MGT3001 Report: Ethical Dilemmas in Corporate Governance Case Study

This report analyzes a case study focused on corporate governance and ethics, specifically examining the whistleblowing scandal involving Apple and JLJ Holdings Limited. The report begins with an executive summary outlining the key issues, including the act of whistleblowing and its impact on the involved corporations. The introduction provides context on whistleblowing, tracing its historical significance and its prevalence in the 21st century, with specific reference to the Edward Snowden case. The report details the partnership between JLJ Holdings Limited and Apple, and the subsequent corruption scandal involving Apple's Global Supply Manager, Paul Devine, and the former assistant manager of Jin Li Mould, Andrew Ang. The arguments section evaluates the ethical implications of Devine's actions and the responses of both Apple and JLJ Holdings Limited. The report then explores various ethical decision-making approaches and theories, such as Warren’s ‘Spider Web’ theory, Herbert Simon's decision-making model, and Snyder's Theory, to assess the impact of the scandal on stakeholders. The conclusion reflects on the complexities surrounding whistleblowing and the importance of ethical practices in corporate governance, highlighting the consequences of unethical behavior and the benefits of ethical decision-making for organizational success. References are provided to support the analysis.

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Corporate Governance and Ethics
By (Name)
Name of the Course
Title of the Instructor
Institutional Affiliation
City and Date
The final date of Submission

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Table of Contents
Executive Summary............................................................................................................................................3
Introduction to whistleblowing (trade secret)....................................................................................................3
JLJ Holdings Limited Partners with Apple....................................................................................................4
Apple’s whistle blower and JLJ Holdings Limited corruption scandal.........................................................5
Arguments.......................................................................................................................................................6
Ethical Decision Making Approaches and Theories......................................................................................6
Conclusion..........................................................................................................................................................8
Technical part.....................................................................................................................................................9
References.........................................................................................................................................................11

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Executive Summary
Whistleblowing refers to the act of leaking private information from private or public institutions. It
has been one of the most common forms of unethical practice affecting huge corporations and countries.
The United States of America was the victim in one of the most publicized whistleblowing act of the
21st Century. Edward Snowden, a private consultant for the National Security Agency, managed to leak
crucial government document to The Guardian newspaper. The leaked information sparked a huge
debate about whistleblowing across the world. Some supported his actions while others condemned it.
He is now given political asylum in Russia (Bendtsen et al. 2016). In the private sector, Apple has
probably been the most affected corporation when it comes to whistleblowing. Back in 2009, an iPhone
prototype was leaked to the press. The prototype was yet to be launched and it had very many negative
reviews. A year later Apple was involved in another whistleblowing scandal. It involved the Global
Supply Manager, Paul Devine, who was leaking information to Jin Li Mould assistant manager, Andrew
Ang, and three other suppliers in Asia. Jin Li Mould was acquired by JLJ Holding Limited in 2010.
Apple filed a civil suit against Paul Devine. He pleaded guilty and was sentenced to 20 years in prison.
He also paid a fine of more than $2 million. Whether whistleblowing is an acceptable act is still an open
question. There exist laws in certain counties which are meant to protect whistle blowers. Organizations
however have a zero tolerance for sharing trade secrets.
Introduction to whistleblowing (trade secret)
Whistle blowing has been of the global scene for a long time. It dates back to the 18th Century during
the Industrial Revolution affecting companies such as Carnegie Steel Corporation. In the 21st Century,
whistleblowing is common in the Internet Revolution affecting companies and countries such as the
United States of America, Apple, Google, JLJ Holding Limited and Samsung among others. Edward
Snowden was the headliner in probably the largest whistleblowing act in history (Truss et al. 2016). He
was a private consultant of the National Security Agency. The action had political, economic and social
consequences. The market shares of the affected corporations significantly dropped. The political

