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1.0 Introduction 1.1 Ethics Some years ago, sociologist Raymond Baumhart asked business people, "What does ethic mean to you'" in which among the replies received were: "Ethics has to do with what my feelings tell me is right or wrong." "Ethics has to do with my religious beliefs." "Being ethical is doing what the law requires." "Ethics consists of the standards of behavior our society accepts." "I don't know what the word means." These replies might be typical of our own. The meaning of "ethics" is hard to pin down. The views many people have about ethics are shaky and like Baumhart's first respondent, many people tend to equate ethics with their feelings. However, being ethical is clearly not a matter of following one's feelings, as sometimes, a person who is following his or her feelings may shrink back from doing what is right. In fact, feelings frequently deviate from what is ethical. Nor should one identify ethics with religion. While it is true that most religions advocate high ethical standards, yet if ethics were confined to religion, then ethics would apply only to religious people. But ethics applies as much to the behavior of the atheist as to that of the religious. Religion therefore can set high ethical standards and can provide intense motivations for ethical behaviour, but ethics, however, cannot be confined to religion nor is it the same as religion. Being ethical is also not the same as following the law. The law often incorporates ethical standards to which most citizens subscribe. But like feelings, laws can also deviate from what is ethical. The American pre-Civil War slavery laws and the old apartheid laws of present-day South Africa for example, are laws that deviate from what is ethical. Finally, being ethical is not the same as doing "whatever society accepts." Although most people accept standards that are, in fact, ethical in most society, the standards of behaviour in society can still deviate from what is ethical; an entire society can become ethically corrupt in fact, a good example being the Nazi Germany. Moreover, if being ethical were doing "whatever society accepts," then to find out what is ethical, one would have to find out what society accepts. To decide what I should think about abortion, for example, I would have to take a survey of American society and then conform my beliefs to whatever society accepts. But no one ever tries to decide an ethical issue by doing a survey. Further, the lack of social consensus on many issues makes it impossible to equate ethics with whatever society accepts. Some people accept abortion but many others do not. If being ethical were doing whatever society accepts, one would have to find an agreement on issues which does not, in fact, exist. What, then, is ethics' Ethics I believe, is two things. First, ethics refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from rape, stealing, murder, assault, slander, and fraud. Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty. And, ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons. Secondly, ethics refers to the study and development of one's ethical standards. As mentioned above, feelings, laws, and social norms can deviate from what is ethical. So it is necessary to constantly examine one's standards to ensure that they are reasonable and well-founded. Ethics also means, then, the continuous effort of studying our own moral beliefs and our moral conduct, and striving to ensure that we, and the institutions we help to shape, live up to standards that are reasonable and solidly-based. In view of this, to understand ethics, we need then to take a look at some of the theories that societies have set up in an effort to define ethics. We will then take a look at some of the ethical issues prevalent in the business world today, and assess them in the light of what established statues and case laws have to say in each of these ethical issues. 1.2 Business Ethics Business ethics is defined as a set of written and unwritten code of principles and values that governs decisions and actions within a company. In another saying, business ethics is all about knowing the difference of right and wrong and making the right decision which coincide with business ethics. According to Ulrich and Thielemann (1993), the question in business ethics is not about the extent of business managers being ethical, but what is more important is what thinking pattern managers are using to legitimize their activities. Ethics in business context is a complex matter as it deals with not only right and wrong, but also distinguishing between profit over public interest, employees and employers interest, agency problem and so forth. The two most common unethical business practices are: Corporate Spying Corporate spying is common among fiercely competitive industries. The corporate spy trade is booming. According to PriceWaterhouseCoopers survey, one quarter of Australian firm admitted that they are involved in “competitive intelligence sharing”. Corporate spies begin by gathering all the information they want about a company by requisitioning documents via the Freedom of Information Act and using the internet. In 1993, Volkswagen swiped a bunch of General Motor’s plan and ended up paying $100 million when they were caught. It all began when Mr. Lopez left General Motors for Volkswagen in 1993, spurning an offer by John F. Smith Jr., GM’s chief executive. General Motors sued Mr. Lopez and seven lieutenants that followed him to Volkswagen of stealing thousands of pages of company documents full of trade secrets. To put an end to the four-year feud between the world’s two largest company, Volkswagen A.G. and General Motors Corporation, Volkswagen agreed to pay $100 million to General Motors and to buy at least $1 billion worth of auto parts from General Motors in the next seven years. In 2004, Air Canada accused WestJet Airlines of stealing confidential flight data and sued for $200 million. And WestJet Airlines countersued claiming that Air Canada had dug through the home garbage of WestJet employees in search of incriminating evidence. The lawsuit centred on Air Canada claimed that WestJet management used the password of a former Air Canada employee to access to a website maintained by Air Canada to download detailed and commercially sensitive information. The practice was undertaken with the knowledge and direction of the highest management levels of WestJet and was not halted until discovered by Air Canada. This conduct was both unethical and unacceptable and WestJet accept full responsibility or such misconduct. To put an end to the law suit, WestJet apologized to Air Canada and paid $5.5 million to cover Air Canada’s investigation and litigations costs and make