Unethical Business Practices and the SEC’s Response to the Waste Management Scandal

The following paper will develop the thesis of the chronic amount of unethical behavior done in business practices. The focus of the essay will be on the SEC’s dealing with such behavior in a myriad of examples such as Dean Buntrock in the Waste Management scandal, and how this unethical behavior in business adversely affects stakeholders. The SEC (Security and Exchange Commission) is an institute set in place in order to delineate what business ethics are violated in certain scenarios.

Dean Buntrock Waste Management's chief executive officer ("CEO") and founder and other employees were deceitful in their business practices. The following paper will focus on the issue of unethical behavior in the Dean Buntrock scandal and will propose a way in which ethics could have been handled in a much more concise manner. This deceit is evident in the SEC’s report pertaining to Waste Management’s bookkeeping and other falsified records: The company’s earnings were aggrandized, and the financial performance of the Waste Management was presented investor’s with faulty monetary projections and numbers (SEC summary).

This level of falsify ended up amounting to 33% lower stock worth and the profits which were reported added up to $1. 7 billion. The ethics of Waste Management were obviously sacrificed in order for the CEO Dean Buntrock to gain more money. This is the main ethical issue involved with this scandal; that of prevaricating records in order for a greater monetary return.

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Not only did Buntrock falsify earnings statements but he also, “avoided depreciation expenses by extending the estimated useful lives of the Company's garbage trucks while, at the same time, making unsupported increases to the trucks' salvages values. ” Buntrock also failed in reporting landfill depreciation due to waste fill, and he didn’t record necessary expenses to write off “impaired and abandoned” landfills as well as giving false testament of “inflated environmental reserve”, plus he capitalized on any number of expenses (SEC).

Each statement in the above list is consummate examples of malicious business practices. Though Buntrock cited a conflict of interest with SEC, which he said presented him in a biased fashion (Business Wire, 2002). Business ethics is about the integrity a company, and its affiliates show towards the business world; both in scope of clients and in regards to basic business practices. Buntrock violated the code of ethics in his purposeful intent to manipulate shareholders, buyers, and other clients.

Buntrock concealed the ‘fudged’ numbers in a process known as ‘netting’. Netting is a severe violation of ethics in the practice of business because in its definition it involves going back to previous years of gain and surplus and passing off past earnings as current gain, as the SEC states, “Defendants offset one-time gains against items that should have been reported as operating expenses in current or prior periods and thus concealed the impact of their fraudulent accounting and the deteriorating condition of the Company's core operations.

” The scandal of Waste Management harkens back to the fraudulent accounting of WorldCom and Enron (Costa, 2006). Waste management ventured into this type of accounting in order to boost their depleting earnings (Elkind, 1998) and in order to ‘net’ they had to go back in their records to 1992. The ethics being disrupted here involve a level of lying that those other big corporation thought they could get away with because they were somehow above the law; the SEC stepped in because proper business was not being conducted.

Buntrock could not keep up with EPA regulations on the landfills he had purchased (Chakravarty, 1993). His alternative to making his landfills up to date for legal filling, he simply ignored the zoning, and thus is exemplified the dirty side of business; his refusal to agree with mandated laws simply says that his ethical stance in both business and environment is nonplussed as long as there is a high pay out involved.

Buntrock made “top-level adjustment” (SEC) and for him to manipulate his company and in turn his clients and employees, is highly unethical. Buntrock intentionally, purposefully, and consciously gave false records in his company. This then becomes the epitome of unethical and Buntrock himself becomes a disreputable business leader. In business ethics, it simply is not proper conduct to delude the shareholders. In organizational theory, this impedes the rate of business being conducted and eats time into unnecessary actions.

Kaplan states, “advantage today is derived less from the management of physical and financial assets and more from how well companies align such intangible assets as knowledge workers, R&D, and IT to the demands of their customers. ” By using a better standard of ethics in business and by putting the customer in front of avarice, the faulty leadership involved with the Buntrock ethical problem may be averted. In order for a revision of the situation involving the Buntrock case, a close examination of the ethical procedure in the company must be done.

