Ethics And Business

Ethics and business, this paper with discuss some of the ethical challenges that former Key Bank Senior Vice President David Francis Verhotz, faced and how they impacted the corporation as well as him personally.

To have a better understanding of ethics it may help to first define it. Business ethics as defined by Webster's is how one examines moral controversies relating to the social and personal responsibilities of business and its practices, in any commerce organization. It looks at various business practices and asks "Is this ethically right or wrong" (www.websters-online-dictionary.org). It is sometimes perceived that that higher one gets within an organization or corporation the further they get from reality or the rules of the business. It's seems more and more that corporate top officials are taking issues into there own hands and doing things that the majority would find dishonest or unethical. For example, Key Bank Senior Vice President had an extensive career that spanned over 30 years. His was a well respected senior banking official that has worked for several high profile organizations over his career including; Fidelity Bank in Philadelphia, and Chemical Bank in New York before joining the KeyCorp team in 1997. At Key Bank he was entrusted to oversee the international loans unit. At that level some people may think that they know the system so well that they would be able to manipulate it to skim some of the money or embezzle off the top for their own personal gain. Embezzle as defined by Wikipedia "Is the the fraudulent appropriation by a person to his own use of property or money entrusted to that person's care but owned by someone else. For instance, a clerk or cashier can embezzle money from his employer; a public officer can embezzle funds from the treasury (www.wikipedia.org)". The definition given by David Francis Verhotz was for him to set up several European banks with loans that he would then pay for with loans from other bank loans he would facilitate. His scandal lasted almost ten years and amounted to 29 million dollars in some reports (www.cleveland.com) and as high as 40 million dollars (www.cleveland.fbi.org). He loved a very lavish lifestyle with a 5.6 million dollar home in Long Island, New York, 2.7 million dollar condominium on Park Avenue. And a reported more then 2 million dollars spent on jewelry for a girlfriend (www.cleveland.com).

One might ask the question; How was Verhotz able to accomplish this? How was he able to do it for such a long period of time, and for such a large amount of money? How does a company not realize that there is that much money missing? All of these questions can be answered by Verhotz using his extensive background, he was able define the departments and individual responsibilities to make up the rules that would suit his needs the best. At his level of employment he was had a very high level of responsibility and with that goes a great deal of trust. He was at a level that controlled the approval process for lending money and as such he also had the inside ability to make loop holes that he could manipulate for his own personal benefit. Within his authority his responsibilities included requesting, approving, and underwriting loans for these three European international banking cumpanyies. The evidence suggests that, from October 15, 1997, just after he was hired with the company through November 8, 2006, Verhotz fraudulently obtained as many as 106 loans totaling approximately $40.6 million dollars