a $10 million donation in children’s charities in the names of both airlines. Unfair Pricing Large companies such as Wal-Mart can afford to lose money or even break even on certain products. As they offer their products at a lower price compared to other sellers, they force out many other competing business that rely solely on these products as their income. Once the competition is beaten, they will raise their price again to maximize profits. Perception of price unfairness may lead to negative consequences to the seller. Including buyers refuse to buy from the seller, buyer spreading negative information about the seller and engaging in other activities that may damage the reputation of the seller in various ways. (Campbell 1999) In Arkansas, Wal Mart’s home state, Judge David Reynolds ordered Wal Mart stores to stop selling some drugs and health and beauty goods at lower-than-cost prices. He also awarded $289,000 to the plaintiffs, which are three independent pharmacies in Arkansas. Wal Mart was selling some products below the wholesale-price it had paid, making it impossible for local pharmacies to compete. Its price is so low that the local sellers can even buy their stocks from Wal-Mart as the price from Wal-Mart is actually cheaper then what they can get from wholesale suppliers. 1.3 Definition of Moral Behaviour in a Contingency According to (Shavell 2009), assumption given to constitute moral behavior in a contingency includes, First, if a contract provides explicitly for a contingency, then the moral duty to perform in that contingency is governed by the contract. Second, if a contract is incomplete in the sense that it does not provide explicitly for a contingency, then the moral duty to perform in the contingency is governed by what a detailed contract addressing the contingency would have stipulated, assuming that the parties know what this hypothetical contract would have stated. To give a clearer illustration, consider a contract concerning clearing of snow from a person’s driveway and the contingency that the seller’s snow clearing machine is stolen. If the contract specifies that if such a theft occurs, the seller still have obligation to clear the snow. Then the seller is said to have moral duty to clear the snow even if his equipment is stolen. On the other hand, if the contract clearly says that in the event of theft the seller does not have the duty to clear the snow then the seller would not have the moral duty to perform in the case of theft. If the contract does not mentioned about the case of theft explicitly, the seller’s obligation to clear the snow would be determined by what a hypothetical complete contract would have said, assuming that the parties know its nature. Morality is conformity with recognized rules of correct conduct, or a character of being virtuous or a system or duties or ethic. Morality is generally not a formal system and it does not depend on how rules are stated. The “recognized rules” refer to rules that are acceptable to one community where one belongs, whether the rules are in the form of law or religion. Law and religion is said to have close relationship, religion is often reflected in one’s moral values and laws of the society. According to Lord Denning, he said” Many people think that religion and law have nothing in common...People who think that have got a wrong idea both law and religion...” According to Lord Denning, law seeks to see that truth is observed and justice is done between men. What is truth and what is justice is not the product of one’s intellect, but of his spirit. Spirit is the creation of religion from where right deeds would flow. 1.4 Morality in the Malaysian Law Customs by definition is the accepted conduct or behavior in a society and it has the force of law. In Federal Constitution, the word “morality” appears in art.11 (5) which states that the right to profess, practice and propagate a religion shall not contrary to, inter alia, morality. The other is in art.10 (2) which is a provision that allows the Parliament to create law imposing restriction on the right to freedom of speech and expressions on the grounds of among others, public order or morality. In other words, the Parliament may restrict personal freedom if public morality is at stake. Public morality means the ideals or general moral beliefs of a society and actions of an individual that affect others. On the other hand, in the law of contract, section 24(e) prohibits any contract in which its consideration is immoral or is opposing to public policy. In criminal law, the Penal Code provides for provisions on offences affecting decency and moral. It is then stated in Chapter XIV in the Code; those offences are related to dissemination of obscene publications, obscene act and obscene songs. Other than these offences, the Penal Code also penalizes deviant sexual acts, such as incest and unnatural offences, which includes buggery with animal, carnal intercourse against the order of nature, outrages of decency (either in public or in private), and inciting a child to an act of gross indecency. 2.0 Ethics Examples in the Business Context Sometimes ethical issues may arise in business situations, some of which, will be explained below; 2.1 Insider Trading According to Joshua Kennon in his article Understanding Insider Trading, insider trading occurs when someone makes an investment decision based on information that is not available to the general public; that is, by using his or her position, the insider makes massive gains or avoids losses by selling or buying shares before information that might affect the price of the company’s shares is made public. While many people may not fully appreciate insider trading or see anything wrong with it, merely seeing it as taking advantage of a fair business opportunity, in actual fact, there is in fact, an ethical issue relating to this act of insider trading. In actual fact, insider trading is an act of stealing. This is because one party has information which is obtained solely because of their connection with the company and this information is not known to the other party. This would in effect, be unfair to the other party who do not have such information nor the means of obtaining them, thus being adversely affected, after price have been adjusted for, based on the said information. For an example, if an individual knows that the price of certain shares will increase when the information is made public, certain people may act quickly on that information, and make the purchase of the shares before the information goes public. When the value of the shares does indeed increase after the information is made public, it is unfair to the others who did not have such information – the buying party has in effect, stolen the increase