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climate in the United States of America was very high. There was also a public out-cry. The whistle
blowing involved leaking confidential government documents and plans to the Guardian Newspaper. A
faction of Americans supported his actions, stating that the government should not spy on its citizens or
other countries. This could easy spark an international incident which may eventually lead to a military
war. The other side said that he should have followed the legal channel. The president of the United
States of America added that Snowden’s act was not patriotic and was unforgivable. He was given a
political asylum in Russia. When it comes to corporate whistleblowing has taken a huge bit at Apple. A
former incident involved the leaking of an iPhone prototype to the press. Apple illegally raided the
house whistle blower in search for the prototype which they recovered. They were however faced with
legal challenges on how they approached the whole matter (O’Neill, Sohal and Teng 2016). Later on in
April 2010 Apple was involved in yet another whistleblowing incident. This time round, they decided to
file a civil suit against the whistle blower, Paul Devine. Paul Devine was jailed for twenty years and
fined $2 million. Apple’s decision making approach was commendable the second time.
JLJ Holdings Limited Partners with Apple
On March 2008 JLJ Holdings Limited was registered as a private company by the Singapore
Companies Act. It went on and acquired three companies from Chua Kim Guan who was the sole
shareholder of these companies. These companies were Emold, Emold Plastics and Jin Li Mould which
ventured in Mould Design and Fabrication. By 1997, Jin Li Mould had managed to experience an
exponential growth attributed to the high quality services it provided (Ho, Ahmad and Ramayah 2016).
This enabled the company to land a contract with Hewlett Packard (Manuj and Mentzer 2018). Four
years later they were able secure a supply deal with Apple. This saw the rise of the company in tandem
with Apple’s growth. JLJ Holdings Limited held an Initial Public Offering on July 2009 which raised a
total of $5 million. This is from the 19 million placement shares to public investors. The shares were
going at $0.27 each. In the Singapore Exchange Catalist chart their shares made a debut at $0.26. They
were now able to realise a strategic expansion from the proceeds they had obtained (Cvijanović,
Dasgupta and Zachariadis 2016).

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Apple’s whistle blower and JLJ Holdings Limited corruption scandal
Apple’s whistle blower and JLJ Holdings Limited corruption scandal became publicized on April
2010. Apple had just launched an internal audit and investigation on its Global Supply Manager, Paul
Devine. This eventually caught the eye of the Federal Bureau of Investigations (FBI) together with the
IRS. Former Jin Li Mould’s assistant manager, Andrew Ang, was tied to the corruption scheme. After
his retirement from the company back in April 2009, Andrew Ang had gone missing. His whereabouts
were unknown throughout the investigations and court hearings (Sanders and Premus 2015). Later on in
August 2010, JLJ Holdings Limited Executive Chairman Chua Kim Guan willingly stepped down his
position. At this time, the Corruption Practices Investigations Bureau had launched an investigation
linking him to the scandal. There was no evidence found to support these allegations. It was now
publicly known that Chua Kim Guan had taken over the scheme after Andrew Ang retired.
In October 2006, Paul and Ang decided to devise a fraudulent. By this time, Jin Li Mould had not
been acquired by JLJ Holdings Limited. Paul was supposed to provide confidential details of Apple
products to Andrew Ang and three other suppliers in Asia (González-Cruz, and Cruz-Ros 2016). These
details entailed the prices and product specifications for the iPhone and iPod. This would have given the
significant advantage over the other suppliers in the market. Paul Devine was to get a certain percentage
from the proceeds made from this scheme. The payments were sometimes referred to as ‘samples’ in the
email conversations between the two parties. No payments were to be made above $10,000. This would
have raised questions from the bank management. Paul also opened up several accounts in his wife’s
name across three countries. Until April 2010, everything was going on smoothly.
Apple had filed a civil suit against Paul Devine, accusing him of breaching the company’s ‘Business
Conduct Policy’. Paul, who had initially denied the accusations, pleaded guilty. The courts gave him a
twenty year sentence in prison. In addition, he was to pay a total of around $2.5 million he had acquired
throughout the scheme. JLJ Holdings Limited CEO kept his position in the firm as no evidence tied him

