Exercise Answer

• European car manufacturer that wanted to enter

the North American market.
• Installed a software chip into cars to cheat
emissions tests and advertised cars as “clean
diesel.”

• Accidentally discovered by research students

trying to replicate tests, and an insider revealed
the reason.

Corporate Finance Institute®

 Exercise Answer

Corporate Finance Institute®

 Exercise Answer
• European car manufacturer that wanted to enter
the North American market.
• Installed a software chip into cars to cheat
emissions tests and advertised cars as “clean
diesel.”
• Accidentally discovered by research students
trying to replicate tests, and an insider revealed
the reason.
• Paid over $30BN in fines & legal fees, and many
of their executives have received jail sentences.
Corporate Finance Institute®
• US retail bank with an aggressive sales culture
• Defrauded their customers by selling unwanted
credit card accounts, opening unauthorized
accounts, transferring funds from good accounts
to bad/unauthorized accounts, and making
unauthorized credit inquiries.
• Complaints to the Consumer Financial Protection
Bureau and anonymous tips by employees to
journalists helped uncover the fraud.
 Exercise Answer

Initial scandal
Litigation - $1.6BN
in legal costs

Corporate Finance Institute®

 A Measure of the World’s Most Ethical Companies

In 2020, 132 companies in 21

countries were considered to be
the world’s most ethical companies.
These companies outperform the
large-cap index by 13.5%.

Corporate Finance Institute®

 The Need for an Ethical Workplace

Maintain Your Own Ethical

“Companies that invest in ethics reap an enormous
return. Better workplace ethics cuts business risks by
reducing the chance that serious ethics problems will
throw companies off course and distract them from
their core business.”
Ethics Compliance Initiative CEO, Patricia Harned
Integrity
• Prepare to take a stand when
needed
• Understand what the ethical culture
and climate is in the organization

• Lawsuits • Company folded

• Fines • Lost trust

• Penalties • Lives were lost

• Jail time

Corporate Finance Institute®