Article Review Example: White-collar Crime in Well Fargo Company

2021-06-15 15:14:39
3 pages
633 words
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Sewanee University of the South
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Article review
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Business executives and CEOs always strive to ensure that the company operates within the limits of business ethics, and thus, they love extolling the virtues imprinted in their corporate culture. In essence, this is with the aim of announcing to the world that they are more than just making profits. However, there are various white collar crimes and incidents that are currently happening that make it clear that in most instances, companies have a hard time acting within the parameters of ethics when that gets in their way of making profits. In essence, striking the balance between making profits and upholding business ethics is challenging because the prospect of less government enforcement encourages the management test the limits of the acceptable business behavior.

The current event under consideration in this synopsis is Well Fargo. The firm released a report that detailed an investigation into the sales practices that led to its workers opening fake and bogus sales accounts for the purpose of meeting aggressive sales targets set by the company. Most importantly, the report noted that the leaders of the companys community division made distortions of the sales model and the performance management system, which subsequently fostered an atmosphere that prompted the company to achieve low-quality sales coupled with unethical and improper behavior within the business (Wells Fargo, 2017). Essentially, it can be noted that using client information in opening fictitious accounts certainly qualifies something more than just low-quality sales. However, when a Los Angeles city attorney sued the company over the same accounts, the CEO, John Stumpf pointed out that doing things wrong is part of life because and is not systemic. The CEO also claimed that nothing was wrong with accounts even after the company paid charges amounting $185 million. He also pointed out that the sales practice of the company was against the ethics, culture, and values of the enterprise while shifting the blame to lower-level employees (Wells Fargo, 2017). The new report, however, asserts that the CEO failed to appreciate the seriousness of the matter and risked Wells Fargos reputation. Therefore, the report points out that the bank will claw back an additional $75 million to in compensation from the CEO, as well as the former head of community banking. The report also highlights that there were indications that years earlier the employees were acting improperly to meet the sales targets set but nothing had been done to address the issue until regulators took action.

The event is related to the issues at hand because it is an example of white-collar crime that links policy and theory (Grabosky & Shover, 2010). In essence, the article warns of no actions being taken against white collar crime, and there is need of preventing such crime to forestall future crime epidemics. In essence, the white collar crime at Wells Fargo was mainly caused by a poor policy framework, which subsequently promoted luring the employees in adopting inappropriate and improper or unethical business practices of manipulating sales data to meet targets. Also, there was a culture at the company that did not ensure that credibility of external oversight was upheld. For instance, the CEO denied the existence of the accounts, but the new report confirmed that such accounts were used before. For this reason, there were no effective systems that promoted internal oversight in the company, as well as self-restraint. As such, it can be deduced that if these parameters were included in the enterprise, as Grabosky and Shover (2010) articulate, would significantly ensure that a company upholds ethical practices.

 

References

Grabosky, P., & Shover, N. (2010). Forestalling the next epidemic of whitecollar crime. Criminology & Public Policy, 9(3), 641-654.

Wells Fargo (2017). Independent Directors of the Board of Wells Fargo & Company: Sales Practices Investigation Report, April 10, 2017. Retrieved from https://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/presentations/2017/board-report.pdf

 

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