Case study nick leeson and the collapse of barings bank how


Case Study: Banning Burkas: Freedom or Discrimination?

In September of 2010, the French Parliament passed a bill prohibiting people from concealing their faces in public areas. While this law applied to all citizens and all forms of face covering, it became known as France's "burka bill" because the rhetoric surrounding the bill targeted Muslim women who wore burkas-religious garments covering the face and body-in public.

French lawmakers argued that the law was important for the separation of church and state and for the emancipation of women. Similar to the 2004 bill that outlawed the use of conspicuous religious symbols, including Muslim headscarves and Christian crosses, in public schools, this law sought to further remove religious expression and iconography from public spaces in France. Some legislators argued that the burka was a harmful symbol of gender inequality that forced women to assume a subservient status to men in public. According to them, the law freed women from a discriminatory, patriarchal subculture.

However, some in the French Muslim community saw the bill as an infringement of religious freedom and an act of cultural imperialism. They argued that French legislators were imposing their idea of gender equality onto their culture. Many of them, including some women, argued that wearing burkas actually emancipated women from the physical objectification so common in Western culture. A number of women protested the bill by dressing in burkas and going to the offices of lawmakers who supported the legislation. Other reports from individual women suggested that the law created a more hostile atmosphere for Islamic women in France. One of these women critiqued the bill, stating, "My quality of life has seriously deteriorated since the ban...the politicians claimed they were liberating us; what they've done is to exclude us from the social sphere."

The law was challenged in 2014 and taken to the European Court of Human Rights. The court upheld the legality of the law.

Please see PDF Teaching Notes for case study resources and citations.

Discussion Questions:

1. Lawmakers might argue that they were creating a more pluralistic society by banning all forms of religious expression in public places, whereas detractors might argue that the ban does just the opposite. Which side do you agree with and why?

2. Should all religious practices be tolerated in a free society? Are there limits to what you think should be allowed?

3. Do you think your home country should implement a ban on face coverings in public? Should religious garments and iconography from all faith traditions be banned in public schools as occurred in France in 2004? Why or why not?

4. According to some accounts, the law inspired instances of people acting violently against women who continued to wear burkas. Do the principles of separation of church and state and the emancipation of women outweigh these consequences?

Case Study: High Stakes Testing

Since the enactment of the No Child Left Behind Act of 2001 (NCLB), some parents, teachers, and administrators have taken their own stand against something that they believe is harmful for public education and American children: high stakes testing.  Under NCLB, every child in the U.S. must achieve proficiency in reading and math. While each state can determine its own level of proficiency, a child's ability to advance to the next grade level, and even graduate from high school, hinges on passing a standardized test. Across the U.S., children in minority communities have been more likely not to receive a diploma due to low-test scores on mandated exams.

Assessment has many benefits. Advocates of large-scale assessments claim that it is an objective and fair measure of student achievement.  Results show how students, or groups of students, measure up against one another and broader standards. Ideally, all children throughout the country will receive an equal education, and testing can help educators target where instructional improvements are necessary. Sonja BrookinsSantelises, Vice President of K-12 Policy and Practice for the Education Trust, acknowledges that there is too much rote test preparation, but argues that we must work together to reduce the achievement gap among student populations. The founder of nonprofit organization StudentsFirst and former Chancellor of D.C. Public Schools, Michelle Rhee, also sees standardized testing as a means to reduce this gap. She states, "It's not inconceivable for a student to be receiving all A's and B's on her report card but still be stuck far behind her peers in other districts and states across the country. And without standardized testing, that child's parents, teachers and principal would have no idea."

Opponents, however, firmly believe that high stakes testing is problematic and even ruinous to our educational system. There is no research to corroborate that standardized testing, a multi-billion dollar industry controlled by three large U.S. corporations, is effective. Teachers complain that they are forced to "teach to the test," leaving little or no time for subjects that are not tested, such as art, social studies, and science. Parent and former teacher Edy Chamness founded a Facebook group in 2011 to rally parents in her community to protest against school accountability and standardized testing requirements. Other parents, including Maeve Siano of Celina, Texas, similarly felt that the preparation and stress associated with testing were more likely to damage her son than help him. Celina Superintendent Donny O'Dell stated, "Our country was basically founded on rebellion, so to speak. So I don't hold that against any of these parents, but we as educators have to do what we have to do...and we need some form of accountability."

