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Unit 4 Business Ethics



  1. a) Make sure that you know how to pronounce the following words, consult the dictionary if necessary:

ethics, to constitute, to illuminate, harassment, legitimacy, whistle, bristle, governance, dimension, commitment, bribery, exploitation, vacuum, unethical, necessarily, legal – illegal – legality, mere, infallible, to occur, greed, desirable, anticipate, egoist, motto, tough, falsify, accumulate, auditor, inaccurate, to pursue, psychological, violate,

b) Read the following text and do the exercises after it.

Text

Ethics is a discipline dealing with "good" or "bad"("right and wrong" or "fair and unfair" or "just and unjust") choices or behavior. This discipline involves questions of what constitutes moral responsibility (duties) and to whom the duties are owed. Most societies adopt a minimum code of ethics, that is, laws, for the purpose of governing relations among people as individuals, partnerships, corporations, and other groups.

Although the concept of ethics and ethical duties may seem abstract, in fact ethics plays an active role in our lives. It affects and gives meaning to the decisions we make. We constantly apply our values and moral convictions to our actions and decisions, frequently without being aware that we are doing so. The clothes we buy, the music we prefer, the way we treat our friends and families - these and other everyday activities and decisions relate to values and goals.

Business Ethics

Business Ethics focuses on what constitutes right or wrong behavior in the world of business and on how moral principles are applied by business-persons to situations that arise in their daily activities in the workplace.

Some examples of the many business ethics questions illuminate the definition of business ethics. In the employment relationship, countless ethical issues concern the safety requirements, civil rights (such as equal treatment and freedom from sexual harassment), and the legitimacy of whistle blowing. In the relationship of business with its customers, ethical issues spread to marketing techniques, product safety, and consumer protection. The relationship between business and its owners bristles with ethical questions involving corporate governance and management's duties to the shareholders. The relationship among competing businesses involves numerous ethical matters, including fair competition and collusive conduct. The interaction between business and society at large has additional ethical dimensions: pollution of the environment, commitment to the community, and depletion of natural resources. Not only do all of these issues recur at the international level, but additional ones present themselves, such as bribery of foreign officials, exploitation of less developed countries, and conflicts among different cultures and value systems.

Law and Ethics

In all societies, ethics and law go hand in hand. Law can never operate in a vacuum. The law must reflect society's customs and values and reinforce principles of behavior that society deems right and just.

As the law reflects and codifies a society's ethical values, many of our ethical decisions are made for us by our laws. Nevertheless, simply obeying the law does not fulfill all ethical obligations. In the interest of preserving personal freedom, as well as for practical reasons, the law does not codify all ethical requirements. In the business world numerous actions might be unethical but not necessarily illegal: for example, failing to fulfill a promise that is not legally binding; exporting products banned in the USA to third world countries, where they are not prohibited; manufacturing and selling tobacco or alcohol products. The mere fact that these business practices are legal does not prevent them from being challenged on moral grounds.

Therefore, although legality is often a reliable guide to moral behavior, it cannot be relied upon blindly as an infallible standard for action. The individual must engage in independent determination of both the legal requirements and the moral requirements of a course of action.


Why ethical problems occur in business

Ethics problems in business appear in many different forms. While not common or universal, they occur frequently. Finding out just what is responsible for causing them is one step that can be taken toward minimizing their impact on business operations and on the people affected.

Personal Gain and Selfish Interest

Personal gain, or even greed, causes some ethical problems. Business sometimes employs people whose personal values are less than desirable. They will put their own welfare ahead of all others, regardless of the harm done to other employees, the company, or society. In the process of hiring employees there is an effort to weed out ethically undesirable applicants, but ethical qualities are difficult to anticipate and measure. The embezzler, the bribe taker, and other unethical persons can slip through. Lacking a perfect screening system, business is not likely to eliminate this kind of unethical behavior entirely.

A manager or an employee who puts his or her own self-interest above all other considerations is called an ethical egoist. Self-promotion, a focus on self-interest to the point of selfishness, and greed are traits commonly observed in an ethical egoist. Such a person tends to ignore ethical principles accepted by others. "Looking out for Number One" is the ethical egoist's motto.

