The High Cost of a loose sense of Integrity | Corporate Business Ethics | Case studies

It is a fact that we live in a culture where Integrity is not Black and White. It is several shades of Grey. Individuals and corporates begin to think that minor “adjustments” to integrity are OK, as long as it helps one to meet personal or corporate goals.

But there is a serious problem with this approach to Integrity. You never know when you go from white to light grey to dark grey to black.

Servant Leadership requires leaders to have the highest sense of Integrity, where integrity it black and white. You either have integrity or you don’t.

The following corporate case studies will convince you of this fact.

ENRON SCANDAL : Founded in 1985 by Kenneth Lay, Enron was an intermediary between the natural gas producers and their customers. Enron started incurring losses as competition increased over the years. To cope with the shareholders, the company started relying on dubious accounting practices like ‘market-to-market accounting’; and it even started over-using ‘special purpose entities’ (SPEs) to dump troubled assets. In mid-2001, analysts began to dig into the details of Enron’s financial statements. This led to the revelation of accounting frauds. The damage to the company’s finance and reputation was irrevocable, leading to an eventual dissolution of the mammoth enterprise. https://www.wsj.com/articles/SB1023409436545200
SATYAM SCANDAL (also known as the Enron Scandal of India)Satyam Computer Service was started in 1987 by Ramalinga Raju and his brothers. In January 2009, Satyam was banned from doing business with the World Bank on claims that Satyam was involved in illegal practices. On investigation, it was found that the company showed falsified accounts to its company board, regulators, investors, and all other stakeholders: https://www.financialexpress.com/industry/what-was-satyamscam-which-toppled-indias-fourth-largest-it-company-from-thetopslots/1010389/
The Volkswagen Diesel gate incident In September 2015, the Environmental Protection Agency (EPA) found that many VW cars being sold in America had a “defeat device” – or software – in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results. The German car giant has since admitted cheating emissions tests in the US. https://www.bbc.com/news/business-34324772
Peanut Corporation of America: In 2009, ore than 700 cases of salmonella poisoning were linked to contaminated peanut products. Nine people died. Investigators traced the contaminated food to a factory in Georgia operated by the Peanut Corporation of America. What came out was that the company leaders allowed the shipment of food products even when no testing was done, and when they know that there was a problem. https://www.npr.org/sections/thesalt/2015/09/21/442335132/peanut-exec-gets-28-years-in-prison-for-deadly-salmonella-outbreak
Theranos and Elizabeth Holmes: Holmes founded a start-up that promised to revolutionise blood testing. She soon became the darling of the investors but despite having some great people in the board, succeeded in cheating thousands of consumers, because her machines did not work, and the test results were all fake. Investigations revealed lies to board members, a culture of intimidation and secrecy, technology that repeatedly failed quality assurance and crucially, results sent to real patients that were fundamentally incorrect, upon which life-changing medical decisions were being made. In 2022, Holmes was sentenced to prison. https://www.panmacmillan.com/blogs/literary/theranos-elizabeth-holmes-john-carreyrou#

One of the DEEP BHC Servant Leadership behaviours, which is a part of our 3-7-10 framework of Servant Leadership Implementation is Behaving Ethically. We help Servant Leaders shake off the notion that Integrity is an adjustable commodity.

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