ASSIGNMENT ON Ethical and Unethical Business

Practices
Subject-Business Ethics
Submitted To Prof Gauri
SYMMS
Roll No-27
Efforts By- Pooja Lilani

Ethical and Unethical Business Practices

Business ethics is the most debated topic of our times. The difference is between
doing the right thing and the wrong thing. Business ethics are the philosophical
core of any business and their outcome is crucial for economic development.
Peter Cooper the great American Investor says "I have always recognized that
the object of business is to make money in an honorable manner. I have
endeavored to remember that the object of life is to do good."
Business ethics are more than moral values and principles that determine our
conduct in the business world. It refers to the commercial activities, either with
other business houses or with a single customer. They can be applied to all aspects
of business; from generation of an idea to its sale. Business uses the society for its
resources and functioning, thereby obligating it to the welfare of the society. While
the objective of all business is to make profits, it should contribute to the interest of
the society by ensuring fair practices. However, greed has led the present business
scenario towards unethical business practices, legal complications and general
mistrust.

Code of Ethics
Lot of organizations implement the code of ethics in their company polices, which
they implement during induction and regular training. A Code of Ethics is
generally a more blanket statement of values and beliefs that defines the
organization.
So what is it for?
Company's assets, funds and records
Conflict of interest
Management and employee practices

 Information on competition

Ethical Business Practices

Here are a few ethical business practices that should be followed to build a honest
reputation and ensure smooth running of any organization.
Investors: Ensuring safety of their money and timely payment of interest.
Employees: Provision of fair opportunities in promotions and training, good
working environment and timely payment of salaries.
Customer: Complete information of the service and product should be made
available. Personal information of the customers should not be used for
personal gain.
Competition: Unscrupulous tactics, competitor bashing and wrong methods
should be avoided while handling competitors.
Government: Rules and regulations regarding taxes, duties, restrictive and
monopolistic trade practices and unlawful activities like corruption and
bribing should be adhered to.
Environment: Polluting industries should ensure compliance with the
government norms regarding air, water and noise pollution.

Unethical Business Practices

You might find many companies who blatantly thrive on unethical behavior and
practices. A free environment is present or promoted where acts of violation of
norms to amass wealth in an unethical manner is followed.
Following are some of the activities that come under the ambit of unethical
practice.

 Resorting to dishonesty, trickery or deception.

Distortion of facts to mislead or confuse.
Manipulating people emotionally by exploiting their vulnerabilities.
Greed to amass excessive profit.
Creation of false documents to show increased profits.
Avoiding penalty or compensation for unlawful act.
Lack of transparency and resistance to investigation.
Harming the environment by exceeding the government prescribed norms
for pollution.
Invasion of privacy used as leverage, for obtaining personal or professional
gains.
Sexual discrimination
Business houses that comply with ethics to determine their conduct are shrinking
in number. The lack of business ethics in the market, is the reason the world
economy is presently in crisis. Organizations now recognize the positive effects
and outcomes of being ethical, humane and considerate. They have a competitive
edge in the market, because of the honesty they show in their services. Their
morally upright reputation attracts better staff and helps in retention. Though ethics
are legally binding in most cases, self-monitoring, transparency and accountability
will go a long way in establishing trust of the people. Besides this, it makes sense
to change, before you are penalized.
When would we as Indians observe ethical business practices in totality? It is a big
question but it has a straight simple answer. Each one of us should be accountable
and responsible to stop unethical business practices.

We must create an environment which adheres to strictest philosophies of clean,

transparent, honest business.
Integrity is most wanted.

HOUSING DEVELOPMENT FINANCE CORPORATION

LIMITED
FAIR/ETHICAL PRACTICES CODE
Intent and Content
This Code has been formulated by Housing Development Finance
Corporation Limited (the Corporation) pursuant to the Guidelines issued by
the National Housing Bank on Fair Practices Code for Housing Finance
Companies vide its circular bearing No. NHB(ND)/DRS/POL- No. 16/2006
dated September 05, 2006. This Code has come into force from 19th
October, 2006 which has been modified pursuant to the Guidelines issued by
the National Housing Bank on Fair Practices Code for Housing Finance
Companies vide its circular bearing No. NHB(ND)/DRS/POL- No. 34/201011 dated October 11, 2010 and has been effective from December 23, 2010 .
The said Guidelines has been further modified by the National Housing
Bank on Fair Practices Code for Housing Finance Companies vide its

circular bearing No. NHB(ND)/DRS/POL- No. 38/2010-11 dated April 25,

2011. This Code has come into force from May 10, 2011.

Objectives
Follow good, fair and transparent business practices by setting reasonable
standards;
Encourage market forces, through fair competition, to achieve higher
operating standards;
Relate to the customer in such manner so as to promote a fair and cordial
relationship;
Set such standards and practices so as to foster confidence in the housing
finance system.