Competitive Pressures on Profits

When companies are squeezed by tough competition, they sometimes engage in unethical activities in order to protect their profits. Research has shown that companies with lower profits, as compared with those with higher profits, are more prone to commit illegal and unethical acts. However, an unstable financial position is only one reason for illegal and unethical business behavior, because profitable companies also can act contrary to ethical principles. In fact, it may be simply a single-minded drive for profits, regardless of the company's financial condition, that creates a climate for unethical activity.

Price-fixing is a practice that often occurs when companies compete vigorously in a limited market. Besides being illegal, price-fixing is unethical behavior toward customers, who pay higher prices than they would if free competition set the prices. Companies fix prices to avoid fair competition and to protect their profits.

Price-fixing is not the only kind of unethical behavior that can occur. MiniScribe, a producer of computer disk drives, can be drawn as an example. Competitive pressures caused the company to falsify sales figures, accumulate defective drives that had been returned and then sell them again as new products, package bricks and ship them to distributors as disk drives, secretly break into auditors' files to change inventory figures on the auditor's reports, and file misleading and inaccurate financial reports. MiniScribe's top managers allegedly resorted to these tactics from 1985 to 1988 when the computer industry was suffering a general decline and after MiniScribe had lost IBM, one of its biggest customers.

Business Goals versus Personal Values

Ethical conflicts in business sometimes occur when a company pursues goals or uses methods that are unacceptable to some of its employees. "Whistle-blowing" may be one outcome, if an employee "goes public" with a complaint after failing to convince the company to correct an alleged abuse. Another recourse for employees caught in these situations is a lawsuit, as happened in the following case.

A pilot for Eastern Airlines charged in court that he had been given undesirable flight assignments and was suspended from work for insisting, without success, that certain safety improvements should be made on cockpit equipment that later was implicated in a fatal airplane crash.

The ethical dilemma here arose because the company's goals and methods required the employee to follow orders that he believed would harm himself, other employees, the company, and the general public. His own ethical compass was at odds with the goals and methods of the company.

Cross-cultural contradictions

Some of the knottiest ethical problems occur as corporations do business in other societies where ethical standards differ from those at home. Today, the policy-makers and strategic planners in all multinational corporations, regardless of the nation where they are headquartered, face this kind of ethical dilemma.

US sleepwear manufacturers discovered that the chemicals used to flameproof children’s pajamas might cause cancer if absorbed through the child’s skin. When these pajamas were banned from sale in the US, some manufacturers sold the pajama material to distributors in other nations where there were no legal restrictions against its use.

This episode raises the issue of ethical relativism. Should ethical principles take their meaning strictly from the way each society defines ethics? What or whose ethical standards should be the guide?

As business becomes increasingly global, and as more and more corporations penetrate overseas markets where cultures and ethical traditions vary, these questions will occur more frequently. Employees and managers need ethical guidance from clearly stated company policy if they are to avoid psychological stresses. A company must not use local custom as an excuse for violating laws of corporate policies; it should conduct its business according to a higher standard.

Some who study international business ethics say that such higher standards of ethics already exist. They point to numerous treaties and codes of conduct for regulating the activities of multinational corporations regarding environmental protection, equitable treatment of employees, laws against bribery, and protection of basic human rights in the workplace.

Focus on text comprehension

  1. Answer the following questions using information from the text.

            1. What is ethics? What questions does it involve?

            2. Why does ethics play such an active role in our lives?

            3. What does business ethics focus on?

            4. What examples of business ethics questions can you give?

            5. How are ethics and law connected?

            6. Does unethical necessarily mean illegal? Justify your answer.

            7. What ethical problems can personal gain cause?

            8. Who is called an ethical egoist? What traits of character does he/she possess?

            9. Why are companies with low profits more prone to commit unethical acts?

            10. Is unstable financial position the only reason for illegal and unethical business behavior? Justify your answer.

            11. When does such practice as price-fixing occur? Why is it considered to be unethical?

            12. What other unethical business practices can you name?

            13. What can happen if the goals a company pursues or the methods it uses are unacceptable to some employees?

            14. Why are the knottiest ethical problems related to corporations doing business in societies that has other ethical standards?

