The Immoral Practice of AIG

1219 Words3 Pages
bulb-icon

Recommended: Ethical issues in corporate governance

The Immoral Practice of AIG

Introduction

In the fiscal year of 2008 one of the largest insurance companies was faced with having to file chapter 11 bankruptcy. This company was American International Group which will be referred to as AIG. To avoid economic failure American International Group turned to the government to seek financial assistance. Since the magnitude of AIG was so enormous the government felt that this company could not fail, because it would have a strong impact on the economy. A whopping 85 billion dollars was advances to the company to assist with their recovery plan. From there things made a turn for the worse due to the un-explanatory disbursement of the funds that was given to AIG. This has caused a massive effect on public relations that will be explained throughout this document.

Hiding Essential Information

It has been in general agreement amongst the public in regard to the ethics that have been violated surrounded by the AIG scandal. According to The Practice of Public Relations there’re six perquisites that a company should adopt in order to perform good public service. One of the first obligatory is Pro communication which has been abused in every measure (Seitel, 2007). With AIG attempting to withhold and conceal the bonuses that were disbursed of 165 million is clearly abuse. Considering the bailout was given by government of taxpayer’s money in order to avoid chapter 11 bankruptcies. There is no argument that the public should have been without a doubt known every dollar spent in their recovery (Postal, 2009). What can be argued were the bonuses necessary?

Indecent Judgment

The accounting practice of AIG was morally wrong and goes against the key public relations principle of Ethics. This co...

... middle of paper ...

...needs to use its employees to rebuild trust. p. 16.

Cohan, W. D. (2010, April). Collaspe of the House of Hank. Institutional Investor Vol.44 , 40-84.

Diane, B., Marcia, V., & Mike, M. (2009, November 4). AIG WHAT WENT WRONG. Business Week , pp. 32-35.

Dictionary. (n.d.). Dictionary. Retrieved July 11, 2011, from dictionary.net: www.dictionary.net/bonus

Postal, A. D. (2009, March 23). AIG Reveals Beneficiaries Of Bailout Funds On Derivatives. National Underwriter , pp. 21-24.

Prinston University. (n.d.). WordNet. Retrieved July 11, 2010, from http://wordnet.princeton.edu/: http://wordnet.princeton.edu/

Reward Management Assoiates. (n.d.). Reward Management Assoiates. Retrieved July 11, 2010, from Reward Management: http://www.reward-management.com/Definitions.htm

Seitel, F. P. (2007). The Practice of Public Relations. Upper Saddle River: Pearson Prentice Hall.

Show More
Related

  • General Motors, Chrysler, and Obama's Bailout Program

    1618 Words  | 4 Pages

    In late 2008, General Motors was in financial distress due to some major financial liabilities. These included labor contracts that were extremely expensive, pension costs that were extremely high that also included healthcare, and an outdated and overgrown distribution system of dealerships that needed to be updated. According to its quarterly report with the Securities and Exchange Commission, General Motors needed to pay over seven and a half billion dollars in early 2010 to prefund the UAW retirees’ healthcare fund and at least forty five billon to its creditors. The financial data for Chrysler was unavailable due to the fact that it is not a publicly traded company, but the Chief Executive Officer, Robert Nardelli, stated that Chrysler would not be able to survive without the help of the government.

    Read More

  • Paranoid Politics In Griftopia By Matt Taibbi

    1010 Words  | 3 Pages

    ...o turn their securities back into AIG and demand billions of dollars. AIG was faced with a problem and they had to start asking subsidiary insurance companies to liquidate their pension and insurance holdings so they could cover their losses. If this happened those customers would have received a fraction of the money due to them and would ensure a global crisis. Of all the people complaining about AIG, Goldman-Sachs was doing it the most frequently and the loudest. An audit of AIG showed that they had no liquidity to pay off the bulk of what they owed so the Federal government issued a bail out of $80 billion which later elevated to $200 billion. Goldman-Sachs received the largest percentage of that $200 billion and would have torched the entire country in order to get that money that felt they deserved; and the housing-market bubble was just at the beginning of it.

    Read More

  • Pros And Cons Of ETF Vs. Mutual Funds

    647 Words  | 2 Pages

    Bodie, Zvi, Alex Kane, and Alan J. Marcus. Essentials of Investments. Ninth ed. N.p.: McGraw, 2013.

    Read More

  • Everyone has the Right to Have Health insurance in the US

    1314 Words  | 3 Pages

    Davidson, Stephen M. Still Broken: Understanding the U.S. Health Care System. Stanford, CA: Stanford Business, 2010. Print.

