Socrates vs. Aristotle

The good society in simple language is defined as a society with no corruption and people abiding to the rules. Today, the society has become what we did not hope for and it has turned into unequal and divided society. People view good happiness as the amount of cars one has, and also how much is in their account. For a good society to begin, the situation about gender, race, disability etc. needs to be redressed, the punishment for crimes should be made brutal, and in this case the crime would reduce. Finally, for a good society to be born, we the citizens need to come together and change the collective and democratic impulse for freedom, equality and unity.

Virtue can simply be put as the quality in someone to do what is right and reject what is wrong. Virtue enables people to conquer moral excellence. Socrates states that perfect world does exist beyond the world we live in while Aristotle states that our world is reality. However, Aristotle argues differently. He perceives life through a totally different perceptive that Socrates has. He says that pleasure as gets enjoyed by human beings is incomplete. He uses this argument to declare it as not a pleasant thing. However, he is quick to add that people will still perform worthwhile activities. The key element that shapes the virtues of a person is natural preference. A person has the urge to do either pleasant or unpleasant things by a systematic guide of his or her natural preference.

Consequently, by looking at the society today, there are quite a number of marks that make a good society. These marks consist of justice, equity, rule of law, economic opportunity, reciprocity, prosperity, critical thinking, ethical standards, and concern for good citizenship, right to defense, and right to private property. Aristotle believed that free men are responsible for their voluntary and involuntary actions and behaviors. He did not include slaves in this scheme because to him the society of ruling men was the basis upon which to build a good society.  “For Aristotle, a society or state is held together by friendship more than justice,” (Moss, 2011). He regarded men with many friendships as good men.

Aristotle had this view or outlook that humans do things to reach a higher level of good. Happiness is the highest good that people can attain. Though this is his view, Aristotle also says that people should not aim at happiness. He states that people do aim at what they believe to be happiness. Typically, happiness is not a satiable goal for most humans. Only through living a completely virtuous life can people really understand happiness. It is because people do not have enough virtue that they are not able to distinguish true happiness from the somewhat empty conception that they currently have.

Next, Socrates' concept of reality contrasts with Aristotle's concept. Socrates' theory of ideal forms claims that a perfect world exists beyond the world around us. Our world contains forms imperfectly copied from the ideal forms in the world beyond. In contrast, Aristotle's theory of the natural world states that our world is reality. Aristotle thought the world consists of natural forms, not necessarily ideal or imperfect. Our senses can correctly perceive the natural forms. Basically, reality became a debate between Socrates' two worlds and Aristotle's single world reality.
            Second, Socrates and Aristotle contrast in their view of what knowledge we possess at birth. “Socrates supports the doctrine of Innatism, which claims that we enter this world with prior knowledge” (Kamtekar, 2012). All people have immortal souls and therefore, the knowledge obtained in one life can be transferred into the next rebirth. However, we forget the knowledge at the shock of birth and we then spend the rest of our lives trying to regain the lost knowledge. In contrast, Aristotle states that we are born without any knowledge. Aristotle also claimed we possess souls, but he disagreed with Socrates on the soul's status of immortality.

Aristotle felt souls do not return to the world, so knowledge cannot be returned to the world either. In addition, not everyone lives a completely virtuous life. This is because we are just human. Aristotle does not expect everyone to be perfect and no one should be. So, it does not matter whether everyone has the correct view of happiness in Aristotle's eyes, but many can find happiness whether it is the correct view or not. Actually, anything that puts a smile on one’s face should be considered happiness.

A virtuous person, to Aristotle, will find virtue to be a good thing and so will find happiness in doing virtuous deeds. A person devoid of virtue will find happiness in avoiding virtue and thus will not be living a truly happy or good life. Neither will they have the right perception of what a good life might be. So Aristotle believed that reasoning is a function that distinguishes human beings from other beings. And that a human being who is able to perform that function well will count as a good human being.

Everything we do is done for some purpose. Some of these purposes though are themselves just means to an end, e.g. we exercise to get in shape and we get in shape because we want to look good on the beach and we want to look good on the beach etc. If every end were just a means to some other end, though, then there would really be no end or purpose to all that we do. If there is no ultimate point or in other words an end or purpose to everything we do, then ultimately there is no point to anything we do. Aristotle thinks that this cannot be right. So there must be at least one end that is not a means but is an end in itself. “This is the ultimate point of life, and Aristotle sets out to find and define it,” (Moss, 2011). In this case, the ultimate goal is happiness of which pretty much everyone agrees. But people disagree about what true happiness is. Most think it is pleasure, especially physical pleasure.