in value from the selling party. It is this unfairness in share trading then that makes insider trading an unethical act. In the eyes of the law on the other hand, insider trading was never considered an illegal act at the beginning of the twentieth century; in fact, a Supreme Court ruling in America once called it a “perk” of being an executive. However, after the excesses of the 1920’s, the subsequent decade of depression, and the resulting shift in public opinion, it was banned, with serious penalties being imposed on those who engaged in the practice. The issue of insider trading gained renewed interest in the wake of the Enron case at the turn of the century. In this case, Enron had created offshore entities, units which may be used for planning avoidance of taxes, raising the profitability of a business. By using these offshore entities, the management of Enron were able to have full freedom of control over currency movement, which in turn, was used to hide losses that the company was making. As a result, Enron was made to look more profitable than it actually was, and created a spiral in which the management had to concoct more and more contorted financial deception to create illusions of billions of profit while the company was actually losing money. This practice drove up share price to new levels, at which point, the executive who knew the existence of these offshore accounts, began to work on insider information and trade millions of dollars worth of Enron shares. As the insider dealings and manipulations continued, the share price continued to increase and hit its highest value at $90 in August 2000. At this point, Enron executives who possessed the inside information on the hidden losses, began selling their shares, while at the same time telling the general public and Enron’s investors to continue buying the shares. Executives told investors that the shares would continue to climb until it reached possibly the $130 to $140 range, while secretly unloading their shares. As executives sold their shares, the price began to drop. Investors however, were continually advised to buy or at the very least, hold their shares. This continued until the share price plunged to $15, but even at this time, many saw this as a great opportunity to buy the shares because of what the executives have been telling them through the media. Meanwhile, the executives of Enron continued to chart of millions of dollars from investors as they offload their portion of the company’s shares. The trust and optimism placed by the investors on Enron proved to be misplaced when the company was declared a bankrupt soon after. This scandal brought about a greater awareness of the need to put statute laws in place to forbid such dealings from happening again. In response to this crisis, countries all over the world tightened their laws and regulations. In Malaysia in particular, insider trading is considered a crime under law, governed by Part V, Division 1, subdivision 2 (sections 183 to 198) of the Capital Markets & Services Act 2007 (CMSA) Under this Malaysian law, if a person is found convicted of committing insider trading, he may be subjected to certain criminal and civil actions. Below are some case laws in regard to insider trading that have been established over the years and the resulting judgment passed on these cases were as follow; a. Criminal persecution may be instituted against the insider if convicted of insider trading and may be punished with imprisonment for a term not exceeding 10 years or fine of not less than One Million Ringgit (RM1,000,000). The only criminal case involving insider trading to date in Malaysia is the case of PP vs Chuah Seng Huat. b. Civil suits instituted under the Securities Commission under the CMSA, an example in point being that in August 2004, the Securities Commission initiated a civil enforcement action against Kuala Lumpur City Securities Sdn. Bhd. and Wan Azmi bin Wan Abdul Rahman, a former employee of Padiberas Nasional Berhad (BERNAS), requiring them to disgorge ill-gotten profits arising from insider trading of BERNAS shares. In this case, a total of Two Million and Eighty Thousand Malaysian Ringgit (RM2,080,000) was recovered from Kuala Lumpur City Sdn Bhd – twice the amount gained by Kuala Lumpur City Sdn Bhd from insider trading of BERNAS shares. Kuala Lumpur City Sdn Bhd and Wan Azmi bin Wan Abdul Rahman were also required to pay civil penalties of Three Hundred Thousand Malaysian Ringgit (RM300,000) and One Hundred and Fifty Thousand Malaysian Ringgit (RM150,000) respectively. Action can also be brought against the insider by any other person affected by insider trading, the only exception being in the event of; i. Chinese Wall Defence for Corporations ii. Chinese Wall Defence for Partnership iii. Exception for Underwriters iv. Exception for Transactions Carried Out Under Scheme of Agreement, Reconstruction and Takeovers Under Any Written Law v. Exception for Corporation with Knowledge of Its Intention vi. Exception of Knowledge of Individual’s Own Intentions or Activities vii. Unsolicited Transaction Exception viii. Exception for Redemption of Unit Trust Scheme under Buy-Back Covenant ix. Parity of Information Defence 2.2 Giving and Receiving Gifts The issue of giving and receiving of gifts as an ethical issue is very much a subjective matter, its conclusion very much dependent on the circumstances and nature of the gift. Usually seen as an ‘advertising, sales promotion and marketing communication medium’ (Cooper et al, 1991), it is practised usually for three reasons which are:  (a) in appreciation for past client relationships, placing a new order, referrals to other clients, etc.; (b) in the hopes of creating a positive, first impression which might help to establish an initial business relationship; and (c) giving may be perceived as a quid Pro quo (i.e. returning a favour or expecting a favour in return for something) (Arunthanes et al, 1994). The proponents of gift-giving argue that doing business is often a result of personal interactions and relationships, and gift-giving should be seen as a natural way of maintaining and enhancing these relationships. ‘Business gifts, especially one given over the course of the festive season, are regarded as an invaluable means of strengthening corporate relationships and in creating goodwill’. (Greaves, 2001) Business gift-giving has proven to be an effective tool in creating favourable relationships among industrial consumers in the United States (Beltramini, 1992), and also in increasing business and building long-term goodwill among realtors (Shama and Thompson, 1989). The business of gift giving then is generally accepted as a means to enhance the prospect and image of a company among its circle of customers. However, businesses