Application
To be applicable to all persons offering the Products and Services of the
Corporation as an employee or otherwise in any manner and/or by any
mode.
The Code is applicable under normal operating environment except in the
event of any force majeure.
The Code is based on ethical principles of integrity and transparency and
all actions and dealings shall follow the spirit of the Code.

Commitment
The Corporation shall at all times do its best to act fairly, reasonably and
meet the standard practices prevalent in the housing industry.
The Corporation shall abide by all the relevant laws, regulations and meet
with the ethical principles of integrity and transparency during its

interaction with customers.

While interacting with customers, the Corporation may take all steps as may
be required to provide clear information either in English or Hindi or the
appropriate local language regarding:
o its various products and services;
o the terms and conditions, the interest rates/service charges;
o benefits available to customers and the implications, if any;
o contact persons for addressing the queries, if any;

The Corporation will provide a copy of this Code, at request, to the

customer. The Code will also be made available on its Website and at every
branch/ office.
The Corporation would not discriminate on grounds of sex, caste and
religion in the matter of lending. However this does not preclude the
Corporation from participating in credit-linked schemes for the weaker
sections of society and in respect of schemes formulated by NHB/ other
Government Agencies, implemented through the Corporation.
The Corporation shall treat the information relating to customers as strictly
confidential and shall not share any information, unless required under law
or waived or permitted by the customer.
The Corporation shall take necessary steps to inform its customers of their
right to information regarding their account and the facilities available to
them.
The Corporation shall be clear and not misleading in any of its advertising
and promotional materials.
The Corporation shall inform its customers of all financial information such

as rates of interest, charges, method of calculation etc through brochures,

posters or during the course of meeting with the customers etc prior to
entering into any transaction.

The Corporation shall endeavor to keep its customers informed of any

change in interest rates / charges etc through letters or any other form of
general or public announcement or displays, from time to time.
The Corporation shall disclose, by such mode and in such manner as
deemed fit, to ensure transparency, all information affecting the interest of
the borrower including but not limited to :
o fees/charges payable for processing loan application;
o the amount of fee refundable, if any, if the loan amount is not
sanctioned;
o Prepayment options and charges, if any;
o Penalty for delayed payment, if any;
o Conversion charges (Switching loan from fixed to floating rate or vice
versa);
o Existence of interest re-set clause, if any.

The disclosure shall be done so as to ensure that the borrower is aware of

all in cost parameters involved in processing and sanctioning of loan.
The Corporation shall not indulge in any act which is discriminatory among
equals.
The Corporation will review the compliance of this Code and a consolidated
report of such review may be submitted to the Board.
Loans

 The Corporation in the normal course of its business shall endeavour at all
times to guide its customers about the process and procedure to be followed for
availing a loan.
Each application shall be considered independently on merit, upon scrutiny of
all the information, documents required for verifying the title of the property,
identity of the person, entity and the security to be offered, including
guarantees.
The letter of guarantees to be executed by the guarantors would cover their
obligations, liabilities and circumstances in which they can be called upon to
pay the dues of the customer/borrower.
The Corporation shall communicate in writing to the customer whose
application has been reject Collection of Dues
The Corporation shall provide the customers with all the information
regarding their dues and provide reasonable time for payment of the same.
The Corporation shall while protecting its interest adopt reasonable and
lawful measures to recover its dues from defaulting customers, including use
of persuasive methods for the purpose of collection of its dues.
Complaints and Grievances

The Corporation shall endeavour to address/respond to all complaints and

grievances within a reasonable time and keep the customers informed about
the status of their complaints.
The Corporation shall make available facilities at each of its branches and
offices for the customers to lodge and/or submit their complaints or
grievances, if any.
The Corporation will ensure that its grievance redressal procedure is made
available on its website.