            15. How should companies deal with this ethical dilemma?




  1. Comment on the following statements using information from the text.

    1. Law cannot exist without ethics.

    2. Legality cannot be relied upon blindly as an infallible standard for action.

    3. Ethical egoists are a danger to the company.

    4. Competitive pressures make companies resort to unethical business practices.

    5. Local custom cannot be an excuse for unethical business behavior.

Focus on vocabulary

    1. Translate the following words into Russian and reproduce the context they are used in:

code of ethics, partnerships, moral conviction, values, employment relationship, sexual harassment, whistle blowing, product safety, fair competition, less developed countries, legally binding, infallible standard, personal gain, ethically undesirable applicants, embezzler, tough competition, profitable companies, price-fixing, limited market, competitive pressure, sales figures, alleged abuse, ethical relativism, overseas markets, multinational corporations

    1. Find in the text English equivalents for the following Russian words and phrases:

принимать минимальный этический кодекс, регулировать/определять отношения, требования по безопасности, гражданские права, равное отношение, отсутствие сексуального преследования, законность сообщения о фактах нелегальной деятельности, приемы маркетинга, безопасность товара, защита потребителя, изобиловать этическими вопросами, руководство компанией, честная конкуренция, заговорщическое поведение, обязательства по отношению к обществу, подкуп должностных лиц, эксплуатация развивающихся стран, укреплять принципы, подчиняться законам, юридически обязательный, запрещать, непогрешимый стандарт, уменьшить воздействие, удалить неподходящих кандидатов, взяточник, игнорировать этические принципы, вытеснять, быть склонным, нестабильное финансовое положение, фальсифицировать данные о продаже, проникать в файлы аудитора, подавать недостоверные и неполные финансовые отчеты, прибегать к чему-либо, претерпевать общий спад, преследовать цели, обнародовать информацию, якобы совершенное злоупотребление, расходиться в чем-либо, этическая относительность, проникать на внешние рынки, извинение за нарушение закона, транснациональная корпорация, справедливое отношение, основные права человека

    1. Match the words to form collocations.

A

moral

consumer

equal

safety

corporate

marketing

civil

fair

sexual

employment

product

whistle

rights

harassment

techniques

safety

blowing

treatment

relationship

requirements

conviction

protection

competition

governance

B

tough

ethically undesirable

less developed

unstable

personal

legally

limited

infallible

sales

bribe

collusive

competitive

gains

pressure

standard

conduct

taker

countries

competition

applicants

financial position

market

binding

figures

C



ethical

alleged

inaccurate

profitable

basic

general

multinational

overseas

auditors’

equitable

files

markets

decline

corporations

treatment

companies

relativism

abuse

financial reports

human rights



  1. a) Explain the following notions. Use any English dictionary for advanced users if necessary:

case, bribery, minor offence, court, trial, charge, sentence, evidence, guilty, fine, jury

b) Fill in the blanks with the words mentioned above.

  1. The accused was found … and sentenced to five years in prison.

  2. I’m appearing in … tomorrow and the prosecution will be opposing bail.

  3. He was made to pay a … of £30 for parking in the wrong place.

  4. She was arrested and put on … for murdering her husband.

  5. The best lawyer in the country took up her … and won it for her.

  6. He was accused of … but they had no real … .

  7. You will face a number of serious … when you go before the judge.

  8. The … pleaded him not guilty.

  9. You have committed a … and I will be lenient with my sentence.

  10. If you plead guilty, the judge will probably reduce your … .




  1. Fill in the blanks with prepositions if necessary. You can consult the text.

    1. We constantly apply our values and moral convictions … our actions and decisions.

    2. Our everyday activities and decisions, ultimately relate … our values and goals.

    3. Business Ethics focuses … what constitutes right or wrong behavior in the world of business and on how moral principles are applied … situations that arise in their daily activities in the workplace.