must tread carefully as corporate gift giving has several legal, ethical and practical questions attached to it. Most observers agree that there is a very fine line between business gift giving and bribing, and it is seldom clear when the line is crossed. On one hand, under certain circumstances and nature, there may be nothing wrong with the giving and receiving of gifts, but on the other hand, the receiving and giving of gifts under illegal circumstances and where the nature of the gifts is not nominal in value and acts as an inducement or in return for a favour is not just unethical but can also be illegal. Back in the year 1965, TIME reported that ‘in Finland, any gift exceeding $30 is considered a straight bribe’. The situations today however, are rarely so straight-forward. Kanter (2008) reported that in a survey on 100 buyers conducted by the Supply Management magazine in UK, 20% of these buyers have reported of being offered an inducement to secure business, but ‘purchasers remained divided on what actually constitutes a bribe’. While William Fyfe, the Procurement Manager of National Trust Scotland, reported ‘a zero tolerance approached’ and accepted nothing, others did not think ‘hospitality, such as lunch, as bribe’. Some of the respondents accepted gifts ‘within the acceptable levels of company policy and always with the knowledge of my line manager’, with only one of them turned down an offer as this could affect his future decisions about the supplier. At least one participant in the Supply Management survey mentioned above also pointed out that the risks of bribery has increased with globalization. Undeniably, the complexity of issues related to business gift-giving has increased manifold as businesses have to deal with global suppliers, customers and employees, exposing them to the various different bribery laws in light of the different views and cultural issues regarding what constitute a bribe in these countries. For an example, Arunthanes et al (1994) pointed out that while gift giving is a ‘critical part of conducting business’ in High-Context cultures such as the Japanese, Arabs and in the Mediterranean, it is only an ‘optional custom’ in Low-Context cultures like US, Germany and Switzerland. Even if such broad cultural contexts are accepted (often, a company’s culture may differ from the culture of its nation of origin, because the executives running the company may have come from elsewhere, or the business has grown accustomed to dealing with international customers), global business transaction may still involve scenarios where a high-context gift-giver has to take extreme caution to not to offend a low-context gift receiver, and where a low-context gift giver may have to put in an effort not to disappoint and to appear cold and detached to a high-context gift receiver. In summary, gift-giving is a complex policy faced by companies today, an issue that must be dealt with in the best possible manner. The implications of getting it wrong can have significant impact on the company’s performance, and create a number of legal, ethical and brand-related issues. An example is a recent Windows case as reported by Joel Spolsky, who writes JOEL ON SOFTWARE, an influential blog on software industry. He reported the story of Microsoft’s attempt, through Edelman, its PR agency, to get bloggers’ attention to its new software, Windows Vista. During Christmas Season of 2006, Microsoft sent out 90 Acer Ferrari laptops, loaded with Windows Vista Operating system, to influential bloggers. The accompanying email from a Microsoft employee mentioned that ‘this is a review machine’ and stated ‘while I hope you will blog about your experience with the PC, you don’t have to.’ It also said that ‘you are welcome to send the machine back to us after you are done playing with it, or you can give it away on your site, or you can keep it’.(http://www.joelonsoftware.com/items/2006/12/28.html) This gift generated heated debate, and many bloggers who received the gift expressed joy in their newfound importance, but ridiculed the effort (One of them asked for free socks to be sent out next). B.L. Ochman, who writes a blog on Social Media and Internet Marketing trends, titled her piece ‘Edelman has new ethics scandal brewing with Microsoft’s Blogger Bribe campaign’. She alleged that the campaign of giveaway laptops, valued at around $2000, was conceived to generate a false opinion about Windows Vista, as the software, like previous Microsoft software releases, may run well on this brand new machine, but is expected to create problems when users try to upgrade their operating system on older machines. (http://www.whatsnextblog.com/archives/2006/12/edelman_doesnt_give_a_crap_what_you_think_about_their_ethics .asp) Ochman also quoted to some length the Journalist Dan Warne – a news editor from APC, the Australian IT Magazine and Web portal. Warne left a comment on IStartedSomething, a blog hosted by Long Zheng, a Melbourne-based student and one of the 90 bloggers who received and reported the gift on their blog. With his mainstream media credentials adding weight to his comment, Warne wondered: “But giving away whole computers' Microsoft isn’t a computer company! It’s a bit like the owner of a motorway giving journalists free cars.” Pointing out that the giveaway laptops are top-of-the-line and expensive, he commented “Microsoft’s PR people would no doubt argue that this is about giving bloggers access to a machine that’s going to give them the best experience running Vista, and will allow them to fully explore the mobility features of Vista. But frankly, if that were the case, the machines could have been a six month loan. –Giving the machine to the bloggers is just … weird … given the risk of reputation damage to Microsoft.” (http://www.istartedsomething.com.nyud.net:8080/20061227/microsoft-free-ferrari/#comments) On the other hand, Robert Scoble, who writes Scobleizer, and widely seen as one of the pioneers of corporate blogging, took the position that “That is a GREAT idea. After all, how can anyone have a decent conversation about Windows Vista without having put a bunch of time on one of the machines'” He further says, “Now, regarding blogger ethics. Did you disclose' If you did, you have ethics. If you didn’t, you don’t. It’s that black and white with me.” (http://scobleizer.com/2006/12/27/i-think-the-microsoft-vista-giveaway-is-an-awesome-idea) Joel Spolsky argues that Scoble is indeed wrong and sending out laptop – ‘yours to keep’ – is ‘ethically indistinguishable from bribery’. He argues that disclosures by bloggers are not enough, and since they may still feel obliged to blog about it and regardless of what the consumers think about their credibility, ‘their message is corrupting the medium’. Microsoft’s