Aaron Beam and the HealthSouth Fraud Question: 1.
There were There were follow following ing obs obsta tacle cless to mo moral ral behavi behaviour our we saw saw at work work in Aaron Aaron Beam Beam’s ’s behaviour and thinking. The principal obstacle was that Beam saw this issue as a business issue as opposed to a legitimate legitimate issue. He thought it would hurt individuals individuals on the basis if he didn’t change the financials, and he was sure that he was going to do it "just this one time." This made him not "outline" this misrepresentation as moral. n an! case, it didnt just start from here but he first began when he prepared the financial records to "look" better. He vindicated his conduct b! utili#ing the utilitarian view on the matter and advocated the metho methodol dolog! og! b! impro improvin ving g the the bigge biggest st meas measure ure of indiv individ idual uals. s. Beam Beam "diff "diffus uses es the the responsibilit!" responsibilit!" to $crush!, and and feels as if he doesnt have a sufficient muscle to remain up to $crush! despite the fact that he induced others to tail them and he himself just must be convinced the first run through, and later e%pressing that it got simpler the second time to change the financials. n the second step &making a judgment about what the ethical course of action is’, Beam has thought that the adjustments in the financial statements are so small that no one would even think about it, although he often called it as &aggressive accounting’ rather than &fraudulent’. 'onetheless, he didnt consider the (B and what might happen to those included, particularl! particularl! the shareholders, shareholders, when the! get caught. Beam demonstrated demonstrated an "abilit! to compl!" $crush! despite the fact that he did reali#e what the! were doing wasnt right. )hether he "confined" it moral or not he still reali#ed that it wasnt precisel! right and did not have enough good character to *uestion. As far as the $crush!’s moral reasoning is concerned, he lacked it altogether. The moral as defined b! the &the standards that an individual or a group has about what is right and wrong or good and evil’ which the Health$outh compan! lacked. $crush! first told Beam that he should do whatever he could to make their financials reports look even better which shows that $crush didn’t bother to care about the investment investment of shareholders shareholders and didn’t even bother to care about the life of others who were being involved in that case later. He onl! wanted to get fame as much as possible in a short period of time. He neglected all the ethics and morals b! just involving Beam in fraudulent activities and ever! *uarter when the compan! went short of meeting )all $treet anal!sts’ e%pectation, the! inflated the revenues. His ethical conduc conductt went went rogue rogue when when a compan compan! ! was was negoti negotiati ating ng a new new credit credit agreem agreement ent with with a s!ndicate of + lenders from around the world totalling of -./ billion, and he pressurised Beam that if the banks got wind of shortfall it would cripple the compan! the! had worked so hard to build. Question: 2.
The lo!al agent argument that was developed b! Ale% 0. 1ichales, to show the business managers should single2mindedl! purse the interests of their firms and should ignore the ethical consideration. As a lo!al agent to the compan!, Beam was putting his effort to make the compan! more profitable b! using the aggressive accounting. He moved some of the compan!’s start2up cost from the &e%penses’ to the &capital investment’ column and also put the account receivables into an asset account. B! doing so he not onl! inflated the revenues but also performed his dut! as a lo!al agent to the th e emplo!er and served the emplo!er as the emplo!er would want to be served. He also served his emplo!er in whatever wa!s to increase
his benefits b! changing the financials ever! time when the compan! went short of revenues especiall! when the compan! was negotiating a new credit agreement with a s!ndicate of + lenders from all around the world. He might have used this argument to defend his action because he was told b! his emplo!er to do all the things in order keep the financials high. Beam did what he was told to advance his emplo!er’s interest. He not onl! violated the accounting principles but also involved other people from different departments b! making their life in jeopard!. The lo!al agent argument is not a valid argument because it doesn’t cater the moral and ethical standards. t onl! provides benefit to the emplo!er b! advancing his interest rather than the compan!’s interest as a whole. n the case Aaron never stood up to his emplo!er, $crush!, and stated that $crush! made himself and others fearful of contradicting him. Question: 3.
Throughout Aaron Beam’s participation in the Health$outh scandal he admits that his actions were misleading and unethical. nitiall! he justifies his participation as 3aggressive accounting.4 However, it is clear intimidation pla!ed a role in his decision to follow $crush!’s orders. According to 5ohlberg’s theor! on moral development, Aaron Beam would be placed at level two &0onventional $tages’. n the beginning of his involvement he portra!s the behaviour of $tage Three6 nterpersonal 0oncordance 7rientation. He is aware of right and wrong actions but nonetheless has a stronger desire to please his emplo!er, $crush!. 8erhaps he had more fear than trust in $crush!, nonetheless he wanted to fulfil the role of living up to his e%pectations. As the fraud escalated into a more serious crime, Beam starts to fall into $tage (our6 9aw and 7rder 7rientation. B! retiring from the compan!, he is attempting to forfeit his involvement. 5ohlberg states that a person at the 0onventional $tage 3can justif! decisions in terms of the norms of the group to which the person belongs4. Aaron Beam battled his moral development for nearl! two decades. He knew the conse*uences would be too difficult to come clean, which is wh! he is essentiall! trapped at 5ohlberg’s 9evel Two of 1oral :evelopment. ;ichard $crush! is described to be charismatic, have boundless energ!, and worked like a dictator. These traits resemble certain *ualities of a child. This is one reason that $crush! would be placed at level one. Although this man was also described as brilliant, his spectrum of intelligence can be perceived in man! different wa!s. $crush! ma! have been a brilliant businessman but his moral development would be at a child’s level, according to 5ohlberg’s moral development. As a role model of the Health$outh scandal, $crush! never displa!ed an! regret for the millions of dollars that he stole. 7n top of that he refuses to take an! responsibilit! of the situation. 9evel 7ne<$tage 7ne6 8unishment and 7bedience 7rientation states that there is 3little awareness that others have needs and desires like one’s own4. Although this man contributed to charities, his acts of generosit! were merel! a mask to cover his selfish acts. The most significant factor that co2relates $crush! at the pre2 conventional stage is his relentless efforts of avoiding punishment.
Question: 4.
=es, Aaron Beam was morall! responsible for engaging in the &aggressive accounting’ methods he used in the Health$outh 0ompan!. (rom the beginning when the compan! went short of revenues and the $crush! told Beam to change the financials, Beam know that this kind of activit! is unethical and immoral but despite the fact he change the financials and inflated the revenues and assets in order to capture more shareholders. He also violated the generall! accepted accounting principles and continued to commit fraud until (.B.. came in to investigate about the insider trading. His responsibilit! was not mitigated in an!wa!, he was the ke! pla!er in all these activities besides $crush! who continuousl! pressured him to do such fraudulent activities. However, he was not morall! responsible for changing the clinic reports in order to increase the compan!’s earnings. At this point his responsibilit! was mitigated due to the fact that he himself was not involved at this point, there were other emplo!ees who were also involved in such activities which the! called themselves as a &famil!’. All those people who were co2operated to increase the compan!’s earnings were morall! responsible. Also the ;ichard $crush! was also morall! responsible for accounting fraud because apparentl! he didn’t work in the accounting department but he gave instructions to Beam which he had to compl! with. He knew what would be the conse*uences of this fraud but he didn’t bother to care into the account of investment that shareholders put in. He thought that these little kind of adjustments would fi% the problems and the compan!’s earnings in the future would solve all these problems.