So, happiness can be seen as the feeling of satisfaction after any cause, be it virtue or vice. Aristotle theory states that the world we live today is reality. He thought that the world consist of, natural forms, inner virtues and free society. While Socrates theory states that a perfect world exists beyond the world we live in. He did not believe that people would deliberately act in a way to be unhappy. “Socrates identifies the four primary virtues in the different aspects today’s society possess wisdom, auxiliaries courage, justice, moderation” (Kamtekar, 2012).

In addition, the components of a good life have been discussed and debated for many years with leisure and economic growth existing as the two main reoccurring themes. Aristotle supported the leisure ethic stating many arguments in the favor of leisure and the absence of work. However, we are a society of reformation and constant change and mostly tend to value a work ethic opposed to the leisure ethic. Aristotle believed the good life required leisure. Nevertheless our society today does not reflect those values. We are a society bent on growth and efficiency and have allowed our leisure time to become dominated by work. To achieve the good life again we must become aware of our problems, make changes and regain the leisure ethic.

The ultimate question to life what every person is seeks is what is happiness and how can one achieve true happiness. Many feel that they have found their answer in belonging to the faith of their choice, but what is it that their faith teaches them that brings them happiness. The philosophers Socrates and Aristotle all have a similar view on what happiness is and how to achieve it. According to (Frede, 2009), “Aristotle's view is based on Plato's and Plato's is based on Socrates' teachings.” This is why they are similar but they are all important and different with each philosopher's personal views and beliefs.

Socrates was a great man who was assassinated for his beliefs on the purpose of life and how to live happily. He presented the excellence of function to determine how a person will truly be happiest. The true person is not what he is on the outside but what his soul is and when that is functioning well the person is happiest. Mind is the human capacity for reflective thinking and also the consciousness of the soul. According to (McPherran, 2010), "The unexamined life is a life not worth living." is a quote from Socrates that supports his views on mind. It states that when a person does not examine his life to find his true self, or excellence of function, that they are ignoring their true self and that a false life is not worth the time to live it. So an examined life will find its true self or what its function is and want to perform its function well.

Subsequently, Socrates devoted his life to finding out moral concepts, mainly trying to differentiate the difference between right and wrong. “The excellence of function is what person's virtue implies,” (McPherran, 2010). A person's virtue is where they will excel and function well at. So if a person is athletically talented in a sport and proceeds to play professionally they may be happy but if their soul was meant to teach young children to read that is where they will be the most pleased with their life. To find our virtue we must use our practical knowledge and wisdom in how to perform certain skills.

The version of Socrates views happiness as the end product of virtue. He thinks virtues will always follow personal pursuits. He argues that to be a happy one has to be good, morally. Socrates believed for a person to live well he or she should put more focus on self-development than putting more emphasis on material wealth. According to (Zhou, 2011), “Socrates thinks that material wealth cannot guarantee happiness.” On the other hand, he sees a probability of happiness bringing material wealth. Therefore, virtues of a man should guide him to becoming happy. To achieve everything desirable in life, a person should have virtue as it is the most valuable possession one can acquire.

As stated by (Frede, 2009) “Socrates had no particular beliefs on politics but did object to democracy, but disliked its Athenian form.” Basically, he objected to any government that did not run on the basis of his ideas of perfect governance. Socrates refused to enter politics because he could not tell other people how to lead their lives when he didn't know how to live his own. He thought he was a philosopher of truth, which he had not fully discovered. Towards the end of his life, democracy was supplanted by the Thirty Tyrants for around one year, before being restored. For Socrates, the Thirty Tyrants were no better and arguably worse rulers than the democracy they sought to replace.

Ultimately, Aristotle wanted his results to show happiness among the people. His opinion toward life was that all people should live a fair and happy life. After many attempts of forming the perfect government, his facts allowed him to believe that a perfect government could be formed only by those who have a middle class. To Socrates, the body is of the imperfect, sensible world, while the soul is of the perfect, real world. The sensible world is what we see all around us, but it is only an illusion. The real world is invisible to us, but it is where the Forms exist. The forms are bodies that provide us with standards. This gives a perfect picture on the similarities and differences between the two.

References

Frede, D. (2009). Socrates and Plato. Phronesis, 54(1), 76-100. doi:10.1163/156852808X375255

Kamtekar, R. (2012). Socrates and the Psychology of Virtue. Classical Philology, 107(3), 256-270.

Mansfeld, J. (2010). Plato and Aristotle in Agreement? Platonists on Aristotle from Antiochus to Porphyry. Mnemosyne, 63(3), 519-522. doi:10.1163/156852510X456291

McPherran, M. L. (2010). Socrates, Plato, Eros and liberal education. Oxford Review Of Education, 36(5), 527-541. doi:10.1080/03054985.2010.514433

Moss, J. (2011). 'Virtue Makes the Goal Right': Virtue and Phronesis in Aristotle's Ethics. Phronesis, 56(3), 204-261. doi:10.1163/156852811X575907.