response, as reported in an Australian News Site, was that this was meant to be an evaluation program, and the bloggers ‘had the option of sending them back or keep them for further discussion’. As justification of giving away such expensive laptop models, it was mentioned that “the laptops allow the bloggers to experience the full capacity of Windows Vista". (http://www.australianit.news.com.au/story/0,24897,20986786-15306,00.html) Yet, others, like Jeremy Peppers of POP!PR, a PR practitioner and blog writer, saw flawed execution, rather than an ethical misstep, in this fiasco. (http://pop-pr.blogspot.com/2006/12/ethics-of-blogosphere.html) Yet others suggested that this whole controversy was started by bloggers who did not receive a laptop and were jealous of those who did. (Andy Beal on http://www.marketingpilgrim.com/2006/12/microsoft-vista-laptop-bloggers.html) It was further suggested that Microsoft’s ‘undue’ attention to bloggers turned the mainstream media against them (veteran software reviewers writing for well-respected magazines only got a pre-release disk of Vista), and these columnists added further momentum to the furore over the issue. The jury is still out on this case, but the debate over this issue drowned whatever little positive opinion Windows Vista had generated in the blogs. While no one thought there is a legal point to be won here, this stands as a good example of a business gift program going wrong. Microsoft not only wasted the dollars spent in gifting (none of the bloggers reported to have returned the laptops), but ended up getting severe bad press for weeks and the debate sourly overshadowed the commercial launch of Windows Vista. From a marketing perspective, it is imperative for businesses, therefore, to evolve robust strategies to avoid such fiascos related to gift-giving. However, before attempting to develop a policy framework which will enable businesses to do this, it may be worthwhile to look closer into this debate and understand what may be called the three dimensions of Business-Gift-versus-Bribe debate. The Three Dimensions of Business-Gift-versus-Bribe Debate The case study above provides a three dimensional framework to understand when a business gift may be perceived as a bribe, or, in other words, where it seems to have crossed the ethical threshold. This understanding will form the basis of a clear set of rules to keep business gifting above-board and design a set of actionable policies which the business could follow. Content The principal problem relating to Microsoft’s gift was its content itself, this being about what it was (a top-of-the-line, shiny new laptop) and its price ($2000 or more), with some commentators even arguing that the gift is unrelated to the company’s core business (‘Microsoft is not a computer company’). Microsoft’s defense was that such a high-end machine was needed to showcase the full capability of Windows Vista. They pointed out that the bloggers were given the option of returning the machines or to give it away, and therefore the question of trying to bribe does not arise. However, the key issue here is that Microsoft departed from the standard industry practice of shipping preview disks of software to opinion-makers. Whether $2000 laptops are less or more, or whether they are justified in the context of the accepted norms in the other industries (like sending out fashion clothing to movie stars), is beside the point. Microsoft broke a convention here by changing the nature of gifting practiced in the industry. Also, sending out the machines around Christmas, Microsoft tried to tap in the Festive Gift goodwill – implying that these machines were indeed sent out as gifts. The key lesson here is that what is being given as a gift defines the nature of gifting, and extreme care must be taken to define should be given out (or received). While market price of the gift item can be used as a benchmark, the type of gift is as important as the price of it (If Microsoft gave out $2000 worth of software, this would not have been an issue). It is always worthwhile to understand the convention, including knowing that something sent out around Christmas may indeed be perceived as a gift. Context The other objection to this gift was why it was being given. It was argued that by giving such a disproportionate gift (most bloggers are amateur writers; Long Zheng, who received a laptop, was studying in the University of Melbourne at the time), Microsoft tried to induce a reciprocity in the bloggers. Though the email may have said ‘you don’t have to write about Vista’, this is more of a legal protection as the United States Corruption Law covers corporate gifts which are designed to induce action by the recipient. While Microsoft steered clear of this legal issue, they tried to exert a psychological influence on the bloggers to write about their ‘pleasurable’ experiences with Vista. The other argument was that a laptop was given out to bloggers in the hope that they would lack the proper testing environment that mainstream tech journalists will have access to, and would write good things about Vista by seeing it at work in a brand new machine, tuned and tested for this purpose by Microsoft engineers. The experience of actual users, who may be influenced by these bloggers’ opinions, will be different – as they will have to install this software on an older machine running pre-existing software programs and will have no help from Microsoft in doing so. So, it was argued that this gift-giving exercise was designed to create a false opinion in the market. While most businesses define what a bribe is and what it isn’t in terms of the content of the gift, law in most countries consider the context of the gift to define the issue. So, regardless of the size, type and value of the gift, if it could be established that such gifts were given to induce, or with intent to induce, action, it will be regarded as an offence. The lesson here is that it isn’t enough for businesses to set clear value / type benchmarks for corporate gifts; it is also necessary to be sensitive to what these gifts are designed to do; and stop short of attempting to induce the receiver to any action that would cross the ethics threshold (for example, by being less than optimum for his/her employers or customers, by being factually wrong / false, or by being dangerous or harmful to anyone). Culture There was a prominent stream of opinion that Microsoft’s faux pa was all about bad execution due to misunderstanding the culture of blogging. This stream of opinion came primarily from PR and Marketing practitioners, who pointed out that Microsoft’s gift to elite bloggers violated the equality and sponsorship-free nature of social media (though there are services like Pay-Per-Post, they