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BUS 401: Business Ethics
Essay -1: Bribery in Bangladesh
Page | 1
Case Analysis:
Question 1) Analyze the case using ethical theories that
you have learned
Answer:
In philosophical, theological, or moral discussions, corruption is spiritual or moral impurity or
deviation from an ideal. In economy, corruption is payment for services or material which the
recipient is not due, under law. This may be called bribery, kickback, or, in the Middle East,
baksheesh. In government it is when an elected representative makes decisions that are
influenced by vested interest rather than their own personal or party ideological beliefs.
1
Relating with the ethical theories:
Although business executives and managers have an obligation to the corporation, in SRB
Friedman clearly states that the pursuit of profit must be constrained by both legal and ethical
considerations. Business executives should maximize profits while conforming to the basic
rules of the society, both those embodied in law and those embodied in ethical custom (SRB p.
33).
Friedman would state that the manufacturer and exporters are free to take actions that minimize
losses or produce profits for the organization as long as the actions are legal. Do not involve
deception or fraud, and do not interfere with the competitive processes of the market.
1Barenboim, Peter (October 2009). Defining the rules. Issue 90. The European Lawyer.
Friedman's argument has two main
thursts:
Profit maximization for shareholders Incompetence to make decisions on
ethical issues
http://en.wikipedia.org/wiki/Philosophyhttp://en.wikipedia.org/wiki/Theologyhttp://en.wikipedia.org/wiki/Spirtualityhttp://en.wikipedia.org/wiki/Moralhttp://en.wikipedia.org/wiki/Impurityhttp://en.wikipedia.org/wiki/Ideal_%28ethics%29http://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Paymenthttp://en.wikipedia.org/wiki/Briberyhttp://en.wikipedia.org/wiki/Kickback_%28bribery%29http://en.wikipedia.org/wiki/Baksheeshhttp://en.wikipedia.org/wiki/Baksheeshhttp://en.wikipedia.org/wiki/Kickback_%28bribery%29http://en.wikipedia.org/wiki/Briberyhttp://en.wikipedia.org/wiki/Paymenthttp://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Ideal_%28ethics%29http://en.wikipedia.org/wiki/Impurityhttp://en.wikipedia.org/wiki/Moralhttp://en.wikipedia.org/wiki/Spirtualityhttp://en.wikipedia.org/wiki/Theologyhttp://en.wikipedia.org/wiki/Philosophy -
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BUS 401: Business Ethics
Essay -1: Bribery in Bangladesh
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Customer confidence
It is the ethical responsibility of every employee to ensure that customers are treated fairly and
that no harm comes to customers as a result of using the companys products orservices. From
time to time, the officers in the company will have inside information that may not be
known to the general public. This may be information about new products, plans or processes,
mergers, acquisitions, negotiations relevant to significant business deals, contracts, sales,
lawsuits, or special relationships with others. You cannot use undisclosed material information
(including material facts and material changes) concerning the company, its shareholders or
partners to your personal advantage, or the corresponding disadvantage of others in the securities
market. It is also prohibited for a person with such information to give it to others, or "tipping",
so that the other person may improperly make use of the information.2
The scenario in the given case:
In the case there were several informations provided:
The organization is state owned
It has the authority to operate independently
Involvement of bribe to take the contract
The organization is bureaucratic and decision-making authority lies with top
management.
Fraud and deception was clearly involved in the situation. The president had a good relation with
the procurement committee and also bribed him for getting the contract. The president also
exploits his power and moreover the bribe was shared with other members of the company.
In addition to these ethical considerations, Friedman places two other important restrictions on
the pursuit of profit: Business people must commit no deception or fraud, and they must
maintain open and free competition.3So if we apply these restrictions in this case, it means
that individual s are free to pursuit their interest (such as making profit) as long as they do not
interfere with the economic and political freedom of others. Such interference occurs when
2Miller, C. (2009). The Conditions of Moral Realism. The Journal of Philosophical Research, 34, 123-155.
