XM Ltd. (XML) which is the Indian branch of US-based Corporation reported that in the years 1998 and 1999 it manipulated its books to make fictitious payments which were recorded as commissions or discounts. According to

In the given case, XM Limited, an Indian branch of American company has paid bribes to various government employees to win contracts. It is considered a serious offence for an American Company under Foreign Corrupt Practices Act (FCPA) to pay bribes in a foreign country to obtain contracts. The coverage of business ethics is very wide as it deals with norms relating to a company and its employees, suppliers, customers and neighbors, its fiduciary responsibility to its shareholders. It reflects the philosophy of business, one of whose aims is to determine the fundamental purposes of a company. Business ethics stands for the saneness or purity of purpose that is upheld through carefully designed actual practices of a business enterprise. It is an embodiment of conscious concern towards execution of business processes in tune with the nobility of the purpose. Ethical conduct is in the long-term interests of businessmen. A business enterprise that is honest and fair to its customers, employees, and other stakeholders earns their trust and good will. It ultimately results in customer satisfaction, healthy competition, industrial growth and high earnings. Businesses must balance their desire to maximise profits against the requirements of stakeholders. Maintaining this balance often requires tradeoffs. To address this unique aspect of business, rules are articulated to guide it to earn profits without harming individuals or society as a whole. The significant issues in business ethics include ethical management of enterprise in relation to its stakeholders in particular and natural environment in general. Ethical policies and practices enable a business enterprise to build goodwill for itself. A business organisation that adheres to a code of conduct gains a competitive advantage and builds long term value. On the other hand, unethical practices lead to the ultimate downfall of big organisations too. Business ethics can be reinforced through a 'Code of Conduct' which businessmen are expected to follow while dealing with others. 'Code of Conduct' is a set of principles and expectations that are considered binding on any person who is member of a particular group. The alternative names for code of conduct are 'Code of Ethics' and 'Code of Practice'. Business ethics comprises of the principles and standards that guide behavior in the conduct of business. Businesses must balance their desire to maximize profits against the needs of the stakeholders. Maintaining this balance often requires tradeoffs. To address these unique aspects of businesses, articulated as well as implicit rules are developed to guide the businesses to earn profits without harming individuals or society as a whole.