are deeply unpopular). These observers maintained that this isn’t a question of content or context, but one of culture - because the bloggers (even those who received it) detested the practice while most physicians will treat a gift from a pharmaceutical company as perfectly normal. This is the third, and clearly important, aspect of gift-giving : establishing clear protocol so that a gift is perceived as such. For businesses, this will translate into a third dimension of policy-making, wherein they will have to go beyond setting value/type benchmarks and consideration of induced action, and understand the gift-receivers’ mindset and culture before making the gift. This is possibly quite obvious in personal gift-giving; but somehow the idea of such discretionary gift-giving hasn’t gained ground in business. However, as illustrated with regard to international business relationships and again in the context of Microsoft’s mistakes, it is important to factor in the cultural preferences of the receiver before attempting to make a gift. Towards a Strategy of Business Gift Giving Many businesses today has clear policies on Business Gift Giving and Receiving, though most of these do not consider all the three dimensions as mentioned above. For example, the Building Material supplies company, Wolseley, has a clear policy on Business Gifts, which states It is recognised that the giving and receiving of business gifts is an integral part of the way in which some businesses operate. The giving or receiving of business gifts should, therefore, remain appropriate to the business and should be modest. The receipt or giving of modest gifts may be expensed in the normal way if paid for by a group company. The giving or receipt of more lavish gifts must be approved by the person's manager. The manager should ensure that an appropriate record is maintained. In cultures where the refusal of an expensive gift would give offence, such gifts may be accepted on the basis that they will become the local company's property, unless the managing director of the local company otherwise determines. [Wolseley Corporate Governance Policy; www.wolseley.com] However, it must be noted that policies are not enough by themselves. Lucas (1995) reports how sixteen Honda executives pleaded guilty of taking bribes when it was established that they took extravagant gifts such as Rolex watches and cash in late 1980s and early 1990s when the company set a $50 limit for gifts. This is where the system of accountability, maintained through the usual chain of management, failed to work. Gordon et al (2001) further studied the corporate approach to bribery using 246 codes of conduct, which showed that despite a clear intent to contain bribery, the task is complicated because (a) it is difficult to define what constitutes bribery; and (b) the international policy framework for bribery is less developed. It was observed that while most companies made a public commitment to fight bribery, the codes differ in terms of how far they go in defining bribery, specifically in terms of (a) parties in corruption – some regard private bribery as well as that of public officials; (b) Active vs Passive Bribery – some codes take into account receiving bribes as well as giving them; and (c) Promising Bribery and Actual Bribery – some codes go further than others and spells out clear rules on solicitation. In this study, 13 standard management tools were cited to be used to control bribery - internal monitoring, monitoring suppliers, reports to Boards of Directors, use of compliance manuals, whistle-blowing facilities, signatures of directors, training, periodic compliance reviews by managers, employee signatures, internal auditing, disciplinary action and active communication. To steer clear of Bribery but to maintain a healthy gift-giving culture which is beneficial to business, Lynn (2000) suggests that companies must have clear policies related to gift giving and receiving to steer clear of potential problems arising out of gift-giving. She pointed out three areas of policy-making – (a) Workplace gift giving, which should ideally be prohibited or restricted; (b) Acceptance of Gifts from Suppliers and other outside entities, where a clear guideline should be set for type and value of gifts the employees can accept, and a policy to return any gift that fall outside the set parameters; and (c) Giving Gifts to suppliers and other outside entities, where it would be important to define who can receive a gift, along with ‘how these gifts are selected and presented’ and also to cognizance of the gift policies of any company that is being included in the list. Conclusion Admittedly, this is a complex area of policy-making, but as the discussion above illustrate, businesses must engage in defining and maintaining a clear and consistent policy towards gifts. Given the convention, and the beneficial effects of gifts on business, they cannot be ruled out altogether. But extreme care must be taken – as improper gifting can create legal issues, affect the morale, corrupt the employees and destroy the brand. Discretionary gift giving appears to be the key. The difficult part actually remains in creating a robust company culture, and a value system which rejects bribing in any form. With keener regulators and invasive media, it is increasingly clear that businesses must operate with a high ethical standard to survive. One may hope, therefore, that executive intent will not be in short supply. To this end, various countries have come up with their own legislation in which all business should comply. In Malaysia, this practiced of giving and receiving gifts are governed by; a. Sec 115, Banking and Financial Institutions Act 1989; strictly prohibiting any officer, director or agent of a licensed institution to accept or agree to accept either for himself or for another anything of value or token from any person applying for any credit facility or in relation to any other business of the licensed institution from any person other than from such licensed institution b. Sec 10 – 18, Anti-Corruption Act 1997 (refer Appendix 1) c. Sec 118, Development Financial Institution Act 2002; (1)No director, officer or agent of a prescribed institution, or any other person being a person receiving any payment or remuneration in any capacity, professional or otherwise, from such prescribed institution, shall, directly or indirectly, ask for or receive, or consent or agree to receive, any gift, commission, emolument, gratuity, money, property, token or thing of value exceeding one hundred ringgit or any service, facility or other intangible benefit, whether for his own personal benefit or advantage or for the benefit or advantage of any other person, from any person other than from the prescribed institution, for procuring or endeavouring to procure for any person— (a)any credit facility from that prescribed institution; or (b)any other thing relating to the business or affairs of that prescribed institution. (2) The provisions of subsection (1) shall not in any mannerderogate from, and shall be without prejudice to, any other writtenlaw relating to corruption or illegal gratification d. Sec 49, Islamic Banking Act 1983 (refer Appendix 2); and e. Sec 161-165, Penal Code (refer Appendix 3) Fundamentally, the act of giving and receiving excessive gifts are prohibited under certain statues set in place in our country, Malaysia. 