UBS essay

UBS essay

             Question 1

In 1997, UBS was formed when the Swiss Bank Corp with then Union Bank of Switzerland. After acquiring and hiring for the investment banking business of Paine Webber, UBS, it became one of the world’s biggest top financial services companies and the leading bank in Switzerland. The ethics scandals at UBS tell us that business ethics are the moral principles that guide the behavior of the business. As a business premise, there is a need for it to operate with a higher regard for business ethical considerations for business continuity. The kind of principles that guide an individual behavior also applies to business. The reports on the various scandals like protecting the tax evaders, manipulating the internal lending process, colluding with rogue traders. This indicates that the Swiss Bank is functioning without ethics. The violation of the various ethical measure during its operation is an indication of the little regard that the bank gives to the ethical consideration during its services. This element might have adverse impacts on the country’s moral aspect and in the long run, on the daily business operations. (Cucinelli, 2017).

Question 2

Other than the $1.5b fine that was given to the UBS, the board of directors is to be blamed for the fraud witnessed. Immediately after the fine, the board of directors pleaded guilty to the US prosecutors for committing fraud. It would be, however, a clear indication that the management was involved and aware of the whole deception. Again this is a show of the lack of the ethical element in the business operation (McConnell, 2013). Generally, the management of the organization is generally considered as an excellent trust for the good practices within a business operation. They are often regarded at the watchdog of any inappropriate business engagement that the other employees might be involved in. However, in a situation where they are the ones concerned or involved directly in such unethical practices, a business premise, in this case, usually is bound to hit its end.  The result is the business is likely to have a bad reputation and loss as a result. At least 40 people, including senior managers, have admitted to being involved in the manipulation. Fining the bank was sufficient, considering the number of management that was involved in the whole fraud (McConnell, 2013).

Question 3

In August 2015, Tom Hayes was sentenced to 14 years in prison, to serve a minimum of his sentence before being considered for early release. He, however, maintained his innocence throughout the trial process and argued that the management was using him as a scapegoat. In my view, the sentence was a harsh one because the whole administration was aware of the fraud (McConnell, 2013). Problems went beyond Tom Hayes, and the lengthy sentence does not, however, appear to be a strong deterrent to others at UBS. Hayes was not made aware by the senior management that his actions would constitute any wrongdoing. His efforts were consistent with those of others at the high level, so the administration was using him as a scapegoat to the whole fraud. It was a violation of both the business operations ethics as well as at the breach of a human right at the highest level ever witnessed.  The occurrence of scandals after his departure is his defense as he fights his sentence (Cucinelli, 2017).

Question4

 Having enjoyed the best competitive advantage that was brought by the Swiss baking privacy, the UBS, however, violated business ethics by committing some criminal offenses like sharing their clients’ information with the third parties. Lessons learned here are that the financial companies have ethical responsibility; these ethics serve a significant role in profits. Inferior ethical cultures can always lead to reduced employee decisions. Secondly, the commercial company’s record and the perception of its ethics can significantly affect its reputation and ensure long term success or failure. It is easier to lose an appositive status than regain it; they have a history of placing moral considerations above a legal or opportunistic expedient (McConnell, 2013).

Question 5

The UBS seemingly has a lot of issues and has to look for remedies to avoid more ethics failure and repair its already damaged reputation. Despite the spoiled status, UBS can still apply some strategies and get back to its position. First, USB can consider apologizing o its stakeholders formally and do engage in the best operations within some time to gain the trust of its stakeholders. UBS can, therefore, reorganize and have managers that are ethical and also to begin holding employees accountable for their actions. Keeping employees responsible will prevent future losses like fines. UBS also needs to get and fund organizations that fight fraud and banking unethical practices (McConnell, 2013).

References

McConnell, P. (2013). Systemic operational risk: the LIBOR manipulation scandal. Journal of Operational Risk, 8(3), 59-99.

Cucinelli, D. (2017). Internal Controls and Risk Culture in Banks. In Risk Culture in Banking (pp. 97-123). Palgrave Macmillan, Cham.