Open AccessLoss of Integrity: the True Failure of the Corporate Sector
Author(s) -
Aa Armstrong,
Ronald Francis
Publication year - 2008
Publication title -
journal of business systems, governance and ethics
Language(s) - English
Resource type - Journals
ISSN - 1833-4318
DOI - 10.15209/jbsge.v3i3.137
Subject(s) - corporate governance , ignorance , business , accounting , point (geometry) , business judgment rule , legislation , law and economics , corporate law , public relations , law , political science , economics , finance , geometry , mathematics
Despite the introduction of legislation and corporate governance standards designed to promote business integrity, prosecution of the directors of many companies for fraud and other offences has continued. This paper describes the changing environment in which the members of the boards of companies operate, and their legal duties and responsibilities. The authors illustrate the traps for, and liabilities of, directors with reference to vignettes of three corporate investigations, Enron, HIH and more recently Opes Prime. This paper argues that, in many instances, the failures of the corporate sector were due to loss of integrity by the major actors. Whether this was related to a belief in their invulnerability, or whether a climate of fraud was seen as acceptable hard-nosed business practice is a moot point. An alternative point, that the collapses could be mediated by ignorance, or by malice, is a critical point, and one deserving of further investigation.