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to the corruption scandal. JLJ Holdings Limited appointed Foo Say Tun as a Non-Executive Chairman
in August 2010.
Arguments
Apple’s Global Supply Manager, Paul Devine was the whistle blower. Unlike most cases of
whistleblowing, he had personal interests at heart (Gurteen 2016). According to the statement released
by Apple, Paul Devine had violated the company’s ‘Business Conduct Policy’. His actions are clearly
unacceptable. This can be justified by the twenty year imprisonment and the $2 million fine. Apple can
be commended on the legal actions it took to handle the matter. Apple had earlier on been involved in
another whistleblowing incident involving an allegedly stolen prototype. The details and design of the
prototype was leaked to the press. Apple raided the house of the purported whistle blower and destroyed
his property. These actions left Apple with several legal battles. Their actions on Paul Devine are
therefore commendable (Raby, Pater and Mackillop 2016).
There are two parties involved when it comes to whistleblowing in corporations. They are the giver
and the receiver of the information. Apple’s Global Supply Manager, Paul Devine was the giver while
JLJ was the receiver. JLJ Holding Limited CEO, Boon Leng, is supposed to be the face of the company.
Boon Leng should have therefore been removed by the board of directors (Tsoukas and Vladimirou
2016). In a statement released to SGX, the organization claimed that the CEO was not involved directly
in the transactions between the company and Paul Devine. Boon should be removed due to
incompetency. Every major corporate decision and action should have the consent or approval of the
CEO. In this case, Boon claims to not know the ‘finer’ details of the supply contract with Apple
(Ogunyomim and Bruning 2016).
Ethical Decision Making Approaches and Theories
The impact of an action or event in a business will have its effects spreading out across the
social, political and economic scene. In the case of JLJ Holdings Limited, it saw majority of its
stakeholders being severely affected. This corresponds to Warren’s ‘Spider Web’ theory. In the analogy,
any vibrations or movements on a spider web will eventually reach the spider no matter how small or far

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that vibration might be. Therefore, before a business makes any decision, it should evaluate the social,
legal or financial consequences. Edward Snowden actions created a public out-cry. The market share of
the involved companies fell and the international political climate rose. On the part of JLJ Holding
Limited, their market shares dropped from $0.27 to $0.08 in less than a year (Kirkwood 2016).
Apple acted irrationally in the whistleblowing case involving the iPhone prototype. However, the
second time Apple was able to abide by its ‘Business Conduct Policy’. This is attributed to Apple’s civil
law suit against its Global Supply Manger, Paul Devine. All the employees of the organizations are
supposed to abide by the organization’s policy. These policies are supposed to guide then organization
in obtaining its goals, vision and mission. The exponential growth posted by Apple over the past five
year can be attributed its ethical practices (Shibin et al. 2016).
Herbert Simon argues that the decision making should be categorized into two segments. The first
includes the how the decision is being arrived at and the process of action after the decision has been
made. According to his theory, decision making is ineffective when the implementation is not carried
out fully. The top management of an organization should therefore be keen and follow up on the
implementation of the terms and conditions agreed upon. Using Apple as a primary example, this theory
has proven to be very effective and efficient (Morgan and Hunt 2016).
After World War II, Snyder’s Theory on decision making was very popular and significant. He
argues that decision making should be dynamic and consider all the sectors of the society. JLJ Holdings
Limited Executive Chairman Chua should have considered all the stakeholders at play before engaging
in the corruption scheme. This resulted to his resignation as the Executive Chairman of JLJ Holdings
Limited. The shares of the holding company dropped significantly (Michalak and Rysavyn 2016).
Organizations such as Apple which follow effective decision making approaches will not only satisfy
all the stakeholders involved but also experience exponential financial growth. However, organizations
which neglect ethical practices such as JLJ Holdings Limited will experience huge financial upsets and
a tainted public image. This is also seen with the disappearance of Jin Li Mould assistant manager,

