BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY Maximum marks: 60

NOTE: (1) Both the sections are compulsory. (2) Section I: All the questions are compulsory.
(3) Section II: Attempt any three all the questions carries 10 marks

Section : I
1. Explain the concepts (15)
a. TBL
b. Carrols Pyramid of CSR
c. Varnashram Dharma
d. Environmental social audit
e. Role of Auditor and director in corporate governance
2. In the light of case study explain the questions asked (15)
December 2009, India faced its biggest shakeup in the realm of corporate governance and ethics in the
Satyam debacle. The Satyam fraud happened, and became public knowledge, not because of any stringent
checks, but on the promoters confession. The government stepped in and in exercise of its powers under
the Companies Act, 1956 replaced the board with high profile independent professionals. Its another
matter that even earlier there were reputed independent directors on the Board which did not prevent the
downslide. The role of the new board was temporary and transitory, to facilitate a takeover in order that
the company and its business could survive. On date there is a new management and owner, but that does
not obliterate the implications of the multicrore fraud being perpetrated, no less a serious white collar than
bribes and kickbacks. The Serious Fraud Investigation Office (SFIO) was recently set up under the
Ministry of Corporate Affairs inter alia to look into cases of substantial involvement of public interest in
terms of size of monetary misappropriation and persons affected. In implementation, this office appears to
be a toothless tiger.But to make the turnaround and reinforce faith in investors, both Indian and foreign, is
in the hands of the acquirer. The acquirer has to put in place transparent mechanisms of business ethics
and corporate governance on the lines of Siemens to proclaim to the world that Satyam has truly emerged
from the fraud era to one which befits its name The Satyam Computer Services Ltd scandal has shown
what bad corporate governance can lead to. It will take some time before the story of the fraud unfolds
fully but as of now, it seems to be much more serious than just the window dressing of the balance sheet.
Probably Satyam created its contradiction in the true sense with Maytas Properties Ltd and Maytas Infra
Ltd, and money was siphoned off from the computer software services firm to buy real estate and bribe
politicians that eventually led to its fall. In the process, shareholders wealth and confidence have been
devastated. The management has put the careers of its staff in jeopardy and the image of Indian
companies has suffered greatly. Some years in jail for the key perpetrators of the fraud look inevitable.
Most of the people primarily involved in the Satyam scam have a connection with reputed business
schools. B. Ramalinga Raju has a masters in business administration from Ohio University and has also
had a stint at the Harvard Business School (HBS), where he attended the owner/president course. But it
seems this education didnt help him in his transition from the mode of governance suitable for a small
entrepreneur, which he was before starting Satyam, to the kind needed to run a public limited company,
where one deals with other peoples moneySatyams audit committee consisted of independent director
M . Rammohan Rao, then dean of the Indian School of Business (ISB). He was on Satyams payroll,
drawing a compensation of Rs13.2 lakh, besides getting 10,000 shares for a nominal value of Rs2 each.
Satyam was paying another director, HBS professor Krishna G. Palepu, Rs91.91 lakh, plus 5,000 shares
for Rs2 each. Raju cleverly used the HBS and ISB brands to cover up his unethical activities. Like Rao,
Palepu too should resign from HBS; he was closely associated with Raju for several years and has
BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY Maximum marks: 60
NOTE: (1) Both the sections are compulsory. (2) Section I: All the questions are compulsory.
(3) Section II: Attempt any three all the questions carries 10 marks

brought a bad name to his institute by failing to protect the interests of shareholders. Rajus other possible
accomplice PricewaterhouseCoopers, the auditing firm, is a regular recruiter from the Indian Institutes of
Management (IIMs). It no longer has the moral right to continue operations.
To assume Satyam is an isolated case would be folly. Window dressing of balance sheets is a common
phenomenon in the Indian corporate sector. In the licence raj era, it was common for firms to give one set
of accounting documents to the sales tax office, another to the income-tax department and yet another to
the banks from where finances were sought. In those days, it was difficult to do business honestly, even
for big companies, as money had to be siphoned off to cut through the red tape. With economic reforms in
the 1990s, doing business without greasing palms became a possibility. But still, manipulation of
accounts is practised by some to siphon off funds or to inflate share prices which are then mortgaged to
financial institutions to get cash. This raises the issue of corporate governance and what business schools
can do about it. Stricter laws or more government interference will not help much if the people running
affairs dont internalize basic ethics. Making students aware of good governance practices is the job of
business schools. Cases such as Satyams fall or the rise of Infosys Technologies Ltd can convey how
ethics are good for any business in the long run. But the best way to preach issues of ethics is to
demonstrate them. In most Indian business schools, governance is in crisis, and this has a negative
influence on students. It presents wrong role models and an unethical culture at the starting point. Beating
the system seems more lucrative. It is time business schools had a code of ethics for their own
governance. IIMs can jointly draft the ethics code for all the processes and practices in an institute and for
the conduct of the governing board, director, faculty and students. There should be clear guidelines of
conduct for directors or faculty members who join boards of companies. If any faculty member lends his
name to a board, he is also lending the name of the institute he represents, and should be made more
accountable. Similarly, ethical ways of internal processesincluding admissions, faculty selection and
evaluation, the selection of the director, student evaluation, interaction with industry, placements, etc.
should be clearly defined. Such a document can be a guide for all business schools.
a. State, how far a sound ethical environment in a company may be created and corporate scandals
may be avoided.
b. I n the light of case study explain the role of corporate governance and State the benefits of socially
responsible corporate performance
c. In the light of case study explain the Advantages of Business ethics and issues in business ethics
Section : II
3. How business ethics be an important tool in building business ethics reputation? What are the
social responsibilities of business? (10)
4. Explain (10)
a. ILO conventions in Brief.
b. Purushartha Model
5. Briefly explain various recommendations on corporate governance by various committees. What
are the issues in corporate governance? (10)
6. Explain Corporate social responsibility in the light of arguments for and against Recent trends in
social responsibility of business. (10)