Corporate Governance, Financial Crime, Ethics and Control

Corporate Governance, Financial Crime, Ethics and Control
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DECLARATIONS
I declare that all the different types of materials which have been included in this
report/essay/project/dissertation is the outcome of my sheer hard work and dedication
towards completing this assignment. Along with this all due respect and acknowledgement
has been provided to the different sources, be it of any medium in the reference list
attached herein with this report.
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Introduction:
Financial crimes have become rampant in the last 30 years and have become a cause
of concern for the governments around the world. It is performed by different people, ranging
from corrupt heads of states, business leaders, government officials and many others. The
repercussions of these kinds of crimes, are both short and of long term nature. The case of
medicine executive Martin Shkreli is no exception to all these. In this essay, the case of Mr
Shkreli and his financial crimes have been investigated using the various concepts of fraud
triangle, theories like Agency, stakeholder and shareholders along with an ethical overview.
Q1.
Ethics refers to that division of philosophy which is concerned with the principles of
morality and well defined standards of what is right and wrong, which helps in ensuring the
delivery and exercise of rights, rules, fairness and justice across the society. Primarily there
are three kinds of ethical theories, Utilitarian, Deontological and Virtue ethics. Utilitarian
emphasises upon the greatest good done for people for largest number of people (Hoffman,
Frederick, and Schwartz, 2014). Deontological ensures that people are treated with respect
and self-esteem. Virtue ethics emphasises on the importance of character and virtue.
Business ethics involves planning and executing business related activities keeping in mind
proper principles and practices of ethics (Hill, 2016). It refers to all those activities, which
bars the company from indulging in any kind of discrimination, insider trading, speculation
of shares, corrupt practices and other kind of business malpractices, which goes against the
moral fabric of conducting business in a fair manner.
Mr Martin Shkreli had been arrested for stock fraud, mail and wire fraud
charges and not because he had increased the price of Daraprim, by a
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mammoth 5000%, but because of the fraud he had committed in two
previous hedge funds and a previous biopharmaceutical company,
Retrophin (Paradise, 2016). He had duped the investors of the company and
has let greed take the better of him. He subscribed to the theory of
dishonesty and greed, which led to face jail time of seven years and a fine
of $7.4 million (Clifford and Moynihan, 2018). According to, the scammers
portray a specific set of characters, such as they look down upon their
victims and others, traits of a narcissist, they are not only driven by greed
alone and also want to earn respect , fame and glory as they believe in
the grandiose of their dreams. All these character traits were seen in Mr
Martin Skhreli, which makes him a typical scammer having a complicated
mind-set. He had violated the trust of the investors and the other
stakeholders of his company, which tantamount to blatant violations of
the ethical practices of a company.
Q2.
Fraud triangle is a framework, which is designed for the purpose of
explaining the rationale and reasoning behind the person’s decision of
committing the fraud, at his or her workplace. It consists of three stages,
consisting of pressure, opportunity and rationalisation (Free, 2015). Pressure
is the motivation behind the reason for committing the crime. It can be
classified into financial, physiological pressure or workplace pressure.
According to the individual, this problem, would not be solved through the
traditional and legal manner, which compels them to resort to crimes like
above. Mr Skhreli was compelled to resort to all these financial frauds, as
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