the companys policy and the coffee beans produced in North Musoria may not be imported in future. The profit margins of company would come down but the company can prevent drastic public reaction by apologising to them. The directors can even remove the managing director Simone from her position. People are becoming more aware of the issue of corporate social responsibility. The annual reports of companies carry information about how they are doing good for the society and are careful regarding issues like global warming. The annual report also carries the directors report in which it would be mentioned that how Orange is an ethical coffee importer. It is therefore the duty of Joanna to give the information to the directors, who are to perform their duties with due care and diligence. The directors should have known what Simone was up to. Joanna is also the in house counsel in Orange Coffee Supplies Ltd. She is also a lawyer by profession. She gets a very good salary from the company and there are dangers that she might lose her job if she speaks against Simone and the companys arrangement of importing coffee beans produced in North Musoria. She might not get the support of the directors and they along with Simone would view her as a threat. They might also offer her a better salary to keep the secret with her and join other managers who are supporting Simone. In lawyers profession there is constant pressure to win the case from different parties. There are lawyers who defend their client even when they know that person to be a cheater. But there are other lawyers who fight in the court only for a truthful person. There is lot of commercialization in the field of law but there are many ethical lawyers, who believe in certain good ideals and principles and still win the case. Joanna reports to Simone directly as the general counsel of the company. She advises the firm on the legal matters. She can advise Simone whether coffee beans made in North Musoria should be imported or not. If any law is being broken in such transactions, Joanna can inform the board of directors regarding the risks attached to such transactions being carried out. The government of the country can take action against the company. The company is listed with the Australian Stock Exchange, which can ask for information on such matter from the company. The accounts of the company are audited. The auditors would ask for more facts on such transactions. If the information regarding such transactions gets out through any of the managers of the company, there would be increased scrutiny by the income tax department. If the shareholders of the company get to know about these imports of coffee beans from North Musoria, many of them would support Joanna. The shareholders have invested their mon ey in the company and know that any adverse publicity about the company, would also lead to fall in the market value of the company. If the customers of the company, get agitated by the revelation, there would be drastic fall in the sales. It is the shareholders who have appointed the directors of the company including Simone. Simone could remind Joanna about the client legal privilege. According to this principle if there is exchange of any vital information between a lawyer and the client, the lawyer is not supposed to reveal this information to others. But Joanna can claim that this rule does not apply in the situation as the information was not given to her by Simone, she only found it somewhere. So she can reveal the information to anyone she wants. There are several options available to Joanna. She could try to make Simone and other directors of the company see the fault in importing coffee beans in such a dubious way. Joanna could take the help of other likeminded managers in making Simone see reason. Otherwise, she can give the information to the media. This would be an extreme step and she is almost sure to lose her job. But if she believes in business ethics, she would do so and try to find the job of a lawyer somewhere else. She would have lot of support from people who are ethical and get a job in a more ethical company.