Zhou, Q. (2011). On Thoughts of Socrates about Virtue in Menon and Whether Virtue is Teachable. Canadian Social Science, 7(2), 138-140.

how bribery affects multinational businesses

For this assignment I will examine how bribery affects multinational businesses today. In the paragraph below I used Russia as one example in which bribery is the norm in business. I countered with the second paragraph on how United States attacks bribery as an ethical issue in itself.

Russia is one of the most corrupt countries on the planet where bribes are happening multiple times daily. Transparency International would give Russia 2.1 points out of ten; meaning ten is no corruption and 0 is the most corruption. Corruption is about 20% of the country’s Grouse Domestic Product (GDP) at 300 billion. Eighty percent of businesses do bribes. It’s an endemic because the media, citizens and politicians have open discussions about the benefits of bribes. In some cases, companies used “Bribes for survival” in which case they use bribes in order to be left alone from the government. An interesting fact is that the Russian government governs for the state not the people so it is the state officials that reinforce the bribery that takes place in their country. There is one man who is trying to clean up the corrupt and his name is Dmitry Medvedev. He started legislation to clean up corruption by asking the bureaucrats to declare their own and family income and assets; however, families were defined as spouse and under-age children, which did not include adult children. An income in Russia is confidential and only available to other bureaucrats. As of March 4, 2009, a man named Mikhail Khodorkovsky, an oil typhoon in Yukos, Siberia, who was accused of embezzling $25 billion in laundering 13.9 billion from his oil company. He is presently on trial for his innocence vs. the state theory which is fraud and tax evasion. His oil company is already divided among state-owned companies. (economist x2, 2008), (Timeonline.uk, 2009)

Using Russia as an example, one can surmise that doing business in other countries, as well as in Russia, where bribery is second nature, ethical issues can arise. Bribery is an illegal act in itself. The United States has laws against bribery. The US has the Foreign Corrupt Practices Act (FCPA) which addresses two main purposes, one is accounting transparency requirements of Securities Exchange Act of 1934 and the second is concerns with bribery of foreign officials. FCPA cases filed continued to increase to this day, other countries are rapidly increase their investigation and prosecution of corrupt payments as well. Some of the countries that are presently changing their tune in corruption are China and Germany. China is campaigning against commercial bribery and Germany is investigating allegations that the country's largest companies made corrupt payments to government officials. In order for US companies to maintain legal and moral grounds, they need to say no to bribery and institute clear corporate codes that employees are bonded to. Violators face heavy corporate fines, executives may face imprisonment or additional fines or both and possibly be disqualified from doing business with the US government. Although FCPA encourages fair treatment in competition for business abroad, the US may be at a disadvantage, because the FCPA applies to only American business and not foreign business; thereby, making it tougher for an American business to compete with business from other countries where bribery is commonplace for their gain. However, in the present day, there is still room for US corporations to expand in Russia in products such as automotive products, household goods, financial services, retail products, a healthcare system, telecommunication, and major construction equipment even with the knowledge that their government has some input in our business. (OEC, 2009) (BuyUSA.gov, 2009)( University of Pennsylvania.edu, 2002) (Business Ethics, pp. 279-281, 2008)

It is clear to me, that our American businesses that wish to adventure and prosper with their business prospects in other countries desperately need to learn the country’s culture and the rule of law of their land. Knowledge is power and it defines how their business practices determine right or wrong actions accordingly to the particular culture of that country. Finally, the ‘no to bribery’ should be the upmost importance of any corporation’s culture when dealing with multi-national corporations.


References

Anonymous. (2008, September 18). Oil, politics and corruption

Retrieved March 14, 2009, from Economist.com:

http://www.economist.com/specialreports/displaystory.cfm?story_id=12080765

Anonymous. (2008, November 17). Grease My Palm

Retrieved March 14, 2009, from Economist.com:

http://www.economist.com/surveys/displaystory.cfm?story_id=12628030&fsrc=rss

Anonymous. (2002, October 23). How Bribery and Other Types of Corruption Threaten the Global

Marketplace Retrieved March 14, 2009, from University of Pennsylvania:

http://knowledge.wharton.upenn.edu/article.cfm?articleid=646

Haplin, T. (2009, March 04). Russian oil tycoon, Mikhail Khodorkovsky, in court for fresh trial

Retrieved March 14, 2009, from Timesonline.uk.com:

http://www.timesonline.co.uk/tol/news/world/europe/article5840301.eceAnonymous. (2008). Doing Business In Russia: A Country Commercial Guide for U.S.