Please see PDF Teaching Notes for case study resources and citations.

Discussion Questions:

1. What is your view on the No Child Left Behind Act of 2001? What is your view on standardized testing in particular?

2. If you were a teacher or administrator who disagreed with standardized testing, but would be at risk of losing your job if you acted on your beliefs, what would you do?

3. Many detractors of standardized testing argue that it is ruining education and is a detriment to our children. Did Edy Chamness demonstrate moral action by opting her child out of testing? How so or how not?

4. Many supporters of standardized testing argue that education needs some form of accountability, without which we would be failing our children. Do you think districts that enforce standardized testing are demonstrating moral action? Why or why not?

5. Whose responsibility is it to determine what students should learn and how they should be assessed? Defend your position.

Case Study: Cheney v. U.S. District Court

On June 24, 2004, the United States Supreme Court decided the case of Cheney v. U.S. District Court. Believing that U.S. Vice President Dick Cheney's handling of an energy task force violated the Federal Advisory Committee Act and suspecting undue influence in government deliberations by the energy industry, environmental groups the Sierra Club and Judicial Watch sued seeking to discover official documents relating to the meetings. Cheney and other government defendants moved to dismiss the lawsuit, but the district court ordered them to produce information about the task force. They appealed, and the Circuit Court also denied their motion to dismiss. The Supreme Court sent the case back to the Circuit Court for further proceedings. Justice Antonin Scalia dissented, arguing that the case against Cheney and the others should simply be dismissed without any discovery.

Justice Scalia's opinion in favor of Cheney was controversial because while the case was pending, Scalia had gone duck hunting in Louisiana with Cheney and others. Some of the plaintiffs in the case asked Justice Scalia to recuse himself, but he refused to do so. Federal law states that "any justice or judge shall disqualify himself in any proceeding in which his impartiality might be questioned." Critics of Justice Scalia thought it reasonable to question his impartiality. Stephen Gillers, a New York University law professor and expert on legal ethics, noted, "A judge may have a friendship with a lawyer, and that's fine. But if the lawyer has a case before the judge, they don't socialize until it's over. That shows a proper respect for maintaining the public's confidence in the integrity of the process."

Defenders of Justice Scalia argued that these criticisms were politically-motivated by people who did not wish Scalia to be able to vote in the case, and that it is common for justices to be friends with political actors who might be involved in cases coming before the Court. Defending his actions, Scalia stated, "Social contacts with high-level executive officials...have never been thought improper for judges who may have before them cases in which those people are involved... For example, Supreme Court Justices are regularly invited to dine at the White House, whether or not a suit seeking to compel or prevent certain presidential action is pending."

Please see PDF Teaching Notes for case study resources and citations.

Discussion Questions:

1. Do you think there is a conflict of interest in this case? Why or why not?

2. Psychological studies indicate that people have an easy time understanding how conflicts of interest may sway the decisions of other people, but often have great difficulty perceiving that similar conflicts might prejudice their own decisions. Is there evidence of this in the case of Cheney v. U.S. District Court? Briefly explain.

3. Do you think it would be easy to rule against a friend or a former employer in a high-stakes case? Does this create a conflict of interest between a judge's natural motivation and the duty to render justice impartially? Why or why not?

4. What do you think would have been the most ethically defensible action for Justice Scalia to take? Why?

5. What is your reaction to the following passage by business professors Max Bazerman and Anne Tenbrunsel commenting upon Justice Scalia's opinion in this case:

"Scalia's comments [on conflict of interest] indicate that he rejects or is unaware of the unambiguous evidence on the psychological aspects of conflicts of interest. Even more troubling than this lack of understanding are the Supreme Court's rules which, like most guidelines and laws that are intended to protect against conflicts of interest, guard only against intentional corruption. Yet most instances of corruption, and unethical behavior in general, are unintentional, a product of bounded ethicality and the fading of the ethical dimension of the problem."