    4. The relationship … business and its owners bristles with ethical questions.

    5. The relationship … competing businesses involves numerous ethical matters.

    6. The interaction … business and society … large has additional ethical problems.

    7. The mere fact that these business practices are legal does not prevent them from being challenged … moral grounds.

    8. Legality cannot be relied … blindly as an infallible standard for action.

    9. Finding out what is responsible … causing ethics problems is one step toward minimizing their impact … business operations and … the people affected.

    10. They will put their own welfare ahead of all others, regardless … the harm done to others.

    11. Research has shown that companies with lower profits, as compared … those with higher profits, are more prone to commit illegal and unethical acts.

    12. A precarious financial position is only one reason … illegal and unethical business behavior, because profitable companies also can act contrary … ethical principles.

    13. His own ethical behavior was … odds with the goals and methods of the company.

    14. They point … numerous treaties and codes of conduct … regulating the activities of multinational corporations and protection of basic human rights … the workplace.



  1. Fill in the blanks with a suitable prepositional phrase from the previous exercise.

  1. The real sales figures are ... the ones given in you report. We can’t ... them.

  2. The new technology can be ... almost every industrial process.

  3. I think there is a ... his poor performance and his family problems.

  4. It is important for a manager to develop a good ... colleagues at work.

  5. Successful companies know the importance of establishing good ... their customers.

  6. The Act prohibits discrimination ... the ... of sex and marital status.

  7. This kind of job involves a great degree of ... the employer and employees.

  8. The Government is ... the general management of the economy and its ... the living standards.

  9. The proposal was turned down ... financial ...

  10. The introduction this law would be ... our policy.

  11. Profits were good ... last year.

  12. The evidence clearly ... her guilt.

  13. One should always stick to safety rules ...

  14. What was the ... her dismissal.

  15. There must be equality of rights for all the employees ... their nationality, sex or religion.

  16. Companies should not ... exclusively ... profits.

  17. We have always tried to provide the public ... with accurate information.



  1. a) Speak about ethics and the role it plays in our lives, use the words and word-combinations that follow:

to deal with sth, to constitute moral responsibility, to adopt a minimum code of ethics, to govern relations among people, to seem abstract, to affect sth, to apply sth to sth, to relate to values and goals;

  1. Dwell on the ethical matters business has to deal with, make use of the vocabulary below:

to focus on sth, right or wrong behaviour, , employment relationship, to concern the safety requirements, the legitimacy of whistle blowing, to spread to sth, to involve corporate governance, duties to sb, fair competition and collusive conduct, to have additional ethical dimensions, to recur at the international level, bribery of foreign officials, exploitation of less developed countries;

  1. Explain why not all legal actions can be called ethical, use the words and phrases given below:

To reflect and codify a society’s ethical values, to fulfil ethical obligations, to preserve personal freedom, to be legally binding, to export products to third world countries, to be challenged on moral grounds, to blindly rely upon sth, to engage in sth;

  1. Dwell on the causes of ethical problems in business, make use of the following vocabulary:

  • personal gain, to put one’s own welfare ahead of all others, to weed out ethically undesirable applicants, to anticipate ethical qualities, to slip through, to eliminate sth, ethical egoist, to ignore ethical principles accepted by others;

  • competitive pressures on profits, to be squeezed by tough competition, to engage in unethical activities, to be prone to, to commit illegal and unethical acts, to act contrary to ethical principles, a single-minded drive for profits, price-fixing, to compete vigorously in a limited market, free competition, to fix prices, to falsify sales figures, to file misleading and inaccurate financial reports;

  • to pursue goals, to be unacceptable to sb, to be an outcome, to “go public”, to correct an alleged abuse, recourse, ethical dilemma, to harm sb, to be at odds with sth;

  • cross-cultural contradictions, to do business in other societies, policy-makers, strategic planners, to raise the issue of ethical relativism, to penetrate overseas markets, to vary, to need ethical guidance, to conduct one’s business according to a higher standard, international business ethics, to regulate the activities of multinational corporations.