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Andrew Ang, from the public ever since the JLJ Holdings Limited corruption scandal became
publicized.
Conclusion
Whether whistleblowing is an acceptable act or not is still an open question. This however
depends on the scale and circumstances surrounding the act. Several countries and corporations have
been significantly affected by whistle blowers. The effects can be social, economic or political or all.
The United States of America was the victim of probably the largest whistleblowing act in history.
Edward Snowden’s actions were greatly received by members of other countries in the world and some
Americans. Majority of Americans, including the president deemed his actions unethical and
unforgivable. Edward Snowden was given a political asylum in Russia. In the case of Paul Devine
leaking trade secrets to other organizations for personal gain is clearly unacceptable. This can be
justified by his twenty year imprisonment and the $2 million fine. Tougher actions should be made to
corporate whistle blowers who only have personal gains. However it all depends on the circumstance
and objective. Organizations should therefore create a full proof ‘Business Conduct Policy’ against trade
secrets (Pandey et al. 2016).

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Technical part
2007 2008 2009 2010
0
10
20
30
40
50
60
70
80
90
Social-political
Economic
The graph above shows the socio-political and economic impact of whistleblowing (trade secrets
and corruption) affecting Apple from 2007 to 2010. The economic impact of sharing trade secrets has
been more adverse than the socio-political effects. This is because trade secrets directly involve business
organizations and activities which directly affect the economy.
The socio-political scene experiences rippling effects. This corresponds to Warren’s ‘Spider Web’
theory. In the analogy, any vibrations or movements on a spider web will eventually reach the spider no
matter how small or far that vibration might be. Both the economic and socio-political experienced an
increase in the years 2008 and 2010. This is attributed to the tension in the business scene.
Apple had successfully launched its first smartphone in the year 2007 popularly known as the
iPhone. In 2008, it was rumoured that Apple was developing other products and this created a tension in
the market. There were two parties which were going to be affected by this innovative product that
Apple was working on. They include Apple’s suppliers and competitors. Apple’s suppliers include Jin
Li Mould of JLJ Holding Limited Company among others. The competitors include Google, Samsung

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and Hewlett Packard among others. Jin Li Mould, a supplier of Apple, was also the supplier of Hewlett
Packard, Apple’s competitor.
The rise in 2008 was attributed the stolen iPhone prototype. This incidence was highly televised
and caught the eye of the public and government. This is because Apple decided to raid the house of the
purported whistle blower and vandalized his property. There were several legal charges filed against
Apple. This was due to the poor decision making approach by its management. The sales of Apple also
went down.
There was a significant drop in 2009. This is because Apple was on a public relations campaign to
replenish its tainted name. Apple made a public apology to the whistle blower. This significantly
reduced the socio-political scene. However, due to the negative reviews about the iPhone, Apples sales
declined. The decline was relatively small.
In 2010 another whistleblowing incident arose. This time round, the economic impact was much
higher. The incident was however not highly publicized as the previous encounter. Apple had filed a
civil suit against its Global Supply Manager (GSM), Paul Devine. Paul was selling trade secrets to Jin
Li Mould of JLJ Holding Limited and three other suppliers from Asia. It involved Apple products such
as the iPhone and the iPod earphones. The details included the product prices, forecasts, specifications
and targets. By the time Apple had realised what was going on, the damage had been incurred. Apple
terminated its contract with Jin Li Mould after the incident. Paul Devine was sentenced to twenty years
in prison and fined $2 million. Apple released a press statement claiming that Paul had violated the
‘Business Conduct Policy’. It also stated that it had a zero tolerance policy for whistle blowers. Apple
was able to realise an exponential growth rate after that incident.

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