How nice a country would be without mischievous and malicious people? However, as the saying goes, ‘every town has its madman’, it is almost impossible to have all citizens of any country out to build their own country together and in one voice. The presence of malicious people in any society tends to not only drag its development but also out to suppress other people especially the destitute. This paper tends will critically analyze Madoff’s ethical issues in his financial scandals as it further provides suggestions to what is supposed to be done and how to ensure Ponzi schemes and Madoff Ponzi schemes do not happen in the future.
Madoff is a great businessperson in the history of the United States of America who in the recent past has been involved in several fraud cases. As sources say, at one point in his life, he would hire employees for his children, brother, and wife. Since these employees demanded their dues after a stipulated period, Madoff could pay off his employees with money from his firm. Furthermore, he would settle off his loans from the same firm. Apart from these, Madoff was an extravaganza. He led a lavish life together with his own family. He would still go back to his investment firm, which had now been converted to his small personal bank, to lead this type of life. From an ethical point of view, he was unfair to his workers since they had invested their ‘meager’ funds in the firm. He could not have used this money for his family expenses, but some other money elsewhere to do it. If an emergency could happen to the worker and some need to be borrowed from the firm, there could be a big challenge. Many times it is hard for one to get back the money to ‘his own firm’ since he or she may have a sense of too much possession and superiority until he does not mind repaying the debt. As far as business ethics is concerned, this act was bad since it may easily result into a fall. Furthermore, it is a sign of egocentricity and dictatorship of which is not encouraged in the world of business (Ferrel, 2009).
Madoff was so rigid that he could not accept the change of technology. It is reported that his office contained an IBM server dated in the 1980s! How could such a great and multimillion-business man hold on such an outdated machine? Madoff was a mischievous businessperson since it is noted that machine was the center of fraud in that it printed out pages of statements, which reflected trades that never existed! To some extent, it is clear that Madoff’s business had some loopholes (Ferrel, 2009). This was dangerous because it could expensively cost a client if a deal was to involve millions of money. The business was of malice intensions. People who had fallen victim of this could probably have reported to the police and it would have been the duty of the police now to ensure to investigate into the matter. To avoid this, the government could have taken a go ahead of getting rid of the server until Madoff replaced it with a new one.
Bernard Madoff did not leave his fraudulent behavior at that. He further involved himself in the ‘Ponzi’ scheme named after its founder Charles Ponzi. The scheme operated on a big and huge profit making investment firms so Madoffs firm was not an exception therefore Bernard saw the scheme being good looking and decided to in cooperate it in his own firm. Bernard could take money from the recent joined investors to pay off the already existing ones. What could have been done if it happened that the number of customers retiring and pulling out was relatively higher than those joining the firm in that it was necessary they be paid their dues? It could have been almost impossible to pay the latter customers since the firm maybe declared bankrupt. Madoff would have used some of the profit to pay off his customers. This indicates that however, the firm was making profit; this profit was channeled into other places best known to him, instead of giving the customers the first priority (Ferrel, 2009). According to ethics in the business world, for any business to succeed, the profit makers of the business should be given the first priority in order to motivate them. Madoff was unethical in the sense that the profit realized from the business did not sustain its existence. This ‘Ponzi’ scheme is dangerous in the business world and investors should be keen enough to realize it. Any big business firm should have good management in that all the managerial personnel are available and transparent in their working. To further discourage this, the government should protect investors to ensure that the do not get involved in such illegal schemes.
In conclusion, the Ponzi scheme as well as the Madoff Ponzi scheme may be viewed as being charitable giving organizations but this is not so. Both schemes came up to ‘legally’ get money from people at the owners gain. Reports say that Madoff was able to deceive even experienced investors into his bait since he looked trustworthy and ethical, thereafter to realize that he was after his personal gains. It is recommended that people should be very careful and sensitive before joining any firm, which will provide them an earning in return. Any potential investor should ask himself or herself a number of questions: is an individual managing the firm? Is there an independent committee running the firm? Is the firm being audited? Among other potential questions which gives a clue of the firm. Furthermore, a person should ensure that a firm has employed auditors, accountants as well regulators since they are the ones who protect the interests of the public.
Reference
Ferrel, L. (2009). The Fraud of the Century: The Case of Bernard Madoff. Web.