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Posted on May 7th, 2014, by

Moreover, other companies also suffered from the mistrust from the part of investors and the deterioration of the public image of large corporations in the US. In fact, white crimes committed by Scrushy reminded Americans that business is unethical in the US and large corporations ignore easily fundamental ethical norms and rules. In such a situation, other companies also suffered from a considerable drop of confidence of investors and the public in their reliability. In such a situation, the public had lost confidence in American business and companies, while the deterioration of the public image of American companies affected consistently their marketing performance. In this regard, the impact of Scrushy was significant but what was more important that the scandal provoked by Scrushy reminded the public that the US business is unethical and often is accompanied by the violation of legal norms which often is difficult to trace because companies and their top executives hide the violation of legal norms like Scrushy did.

In such a situation, investors became unconfident in the reliability of companies operating in health care industry as well as in the US at large. What is meant here is the fact that Scrushy made investors doubt whether other companies conduct fair and responsible policies or probably they are scheming just like Scrushy did. At this point, the difficulty to identify and investigate frauds and accounting scheming raised the problem of the effective auditing of accounting balance of large companies (Dessler, 2004). In ethical terms, Scrushy violated confidence of investors in American companies. In fact, investors do need to be confident in companies they are going to invest in because any investment is accompanied with certain risks, although the degree of riskiness varies. Therefore, investors need to be confident in the company they are going to invest in. In actuality, this means that a priori investors rely on the ethical behavior of top executives of the target company. Investors expect that top executives will do their best to make the target company prosper. However, Scrushy ruined such confidence of investors in American companies because investors became uncertain that top executives would observe principles of business ethics and would stand for interests of investors.

At the same time, the case of the HealthSouth revealed the imperfectness of existing legislation and auditing. What is meant here is the fact that auditors failed to identify financial problems in the HealthSouth, although the company faced substantial financial problems, which Scrushy had managed to hide until the investigation had discovered all his crimes. The ineffectiveness of auditing also raises the problem of the ethical responsibility of auditors in the contemporary business environment (Tarantino, 2006). To put it more precisely, auditors are responsible in terms of outcomes of their work because shareholders and investors expect auditors conduct auditing accurately and identify any possible threats and risks associated with the financial performance of the audited company. In case of the HealthSouth, auditors failed to identify any problems. Therefore, auditors also bear the burden of ethical responsibility for negative effects of the HealthSouth failure because auditors failed to perform their professional duties successfully.

The government responsibility is high because the government failed to prevent crimes and frauds committed by Scrushy. In fact, the government did not undertake effective measures to prevent the risk of frauds, while the existing legislation had proved to be ineffective in face of scheming and frauds conducted by Scrushy. Moreover, the authorities collaborated with Scrushy, while Alabama Governor was bribed by Scrushy. This means that the government at both state and federal level did not stop Scrushy. Instead, the government at the state level collaborated with Scrushy and helped him to develop his business using the support of politicians, the state government and taking the office in the regulatory agency. In such a context, the government policies and actions of some authorities, including Alabama Governor, were unethical and irresponsible because they either failed to prevent frauds of Scrushy or collaborated with him.

In addition, Scrushy almost escaped the punishment in 2005, when he was pleaded not guilty. In such a context, the ethical dilemma concerning the punishment of white collar crimes arises. Obviously, the crime committed by Scrushy is obvious and he was accused and convinced on multiple charges but he got only 70 months in prison, although his fraudulent actions ruined the life of many people, especially HealthSouth’s shareholders and employee. Scrushy neglected basic ethical norms and principles for the sake of profits but existing legal norms and the criminal justice system are tolerant to white-collar crimes since, even when his crimes were evident, Scrushy was pleaded not guilty in 1995 and only the accusation of corruption, money laundering and other accusations allowed the prosecution to prove his guilt and to send him to prison.

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