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Assignment 1

Name: Siddhant Bisht

Sap id: 1000017663

"Ethical Dilemmas in Business: Case Analysis and Recommendations"

Introduction

 Overview of Kingfisher Airlines Scam

The businessman Vijay Mallya established the Indian airline Kingfisher Airlines in 2005. It was

advertised as a luxury airline and was well renowned for its opulent services. The airline,

however, experienced financial issues and stopped operations in 2012. The "Kingfisher Airlines

scam" refers to the airline's financial issues and related disputes, particularly those involving

alleged financial irregularities and financial mismanagement.

One of the most important figures in any conversation on enjoying life to the fullest is Vijay

Vittal Mallya. Former Member of Parliament (Rajya Sabha). He was the owner of the Royal

Challengers Bangalore cricket team, the former chairman of United Spirits, the chairman of the

United Breweries group, the founder of Kingfisher Airlines, and the former owner of Force India

Formula One team. A former celebrity known for leading an expensive lifestyle is currently

involved in a 9000 crore financial controversy. He is currently being sought to be returned to

India by the UK.

 The purpose of analyzing the case is the biggest scandal of all time
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Given that the Kingfisher Airlines scam case is one of the biggest financial scandals in history, it

is of utmost importance to analyze it. This well-known case offers insightful information about

the complex network of financial irregularities, company mismanagement, and regulatory

failures that can have disastrous results. In the Indian aviation sector, Kingfisher Airlines was

once revered as a symbol of luxury and richness. Its stunning collapse left a path of financial ruin

in its wake. The airline's demise was mostly due to Vijay Mallya, its owner, and his wasteful and

unsustainable business methods.

The case provides insight into how a charming businessperson who appeared to be financially

strong and backed by powerful connections was able to acquire a massive debt load while

competing in a sector known for its intense rivalry and narrow profit margins. The airline's

extravagant spending, careless growth, and failure to pay off rising debt were ultimately the

cause of its bankruptcy. The Kingfisher Airlines incident also revealed major flaws in the finance

and aviation industries' regulation and monitoring structures. It prompted inquiries into how

banks, governmental organizations, and auditors may have contributed to the development of

such a massive financial catastrophe.

Legal disputes, Vijay Mallya's extradition processes, and a renewed emphasis on strengthening

corporate governance and financial standards in India were all a result of the Kingfisher Airlines

affair. It is essential to analyze this incident in order to comprehend the complicated dynamics of

business mismanagement and financial fraud as well as to put safety measures into place to stop

such catastrophic catastrophes from happening in the future. In conclusion, the Kingfisher

Airlines scam case is a sobering example of the far-reaching effects of corporate arrogance and a

lesson in the value of strong regulation and oversight in the financial and business sectors.
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Case Analysis

 Whistle blowing and ethical dilemma

Kingfisher Airlines was shut down. Beginning on October 1, 2012, the protesting workers

skipped work. Since February 2012, workers have been peacefully demonstrating for the

payment of their paychecks. The employees' situation got worse as a result of management's

indifference. Sushmita Chakravarti, the wife of Kingfisher store manager Manas Chakravarti,

committed herself on October 4, 2012. "My husband works for Kingfisher where they have not

paid him salary for the last six months," she wrote in her suicide note. Because of the severe

financial crisis, I'm killing myself.

The workers organized a candlelight vigil to support the distraught family. The company's

chairman, Vijay Mallya, did not, however, say anything about the unfortunate incident at all. In

addition to spending the majority of the month unavailable in India, he did not post anything to

his twitter account until October 23. He reportedly left the nation in his own Airbus, according to

the media. The Kingfisher Airlines fraud poses a challenging moral conundrum and emphasizes

the critical function of whistle blowing in corporate governance. Serious ethical questions were

raised by the controversy involving the airline's financial mismanagement and fraudulent actions.

Employees and stakeholders debated whether or not to report organizational misbehavior on the

one hand. In this case, whistle blowing may have avoided the airline's final collapse and

protected investors from huge losses.

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The need of having a strong whistleblower protection system in place within corporations is

shown by this instance. It serves as an example of how the absence of these protections can

encourage unethical behavior and corporate wrongdoing. Whistleblowers should be encouraged

and supported by organizations, and employees must feel comfortable coming forward to

disclose misconduct. In order to preserve public confidence in the financial system, regulators

and authorities are crucial in conducting investigations and bringing criminal charges against

wrongdoers. Whistle blowing may have acted as an ethical compass in the Kingfisher Airlines

fraud, directing the company away from a path of deceit and eventually benefiting all

stakeholders.

