In the first take home exam, we have chosen the case of Fraud-accused Nirav Modi and Firestar Diamond

Ltd – possible involvement of PNB. We have answered the questions like why we have chosen this
particular case for our analysis, we have defined the unit of analysis for this case, then we have applied
the eleven laws of systems thinking in perspective of this case, even we have created our two laws similar
to those eleven laws of system thinking and at last we have applied the Ten Archetypes of Systems-
Thinking for the study of market phenomena we have selected.

Now for the take home exam two, we have to make a moral judgment call on the market event (as
mentioned above) that we have chosen: Who was right, who was wrong. This corporate judgment should
be based on the five supporting sets of beliefs and values held by a particular person in the below
mentioned hierarchical series of moral values.

Ethics can be defined as the discipline dealing with moral duties and obligation, and explanation what is
good or not good for others and for us. It is the study of characteristics of morals and it also deals with the
moral choices that are made in relationship with others. Businesses must balance their desire to maximize
profits against the needs of stakeholders. Maintaining this balance often requires trade-offs. To address
these unique aspects of businesses, rules - articulated and implicit are developed to guide the businesses
to earn profits without harming individuals or society as a whole.

1. The first one is a set of normative ethical theories:

It’s the reasoning process based on which we would be justifying our moral judgment and ethical actions.
As mentioned in the chapter 15, the major moral ethical theories are deontology, teleology, distributive
and corrective justice.

In the deontology theory, having a moral determination and following the right rules is a better path to
ethical conduct than achieving the right results. Here ethical actions arise when one performing his/her
duty and that duties are defined by balanced thought. It considers all humans as equal, not in the physical,
social, or economic sense, but equal before God irrespective of color, caste, creed, religion.

So, what path both the parties i.e. Nirav Modi and PNB has followed is important here rather than the
results. We can say that both have followed unethical path. Bank people did not think about the procedure
to be followed by the bank which in turn for the safety of the bank as well as the entire country. In the
same way Nirav Modi didn’t think about the official procedures to be followed in the country by each
individual for taking the loan.

In the teleology theory, just opposite to the deontology theory, actions are right as they produce and
promote the greatest happiness, wrong as they promote unhappiness. So here the path we are following
for getting the result is not important rather the result what we are getting in the end is important. The end
result must be good for the oneself as well as for the society.

So, it can be presented as the group which are identified by one main rule, that is the moral evaluation of
actions, motives or rules is based on how much good they generate or how much bad they allow us to
avoid.

Here we can see the result generated out of such a big fraud is drastic for whole society and country in
which we are living.

In the distributive theory, what is the fair way to distribute goods among a group of people? This means
that corporates should act in such a way that, while fulfilling most of their duties and moral obligations,
the benefits of their action should clearly exceed the costs, and those costs and benefits, rights and duties
should equally spread across all people affected by the action.
 With this theory, if we see the part of bank executives, it is clear that they have not exceeded the cost
rather they have increased the burden on the bank since without collateral security up to the level of the
loan amount, bank is in huge risk.

The last is the corrective justice theory. Regardless of costs and benefits, rights and duties, and their
existing distributions, that executive action is moral if its sets up legitimate laws, and effective procedures
and processes to rectify unjust structures in society that inequitably distribute costs and benefits, rights
and duties across the greatest number of affected stakeholders.

Here, it can be indicated that bank executives even after committing the wrong thing, they have not
rectified their processes and have not at all think about the poor people whose money they are lending to
Nirav Modi’s company.

2. The second one is a set of moral principles derived from set A mentioned above i.e. set of normative
ethical theories.

Moral judgments express a decision, verdict or conclusion about a particular action or about a person's
character based on our understanding of moral theories and/or their principles. The average executive in
most circumstances has no difficulty making moral judgments such as whether to tell the truth, whether a
given decision is morally right or wrong, whether there is conflict of interest, and so on.

Our moral life is generally consisting of a rich blend of directives, experiences, and virtues that add to
guide us to moral judgments. The moral principles are justified by moral theories, which integrate
bodies of principles, rules and action guides. These principles basically lying on good behavior,
sincerity, welfare of society etc.

If we talk about the principles related to this case, then it can be seen that both the parties have not ever
thought about the principles or values before releasing the loan amount. If they would have done so, then
definitely the fraud could have been prevented and our country’s money could be saved. If they would
have counted the moral principles, then those principles could have bounded them from doing such
monetary fraud.