ETHICAL PRACTICES BY HDFC BANK

HDFC only Indian bank in global list of ethical company

Posted: Thu, March 17, 2011 | 12 PM IST
Mumbai, March 17: HDFC Bank, second largest private sector bank, is the
only Indian organization got listed in the world's most ethical companies' list
this year. As per the list prepared by the Ethisphere Institute, only one Indian
firm HDFC has made a place in the 110 world's most ethical companies.
HDFC is one of the most trusted brands in the India and for a financial
services company it is quite noticeable that people should perceive that it as
ethical as well. Commenting on the attainment HDFC Vice-Chairman and

CEO Keki Mistry said: "It obviously feels nice to be one of the world's most
ethical company and the only one from India." The new achievement of
HDFC will help to inhance the brand equity of the company going forward.
Among the list of companies online market portal eBay, Ford Motor
Company, banking giant Standard Chartered Bank, Accenture, Adobe
Systems, software giant Microsoft and food and beverage firm PepsiCo found
in top position.

Reliance Unethical Practices

Complaints India enables consumers and users of services and products to post
their common complaints and suggestions regarding airline, bank, business,
companies and Government and non Government organizations in India and
abroad. Track your car complaints, mobile phone complaints, bank complaints,
credit card complaints etc at this website. It's a consumer forum, board or bureau
for
consumers
to
redress
their
complaints.
Consumer Courts in India now gives the power to consumers to fight for their
consumer rights at district level consumer forums. However consumers can
proceed to confront companies and try to get quicker responses through the
website. For companies its important to quickly address consumer complaints to
protect their product or service brand image. Consumer-India web site has a
number of resources for your assistance. Separate new product complaint and NRI
complaint sections help in easier posting and tracking of complaints.
With online internet scams proliferating, its easy to get cheated by fraud
companies. Consumers need to protect themselves from online scams, email
scams,
phishing
etc.
Complaints can be posted on all products and services. You can post complaints
Mobile Services (Airtel, BSNL, Idea, Reliance, Docomo, Unior, Aircel etc),
Mobile Phones (Nokia, LG, Samsung, Sony Ericsson, Blackberry,
MicromaKarbonn etc), Home Appliances like TVs, Refrigerators, ACs,
Cooking Ovens etc.

Unethical Practices
Infosys Employee Testifies on Alleged Visa Fraud

By Megha Bahree and Miriam Jordan

An Infosys employee, who has alleged that Indian tech giant, Infosys Technologies
Ltd., engages in visa fraud, provided more details to a U.S. Senate subcommittee
this week.

Tony Avelar/Bloomberg News

In a testimony, an Infosys employee provided more details about alleged
visa fraud at Infosys.
In a statement to the Senate Judiciary Subcommittee on Immigration, Refugees and
Border Security on Tuesday, Jay Palmer, the whistleblower at Infosys, said the
company intentionally violated our visa and tax laws for the purpose of increasing
revenues. Mr. Palmer accused Infosys of frequently violating U.S. visa laws and
of staffing multiple client projects with illegal employees, including at Goldman
Sachs, American Express, Wal-Mart and Johnson Control, among others.
Mr. Palmer filed a lawsuit against the company in February in Circuit Court in
Alabama, alleging the company sought his help to circumvent U.S. law. The
lawsuit has led to a probe by U.S. authorities.
Infosys, which is cooperating with the inquiry, denied the allegations. Paul N.
Gottsegen, chief marketing officer for Infosys, said in a statement Wednesday that
Mr. Palmers remarks were full of inaccuracies, exaggerations and falsehoods.

There is not, nor was there ever a strategy, scheme, or policy by the company to
use the B-1 visa program to circumvent the H-1B visa program, he said. The
company did not have a practice of sending unskilled employees to the United
States on B-1 visas to do the work expected of skilled individuals in the U.S. on H1B visas.
Mr. Palmer disagreed. This is how, he says, it was done.
During a March 2010 visit to Bangalore headquarters he says he heard several
conversations between Indian managers and U.S.-based managers where it was
made clear that Infosys was going to increase the use of the B1 visa program to get
around tough new restrictions the U. S. had placed on the H-1B program. Infosys,
he says, decided to flood the local Indian consulate with visa applications in order
to get as many approved as possible no matter the level of an individuals skill. He
says that in many cases the company sent relatively inexperienced workers to the
U.S. for projects.
He says Infosys sent employees on B1 visas to the U.S. for specific full-time jobs
at client sites but instead of paying them U.S. salaries, it would pay them much
lower Indian salaries, calling it a stipend. Infosys, however, charged its clients U.S.
rates for the employees, thus getting full reimbursement from their American
clients for Infosys labor costs. He also says Infosys paid no taxes on payments to
these workers.
According to Mr. Palmer, Infosys created an internal website of dos and donts
with tips including: Do not mention activities like implementation, design &
testing, consulting etc., which sound like work. Also do not use words like, work,
activity, etc., in the invitation letter. Please do not mention anything about the
contract rates as youre on a B-1 Visa.
He says that in order for this to work, the U.S. contracts had to be written as Fixed
Price contracts and not as Time and Material contracts. On a Fixed Price
contract a customer is charged a lump sum for labor, and the people doing the work

