Ethics in Corporate Governance - Assignment Example

Case Carillion has been a big company with annual turnover of more than £ 5 billion. The company has an employee base of around 45,000 personnel all over the world. It earns magnificent profit through offering its services in the UK public sector. The company has been investigated for negligence in the healthcare of patients in which six persons lost their sight (irreversible) after treatment. Since September 2011, the company unit has seen 21 serious incidents and the unit had also lost the record of outpatients of ophthalmology that had resulted in losing their license as well.

These scandals have raised so many questions over ethics and corporate governance of Carillion. The company also lost its repute for illegal shakedowns and extortion of workers hired on low wages at Swindon Hospital and it has also been reported that whistle blowers were also victimized and at last workers initiated strike in Feb 2012. ("Carilllion’s failure of corporate governance | Left Futures.") Analysis Stakeholders in the case are primarily the patients (public), health authorities, employees, management and shareholders.

Patients have deeply suffered because of low standards of corporate governance and ethics that did not keep any accountability of the teams and the provided services and loss of lives is the biggest cost in the case. As a result the health authorities also showed their concern and investigated the matter and allegations. Health authorities have seen poor performance and compromised ethics and codes in the matter. The company has to be efficient in providing care to the patients and it must be the top priority.

According to OECD Principles, auditing committee must be in place to assess the conditions of services and the board and management must have a structure that aims to retain quality and two way communication with internal and external stakeholders (OECD Article I and V, 2004). The board of company has been up-to-dated with the current condition of Carillion but the board stayed silent throughout and the management also showed the negligence in the same way. Remuneration is another issue that the company is suffering from, as it has hired Asian workers on low wages.

The company must provide adequate compensation which should be appropriate according to labor market. Also, the whistle blowing mechanism must be given assurance of job security and safety from extortion and bullying for the whistle blowers (Syste and Hein, 2013). According to Serbanes Oxley Act (2002) roles and responsibilities of the board must be clear and it should be of adequate size with independent and committed people while in this case the board has continuously ignored major occurring like deaths of patients.

The act also identifies the need to have integrity and code of ethics developed by the company to comply with so no stakeholder may have any regret or grudge and eventually the management of company may reveal ethical behavior by promoting ethical decisions. The disclosure of transparency is also a necessity for the corporations that Carillion has thoroughly ignored in the case (OECD Article II and III). Work Cited "Carilllion’s failure of corporate governance | Left Futures." Left Futures - forward thinking for the democratic left. N.p., n.d. Web. 9 Mar. 2014. Sytse D. & Hein S. (2013) Economic Approaches to Organizations, 5th edition, chapter 15, London: Pearson "OECD Principles of Corporate Governance, 2004, Articles II and III". OECD. Retrieved 9 Mar. 2014. Sarbanes-Oxley Act of 2002, US Congress, Title I, 101(c)(1), Title VIII, and Title IX, 406 "OECD Principals of Corporate Governance, 2004, Articles I and V". OECD. Retrieved 9 Mar. 2014.