It has previously been stated that the company kept fraudulent account of bookkeeping and was involved in a process called ‘netting’. Both of these actions are illegal in matters of business and should be avoided or, in the case of such activity already transpiring, someone in the company should let a higher authority such as the SEC be involved and begin an investigation. Simple process changes brought to necessity through competition in the economy can be adhered to in the new ethical management style of Waste Management by various implementations of organization.

The different ways in which an ethical Waste Management may be able to more fully focus on cost, client attention, and over-all company enhancement is by, “organize(ing) around its various processes instead of its traditional functional, product, and geographic boundaries” (Kaplan, 2006). There are other ways in which Waste Management can further assist both business and clientele as Kaplan states further, “"virtual" and "networked" organizations operating across traditional boundaries and the "Velcro organization," a company capable of being pulled apart and reassembled in new ways to respond to changing opportunities”.

The source of someone doing something unethical is brought about by unlimited desire. Something that goes unmitigated becomes possessive of that person and they in turn want, and want, without satiation, as Rimback states, “Our leaders, peers and subordinates expect nothing more than an honest attempt to do the right thing, to make the right call during moments of controversy and challenge.

Our duties are too important to do otherwise. Our mission can only be performed by professionals who possess the highest ethical standards. It's those standards that ensure we do our duty even when the times get tough. “ This is how bad government begins and how poor working environments are conducted. Unethical behavior overtakes the rational (part seeking truth, and reason) of the person resulting in moral weakness.

It is not then self-interest that led Dean Buntrock to unethical behavior, and there is a definite equilibrium between the allowance of each part of a person guided by reason, and asceticism; in the scandal of Waste Management, ethics were not followed, and this is were Dean failed as a leader of his company. Without the guidance of moral reason then a state of chaos and extreme corruptive environments ensue entailing the forced hand of the SEC and the further depreciation of moral code and faith the clients had in their company.

This is how a corporation should not be led. Proper conduct is essential and without ethics the work place becomes uncooperative and this leads to bad performance. The concern of making a better working environment for Waste Management would involve firing the employees who were directly related to the incident and in order to reinstall faith of the client with the company a new leader or CEO would take over the business and run it with proper ethical standards at the forefront of the business actions.

In issues of business ethics there are a myriad of examples of exceptions to the rules, but in general, a strong ethical approach to business ensures a well kept working environment. As such, workers will be content in their place in the corporation, and mangers will remain ethical in their decision making where the worker is involved, both in the hiring phase as well as the actual working phase or employment. Also, what is true for the individual in regards to ground rules is true for the group; rules apply to both without exception.

Therefore, no one feels as though others are receiving special privileges, and no one is discriminated against. If one worker has to work overtime, then the group has to work mandatory overtime.

Bibliography

Business Wire. (2002). Former Waste CEO Responds to SEC Allegations, Challenges Fairness. ;http://www. findarticles. com/p/articles/mi_m0EIN/is_2002_March_26/ai_84193004; Chakravarty, Subrata N. (1993). Dean Buntrock’s Green Machine. Forbes, Vol. 152 Issue 3, p96-100. Costa, John Dalla.

(2006). Ethics and Marketing. Marketing Magazine, Vol. 111 Issue 19, p12 14. (Online). Available: http://www. marketingmag. ca/magazine/current/feature/article. jsp? content=20060522_6 397_67397 Elkind, Peter. (1998). Garbage In, Garbage Out. Fortune. Vol. 137 Issue 10, p130-138. SEC (2002). ;http://www. sec. gov/litigation/complaints/complr17435. htm; Kaplan, Robert S. (2006). How to Implement a New Strategy Without Disrupting Your Organization. Harvard Business Review. Vol. 84 Issue 3, p100-10

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