3. The third one is a set of moral standards derived from sets A and B.

Moral standards are less general or more specific moral norms of behavior that require, prohibit or allow
certain actions. Such norms are derived from moral theories and their moral principles. Moral standards
are teleological if they relate to social costs and benefits; they are deontological if they uphold rights and
duties; they are related to distributive justice if they deal with issues of fairness and justice, and they are
related to virtue ethics if they promote a general sense of physical, functional and moral wellbeing.

Hence with relation to this case, it can be drawn that moral standards have not been followed since they
have not followed the moral principles and moral theories. Like Nirav Modi never thought that it was not
right to get illegal sanction of LC by bribing the bank staff.

4. The fourth one is a set of moral rules derived from sets C.

Moral rules are concrete applications of moral principles and moral standards to a society, corporation,
government or any social institution, given the situational context of economy, politics, culture, science
and technology.
When we analyze this case, we found that none of the moral rules have followed by both the parties. Since
they have not followed any single moral rules here. Bank executives have not thought that they didn’t have
the power of illegal sanction of the LC. Neither Nirav Modi thought that it was not his right to get illegal
sanction of LC by bribing the bank staff. Neither they both thought about the impact of such type of fraud
on the Indian economy, the negative image created about the public sector banks over the people in the
country and about the trust breach they had created between the Indian banks and the society.

5. The fifth one is a set of moral judgments resulting from applying sets A, B, C or D while assessing
concrete actions.

Statements of corporate codes could be typically moral standards or norms, which are also derived from
moral theories, but they are less general than moral principles or moral rules. Some examples of moral
judgments: Capital punishment is wrong. Child labor is evil. Sweatshops are dehumanizing.

In relation to this case, both the parties, PNB as well as Nirav Modi have not made any moral judgment
while sanctioning the LC from PNB to Nirav Modi. They have not made judgement whether what they
were doing is correct or not, whether it was impacting badly over others or not. Hence illegal sanction of
the LC by the bank without following proper procedures, without keeping the bank’s objective in the mind
of its staff as well as on the Nirav Modi’s part that without keeping the point in his mind that if business
gone into loss how he would be repaying to the bank since he was not attaching any collateral security
with it, all are the steps followed by both the parties without thinking about the moral judgements.

The word dilemma is commonly understood as a "challenging problem" implying a "forced choice" for the
agent between two or more equally unfavorable (or fatal) choices or alternatives.

In terms of corporate decision-making the universal dimension of ethics may be viewed in its two aspects:
first are the values related to Truth like integrity, honesty and transparency; second are the values related to
Goodness or wellbeing, which include economic, social, ecological and human wellbeing. In general, a
company which believes in ethics and values should not compromise on these two universal values.
Furthermore, there is at present a growing understanding in the corporate mind that ethical, ecological and
social responsibility is not merely a matter of idealism but

Exhibit 15A: A Framework for AOL 5: Reverse Moral Justification

Step Reverse Moral Justification Assessment of Justification

E Start with a specific moral judgment Moral judgment is firstly bank people had to think about
based on a given case- the alternatives of giving LC to Nirav Modi at some
advantages which were not for the general public since
Nirav Modi was the old customer of PNB and loan amount
was big which could be profitable for the bank rather than
illegal sanction of the loan.

Also Nirav Modi could have followed proper procedure of

getting loan in the form of LC rather than giving bribe to
the bank officials and hence following unethical measures.
 We judged so because bank staff were unable to take moral
judgement of what they doing is right or wrong. It is
important for the analysis of the case because then only we
may be able to decide what is wrong and what is right.

D What specific moral rules justify this The moral rule which is justifying this moral judgement is
moral judgment and why? any decision taken by the corporates should not be harmful
to the others which includes everyone from their own
company to entire country, to the common citizens of the
country. Also being the business person, we should no
follow any unethical mean to get our work done.

C What specific moral standards justify The specific moral standards which is justifying the moral
this moral judgment and the rules it is judgement is that they prohibit certain actions to be
based on, and why? performed like always adhering to the guidelines and
always maintain the dignity while doing businesses.

Different grouping within society tend to have different

moral standards of acceptable behavior and we have
tendency to behave differently at different times and when
we are with different groups of people. Thus it becomes
very difficult to hold a position of ethical relativism
because of the difficulty of determining the grouping to
which we are seeking to conform.

B What specific moral principles justify The specific moral principles justifying this moral
this moral judgment and the rules and judgement is teleological moral principles means the social
standards it is based on, and why? welfare which was to be followed by business tycoon Nirav
Modi towards the entire country, deontological moral
principles mean the social justice to done by the bank
officials towards their loyal customers who were having
trust on them regarding their money.
Even the responsibility moral principles also work here
well since both of the parties should followed their formal
responsibilities.