  1. Translate the following sentences from Russian into English using the vocabulary of this unit.

    1. Каждый человек совершает поступки в соответствии со своими этическими убеждениями. Минимальный кодекс этики – законы – принят во всех обществах. И эти законы должны отображать ценности общества и должны укреплять принципы хорошего поведения. Эти законы регулируют отношения между индивидами, членами товариществ и другими группами.

    2. Бизнес этика определяет трудовые отношения, отношения между бизнесом и потребителем, отношения между компаниями, отношения между бизнесом и обществом, между бизнесом и владельцами бизнеса. Трудовые отношения касаются требований безопасности труда, гражданских прав (например, равное отношение к мужчинам и женщинам, отсутствие сексуального преследования и др.) и законности сообщений о фактах преступной деятельности.

    3. Отношения между бизнесом и потребителем определяют возможные приемы маркетинга, безопасность товара и защиту потребителя. Отношения между конкурирующими компаниями включают принципы честной конкуренции и отсутствие заговорщического поведения.

    4. Отношения между бизнесом и обществом покрывают такие сферы, как загрязнение окружающей среды, обязательства по отношению к обществу и даже истощение природных ресурсов. А отношения между бизнесом и владельцами бизнеса изобилуют вопросами по руководству компаний и по обязанностям руководства в отношении акционеров.

    5. Но подчиняться законам еще не значит быть этичным. Некоторые этические обязательства не являются юридически обязательными. Законность не всегда надежный путеводитель этики, она не непогрешимый стандарт.

    6. Личная выгода и эгоистический интерес – то, с чем необходимо бороться. Жадных и эгоистичных людей много. И даже попытка удалить кандидатов, неподходящих по этическим соображениям, на этапе приглашения на работу не всегда удается, т.к. невозможно предвидеть и правильно оценить все качества человека. Жадные люди могут стать расхитителями и взяточниками. А эгоисты готовы пренебречь чем угодно, чтобы добиться своей цели, например, карьерного роста.

    7. Конкурентное давление может вызвать неэтическое поведение компании, если вдруг эта компания окажется в условиях жесткой конкуренции, т.е. ее будут вытиснять с рынка. Компании с нестабильным финансовым положением в отличие от рентабельных компаний более склонны совершать неэтические поступки. Фиксирование цен – частая практика компаний, конкурирующих на ограниченном рынке.

    8. Преследование компанией целей отличных от целей ее сотрудников часто приводит к конфликту. Если компания несправедливо обвинила сотрудника в злоупотреблении, то сотрудник может обнародовать информацию и таким способом восстановить справедливость, или же сотрудник может обратиться в суд.

Language focus

  1. Revise the difference between to pursue, to prosecute and to persecute.

Example: Ethical conflicts in business sometimes occur when a company pursues goals or uses methods that are unacceptable to some of its employees.

  1. Match the verbs to pursue, to prosecute and to persecute with their meanings.

  1. to bring a criminal charge against someone in court; (of a lawyer) to represent in court the person who is bringing a criminal charge against someone (≠ to defend)

  2. to treat cruelly and cause to suffer, especially for political or religious beliefs; to try to harm someone by continually annoying them or causing trouble for them, to harass

  3. to follow, especially in order to catch, kill, or defeat; to continue steadily with, to carry on



  1. Fill in the blanks with to pursue, to prosecute and to persecute in the correct form.

  1. Tax evasion is a criminal offence and all those practicing it will be … .

  2. The fascists thought of themselves as belonging to the superior Aryan race and … people of all other nationalities.

  3. He had enough authority to … his own course of action and not to pay any attention to ill-wishers.

  4. People who think they are always being … may be suffering from a mental illness.

  5. The tourists were … by beggars.

  6. The State was eager to put the mafia boss into jail, so the most efficient man in the country was asked to … .

  7. I didn't … the development of that incident as I had too many other things to take care of.

  8. The police are … an escaped prisoner.

  9. Nowadays xenophobia has reached record levels in many countries and many immigrants find themselves … by the native population.