Ethical Evaluation

 Action or decisions taken by the company or government

The Kingfisher Airlines scandal case is an intricate moral conundrum involving both the

government's choices and those made by the airline's management. On the one hand, Vijay

Mallya and the management of Kingfisher Airlines may have acted in a very unethical manner.

They are charged with embezzling money, diverting loans for personal use, and abandoning

thousands of workers and creditors in dire straits after the airline went down. This raises

questions regarding the moral obligations corporate executives have to their stakeholders,

including their workers, investors, and creditors. It also emphasizes the necessity of strong

corporate governance standards to stop such wrongdoings.

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However, the government's choices and responses to the Kingfisher Airlines scandal also need to

be ethically scrutinized. Some critics contend that the administration's handling of the issue,

notably in permitting Vijay Mallya to leave the nation despite ongoing legal procedures and

financial commitments, raises concerns about political influence, corruption, and the

effectiveness of the legal system. This case emphasizes the significance of making sure that

everyone is treated equally by the legal system and that powerful people are not given

preference. The government's oversight and regulation of the airline industry are also questioned.

Instances of collaboration or negligence in the oversight of Kingfisher Airlines' financial health

raise ethical questions if regulatory organizations did not appropriately regulate the carrier.

The Kingfisher Airlines scam case serves as a sharp reminder of the ethical difficulties that both

business and government face. It emphasizes the significance of holding business executives

responsible for their deeds and making sure that governmental agencies act impartially and

openly in the pursuit of justice. In this situation, corporate governance, accountability, and the

integrity of the legal and regulatory structures should be the main subjects of ethical analysis.

Recommendations

 Fraud Detection Strategies

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The case study of the Kingfisher Airlines scam provides insightful analysis as well as

suggestions for fraud prevention techniques that can be used to stop future incidents of this type.

First, thorough due diligence techniques should be used to evaluate a company's financial

standing and reliability. Kingfisher Airlines was able to accrue significant debts in this case due

to inadequate regulation, which eventually helped to fuel the scam. Second, financial institutions

and regulators need to keep a close eye on how monies borrowed by businesses are being used.

Regular audits and examinations of how loans are used can aid in the early detection of

anomalies. Thirdly, the rules of corporate governance should be strictly followed to make sure

that the board of directors and top management are held responsible for their choices and deeds.

A substantial part of the scam in the Kingfisher Airlines case was blamed on governance issues.

Finally, measures that protect whistleblowers should be promoted and strengthened to encourage

employees to come out with fraudulent activity without fear of punishment. Financial

organizations and regulatory agencies can improve their ability to identify and stop fraud by

using these techniques, lowering the possibility of future scandals similar to the Kingfisher

Airlines case.

Conclusion

A vivid warning of the dangers of corporate mismanagement and financial irregularities in the

aviation business is provided by the Kingfisher Airlines scandal case. Vijay Mallya's

businessman-led demise of the once-famous airline left a web of financial irregularities, unpaid

obligations, and a huge loss of public trust. To avoid similar incidents in the future, the case

emphasizes the necessity for strict control and accountability in the aviation industry. It also

emphasizes how crucial it is for the legal system and regulatory agencies to take swift action to
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hold people and organizations responsible for their deeds. The Kingfisher Airlines fraud

ultimately serves as a warning about the repercussions of careless financial behavior and the

ongoing importance of keeping transparency and integrity in the business world.

References

1. https://economictimes.indiatimes.com/industry/banking/finance/this-is-how-much-
vijay-mallya-owes-to-different-banks-in-india/central-bank-of-india/slideshow/
58360003.cms
2. https://www.ndtv.com/india-news/best-assurance-from-uk-on-vijay-mallya-
extradition-foreign-secretary-2493892
3. https://www.business-standard.com/about/who-is-vijay-mallya
4. https://blog.ipleaders.in/fraud-case-of-vijay-mallya-and-the-laws-related-to-it/
5. https://soniajaspal.wordpress.com/2012/11/01/kingfisher-airlines-ethical-dilemmas-
of-mr-vijay-mallya/