A What specific moral or ethical
theories justify this moral judgment
and the rules, standards and principles
it is based on, and why?
The specific moral theories justifying this moral judgement
are
1. The deontological moral theory since in this, what ethical
path to be followed for the desired results is important
rather than the results which was unfortunately not
followed by both the parties.
2. The teleological moral theory in which what result we
are achieving is important in terms of ethics and morals.
The result achieved should not be harmful to anyone in the
society but in this case, they have not bothered for the end
 result at all rather just bothered about their own benefits.

3. The distributive theory where each individual should get

the benefits equally which was not followed here rather just
few individuals were given preference over others based on
their stardom and power.

Steps What have you learnt in this iterative We have learnt that there are steps to be followed with
moral reasoning and backward regard to moral principles, rules, standards for analyzing a
E-A judgment and justification process? case to decide whether the action or the decision taken is
right or wrong.

In general, we frame our moral judgement about the case

that what the both parties would have followed for morally
justifiable to the greatest number of affected persons in the
case is they should not have sanctioned the LC without
following proper norms of the banks and should not be
given bribe to the bank officials.

Exhibit 15B: A Framework for AOL 5: Forward Moral Justification

Step Forward Moral Justification Assessment of Justification

A Study a given Case thoroughly,
holistically, and identify the critical
problem that defines and undergirds the
Case. What ethical theories would you
invoke in understanding, characterizing
and defining this problem? What are the
key subjects, objects, properties and
events (SOPE) of the Case? Why?
The critical problem defined in the case is that none of
the parties has followed ethical procedure to deal with
each other rather they just thought of their own
personal benefits surpassing the guidelines and the
society benefits.
The specific moral theories justifying this moral
judgement are
1. The deontological moral theory since in this, what
ethical path to be followed for the desired results is
important rather than the results which was
unfortunately not followed by both the parties.
2. The teleological moral theory in which what result
we are achieving is important in terms of ethics and
morals. The result achieved should not be harmful to
anyone in the society but in this case, they have not
bothered for the end result at all rather just bothered
about their own benefits.
3. The distributive theory where each individual should
get the benefits equally which was not followed here
rather just few individuals were given preference over
others based on their stardom and power.
B From these ethical theories what specific
moral principles would you derive that
will enable you to explain, analyze and
morally assess the key subjects, objects,
properties or events (SOPE) of this
problem, and why?
C What specific moral standards would
you derive from the moral principles
derived at Step B in order to justify your
explanation, analysis and moral
assessment of SOPE under Step B, and
why?
D Fourthly, what specific moral rules
would you extract from the moral
standards (Step C), moral principles
(Step B) and ethical theories (Step A) to
further justify your explanation, analysis
and moral assessment of SOPE under
Steps B and C, and why?
The specific moral principles justifying this moral
judgement is teleological moral principles means the
social welfare which was to be followed by business
tycoon Nirav Modi towards the entire country,
deontological moral principles mean the social justice to
done by the bank officials towards their loyal customers
who were having trust on them regarding their money.
Even the responsibility moral principles also work here
well since both of the parties should followed their
formal responsibilities.
The specific moral standards which is justifying the
moral judgement is that they prohibit certain actions to
be performed like always adhering to the guidelines
and always maintain the dignity while doing
businesses.
The moral rule which is justifying this moral
judgement is any decision taken by the corporates
should not be harmful to the others which includes
everyone from their own company to entire country, to
the common citizens of the country. Also being the
business person, we should no follow any unethical
mean to get our work done.

E Given Steps A, B, C and D, and the
moral assessment of SOPE under each,
what specific moral judgments can you
arrive at regarding key SOPE in the
Case, how and why? How can you
thereby justify this moral judgment and
the rules, standards, principles, and
ethical theories it is based on, and why?
Moral judgment is firstly bank people had to think
about the alternatives of giving LC to Nirav Modi at
some advantages which were not for the general public
since Nirav Modi was the old customer of PNB and
loan amount was big which could be profitable for the
bank rather than illegal sanction of the loan.
Also, Nirav Modi could have followed proper
procedure of getting loan in the form of LC rather than
giving bribe to the bank officials and hence following
unethical measures.

We judged so because bank staff were unable to take

moral judgement of what they were doing was right or
wrong. It is important for the analysis of the case
because then only we may be able to decide what is
wrong and what is right.
Steps What have you learnt in this iterative We have learnt that there are steps to be followed with
A - E moral reasoning and forward moral regard to moral principles, rules, standards and theories
judgmental justification process? for analyzing a case to decide whether the action or the
decision taken is right or wrong in terms of business
ethics and morals.