Notably, social responsibility and comprehensive ethical strategies are essential contributors of a business success. These mainly hinge on a sound relationship among all business stakeholders, right from the production level to the final consumers. On the other hand, failure to conform to these factors may lead to poor performance by the business as well as portray a bad image for the firm.
Examples of Irresponsible Behavior in Business
HSBC was accused of failing to implement US anti money laundering laws that exposed Americans to financial exploitation by Mexican drug lords and other nations such as Iran. This scandal is approximated to amass a bill of approximately $1.5 billion. According to an article by Nathaniel Thomas (2012), a powerful US senate that had been set up to investigate these allegations discovered that the bank allowed the movement of funds to other countries such as Cayman Islands, Syria, Mexico and Iran from its US branches. This led to the stepping down of the bank’s head of compliance, David Bagley. The bank approximated its cost to state at $700 million but this is set to double, up to $1.5 billion. For the bank’s investors and stakeholders, the bank is set to announce a drop in its pre-tax profit from $7.2 billion last year to $5.3 billion this year, for its third quarter (Thomas, 2012).
Executives from companies such as Google, Amazon and Starbucks are currently facing a probe team by Public Accounts Committee in the UK for tax evasion. Moreover, the Commons Committee is also set to investigate corporate tax evasion allegations by these companies where profits were being siphoned away from exchequers towards lower tax paying jurisdictions. This is in the view that large foreign corporations with arms in the United Kingdom have adapted methods through which they pay very little tax as compared to the resident taxman (Ebrahimi & Wilson, 2012). Apple Inc has come under sharp criticisms particularly for paying less than 2% in tax towards its overseas profits. Apple is said to earn approximately $36 billion in profit on its foreign indulgences while paying less than 2% of this in tax. Apple has evaded a tax of up to £570 million, a cost to the UK that has prompted these investigations. Local investors and stakeholders residing in the UK are paying higher taxes as compared to their foreign investors (Ebrahimi & Wilson, 2012).
Ebrahimi, H. & Wilson, H. (2012, Nov 4th), Treasury committee could grill US companies
over 'tax evasion', The Telegraph. Retrieved on 12th November 2012, from http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9654235/Treasury-committee-could-grill-US-companies-over-tax-evasion.html
Thomas, N. (2012, Nov 4th) HSBC to face £1bn fines over money-laundering, The Telegraph.
Retrieved on 12th November 2012, from http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9654631/HSBC-to-face-1bn-fines-over-money-laundering.html