Fraud, Corruption and Bribery - 17-01

Stop turning away to start turning the tide

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Stop turning away to start turning the tide Justifications, moral neutralisation… or plain excuses? When normal people such as Tony or James, in our first example, experience moral dissonance, an initial, natural response is to look for a way out of the situation. One option is to walk away and do something else.The other is to try to understand the cause of the dissonance and then re-cast it to avoid further moral discomfort. Both approaches entail “moral neutralisation”. Moral neutralisation is nothing new. [5]. In essence, the theory states that people will not do something if they think they it is going to bring shame on them. Moral neutralisation, therefore, happens before a decision to act is taken; it differs from the typical rationalisation of fraud and corruption, which occurs after the event. [6] Sykes and Matza focused on juvenile delinquents, young criminals, and their peers with similar backgrounds, who did not end up breaking the law. Social environment and upbringing was common but their conduct radically different. The sociologists hypothesised that the delinquents used moral neutralisation techniques to overcome moral dissonance. Sykes and Matza came up with five moral neutralisation technique categories; the table below illustrates these by reference to Example 1 above – here are methods that James can use to neutralise the dissonance he experiences between his moral values and his need to win the contract by paying the consultant. Often a combination of these techniques contributes to reducing the moral dissonance - James and his people will probably agree to pay the consultant, even though it likely to mean corruption somewhere along the line. Sumantra Ghoshal [7] claims that these attempts to deny moral responsibility rest on an unfounded
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Follow us on Twitter @fraudintell and join discussions in our Linkedin group 5 © Informa UK Ltd 2012 You may be breaching copyright if you photocopy any pages from this publication. To purchase additional copies or site licences, please call 020 7017 4192 assumption about determinism in human conduct: when managers, including CEOs, justify their actions by pleading powerlessness in the face of external forces, they are resorting to dehumanisation of practice. When they claim that competition or capital markets are relentless in their demands, and that individual companies and managers have no scope for choices, they use the false premise of determinism to free themselves from any sense of moral or ethical responsibility for their actions. Charles Prince in Citigroup is an example of a business leader who reasoned in the way Ghoshal criticises. Interviewed about his bank’s practice of extending loans on hazardous terms even when the warning lights were starting to flash, he famously said, “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing . ( Financial Times , 9 July 2007).
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  • Spring '12
  • Ahmed
  • Ethics , moral dissonance

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