Abuse of official position refers to misconduct performed by a person in their official capacity for personal gains. Such an action can result from disloyalty. It can take many forms such as taking advantage of employees below those in power, gaining access, and using confidential information for personal gains and also manipulation of junior employees to participate in unlawful actions. Some of the causes of the abuse of power include bosses who want to show their subjects that they can do anything within their power because they cannot question them owing to the position they occupy. People in power may also want to create high self-esteem. They, therefore, abuse their power and build self-confidence for themselves and lastly the urge to earn extra money through corruption in the form of bribery and kickbacks. Abuse of power often leads to the collapse of organizations, loss of jobs, and unfair competition. This paper is a study of the various ways in which people can abuse their official positions.
Inside trading refers to participation in buying and selling stocks of companies that trade publicly having had prior information which the public does not have about the company. It occurs when an employee has access to information about the company which the public has no knowledge about, and the data can affect stock prices. For example, some employees may be knowing the poor financial state of their company. With this knowledge, they can sell all their stock. Encouraging one’s relatives to sell stock or buy shares from a company because you have information which is capable of affecting stock prices of the company is also insider trading.
An example of an insider-trading scandal is one that involved Martha Stewart in 2003. Stewart was later sentenced to five months in prison for her involvement in insider trading (Gekas, 2010). Stewart owned stock in ImClone Systems, the biopharmaceutical company whose experimental cancer drug, Erbitux, was about to be rejected by the Food and Drug Association (FDA). Stewart’s broker, Peter Bacanovic, happened to be Sam Waksal’s broker, and so he has information regarding the impending drop in the price of the shares of ImClone Systems. This news saw Stewart sell her shares, and the result was that the stock dropped by 16% as the story became public. Even though she Stewart claimed her innocence throughout the period, she was finally found guilty of obstructing justice and misleading investigators. She eventually served five months in prison, was fined $30,000, and two years of parole. If other investors knew the impending drop in the price of ImClone Systems’ shares, they would not have bought the shares.
According to Vlaeminck (2013), Propriety data is data or documents that are generated by a company, and contain information which the company keeps secret as it gives it a competitive edge over its competitors. Proprietary data can be an individual’s or company’s information, and patent and trade secret laws protect it. This information is always kept confidential so that competitors don’t access it. Some employees of a company for their selfish interests may divulge their trade secrets to the benefit of competing organizations, which is unethical. The law should protect the company’s trade secrets because they are private property. Stealing of company information by employees and sharing it with other people who are not part of the company is illegal. This is because it violates the confidentiality terms which bind the employee to keep company information secret. Keeping company information secure and abiding by the confidentiality terms of the company are complicated moral issues which employees have to grapple with in their daily activities. People are entitled to look for jobs and advance in their careers. Therefore, it is not easy to draw the line between workers skills and knowledge from company proprietary information.
Tesla has sued some of its former employees in March 2019 for stealing its proprietary information (Mukherjee & Nellis, 2019). One of the former employees sued is Guanzhi Cao, who is accused of copying the source code for the autopilot feature of Tesla’s autonomous vehicles. According to Tesla, Guanzhi Cao copied more than 300,000 files regarding the autopilot feature. Cao is currently working for Xiaopeng Motor Company, which is Tesla’s competitor. According to O’Kane (2019), Cao has admitted to uploading the Tesla documents to his iCloud account in 2018. Tesla has also sued four of its former employees who are currently working for Zoox Inc. for stealing its proprietary data regarding warehousing, logistics and inventory operations. In the race to dominate the electric vehicle market, companies are increasingly suing their rivals as they strive to keep their proprietary data safe.
Bribes and Kickbacks
Bribery is giving money, goods, or any other form of compensation to a recipient in exchange for a change of their behavior that the recipient would otherwise not change. The sole aim of a bribe is to let someone act against their duties. A Kickback is a negotiated bribery whereby a person is paid a commission for services rendered. Bribing can happen locally, nationally, and even at the global arena. When a project is being undertaken, and those in charge of the project give bribes to the authorities to bypass industry regulations, people are likely to be harmed by the substandard projects developed. An example of bribery and kickbacks is the microenterprise development project in Latin America. In this case, the officials in charge of the project ‘extorted kickbacks and personal loans,’ which were not repaid from the enterprises contracted by the project. The employees of the small enterprises that were hired to clean roads reported that they coerced into contributing money for the purchase of an SUV for the project director. The project officials inflated the contract from 15% to 67% to fund the kickbacks. Also, the duration of the contract was reduced without adjusting the contract amounts to rhyme with the new duration. This scandal was later discovered after the owners of the small enterprises registered their dissatisfaction with the donor agency (“Case Examples of Bribes and Kickbacks,’ n.d).
The abuse of official position in an organization is unethical, and it has far-reaching consequences on both the organization and the holder of the post. On the issue of bribes and kickbacks, companies end up giving contracts to unqualified firms which may end up doing substandard work and loss of funds. Insider trading leads to investors’ loss of money by investors who had no prior information about the performance of stocks of a company. Another effect is that if the selected few people trade using the materials which are still secret as their guide, the integrity of the market is destroyed. This discourages investors from investing in the market. On the issue of propriety data, it helps companies compete favorably without one company preying on another, especially in a growing company versus the established companies. When a rival company acquires proprietary data, it gives it an undue advantage over the owners of the information. Bribery and kickbacks lead to loss of money. In the example of a road maintenance project, the cost of maintenance was inflated from 15% to 67%. Also, the microenterprises which were contracted to help in cleaning the roads lost money as they were forced to contribute to the purchase of a car for the project director.
- Case Examples of Bribes and Kickbacks. Retrieved 24 July 2019, from https://guide.iacrc.org/case-examples-of-bribes-and-kickbacks/
- Gekas, A. (2010). 8 Infamous Wall Street Scandals. Retrieved 24 July 2019, from https://www.womansday.com/life/advice/a1946/8-infamous-wall-street-scandals-111315/
- Mukherjee, S., & Nellis, S. (2019). Tesla sues former employees for allegedly stealing data, Autopilot… Retrieved 28 July 2019, from https://www.reuters.com/article/us-tesla-lawsuit/tesla-sues-former-employees-for-allegedly-stealing-data-autopilot-source-code-idUSKCN1R21P9
- O’Kane, S. (2019). Former Tesla employee admits uploading Autopilot source code to his iCloud. Retrieved 28 July 2019, from https://www.theverge.com/2019/7/10/20689468/tesla-autopilot-trade-secret-theft-guangzhi-cao-xpeng-xiaopeng-motors-lawsuit-filing
- Vlaeminck, S. (2013). Data Management in Scholarly Journals and Possible Roles for Libraries-Some Insights from EDaWaX LIBER Quarterly, 23(1), 48-79. DOI:http://doi.org/10.18352/lq.8082