  10. The investigation brought to light the shady dealings of the Ministry and many of its officials were ... for extortion and bribery.

  11. The government is … a policy of non-intervention.

  12. After they split up he couldn't bring himself to put up with it for a long time and … her until she was fed up and moved to another town.

  13. Bad luck has … us all through the year.

  1. Translate the following sentences into English using to pursue, to prosecute and to persecute.

  1. Отмывание денег - серьёзное преступление и преследуется по закону.

  2. Куда бы она ни пошла, ей кажется, что ее кто-то преследует.

  3. Когда-то мы работали вместе и преследовали общую цель - изменить мир к лучшему.

  4. Министра преследовали в судебном порядке за получение взятки.

  5. Министр Внутренних дел пообещал более не преследовать руководителей компаний по политическим мотивам.

  6. Преступник бежал быстрее, чем те, кто его преследовал.

  7. Выяснилось, что одного нашего сотрудника долгие годы преследовали по религиозным мотивам.

  8. Следуя политике приватизации, правительство уже продало несколько фабрик и заводов.

  9. Преследовать людей по расовому и религиозному признаку аморально.

  10. Если штраф не будет уплачен в течение 10 дней, мы будем вынуждены преследовать нарушителя в судебном порядке.



  1. Revise the difference between the Past Indefinite and the Present Perfect.

    1. Open the brackets using the verb in the Past Indefinite or the Present Perfect.

Stella McCartney (join) the troubled Paris fashion house Chloé barely a year ago. It (take) her just one year to reverse its fortune. Previously Chloé (be) virtually invisible as a major force in the world of fashion. But almost single-handedly she (transform) Chloé into the most talked about fashion brand in the world. She (increase) sales fivefold. Paris (not see) anything like it since the young Yves St Laurent (take) the city by storm 30 years ago.

When she (be appointed) it (be) clear she (know) what she (have) to do. “I want to bridge the gap between the consumer and the press. At the moment fashion is just sort of stuck in the middle.

So far, Stella (stick) to her philosophy of avoiding outrageous and uncommercial catwalk creations. She (keep) to the simple philosophy of designing clothes that she or her friends would want to wear.

    1. Translate the following sentences into English.

    1. - Она работает в нашей компании уже 4 года. – Я и не знал, что она здесь так долго.

    2. - С тех пор как он пришел в наш отдел, здесь произошли большие изменения. – Да, но все эти изменения к лучшему.

    3. У нас были большие проблемы, т.к. поставщик задержал поставку сырья.

    4. В то время, как он готовил презентацию, его партнер вел переговоры с новыми поставщиками.

    5. Он около двух часов искал нужную информацию в Интернете, когда вдруг наткнулся на интересный сайт.

    6. Анна получила повышение после того, как заключила контракт на покупку большой партии бытовой техники.

    7. Когда мы вошли в отдел, там было много дыма. Опять кто-то курил.

    8. К 1998г. компания в 3 раза увеличила свою долю на рынке.

    9. Затем объем продаж стал снижаться в то время, как их конкуренты активно укреплялись на рынке.

    10. В прошлом году они разорились, т.к. руководство приняло не верную маркетинговую политику.



  1. Phrasal verb: to bring

Example: Opposition parties are threatening to bring down the government.

  1. Match the phrasal verb with its meanings.

bring about

bring down (2)

bring forward

bring in (2)

bring out

bring around

bring up

to cause the government or politician to lose power

to introduce a new law or system

to persuade someone to agree with you

to cause sth to happen

to announce plans or ideas officially so that people can discuss them

to start discussing sth

to use the skills of a person or a group of people

to produce a new product and start selling it

to reduce price or level of sth



  1. Fill in the blanks with the phrasal verb to bring.

  1. Most shops … their prices after Christmas.

  2. After much discussion? I … the committee … to my point of view.

  3. I feel I must … another small matter.

  4. New technologies have … great social changes.

  5. The corruption scandal involving several ministers eventually … the government.

  6. If you want to succeed you should … a low-priced car to compete with your rivals.

  7. An independent investigator will be … to look at the allegations.

  8. Has your department … a new spending plan?

  9. The government has … new laws to protect workers. But at the same time they have increased taxes.



  1. Translate the following sentences into English using the phrasal verb to bring.

  1. Сначала она была против каких-либо изменений в проекте, но я поговорил с ней и смог ее убедить согласиться с нашими планами.

