Assignment On Board Briefing Paper

BUSINESS ETHICS

BOARD BRIEFING PAPER 1
Agenda Item: Walmart and Foreign Corruption
Paper Type: Discussion Paper for the board of directors
Sponsor: Chairman of Board of Directors
Draft Resolution: Discussion paper for examining the roles and responsibilities of the
directors within ethical, legal and moral frameworks.
Executive Summary: One of the most significant groups in a company is that of the
directors who are entrusted with the responsibility of the management of the affairs
of the company while paying attention to the stakeholders needs. The case of the
corruption charges in context of the company Walmart Inc. highlights the short
comings in the roles and responsibilities of the directors, as they failed to act
ethically. In addition, the director duties in light of the agency relationship are not
complied with. Thus, the challenges faced by the directors in globalised business
environment are highlighted together with the recommendations. Hence, the board
briefing paper involves a comprehensive analysis of various aspect of global
business functioning.
Background
A board briefing paper is presented for the discussion of the board of directors. The
aim of the paper is to evaluate the various aspects of the ethics and governance in
the wake of increased number of corporate collapses and corporate scandals. The
most recent corporate scandal of the company Walmart Inc. The organisation has
been in news for various issues since the year 2011, when the inadequacies were
identified in the internal operations of the company as company was undergoing
expansion (Merle, 2019). Hence, it is imperative to understand the various issues
involved in the case as a guide to the directors and senior management of the
company.
Issue
Ethics denotes the collection of the moral guiding principles and the statutory
guidelines to act in a manner that is right. Thus, the principles of ethics guide the
managers to act on behalf of the company in a legitimate manner. However, in spite
of the presence of the ethical guidelines, there are instances of corporate scandals
and collapses due to abuse of power and conflict of interests of the directors.
Recently, the retail global organisation Walmart Inc. has entered into an agreement

BOARD BRIEFING PAPER 2
with the regulators namely the Securities and Exchange Commission and the Justice
Department against the corruption charges. The said scandal is not only significant
because of the involvement of the one of the most prominent global entity, but also
because of the amount of the fines and penalties that is $ 407 million (Barakat,
2019). The said penalties are levied under the breach of the Foreign Corrupt
Practices Act. The said act lays down the prohibition on the US companies to
operate abroad with the aid of the bribery activities.
In the mentioned case, the directors and other senior executives of the company
played a critical role by not only extending illicit payments to the third parties, but
also by hiding the facts of the discrepancies in the functioning of the company for
about seven years. In addition to the above, the directors of the company were made
aware of the critical risks in the internal accounting and reporting systems as the
payments made to the third parties for facilitating the international expansion
objectives of the company were show in the financial statements as miscellaneous
payments, without the proper justification of the same. This highlights the lack of
transparency in the financial statement preparation and reporting of Walmart Inc
(Bose, 2019).
Implications
The varied implications of the above mentioned issue are essential to be evaluated
to understand the roles and responsibilities of the directors of the company in
present times. One of the critical concepts of ethics that was widely abused by the
corporate executives was that of the ethical relativism. The concept states that there
is no single universally applicable code of ethics and which implies, an act which are
immoral or unethical in one society may be ethical or legal in other. It is crucial to
note that in earlier times, it was easier for the organisations to take the shelter of
different ethical stances to judge the legitimacy of the acts of the corporation and
thus, get away with the irregularities (Kolodinsky et. al, 2010). However, this is not
the case in the present globalised business environment. There is greater degree of
responsibility demanded from the directors of the company by the various
stakeholder groups and failure to fulfil the same cannot sustain the entity in long
time. Some of the universally accepted legal, moral and ethical standards are
presented as follows.