Ethics prevail in society and specifically in the business environment to lay down guiding principles for performance and enhance employee productivity and general morale. Businesses put in place business ethics to uphold and sustain integrity among the workforce and garner key stakeholders’ trust. The emphasis on business ethics is rising as corporations subsidize their practices to promote business ethics. Business ethics are pivotal in determining the behavior of the workforce, especially in businesses with established ethics programs where employees tend to emulate their corporations. Also, business ethics is vital in harnessing profitability. It is because customers incline to a corporation that shows high ethical standards, increasing unit sales. However, unethical practices in the business environment could have detrimental implications for the firms as they could hone in problems affecting the performance and overall health. Therefore, this paper articulates an unethical case study reported on the media concerning the Nikola scandal in July 2021.
Nikola Scandal
The Nikola Scandal entails the securities fraud imposed on the company’s founder, Trevor Milton. According to Brandom (2021), Milton was charged with serial preying on unwary investors who had resorted to venturing into trading upon losing their jobs during the onset of the COVID 19 pandemic. Milton was allegedly accused of making a false and misleading impression about readiness to release a functional product, and in the process, Nikola was raising at least $500 million of investment. The product to be released was Nikola One semi-truck prototype that could maneuver utilizing its power. On the contrary, the issue was based on a staged video of the truck moving downhill. Also, Milton falsely alleged that Nikola was manufacturing hydrogen-based fuels at subsidized rates below the rates in the market and had amassed significant funds for the truck orders. The announcement rendered excitement, especially in the case of General Motors’ allocated $2 billion deal to garner equity investment to facilitate the release of the Bader pickup truck (Brandom, 2021). However, the triumph was interim when a whistleblower accused Nikola of fraud. The publicized illustration was stage-managed to show that the Barger truck could move using its power (Brandom, 2021).
Description of how the issue was handled
After the exposition of the fraud scheme in the Badger pickup truck prototype, Nikola saw immediate and detrimental fallout. It includes General Motors quitting their equity deal, Milton resigning as the executive chairman, and shutting down relative electric ATV and motorboat projects. Besides, Nikola was charged $125 million to clear the fraud charges.
Discussion
Therefore, from my perspective, Milton’s scheme is unethical. It is because he promoted stage-managed videos to create a false impression that aimed to defraud innocent investors of their hard-earned money. As a business, it is ethical to promote legitimate content that could be accounted for if something happens. Publicly sharing false information for personal reasons could influence the loss of investors’ funds and is against business ethics. The false information also rendered investors like General Motors commit their resources to support the release of a prototype that was yet to be conceived, exposing their financial allocations at risk. Such indictments threaten the well-being of the critical stakeholders of Nikola, while business ethics emphasize creating value and transparent communication with stakeholders at all times.
However, I am not convinced by how Nikola’s fraud scheme was handled. The damage from the scheme was significant, and similar charges and punitive actions taken against the corporation should have been relatively substantial. In that light, I believe that Milton should have faced stringent disciplinary actions with setting an example for other businesses. I believe that establishing an abrasive judicial system and strict business policies could effectively promote higher levels of ethics in the commercial environment.
References
Brandom, R. (2021, July 29). Nikola founder charged with securities fraud over allegedly fake truck demo. The Verge. https://www.theverge.com/2021/7/29/22599726/nikola-founder-securities-fraud-charge-milton
write