    Read More

  • The 2008 Financial Crisis

    1322 Words  | 3 Pages

    Phil Angelides, B. T.-E. (2011). The Financial Crisis Inquiry Report. Washington: U.S. Government Printing Office.

    Read More

  • Ethics and Communication: An Organizational Perspective

    703 Words  | 2 Pages

    In short, it was determined that communication ethics lay at the crux of these cases and others (Neher, W. W. Sandin, P.J., 2007, p. 253). In the process, these companies reputation is been damage and spend millions of dollars to repair their image and spending millions of more on court battles. In the public response, Enron scandal rippled through financial markets an Enron stock fell from $85 to 30 cents in 2001 which can be attribute to communication in the work place (Neher, W. W. Sandin, P.J., 2007, p.

    Read More

  • Freddie Mac Ethics

    1115 Words  | 3 Pages

    The Associated Press. (2007). Freddie Mac pays $50M to settle fraud charges. Washington: USA TODAY.

    Read More

  • Tylenol Case Study

    1454 Words  | 3 Pages

    The discipline of public relations is a modern profession which has been in existence for only close to a century; however, it has already taken an important role in the fields of business, government, entertainment and non-profit organizations including educational institutions and healthcare organizations. Public relations professionals are required to have excellent organizational, interpersonal and communication skills and have the ability to persuade the public. It is imperative for PR professionals to effectively communicate with its public in order to establish and maintain a positive relationship. Furthermore, public relations professionals must have the ability to work under pressure and effectively manage crisis which may have detrimental effect on the company and the public it serves. State purpose of paper and an overview of what will be covered in the introduction

    Read More

  • Controversial Activity about Short selling been Ethical

    1580 Words  | 4 Pages

    Perry, J., Holmes, N., Barwick, G., & Small, R. (2008). Recent developments: short selling and market abuse. London: ashurst.

    Read More

  • Discussion Of The Adelphia Communications Scandal?

    1686 Words  | 4 Pages

    The Adelphia Communications Scandal in 2002 dominated the corporate mainstream when the company’s management prepared financial statements that failed to represent the economic reality of the company by excluding billions of dollars of debt. The Securities and Exchange Commission (SEC) calls the case “one of the most extensive financial frauds ever to take place at a public company” (Markon & Frank, 2002). At the center of the case is John Rigas, the founder, former chairman, chief executive of the company and the patriarch of the Rigas family. Also arrested are his sons, Timothy and Michael, both former executive board members, James R. Brown, former Vice President of Finance, and Michael C. Mulcahey, former Director of Internal Reporting. The lawsuit filed by th...

    Read More

  • Portfolio Analysis and Investment

    987 Words  | 2 Pages

    William Sharpe, Gordon J. Alexander, Jeffrey W Bailey. Investments. Prentice Hall; 6 edition, October 20, 1998

    Read More

  • Exhange Risk Faced by Multinational Corporations (MNCs)

    1553 Words  | 4 Pages

    Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.

    Read More

  • Ethical Ethics Of Enron

    972 Words  | 2 Pages

    CEO Kenneth Lay’s ambition for ENRON a company he had helped form went beyond the business of piping gas. Enron went to become the largest natural gas merchant in North America and the United Kingdom. But the reality is, this company business model never worked. This was a company that was so desperate to win Wall Street 's respect that it kept it stocks shares prices going up despite the losses it was incurring in order for executives to keep lining their own pockets. Over the course of this Case Assignment, I will identify the examples of financial reporting misconduct, I will explain the deontological as well as a utilitarian ethical perspective and lastly I will identify the stakeholders likely to be affected by that misconduct.

    Read More

  • Libel On Social Media Essay

    1520 Words  | 4 Pages

    Middleton, Kent, and William E. Lee. The Law of Public Communication. N.p.: Pearson Education, 2014. Print.

    Read More

  • The Role of Ethics in Corporate Governance

    1629 Words  | 4 Pages

    This paper discusses the role of ethics in corporate governance. I seek to show the application of moral and ethical principles in corporate governance. Ethics is a topic that has generated a lot of interest in the last decade especially after high profile scandals. The failures of prominent companies such as WorldCom, Enron, Merrill lynch and Martha Stewart portrays the lack of corporate ethics. The failure of such business has seen an increased pressure to incorporate ethics in corporate governance. The result of corporate scandals has been eroding investor and public confidence. The entire economic system has experienced some form of stress from loss of capital, a falling stock market and business failures.

    Read More

More about The Immoral Practice of AIG

Open Document