Do you agree with their assessment? Why or why not?

Case Study: Dennis Kozlowski: Living Large

Dennis Kozlowski came from modest circumstances. He began his career at Tyco International in 1975 as an auditor, and worked his way up the corporate ladder to become CEO in 1992. Kozlowski gained notoriety as CEO for the rapid growth and success of the company, as well as his extravagant lifestyle. He left the company in 2002 amid controversy surrounding his compensation and personal spending, and in 2005 Kozlowski was convicted of crimes in relation to purported unauthorized bonuses of $81 million, in addition to other large purchases and investments.

As CEO, Kozlowski was lauded for his risk-taking and the immense growth of the company. He launched a series of strategic mergers and acquisitions, rapidly building up the size of Tyco. During his first six years as CEO, he secured 88 deals worth over $15 billion. Strong growth was bolstered by a booming economy, and Tyco's stock price soared as the company consistently beat Wall Street's expectations. However, when the economy slowed, the company began to struggle.

Allegedly, Tyco paid for Kozlowski's $30 million New York apartment, as well as personal gifts and parties, including $1 million of the total cost of a $2 million birthday party for his wife. After Kozlowski paid a $20 million finding fee to a board member without proper approval, paintings invoiced for Tyco offices ended up in Kozlowski's apartment, and other irregularities appeared, Kozlowski was criminally charged with looting more than $600 million of assets from Tyco and its shareholders.

While many questioned his lifestyle, others questioned the trial and conviction. Commenting on the case, civil rights lawyer Dan Ackman wrote, "It's fair to say that Kozlowski...abused many corporate prerogatives... Still, the larceny charges at the heart of the case did not depend on whether the defendants took the money-they did-but whether they were authorized to take it." Kozlowski asserted his innocence of the charges, stating, "There was no criminal intent here. Nothing was hidden. There were no shredded documents. All the information the prosecutors got was directly off the books and records of the company."

Please see PDF Teaching Notes for case study resources and citations.

Discussion Questions:

1. Do you think Dennis Kozlowski was an effective leader for Tyco International? Were his actions ethically permissible? Why or why not?

2. As CEO of a major company, how might entitlement bias have affected Kozlowski's behavior?

3. What rationalizations do you think Kozlowski might have used to justify his behavior in his own mind?

4. If you were in Kozlowski's position, how do you think your actions would affect the behavior of your employees? Why?

5. Can you think of any other examples of leaders who have abused the power of their position? What similarities and differences do you see between them and Kozlowski?

Case Study: The Costco Model

Costco is often cited as one of the world's most ethical companies and has been called a "testimony to ethical capitalism" in large part due to its company practices and treatment of employees. Costco maintains a company code of ethics which states, "The continued success of our company depends on how well each of Costco's employees adheres to the high standards mandated by our Code of Ethics... By always choosing to do the right thing, you will build your own self-esteem, increase your chances for success and make Costco more successful, too."

In debates over minimum wage in the United States, many commentators see Costco as an example of how higher wages can yield greater company success, often pointing to competitors such as Walmart and Target as examples that fall short in providing for their employees. Other commentators do not see Costco's model as being easily replicable for different types of businesses, citing wages as only one of many factors to consider in companies' best practices.

Costco tends to pay around 40% more and provides more comprehensive health and retirement benefits than Walmart and Target, saving large amounts in employee turnover costs. The company resists layoffs, invests in training its employees, and grants them substantial autonomy to solve problems. U.S. Secretary of Labor Thomas Perez stated, "And the remarkable loyalty that [employees] have to [Costco cofounder Jim Sinegal] is a function of the fact that he categorically rejects the notion that, 'I either take care of my shareholders or my workers.' That is a false choice."