do not need to be identified to the client. But on a T&M contract, on the other
hand, the people doing the actual work had to be named along with their hourly
rate. In August 2010 Mr. Palmer says he received emails and requests to rewrite T
& M contracts to FP contracts.
Describing a specific instance, he says that in December 2010 an Infosys employee
showed him a spreadsheet with a list of B1 visa workers on a project at Johnson
Control, who should not have been doing such work. He said that these workers
were working full-time testing software code and writing scripts but were paid
their salaries by Infosys depositing money into the cash card accounts without
withholding any income tax.
Mr. Palmers testimony comes as the Indian IT industry finds itself facing more
scrutiny than ever. Outsourcing has always been a hot-button issue in the U.S., but
with a stubbornly high unemployment rate in the U.S., the offshoring of what are
perceived to be American jobs has become an increasingly sensitive political issue.
Last year the U.S. passed legislation that raised fees for skilled visas, particularly
affecting Indian IT firms. IT firms based in India generate 60% of their revenue
from the U.S.
On their part, Indian firms have seen the increased visa fees as well as delays in
getting approvals and much tougher interviews as part of a concerted campaign
against them. Some Indian officials have even labeled the U.S. moves unfair trade
practices.
In his testimony Mr. Palmer, says he and his attorney have received over 40
communications from individuals at other Indian companies stating that the same
type of H-1B and B1 visa fraud is being committed there as well.
Infosys said it would not rebut Mr. Palmers remarks point-by-point at this time
because of its ongoing litigation with him.

We take very seriously our obligations under the law and specifically our
responsibilities to comply with the immigration laws and visa requirements in all
jurisdictions where we have clients, said Infosyss Mr. Gottsegen. Mr. Palmer is
obviously intent on spreading his falsehoods about Infosys and our business
practices as broadly as possible in order to advance his objective of getting as big
of a payout as he can from the Company.
In his testimony, Mr. Palmer also lobbied for more restrictions on work visas to
foreign companies.
My real life experiences have educated me to the point that if Congress decides
that an increase of Green Cards or legal work visas in the U.S. is a must, then there
should be limitations or ratios, he said. For example, for every H-1B visa issued
to foreign national company they should have to hire an American worker.
More In Infosys
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Infosys Noses Ahead of TCS After Earnings
He also said Indian companies were benefiting at the expense of the American
economy, a charge the Indian IT industry disagrees with. Indian software and
services industry body NASSCOM has said in the past that the cost savings they
provide help make U.S. firms more competitive.
I have read statements from NASSCOM stating that not increasing Green Card
numbers and with the current visa restrictions, the Indian economy would suffer,

said Mr. Palmer. Let me ask the committee, what about our economy? What about
the years and years of ignoring the laws. These companies maliciously do not hire
Americans and look at ways to circumvent policy and law instead of working with
it. Look at the stock and growth of these large foreign companies in a down
environment they are not suffering.

ndian financial industry has always been successfully able to trace every prospect
offered by the India's fiscal policy both in terms of alteration and expansion. In
spite of all the endeavors implemented to develop the financial market, it still
remains fatally faulted due to lack of three major key elements namely inadequate
management, stringent accountability, and proper punishment.

As a result, the capital market of India has remained one-dimensional and has
staggered from one investment scandal to another. A straightforward listing of the
top 10 investment scams narrates the account of why Indian investors were left
annoyed by the scamsters.