2.3 Conflict of Interest Conflict of interest arise when an individual is in a position where they cannot act fairly and properly in the interests of one party without prejudicing the rights and interests of another party for whom they also act (Lee & Detta, 2009). In other words, it is a term used to describe a situation in which a person’s private interest contrary to the public obligation. For an example, an officer of a company should not be entering into contracts between her company and a company that she has created as part of a sideline of work. Conflict is arises as her duty is to negotiate the best price for her company and her interest as a business owner is to maximizing her profits. In her role as an officer, she wants to get the lowest price. In her role as a business owner, she wants the highest price she can get at the lowest price. In this case, the act of the officer cannot say it was illegal but unethical. In order to prevent situation above happened, under Malaysian Law, Section 131 (5) of the Companies Act 1965: “Every director of a company who holds any office or possesses any property whereby whether directly or indirectly duties or interests might be created in conflict with his duties or interests as director shall declare at a meeting of the directors of the company the fact and the nature, character and extent of the conflict.” Meaning that a director of a corporation is required to disclose any office held by him or any property possessed by him as it could create a conflict with his duties or interests as a director of the corporation. In addition, when the contract is held belong to an institution, the directors were not entitled to expropriate it and make it to themselves as in the case of Industrial Development Consultants Ltd v Cooley. Mr Cooley was an architect and the managing director of IDC. The Eastern Gas Board has a lucrative contract going, to design a depot in Letchworth, but they told Mr Cooley that they did not want to give it to a firm. Mr Cooley told IDC that he felt a bit poorly and could he resign from his job on early notice. They let him go. He went off and got handsomely compensated. IDC found out. They sued him for breach of his duty of loyalty. (http://www.worldlingo.com/ma/enwiki/en/Industrial_Development_Consultants_v._CooCoo#Notes). The statutory expression for situation above can be found at Section 131(7B) of Companies Act 1965: “Where a contract or proposed contract is entered into in contravention of this section, the contract or proposed contract shall be voidable at the instance of the company except if it is in favour of any person dealing with the company for any valuable consideration and without any actual notice of the contravention.” Conflicts of interest need not be as direct as self-dealing by an officer of the company. For example, there would be a conflict of interest if a company awarded a construction contract to a firm owned by the father of the state attorney general while the state attorney general’s office is investigating that company (Jennings, 2008). In fact, conflicts of interest raise doubt about the quality of the business decisions made and the integrity of the person making those decisions as interests of employees may impair their ability to make unbiased decisions on behalf of the company. For example, Jenny is the person who in charge a project to build a new site for her company. Jenny requires choosing a subcontractor that able to provide best service and lowest price. Jenny knows that her cousin runs a company which could do this job. If Jenny chooses her cousin’s company as her company subcontractor without considers any pro and cons. Conflicts of interest has impaired Jenny’s ability to make unbiased decision as she was biased by her family connection to give them the work. In this case, to act ethically, Jenny should tell her line manager about her cousin’s business and ask to be removed from the decision about which subcontractor should employ. That way the company can form an unbiased view about whether or not to employ Jenny’s cousin and avoid the appearance of a conflict of interest. Generally, codes of ethics forbid conflicts of interests. Therefore, the appearance of a conflict of interest must be avoided at all times, but when conflicts cannot be avoided, then we have to manage it carefully. 2.4 Tax Evasion and Tax Reduction The Malaysia legal system is based upon common law and, in keeping with such traditions; judicial proceedings are adversarial in nature. Historically, much of Malaysian tax and revenue jurisprudence originated from the British and other Commonwealth jurisdictions. Taxation is one of method of transferring resources from the private to the public sector and become an important source of government revenue. Income taxes in Malaysia are established by the Income Tax Act of 1967 which lead to the establishment of IRB namely as Inland Revenue Board of Malaysia act as an agent to provide services in assessing, administering, collecting and enforcing the payment of income tax and other taxes that are under the board’s jurisdiction. Many of us understand the purpose of taxation levy made by the government but, however, as a taxpayer always tried to minimise or avoid in paying taxes. Tax resistance can take two basis forms of evasion and avoidance. Tax Evasion is immoral as it is illegal manipulation of one’s affairs so as to reduce tax, while avoidance refers to tax reductions that are legal within the law. It is generally understood the differences, but the borderline between both is just fuzzy as any attempt to minimise tax is acceptable if the law are not violated. For instance, if taxpayers go to inordinate lengths to reduce their tax liability, this could hardly be considered compliance, even if it were within the letter of the law. A better definition of compliance might therefore include actions which are consistent with the spirit as well as the letter of law. A definition of non-compliance might be the failure of taxpayers to act in accordance with the statutory requirements or intentions of the tax law and administration without the application of