Businesses Behaving Badly

BUSINESSES BEHAVING BADLY Companies love to talk about their values and ethics - but recent surveys reveal a worrisome gap between words and actions. Corporate fraud losses account for an estimated $3.5 trillion a year worldwide. That's nearly 130 times more than what McDonald's makes in sales every year. Why are we so fraught with fraud? Whether it's skimming $100 a month from the books or planning a multimillion dollar Ponzi scheme, perhaps it's rooted in one place: bad ethics. Bad ethics start young. Even before they hit the workforce, students are 51% HIGH SCHOOL STUDENTS SAY THEY CHEATED ON AN attempting to benefit from bad behavior. EXAM IN THE PAST YEAR Cheating in schools is rampant today PERCENTAGE OF GRADUATE STUDENTS WHO ADMIT TO CHEATING BUSINESS SCHOOL 56 ENGINEERING 54 EDUCATION 48 LAW 45 125 OF 279 Harvard students who WALL ST took a course in government in 2012 are under investigation for cheating on the final exam. Once they join the work force, employees allow their bad practices to influence the way they work: 1/4 WALL ST. 26% of executives say they have executives see cheating as a key to success. observed or have firsthand knowledge of wrongdoing in the workplace. 3/4 > While employees silently benefit from poor practices, the financial repercussions of EMPLOYEES corporate fraud and cheating can be devasting to businesses. have stolen at least once from their employer. ORGANIZATIONS ANNUALLY LOSE: 33% 5% REVENUE 1/5 OF COMPANIES LOSE: $1,000,000 + THE MEDIAN LOSS: hess bankruptcies are caused by employee theft. $140,000 of all In 2011, the FBI handed out $8.8 billion in restitution orders for securities and commodities fraud. $1.2 billion HEALTH OCARE FRAUD $18.4 million + $1.28 billion MONEY LAUNDERING FBI MORTGAGE FRAUD $87.6 million + INSURANCE FRAUD $2.4 billion THE COMPANY CORPORATE FRAUD e ETHICIST SOURCES Association of Certified Fraud Examiners 2012 Report to the Nations / McDonald's 2011 Annual Report / Josephson Institute Center for Youth Ethics 2012 Report Card on Ethics of American Youth / Rutgers University Study, "Academic Dishonesty in Graduate Business Programs: Prevalence. Causes, and Proposed Action" / New York Times / Labaton Sucharow, Wall Street Fleet Street Main Street: Corporate Integrity at a Crossroads, July 2012 / International Foundation for Protection Officers / Financial Crimes Report 2010-2011