  2. Отставка генерального директора вызвала кризис во всей компании.

  3. В прошлом году компания выпустила на рынок новую модель стиральной машины, но она оказалась неконкурентоспособной и ее быстро сняли с производства.

  4. Чтобы справиться с этой проблемой компании необходимо пересмотреть свой устав.

  5. Затянувшийся экономический кризис послужил причиной падения политического строя, существовавшего на протяжении 70 лет.

  6. Я попробую поднять вопрос о введении гибкого графика на завтрашнем собрании, но боюсь, мы не сможем убедить нашего начальника согласиться с нами.

  7. Джеймса Уоткина пригласили в наш отдел, чтобы он помог нам разобраться с новым программным обеспечением.

  8. Кто выдвинул такой блестящий план?

  9. Мы действительно сможем снизить затраты на производство и поднять качество товара.

  10. Недавний скандал привел к отставке министра.



Focus on speaking

    1. Do you agree with Shirley Chisholm who said: “When morality comes up against profit, it is seldom that profit loses”?

    2. Using the material of the unit, prove that ethical problems frequently occur in business.



Unit 5 Corporate crime

  1. a) Make sure that you know how to pronounce the following words, consult the dictionary if necessary:

corporate – corporation, to offend – offender – offence, conceit, primary, jurisdiction, industrial, espionage, insider, to distort – distortion, negotiate, bribe – bribery, budgetary, narcotics, smuggler, to organize – organization, to extort – extortion, illegitimate, nepotism, cronyism, North Korea, Syria, to embezzle – embezzler – embezzlement, minor, sophisticated, to falsify – falsification, phantom, audit, strategy, to misappropriate – misappropriation, to recruit – recruit, tour

b) Read the following text and do the exercises after it.

Text

Corporate crime refers to crimes committed either by a corporation or by individuals that may be identified with a corporation or other business entity.

In law, corporations can commit the same offences as natural persons. The majority of crimes are committed because the offender simply sees the chance and thinks that he or she will be able to commit the crime and not be detected. For the most part, greed, rather than conceit, is the motive. And the corporation is the vehicle for the crime. This may be a short-term crime, i.e., the corporation is set up as a shell to open credit trading accounts with manufacturers and wholesalers, trades for a short period of time and then disappears with the revenue and without paying for the inventory. Alternatively and most commonly, the primary purpose of the corporation is as a legitimate business, but criminal activity is secretly intermixed with legal activity to escape detection. To achieve a suitable level of secrecy, senior managers will usually be involved.

Examples of criminal behavior in most jurisdictions include: corruption and related types of abuse, industrial espionage, insider trading, etc

Corruption and related types of abuse

One of the main problems in the developed world is corruption. It undermines economic development by generating considerable distortions and inefficiency. In the private sector, corruption increases the cost of business through the price of illicit payments themselves, the management cost of negotiating with officials, and the risk of breached agreements or detection. Although some claim corruption reduces costs by cutting red tape, the availability of bribes can also induce officials to contrive new rules and delays. Openly removing costly and lengthy regulations is better than covertly allowing them to be bypassed by using bribes. Where corruption inflates the cost of business, it also distorts the playing field, shielding firms with connections from competition and thereby sustaining inefficient firms.

Corruption also generates economic distortions in the public sector by diverting public investment into capital projects where bribes and kickbacks are more plentiful. Officials may increase the technical complexity of public sector projects to conceal or pave way for such dealings, thus further distorting investment. Corruption also lowers compliance with construction, environmental, or other regulations, reduces the quality of government services and infrastructure, and increases budgetary pressures on government.
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