enforcement activity. In this case, the action of taxpayers could not be considered as illegal but unethical. In fact, the law does not provide a sound basis for distinguishing cases of acceptable tax avoidance. It therefore difficult to reach a mutual understanding of saying unethical of taxpayers although it completely compliance with the law in order to maximise tax deductions while minimizing tax liability. Taxpayers typically have a same mindset that they have discovered interpretation of the law that show that they are not subject to being taxed in certain amount. In relation to this which create a lot of debates surrounding whether these issues become an ethical or vice versa as until nowadays tax authorities facing the same problems to tackle on it. This could be happened under the situation whereby the declaration of its available property or assets to IRB should be transparent and without any doubt appeared in between. Any transactions taken place during the year will have effect which may save her substantial tax on the profit. Although among the transactions may have been legal, but it was also obviously unacceptable which is not in line with the philosophy of tax avoidance. In order to prevent the above situation happened, anti-avoidance legislation can be found in Section 104 of Income Tax Act, 1967: “Where Tax Authorities may disregard or vary any transaction and make any necessary adjustment as he / she believed the transaction has the direct or indirect effect of evading or avoiding any liability which is imposed will subject to this Act. Meaning that if someone who is dealing with transaction and fall within this section of Act will have to make a reasonable return or pay tax accordingly.” In applying to the Section 104, the Tax Authorities must first have reason to believe the transaction have the effect of altering the tax followed by the strong evidences. Overall, the question on whether the approach is ethical or not will still needs a depth consideration as the trend nowadays toward the tax avoidance is ethical but also due to very subjective. Therefore, execution of legislation will able to prevent taxpayer to abuse their rights in order to be fair with each other. 3.0 Conclusion Some dealings are immoral / unethical but it does not necessarily means illegal. As such debate arises when definition of unethical, immoral and illegal being brought up. Hence, is unethical really means illegal' Undeniably, some unethical dealings are practical to be practised. A good example to explain this would be in Euthanasia dealings. Euthanasia, also known as mercy killing or assisted suicide, is a very controversial subject. Is it morally right to end our own lives, or ask someone to help us end our own lives' Is it morally right to legalize euthanasia' In moral standpoint, Euthanasia could means disrespects of human life. It lets us judge whether someone's life is worth saving, or whether we should take the easy, painless option of a quick death. Euthanasia, while more convenient and painless, allows us to dispose of our loved ones instead of fighting for the best treatment and caring for them until their very last breath. As such Euthanasia is deemed as unethical and immoral. However, most adult Americans are in favor of legalizing euthanasia and giving patients the right to die. Some of the arguments for allowing people to have the right to die are very persuasive. In America, it is legal for a patient to refuse medical care and be allowed to die. Why then is it any different for a patient to ask to be killed in a humane painless manner' If people have the right to choose how to live, why should they not also have the freedom to choose how to die' Euthanasia is hence deemed as an act to help a person, or bring a person “out of their misery," with their deepest desire to end their life on their own terms. While some unethical acts are practical to be practised, it is always bound to the country’s law suit. Some unethical dealing may be legal to one country and illegal to another. Hence, it is very subjective to specifically term issues as legal or illegal. It is very depending on situation and type of issues before one is being judged for any illegal misconduct. In this project paper, we mainly focus on business ethics issues and we have illustrated a few examples on business ethics which are insider trading, giving and receiving gift, and conflict of interest, tax evasion and tax reduction. Business ethics is all about knowing the difference of right and wrong and making the right decision which coincide with business ethics. The very common unethical business practices that are rampant nowadays are cooperate spying and unfair pricing. Insider trading is an example of white-collar crime. While insider trading is illegal in most of the countries, many may not see anything wrong with such act. They may see it as merely taking advantage as a fair business opportunity. In actual fact, it is stealing because one party receive information from their connection which is not known to other party. Knowing the price of certain shares will increase when the information is made public, some may quickly act on that information. This would unfair to others who do not have such information or the means to obtain it. When the value of the shares does increase after the information is made public, it is unfair to the others who did not have such information. The buying party has in effect stolen the increase in value from the selling party. This is why the practise of insider trading is not only unethical but also illegal. Giving and receiving gift is seen as unethical and illegal when the nature of gift is not nominal in value and where the gift is given as an inducement or in return for favour. Hence, businesses must engage in defining and maintaining a clear and consistent policy towards gifts. An improper gifting can create legal issues, affect the morale, corrupt the employees and destroy the brand. In Malaysia such giving and receiving of gifts amount to the practice of corruption. Conflict of interest arises when an individual is in a position where they cannot act fairly and properly in the interests of one party without prejudicing the rights and interests of another party for whom they also act. Codes of ethics generally forbid conflicts of interests. Therefore, the appearance of a conflict of interest must be avoided at all times. Tax evasion is escaping payment of taxes by illegal means, for example by hiding the true state of one's finances from tax authorities. While tax avoidance is escaping payment of taxes by legal means, such as by changing tax residence to a tax haven or by making use of pension plans that postpone tax until retirement. 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