Companies – 2008 Retrieved March 14, 2009, from BuyUSA.com:

http://www.buyusa.gov/russia/en/ccg.html

Anonymous. (2009). OECD Convention on Combating Bribery of Foreign Public Officials

in International Business Transactions Retrieved March 14, 2009, from OECD.com:

http://www.oecd.org/document/21/0,3343,en_2649_34859_2017813_1_1_1_37447,00.html#text

Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Bribery.

In Business Ethics Ethical Decision Making and Cases (pp. 279-281).

Boston, New York: Houghton Mifflin Company.

Plato vs Aristotle

To compare the political theories of two great philosophers of politics is to first examine each theory in depth. Plato is regarded by many experts as the first writer of political philosophy, and Aristotle is recognized as the first political scientist. These two men were great thinkers. They each had ideas of how to improve existing societies during their individual lifetimes. It is necessary to look at several areas of each theory to seek the difference in each. Plato and Aristotle defined the concept and established the philosophical foundations of what may be called ‘rational freedom’. (Boeree) Plato and Aristotle defined the key themes of ‘rational freedom’ and sought to show how these could be embodied in the polity. The most important question discussed by Plato and Aristotle concerns the nature of the relation of the individual to the political community. The human being as a zoon politikon or social animal is not an isolated, autonomous entity but a part of society, living in a social context. (Butcher)  It follows that the flourishing of the individual required a social context that is devoted to realizing the good life. Individuals as social beings realize their essential human potentialities in and through the political community, in relation to rather than as against each other. The principal concern of Plato and Aristotle was to discover the norms and rules that govern the life of the political community as the good life enabling the flourishing of the human individual.

Plato and Aristotle were both philosophers from Greece who criticized democracy as a poor form of government. Plato’s thoughts on democracy were that it causes the corruption of people through public opinion and creates rulers who do not actually know how to rule but only know how to influence the beast, the public. Aristotle’s views about democracy hold that democratic office will cause corruption in the people, if the people choose to redistribute the wealth of the rich they will end up destroying the state and since the people have no knowledge about governance when they elect rulers they will dislike.

Plato prescribed in his communism concerning the abolishment of private property, especially to the guardians and the auxiliaries.  Plato says anything (property) that must be owned by them, must be owned collectively.  This could be as a reason of their societal hierarchy and the tendency to abuse such privilege.

Aristotle on the other hand criticized the abolition of private property, as he recognizes the need to own such even though the private possession of goods must be within certain limits. He therefore preached against the excessive accumulation of goods and advised citizens to use their limited possessions for the benefit of the common good.

   Plato’s republic ideal state supports feminism, in that education for ruling as well as the job for ruling itself should be open to girls and women like the men. Thus, one’s sex is generally irrelevant to ones qualifications for education or employment.

Aristotle declares that the women are normally subordinate to men, for the male is by nature superior and the female inferior. The men rules but the women are ruled.  Thus, Aristotle accepts the customary patriarchal subordination of women to men. (Cohen)

 Plato’s ruling ideology has been summarized as the “rule of the best man” – the philosopher king who alone knows the ideal standards for the state. Also, ruling is a skill; as the best man must be trained to rule. Ruling is also an ideal. (Boeree)

Aristotle’s ruling ideology has been summarized as the “rule of the best laws” – a well ordered constitution which entails good governance.  For him, although ruling is a skill and an ideal as well; it is also a science, although Aristotle understands politics as a normative or prescriptive discipline rather than as a “purely” empirical or descriptive inquiry. (Boeree)

Plato proposes the abolishment of the family in his communism, as he says the guardians and the auxiliaries shall have no wife of their own, but in common. Children should be separated from their parents at birth and raised by the state.  Thus, there will be more unity and fewer disharmonies. (Fowler)

Aristotle disagrees and upheld that the family is the bedrock of the state and fundamental society established according to the law of nature to provide man’s daily needs. (Frede) He despised communism, in his words “Everybody is inclined to neglect something which he expects another to fulfill; as in families many attendants are often less useful than a few”. (Fowler)

 The main focus of Plato is a perfect society. He creates a blueprint for a utopian society, in his book The Republic, out of his disdain for the tension of political life. This blueprint was a sketch of a society in which the problems he thought were present in his society would be eased. Plato sought to cure the afflictions of both human society and human personality. Essentially what Plato wants to achieve is a perfect society.

 Aristotle, unlike Plato, is not concerned with perfecting society. He just wants to improve on the existing one. Rather than produce a blueprint for the perfect society, Aristotle suggested, in his work, The Politics, that the society itself should reach for the best possible system that could be attained Aristotle relied on the deductive approach, while Aristotle is an example of an inductive approach.  Utopia is a solution in abstract, a solution that has no concrete problem. There is no solid evidence that all societies are in need of such drastic reformation as Plato suggests. Aristotle discovers that the best possible has already been obtained. All that can be done is to try to improve on the existing one.

