Ethics Competency

Case

This case involves Coleen Colombo, an underwriter who joined BNC Company in the year 2003. She has been doing very well during the first two working years and in fact, she performed beyond the company’s expectations. However, things changed when Colombo met a male wholesaler who wanted a loan.

This wholesaler had filled incorrect home values, salaries, and even occupations. According to a lawsuit in a California Court, this made the loan questionable. The wholesaler even attempted to bribe her so that she could allow his loan to go through, yet it showed fraudulent signs. Sylvia Vega, a former wholesaler admitted that such bribes at BNC branch were a common practice. Sylvia left the company in the year 2005. She added that she used to make a lot of money each month following booms.

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This woman further added that underwriters demanded one thousand dollars when a client applied for the first 10 loans, and two thousand five hundred dollars, following the next 20 loans. The underwriter did not care whether the mortgages would be approved or not.

Vega said that her commission was reduced the moment she refused to pay such mortgages. The loan files, which she had used began disappearing, and she would use it as an example whenever other employees complaining. Colombo said that when she informed the operation’s vice president about the wholesaler who offered her a bribe, the vice president did not take any action. Instead, he brushed her off while at a meeting. The senior underwriter felt offended, and she left in tears.

She later went for a leave, and when she came back, she realized that some colleagues wanted her to be fired for complaining. After a short while, the same wholesaler began harassing Colombo sexually. As such, she was afraid, and she felt quite uncomfortable while at the work place.

Another underwriter also admits that the company was an uncomfortable place to work. The case remains on hold to date since the company was filed for bankruptcy in 2008. The company’s spokesperson, however, denies the claims made by the former employees. The subprime credit went sour following stiffen principles of lending, increased credit lines, and the lenders had to purchase uncertain credit, which they had already utilized. The wholesalers had to look for new markets, following this unfortunate incidence.

Case Facts

A wholesaler presented questionable loans to Colombo, the company’s senior underwriter, but lucky enough, Colombo realized that the occupations, salaries, and home values were incorrect.
The same wholesaler attempted bribing Colombo so that she could make the loans go through, and when she informed the vice president, he ignored the issue. She later realized that the loan files disappeared one after the other.
He also started harassing Colombo sexually, making her feel uncomfortable while at the work place making her feel as if she had become a prostitute.

Justification/ recommendations

Fact 1

It would be unethical for an underwriter to accept questionable loan. Colombo must have been a competent employee and a person of integrity. Colombo was not afraid when she refused to grant the loan to the wholesaler, yet he was a co-worker.

Another evidence to show that the company was corrupt was the fact that the vice president, did not take any action when Colombo reported that a wholesaler wanted to bribe her so that she would approve his loan. BNC Company was corrupt given that it did not check whether a client qualified for a loan.

All that mattered was whether the client had $1,000 for the first ten loans, and $2,500 for the next twenty loans. The company’s underwriters did not verify the necessary documents. In case of an issue, it would be handled privately, on a bribery basis. The case shows that the employees in this company were cooperative when it came to bribery because they would get a share too.

Sylvia Vega says that she took home large amounts at the end of the month, which came in the form of booms. However, Colombo appeared different. She refused to side with the wholesaler, a fellow employee. This shows that the two employees had different trends. John Holland’s Personality-Job Fit Theory argues that those people who share common similarity trends seem to be cooperative at the work place, and do work in which they all fit.

It further states that people who go for jobs driven by their personality are more likely to be successful. For example, we learn that Colombo was successful in the first two years because she did her job well. She knew why she had joined the company, and what she wanted to achieve.

The theory goes ahead to explain that people’s behavior at the work place is not determined by the environment. Managers must look for effects of the group and individual behavior in an organization. An organization has three basic elements that include structure, people, and technology. All organizations must have suitable organizational structure, with an appropriate number of layers. Each organization ought to be independent without any external or internal influence.

Fact 2

The wholesaler tried to bribe the senior underwriter. The underwriter had etiquette not to accept the bribe, but when she informed the company’s vice president, she was ignored and her claims were not taken seriously.

This is likely to lead to poor performance or lack of motivation due to lack of support. This could further trigger change of a job. For instance, Colombo could no longer work in the company where she did not feel appreciated. According to Herzberg’s two-factor theory, the hygiene factors and the motivating elements affect the employees performance.

Hygiene factors come with the need for a business to enhance neatness at work. Motivating elements are status, chances of advancement, recognition, responsibility, challenging tasks, and personal achievement at job. Motivating elements at BNC include achievement, growth and satisfaction. The company’s growth can be associated with the harmonious and coordinated control by the management. The company has enough human resources, finance and technology.

The case also teaches us that the loan forms disappeared mysteriously. This was aimed at destroying evidence, which Colombo could have used against the company. The company’s management understood that substantial penalties could be imposed on them following such allegations.

Section 802 of Sarbanes-Oxley Act describes the penalties for alteration of a company’s documents, destruction and falsifying the records. According to this section, a person should not change or cheat in any form in order to influence investigations; such a person gets fined or imprisoned for twenty years, or both. The Act requires that accountants, who conduct an audit of securities, should maintain all the work papers for a specified period.

BNC Company needs to follow Sarbanes-Oxley Act recommendations. The company needs both internal and external auditors. Sarbanes-Oxley Act has also imposed significant responsibilities on both, the auditor and management. The management needs to identify, evaluate, and document the necessary control. It determines the business locations to be evaluated.

The auditors, on the other hand, provide opinion regarding internal controls of an organization. These processes will be beneficial in risk identification by ensuring consistency. Unnecessary controls and areas requiring improvement may also be identified through this process. Control processes help in reducing fraud and litigation, which could lead to efficiencies in operations (Hellriegel & Slocum, 2010).

Fact 3

Sexual harassment at the workplace is highly unethical. Following the case presented earlier in this paper, Colombo was exposed to sexual harassment undertaken in order to intimidate her. Were it not for her assertiveness, the underwriter would have intimidated Colombo, which would make her quit the job, or agree to accept the bribe.

She admits that the workplace seemed like a prostitution zone. A company needs to have a strong management team that is ethical. For example, BNC company vice president was unethical, a fact that could make the employees fail to understand to whom to report certain issues.

Therefore, a human resource department is required in all companies. Such a department would check into employees’ problems and, therefore, they would not feel threatened or insecure. The human resource department looks after employee issues, and in case of any misbehavior, the department takes the necessary action.

The sexual harasser should be suspended, pending investigations. If he is found guilty of the offence, his contract should be terminated immediately. This would serve as a lesson to other potential harassers because they will also be afraid of losing their jobs. In case the human resource management does not appear willing to help, an individual can report the issue to the Human Rights department or to the court of law in order to get justice.

Reference

Hellriegel, D., & Slocum, J. W. (2010). Organizational behaviour. New York: Cengage Learning.