Unethical Practices
A brief about Top 10 Investment Scams in India

1. The Securities Scam

The capital market witnessed its foremost investment scandal in the form of
securities scandal in the year 1992. It revealed the utter anarchy and lack of
administration in the prevailing fiscal market. The money market at that time
permitted funds to be relocated with impunity from financial institution and
corporates into equity and consequently witnessed crores of bank's capital to
transfer into brokers' account. This illegal market practice was later asserted as
"legal and acknowledged".

In an attempt to punish the tricksters, a special court was initiated and

scrutinized around 70 cases registered by CBI. Surprisingly, not even a single
trickster was found guilty by the dreadfully sluggish judicial system. As a
matter of fact, the scamsters made frequent attempts to re-enter the market with
same set of traps and resulted in losses to investors.

2. The IPO scam

Soon after the entry of international organizational investors, the Control over
Capital Issues was banned as the market saw heavy bull trend resulting in the
revitalization of the secondary market from the previous scandals. The ban of
Control over Capital Issues unlocked the prospects of massive scandal in Initial
Public Offerings (IPO). The scam was executed in two parts; the first part was
carried out by the firms that increased their market costs to incur profits in order
to sponsor lucrative projects. The second part saw the unison of small time
merchants, CAs, investment bankers and traders to hoist new firms and heave
public capitals.
The IPO scam prevailed for three long years from 1993-1996 and finally saw its
downfall when the costs of the registered firm started deteriorating.

3. Favored share scam

The scandal was an outcome of the extensive cost fixing on the derivative
market. Besides increasing fresh capital, advocates of Indian firms promptly
coordinated general body authorizations to transfer shares to themselves on a
privileged basis and at a considerable reduction to the market, thinking that the
share prices would never see the ground. Conglomerates started this trend and
accrued profits of nearly 55o crores until Securities and Exchange Board of
India (SEBI) formulated strict guidelines to abandon the market practice.

4. CRB's cardboard scam

The ` 1000 crore finacial multinational named as Chain Roop Bhansali (CRB)
was the only biggest firm and most impudent of all to benefit and disappear in
the loosened market ambiance of mid-1990s. The services offered by his firm
entailed FC collection, mutual fund, banking, etc. The clearances obtained by
the firm for the trading of these services required sufficient inspection by SEBI
and the RBI and the fact that they managed to qualify shows the supervisory
weariness of the regulators. Facilitated by the clearances and profitable credit
ranking, CRB accrued greater profits based on high value financing. The CRB
collapse not only affected the investors but also the other finance firms.

5. Plantation firms' scam

Since few firms in mid-90s were subject to no guidelines, the plantation
companies during that time also got away with profit protrusions. The
plantation firms projected themselves as a part of IPO and assured massive
returns. The investors were lured and the companies accrued profits from fake
campaigns of around ` 8000 crores plus.

6. Mutual Funds scam

After several mutual fund scams, the UTI bailout reflected the lack of proper
guidelines in the Indian capital market. Since UTI was initiated under its own
regulations, it was the tax payers who suffered the loss of ` 4800 crore in the
process. After three years, the company was back purchasing Ketan Parekh's
controlled scrips and incurring massive losses in the process. The evidence of
the private mutual funds performance has also been inconsistent after hitting the
downfall in 1999 and 2000. It took a considerable amount of time for capital
market to win back the trust of mutual fund investors.

7. The 1998 scam

The scamster of 1992 scam, Harshad Mehta came back with a bag of tricks
again in 1998. This time he lured investors through a website by trading stock

tips. His unremitting manipulation of several shares resulted in the much

expected collapse of Bombay Stock Exchange.

8. Home Trade scam

Initiated in 2000, Home trade invested rs 24 crore in promotional campaigns to
attract investors. The scam affected 8 co-operative banks that lost ` 82 Crore in
EPF scheme. The Chief Executive of Hometrade, Mr. Sanjay Aggarwal was
convicted by Nagpur Police later.

9. DSQ Software Scam

In the year 2000 and 2001, the Managing Director of DSQ Software, Mr.
Dinesh Dalmia, was held responsible for ambiguous mergers and prejudiced
allocation of the amount of upto ` 595 Crores. He was later convicted in the
year 2006.

10.Satyam Scam
After manipulating the firm's documents for several financial years, the former
Chairman and Chief Executive of Satyam Computers, Mr.Ramalinga Raju, was
arrested for committing scam, following unethical practice and forgery. He
showed greater profits and committed fraud of ` 700 crores.