 Plato's utopia consists of three distinct, non-hereditary class systems. The Guardians consist of non ruling Guardians and ruling Guardians. The non-rulers are a higher level of civil servants and the ruling is the society's policy makers.  Auxiliaries are soldiers and minor civil servants.  The workers are composed of farmers and artisans, most commonly unskilled laborers.  The guardians are to be wise and good rulers. It is important that the rulers who emerge must be a class of craftsmen who are public-spirited in temperament and skilled in the arts of government areas. The guardians are to be placed in a position in which they are absolute rulers. They are supposed to be the select few who know what is best for society.  (Butcher)

Aristotle disagrees with the idea of one class holding discontinuing political power. The failure to allow circulation between classes excludes those men who may be ambitious, and wise, but are not in the right class of society to hold any type of political power.  Aristotle looks upon this ruling class system as an ill-conceived political structure.  He quotes "It is a further objection that he deprives his guardians even of happiness, maintaining that happiness of the whole state which should be the object of legislation," (Hacker) ultimately he is saying that Guardians sacrifice their happiness for power and control. Guardians who lead such a strict life will also think it necessary to impose the same strict lifestyle on the society it governs.  

Aristotle puts a high value on moderation.  Many people favor moderation because it is part-liberal and part-conservative. (Cohen) There is so much of Plato's utopia that is undefined and it is carried to extremes that no human being could ever fulfill its requirements.  Aristotle believes that Plato is underestimating the qualitative change in human character and personality that would have to take place in order to achieve his utopia.  Plato chose to tell the reader of his Republic how men would act and what their attitudes would be in a perfect society.  Aristotle tries to use real men in the real world in an experimental fashion to foresee how and in which ways they can be improved. (Cohen). 

Both Plato and Aristotle agree that justice exists in an objective sense: that is, it dictates a belief that the good life should be provided for all individuals no matter how high or low their social status.  "In democracies, for example, justice is considered to mean equality, in oligarchies, again inequality in the distribution of office is considered to be just,” says Aristotle. (Hacker) Plato sees the justice and law as what sets the guidelines for societal behavior. 

Aristotle puts emphasis on the institution of the polis. (Fowler) This institution is not the state or society merely the larger unit of the two. Neither Plato nor Aristotle found it to be necessary to distinguish between the state and society and therefore it was difficult to define polis.  The polis was set up to allow political participation on the part of the average citizen; this contradicts Plato's theory of one ruling class controlling the political power and all decisions that affect the entire society. The theory of Democracy that Aristotle derived states that democracy is a "perversion" form of government of "polity" (Hacker). Aristotle said, "The people at large should be sovereign rather than the few best" (Hacker). Plato would never allow the full public participation in government as Aristotle would like. According to Plato public judgments of approval and disapproval are based on belief and not on knowledge. 

Plato thought that if a revolution were to take place it would be a palace revolution. A palace revolution occurs when there is a power transfer from one power holder to someone else. (Hacker) Aristotle sees the cause of revolutions originating with either the rich or the poor. He feels that the means of preventing revolutions is to anticipate them.  Plato thinks that in a utopia a disgruntled group of guardians will emerge and break from the rules. He thinks that in an oligarchy two things may happen to spark a revolution: the first being the ruler and their offspring grow to be weak rulers and too sympathetic, the second is that the number of poor grows larger and suffer exploitation at the hands of those in power over them. Aristotle states that to know the causes which destroy constitutions is also to know the causes which ensure their preservation. 

Plato and Aristotle alike were two men who had ideas on ways to improve existing society. Plato, a political philosopher, was in the pursuit of philosophical truth. Aristotle was concerned with the citizen and the design of political institutions.  They both had well thought out ideas and plans on how to build a better society. Both Aristotle and Plato have had a tremendous impact on political scientists of today.

Aristotle helped to develop some democratic ideas and these men were great thinkers. Their opinions on society and its functions were quite different, but they both had the same intention, to build a better way of life for the societies they lived in and for the societies that would come to be in the future.

            When I think about how Plato and Aristotle might speak about the Affordable Health Care Act would be quite interesting.  It is likely they would quite debatable for the two of the.  There are several opinions about this not necessarily good for all and I would say that they both generally agreed that decisions should be made based on how it affects the whole.  This method of health care very dictatorship-like in my opinion and isn’t necessarily good for all.  Plato thought that individuals should be classified, where Aristotle didn’t.  Healthcare before and after the Affordable Health Care Act does classify people based on working status and income.  Although, Plato and Aristotle agree on the concept of an ideal state, they still disagree on deeper issues as Aristotle distanced himself from Plato, who was his mentor, at some point.

