Problem:
Implementation of the code of conduct at ECG has been a success. Employees are engaged in the training sessions and have been carefully reviewing the detailed code of conduct available on the ECG intranet. Furthermore, you are regularly being consulted by various individuals regarding situations that represent or could potentially have ethical implications. Now the Ethics Review Committee has convened another meeting to discuss two matters that have been reported, as defined in the following:
The intended acquisition of Government Allies, Inc. after the IPO represents a tremendous growth opportunity for ECG. As the company completes due diligence on the acquisition candidate, it is discovered that a senior executive at ECG and her spouse have a previously undisclosed financial interest in Government Allies. This executive will notably profit from the acquisition because all investors in Government Allies will receive shares of ECG stock proportionate to their investment upon successful completion of the IPO and of the acquisition. The ECG executive had been a member of a task force charged with determining acquisition candidates, and she was a strong advocate for moving forward with the effort.
ECG is participating in a competitive bid on a lucrative IT consulting contract for X TelCo, a key player in the communications industry. A team of industry and practice leaders is formed to develop the proposal and give the presentation to X TelCo. Securing the contract would boost sales and positively influence the IPO. One team member previously worked in the industry with two current executives at X TelCo who are among those to review bids. Initially unknown to the ECG team, this employee maintains occasional contact with the former coworkers. He recently contacted the executives, securing additional information about the bid process and promoting the firm's capabilities.
What ethical standards might be violated in these two situations and why? How should each one be addressed by leadership and the Ethics Review Committee? Support your points with ethical and business reasoning.