Thursday, December 15, 2005

Ethics of MBAs

Felt rather disgusted when I first read this in ET:

In a shocking case of corporate misgovernance, a senior executive of Samsung India Electronics, the Indian arm of the South Korean electronic giant, misappropriated funds worth several crores of rupees from his firm, using ingenious methods to achieve his task.

Vivek Prakash, vice-president, sales and marketing (IT division), had everything going for him. He was only 34 years old and, in the firm’s hierarchy, he was next only to the director, drawing a handsome salary. His total package amounted to Rs 40 lakhs per annum.

Yet, he put in his papers abruptly one fine morning, last January. When he did so, his bosses in India and in South Korea were not surprised. From late last year, they could detect irregularities in his functioning. On scrutiny, they stumbled upon something to give them sleepless nights for many days.

Using R S Sahu, manager, accounts (receivables), an officer who was reporting directly to him, as an accomplice, Prakash had duped the company of Rs 18 crore. While the Delhi Police’s economic offences wing (EOW) had already laid its hands upon evidence on the embezzlement of this amount, there is a feeling that magnitude of the fraud could be bigger.


Was even more disgusted when I learn that this guy is an IIM grad (Bangalore - '95 batch).

Yes, one on the one hand there is Manjunath who sacrificed his life, unwilling to be bought out. And on the other hand there is Vivek Prakash who sacrificed his honour, who so willingly sold out.

And for what? Why would someone who had everything going for him take such a risk? I guess he thought he was just too smart to get caught.

But he did and the future looks pretty bleak. The Delhi high court recently refused his application for anticipatory bail.

Smarts vs Ethics
There is a hectic debate going on in some of the IIM egroups and mailing lists. One alum wrote:

I suggest IIMs and alumni collectively should take the lead in denouncing this guy (and any other alumnus caught doing such things or worse)... take back the degree, etc. To send the message that while even IIMs may have black sheep, we strongly condemn such behaviour, and will take the lead in punishing him, in whatever ways we can.

Another adds: I just finished reading a book about the Enron collapse ("Smartest Guys In The Room"), where most of the fraudsters were very highly educated. Education is no guarantee for ethics... But still, it is a shock - coming so soon after Manju.

Of course in case of Enron it wasn't one individual but an entire organisation built on a culture where the bottomline came first and nothing else mattered.

Oh, they did have an 'Official Code of Ethics'. As Michael Miller describes it: The July 2000 booklet is nearly 65 pages of take-the-high-road legalese that must have made employees feel they were working for the Vatican or some other equally pure and clean organization...

As they say it's all about what you do and not about what you say or preach. And a conscience is something that ought to prick you when no one is looking.

A blot on us all?
I don't know what the IIM 'community' can do to punish Vivek Prakash.

But yes, in some small way his individual decision to embrace the Dark Side does leave a small blot on the collective brand equity of IIM graduates. Just like Manjunath's principled stand added a positive shine to it.

We, who condemn corruption at large should highlight the need for ethical practices in business. And along with Manjunath, include a case study on Vivek Prakash to be taught in b schools as well!

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