Boeree, Dr. C. George. Socrates, Plato, and Aristotle. Shippensburg University, 2009, accessed November 30, 2013; available from http://webspace.ship.edu/cgboer/athenians.html; Internet.

Butcher, S. H. Some Aspects of the Greek Genius. Port Washington, N. Y.: Kennikat Press, 1969.

Cohen, S. Marc. Introduction to Aristotle. Seattle, WA: University of Washington, 2008, accessed November 30, 2013; available from:  http://faculty.washington.edu/smcohen/433/arintro.htm; Internet.

Fowler, Michael. Aristotle. University of Virginina, 2008, accessed November 30, 2013; available from http://galileo.phys.virginia.edu/classes/109N/lectures/aristot2.html; Internet.

Frede, Michael. Aristotle. Michigan Technological University, 1997, accessed November 30, 2013; available from http://chemistry.mtu.edu/~pcharles/SCIHISTORY/aristotle.html; Internet.

Hacker, Andrew. Political Theory: Philosophy, Ideology, Science. New York: Macmillan, 1961.

business ethic issues

At this time, United States is experiencing many economic difficulties. It is a great time to be studying business ethic issues. In this paper, I want to explore and analyze why assumedly competent CEOs end up damaging the very company, including the company’s stake holders that the CEOs should be representing. I plan to construct a personal profile on each of the CEOs. Under each profile, I will briefly review their accomplishments, career history and provide information on their illegal activity or presumably unethical business practices that have or possibly will end their productive life as they know it. I will also provide data that is presently provided at this time, on how and what the legal system is doing to convict these CEOs. Next, I will comment on the ethical issues that were created by these CEOs. Finally, I will provide some scenarios that I believe could have been done to possibly prevent the corruption in the first place or at least lessen the impact. The CEOs that I will be focusing on, in this paper, will be the following: Richard S. Fuld. Jr. of Lehman Brothers, Tom Petters of Petters Co., John Thain of Merrilll Lynch which merged into Bank of America and Bernie Madoff of Madoff Investment Securities.
I chose unethical business practices as an ethical issue, because most of these CEOs, that I mentioned previously, are essentially immoral. It is so hurtful to people and stakeholders when the CEO endorse deceptive activities. For instance people lost as much as 33-50% of their life savings, because a couple of these CEOs, especially Bernie Madoff and Tom Petters, found a way to take advantage of their trust. The other two CEOs, Mr. Thain and Mr. Fauld Jr., avoided transparency affecting the well-being of their company's stakeholders. The main question that needs to be raised, is how these CEOs practiced their unethical behavior for so long. You wonder about the complacency of the company as a whole. Is it possible that the CEO’s honesty, fairness, and integrity were misjudged by the stakeholders who trusted their CEOs to manage their money or conduct their business in an ethical responsible manner? The answer to this question is an obvious yes! [The Techniques of Inner Leadership, pp, 5, 9, 12, 205, 206, 221, 225, 2003]
In this paper, I will show by examples, how the actions of these CEOs has negatively affected stakeholders and employees. This paper is about the illegal acts of the CEOs that either wrongfully use the tax payers money or deceived people thorough so call ponzi schemes. The CEOs should have followed the rules especially Richard Fuld Jr, who committed a transparency issue prior to Lehman Brothers declaring chapter 11 and was unable to reorganize with no money. John Thain, Merrill Lynch CEO, who also had a transparency issue, padded his office, paid bonuses to his executives and himself which were exorbitant prior to a merger. Bernie Madoff had a ponzi scheme all over the world worth $50 billion. A financial investigation by Harry Markapolos warned the SEC about Mr. Madoff in the prior 10 years and SEC didn't do anything until it was too late. Tom Petters was a local CEO who also used a ponzi scheme to line his pockets. A needed strategic tactic is in order for the Securities and Exchanges Commissions to have quicker data collection of these CEOs. [The Techniques of Inner Leadership, pp, 5, 9, 12, 205, 206, 221,225, 2003]
The #1 CEO Bernie Madoff, who, at the present time, has already admitted using a ponzi scheme in order to obtain large sums of money for fraudulent investments. He defrauded investors approximately 50 billion dollars in the largest swindle in Wall-Street history. Madoff had a degree in Political Science, and attended a short time to Brooklyn Law School, but didn't finish. Madoff is an American businessman and former NASDAQ stock exchange chairman. He served as the Chairman of the Board of Directors and Board of Governors on the NASD. He founded the Bernard L Madoff Investment Securities LLC in 1960 and was chairman since 2007. By the 1980s, Madoff Securities handled approximately 5 % of trading of over- the- counter stocks on the New York Stock Exchange. In 2000, Mr. Madoff took advantage of the internet as a vehicle to advance his trade. Madoff Securities became one of the top ranking trading and securities firms in the nation. Madoff was masterful in his scheme. His success with dealing with Non-profit charities, the elite, while investing their charitable funds, keeping secretive and the knowledge of tax law helped him keep his old ponzi scheme a secret for all this time. The charities lost millions in form of an affinity fraud. Mr. Madoff was not a new name for the Security Exchange Commission and regulatory authorities. He was investigated earlier in 1992 for reportedly being involved in illegal activity with Madoff Securities LLC before. It all started in 1992 when SEC invested one of Madoff’s feeder funds, Avellino & Bienes who didn’t invest in anyone, but Madoff. Bernie Madoff denied that he knew about the illegal activity so he wasn’t arrested. In May 1999, a financial analyst, Harry Markopolos complained to the SEC that ‘he questioned the legally of how profits were made per Madoff’s claim when using Madoff investment strategy.’ Then in 1999 and 2000, the SEC found that the firm was hiding customer orders from traders and then Madoff took corrective measures. The SEC made two inquires at that time; however, they were unable make connections to illegal activity. Again, in 2005, the SEC’s investigated Madoff and found him in violation of three activities which were as follows: ‘the strategy used for customer accounts, the requirement of brokers to obtain the best possible price for customer orders, and operating as an unregistered investment advisor.’ For this misdeed, he only received a hand slap and SEC findings were not made public. Also, in 2005, again ‘Markapolo sent the SEC a detailed 7 page memo entitled “The World’s Largest Hedge Fund is a Fraud”.’ The SEC has been accused in missing many red flags; whereby, ignoring tips that were sent to them and not probing more. When Barnie suggested to his sons to pay off 200 million dollars in assets owned by the firm two months ahead of schedule, the sons questioned their father about this, at which time, the father admitted that the whole asset management arm of Madoff Investment Securities was a ponzi scheme. It was at this time December 10, 2008 his sons told the FBI about their dad’s ponzi scheme. It was the beginning of the end of Madoff’s dynasty. At present, he is still out on bail for $10 million, and is on house arrest and wearing an ankle bracelet. However, as of March 6, 2009, Bernie has pleaded guilty and is still waiting for sentencing. (Wikipedia, 2009) (infoplease, 2009) (New York Times, 2009)
Another charismatic person, similar to Bernie Madoff is Tom Petters, CEO and Chairman of Petters Group Worldwide. Tom Petters only had a high school education. His company had offices in North America, South America, Asia, and Europe. He started out his career by selling electronics to college students. He eventually moved to Colorado to manage a chain of electronic stores that eventually went bankrupted. He moved back to Minnesota and incorporated a solo operation called Amicus Trading Wholesale Company which eventually was renamed to Petter's Company. Mr. Petters was known for buying and reviving ailing companies that included Sun Country Airlines and Polaroid Corporation. Some of his awards where Corporate Leader of the year, 2001, Distinguished Humanitarian Award, 2003, and Big Brother, Big Sister Odyssey award in 2005. In 2004, his son was murdered in Italy. Shortly after, Tom Petters established the John T. Petters Foundation and provided endowments to universities throughout the United States. One interesting endowments went to John T. Petters Center for Leadership, Ethics and Skill development in the Richard T. Farmer School of Business of Miami University.
Tom Petters, CEO of Petters Company of Minnetonka, Minnesota was indicted for fraud which he was allegedly in a large scale ponzi scheme; whereby, new investors’ money was used to pay older investor's return. Tom Petters was apparently fabricating documents in order to obtain billions of dollars in loan from various investors and this also included hedge funds. He would use falsified purchase orders to nonexistent purchases of merchandise. Apparently the story is he took a new lender's loans to pay off outstanding loans or role in new loans from the same lender. He also took the proceeds from these loans to subsidize his own life style or funneled the money from these loans into his own company. The US Attorney's Office charges Petter with wire and mail fraud, money laundering, and obstruction of justice. Tom Petters may end up in prison for the seven counts of fraud which brings twenty years imprisonment for each count. To this date, Petters is being jailed without bond until his pending trial. Since his arrest, several Petters entities including two companies are filing for bankruptcy. (Hudgefund Law Report, 2009) (UofM, 2008)