While few disagree with the benefits of fair treatment of employees, some commentators credit the success of Costco to its broader business model that favors higher productivity, not employee satisfaction. Columnist and economist Megan McArdle explains, "A typical Costco store has around 4,000 SKUs [stock keeping units], most of which are stacked on pallets so that you can be your own stock boy. A Walmart has 140,000 SKUs, which have to be tediously sorted, replaced on shelves, reordered, delivered, and so forth. People tend to radically underestimate the costs imposed by complexity, because the management problems do not simply add up; they multiply." Furthermore, McArdle notes that Costco mainly serves as a grocer rather than department store and caters to a generally affluent customer base in suburban areas.

Please see PDF Teaching Notes for case study resources and citations.

Discussion Questions:

1. How does Costco, as described, match up to the "best practices" as described in the video? Where does Costco fall short? Where does Costco succeed?

2. Walmart pays its employees substantially less than does Costco, even though the two companies often compete head-to-head. How can Costco stay in business when it pays up to 40% more to its employees than do direct competitors?

3. What do you think are the most important practices for a retail company to pursue to foster an ethical environment for workers and consumers? Why?

4. A stock analyst criticized Costco, saying: "Costco continues to be a company that is better at serving the club member and employee than the shareholder." Do you think this a fair critique? Why or why not?

5. Another analyst complained that Jim Sinegal "has been too benevolent. He's right that a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden." Again, do you think this a fair criticism? Why or why not?

6. Is a company that does not follow the Costco model a "bad" company? Explain.

Case Study: Nick Leeson and the Collapse of Barings Bank

Founded in 1762, Barings Bank was a UK institution with worldwide reach.  Even the Queen of England had an account there. In 1989, Nick Leeson was hired at Barings, where he prospered and was quickly promoted to the trading floor and appointed manager in Singapore where he traded on the Singapore International Monetary Exchange (SIMEX). He was an aggressive trader, making large profits in speculative trading. In 1993, his profits constituted almost 10% of Barings' total profits. He had developed a reputation for expertise, for near-infallibility, and his superiors in London gave him little supervision.

In July 1992, a new employee suffered a small loss on Leeson's watch. Leeson did not wish to lose his reputation for infallibility or his job, so he hid the loss in an error account. Leeson attempted to make back losses through speculative trading, but this led to even bigger losses, which again were hidden in this account. He kept doubling up his bets in an attempt to get out from under. Leeson later said: "[I] wanted to shout from the rooftops...this is what the situation is, there are massive losses, I want to stop. But for some reason you're unable to do it."

Leeson later wrote, "I had this catastrophic secret which was burning up inside me-yet...I simply couldn't open my mouth and say, 'I've lost millions and millions of pounds.'"

When Leeson took out a short-term, highly leveraged bet on the Nikkei index in Japan, a severe earthquake in Kobe, Japan sent the index plummeting, and his loss was so huge he could no longer hide it. Barings, a 233-year old bank collapsed overnight and was bought by ING for £1. Leeson fled, but was eventually caught and returned to Singapore where he was convicted of forgery and cheating and served four years of a longer sentence.

Please see PDF Teaching Notes for case study resources and citations.

Discussion Questions:

1. How was loss aversion apparent in Nick Leeson's conduct? Explain.

2. Judith Rawnsley, who worked for Barings Bank and later wrote a book about the Leeson case, proffered three explanations for Leeson's behavior once the losses had started to pile up: 1) Leeson's loss aversion stemmed from his fear of failure and humiliation; 2) his ego and greed were exacerbated by the macho trading environment in which he operated; 3) he suffered from common distortions in thinking patterns that often result from high levels of stress, including overconfidence and denial. Which of these explanations (or all) do you think played a role in this case? Why?

3. Leeson explains that he wanted to stop, but could not. Based on his and Rawnsley's reflections, where do you think the blame primarily lies and why? With Leeson individually, or with the system within which he operated?

4. If you were in Leeson's position after the initial loss made by the employee, what would you have done? Why?

5. Do you have trouble owning up to mistakes that you have made? Do others whom you know? Explain with examples.

Each case 500 words.

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