John A. Thain is Chairman and CEO of Merril Lynch Company and was on the NYSE EuroNext Inc from January 2004, as well as Co-CEO of Goldman Sachs Group Inc. He received a BS degree from Massachusetts Institute of Technology, and a MBA from Harvard University. He is a member of the MIT Corporation, the Dean's Advisory Council – MIT/Sloan School of Management, INSEAD (US National Advisory Board), the James Madison Council of Library of Management, the US Stock Exchange prior to Merrill Lynch. John Thain was designed to become a present of the global banking, securities, and wealth management of the merger, but mysteriously resigned. Bank of America lost interest in Mr. Thain when he had mounting losses at Merrill. Since December 2008, he wanted a bonus of 10 million dollars for compensation on the last day before the merger, yet never obtained that bonus. When he went to Merrill Lynch, he was given a 15 million dollar sign-on bonus, 50 million dollars a year and then based on the company’s stock price, would be paid 120 million dollars a year. In 2007, Mr. Thain was the best paid out of the S&P 500. After the Bank of America resisted his request of 10 million dollars for merger compensation, he dropped his request in December 2008. When John Thain left, other executives left as well including brokerage chief Bob McCann, investment head Greg Fleming. Mr. Thain refurbished his office at a time Merrill Lynch was failing and along with the upcoming merger with Bank of America. He also paid himself and all his top executives a cushy bonus prior to leaving. He wasn’t transparent about his company’s collapse. The company was accused of artificially inflating the value of the Collateralized Debt Obligations (CDO) and other assets backed by the subprime mortgages; whereby, the company issued false and misleading statements about the bonds. (Wikipedia, 2009)
Richard Fuld Jr. was a CEO of Lehman Brothers who could face civil lawsuits for overseeing the bank’s collapse in Chapter 11 while transferring his 3.3 acre $13 million seaside home to his wife for $100. Richard Fuld Jr. earned a BS from the University of Colorado at Boulder in 1969 and his MBA from New York University's Stern School of Business. He trained at the Naval reserves Officer Training Corps and later became an Airforce pilot for a short time. Mr. Fuld Jr. joined Lehman Brokerage firm since 1969 as an intern and worked his way to the top and was known to pick up the company out of crisis four times prior to this event. Mr. Fuld. Jr. mislead investors in the state of the company prior to the Lehman Brothers’ collapse and the 700 billion dollar stimulus bill made to counter that. He was criticized for not being transparent on his failing bank to his stakeholders. (Wikipedia, 2009) (Reuters, 2009)
The facts are both Tom Petters and Barnard Madoff used large-scale fraudulent activity through ponzi schemes. Richard Fuld Jr. and John Thain both were not transparent in the well-being of their companies; whereby, has not only caused bankrupt, but also bailout issues to their companies. All of these CEOs were knowledgeable and experienced in their line of work; however, all the companies they worked for eventually went bankrupted. Not one of these CEOs had a conscience for their misdeeds. All of them didn't think twice in providing their financial needs first. So in other words, the greediness or ‘I deserve it’ attitude, became their philosophy instead of promoting ethical concepts such as the following: honesty, where stealing and theft is not a part of their makeup; fairness where having justice, equality, and morality plays in the forefront and lastly, integrity, where one is whole and sound; thereby, would not knowingly harm customers, clients, employees and other competitors through deception. Instead, all of these executives promoted unethical acts for greed, allowed their company to go bankrupt without transparency and finally for a couple CEOs, their willingness was to continue their fraudulent activities at all costs. Not even the Federal Sentencing Guidelines for Organizations (FSGO) or the Sarbanes-Oxley Act without the assistance of whistle blowers could have stopped them even though the SEC investigated the companies in question at prior times. (Business Ethics, pp 60-63, 2008) (Ferrell, O. C., LeClair D.T., Ferrell, L., PDF, 1998)
One ethical issue is executive compensation. Both Mr. Thain and Mr. Fuld Jr. had an extraordinary payout for their positions; whereby, the justification for the payouts where scrutinized by both the the media and the Congressional Panel. Secondly, the ineffectiveness of SEC monitoring the fraudulent activities of Tom Petters and Bernie Madoff without the use of internal reporting done by whistle blowers. Thirdly, the missing concepts of character in each one of these CEOs somehow were inhibiting good habits to be ethical. As in the quote from Admiral Larson, “true leaders know that characters is not about never failing; it is about never quitting the effort to be ethical regardless of the cost” (josephsoninstitute.org, 2008)
The primary alternatives for CEOs should have strong personal character in which they have moral values and ethical reasoning while living it and treat others the way they want to be treated. These CEOs have to have a passion to do right; whereby, they're able to face challenges and make tough choices with an ethical point-of-view. They also have to be proactive in which they are continuously reviewing potential ethical issue and trying to resolve it. They also have to have the stakeholders interest in mind where they're transparent and communicating to all about the status of their corporation. And lastly, they need to be role models for ethical behavior and they need to embrace an ethical culture in order for others to follow. “Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy” – General H. Norman Schwarzkopf, 1991 Gulf War. To apply to The Gramm-Leach-Bliley Act and Sarbanes-Oxley Act and have the SEC infiltrate faster an no procrastinating. Gramm-Leach Bililey Act was passed so that companies keep financial records and backups of those records else they face criminal charges. I believe the SEC should be more expedient and more aggressive when they have