3Miller, C. (2009). The Conditions of Moral Realism. The Journal of Philosophical Research, 34, 166-175.
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BUS 401: Business Ethics
Essay -1: Bribery in Bangladesh
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individual in business, for instance, breach contracts, cheat customers, misrepresent the efficacy
of their products, withhold important information on product safety, sabotage a competitors
operations, or monopolize markets by political means, such as lobbying the government for
protection against imports.4
In this case there was clearly breach contracts, cheat customers, misrepresent the efficacy of their
products, withhold important information on product safety, sabotage competitors operations, or
monopolize markets by political means, such as lobbying the government for protection against
imports.
According toMilton Freidmans theory managers are said to be agents of their employer and
their foremost duty is to maximize profit. Managers are hired to work for the company and play
the role as a representative of their employer. The guidelines are given to them to complete their
task and their job is to make sure that the business objectives are met. In a free-enterprise,
private-property system, a corporate executive is an employee of the owners of the business. He
has direct responsibility to his employers. That responsibility is to conduct the business in
accordance with their desires, which generally will be to make as much money as possible while
conforming to the basic rules of the society, both those embodied in law and those embodied in
ethical custom. Of course, in some cases his employers may have a different objective. A group
of persons might establish a corporation for an eleemosynary purposefor example, a hospital or
a school. The manager of such a corporation will not have money profit as his objective but the
rendering of certain services.
4Phillips, R., Robert; Edward Freeman (2003). Stakeholder Theory and Organizational Ethics. Berrett-Koehler
Publishers.
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BUS 401: Business Ethics
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Question 2) why is this important to have code for this particular
situation? What factors should be considered while preparing a code
of ethics to encounter the particular situation?
Answer:
An ethical business has to be concerned with the behavior of all businesses that operate in the
supply chaini.e.
Suppliers
Contractors
Distributors
Sales agents
Pressure for businesses to act ethically
Businesses and industries increasingly find themselves facing external pressure to improve
their ethical track record. An interesting feature of the rise of consumer activism online has been
increased scrutiny of business activities. Pressure groups are a good example of this. Pressure
groups are external stakeholders they
Tend to focus on activities & ethical practice of multinationals or industries with ethical
issues
Combine direct and indirect action can damage the target business or industry
Is ethical behavior good or bad for business?
The advantages of ethical behavior include:
Higher revenuesdemand from positive consumer support
Improved brand and business awareness and recognition
Better employee motivation and recruitment
New sources of financee.g. from ethical investors
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BUS 401: Business Ethics
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The disadvantages claimed for ethical business include:
Higher costse.g. sourcing from Fair-trade suppliers rather than lowest price
Higher overheadse.g. training & communication of ethical policy
A danger of building up false expectations
Supplier/Customer Relations
In addition employees and business owners must consider the ethical issues involved with their
relationships between suppliers and customers. Business owners in particular must consider
whether it is ethical to do business with suppliers who have unethical practices. When dealing
with customers or clients, business people must ensure that they use their information correctly,
do not falsely advertise a product or service, and do not intentionally do sub-standard work.
Business people are now held accountable for their own actions, as more and more people are
now demanding that they meet their social duty not just for their country but most especially to
their customers, which are considered as their life and blood. An unsatisfied customer can
definitely hurt any company, something that no one would want to happen.
So how does one business determine what is ethically unacceptable and acceptable behavior?
Where do business owner, chief executives and employees get their standards or guidelines for
ethics? Is there a definition for business ethics that can really set an honest and fair business
practices?5
This is the dilemma that many employees and business owners are facing every day. Everyone
will somehow and someday is faced with a decision that involves ethical behavior.
5Cory, Jacques (2004-09-29).Activist Business Ethics. Boston: Springer.
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Since, there is no clear definition of Ethical Issues in Business then it would be really hard if
all you have are guidelines that the company gave you.
Fairness and honesty are big issues, a very complex dilemma especially if this will somehow
hurt the business. Since ethics are moral issues, thus making a decision that will have negative
effect on the company is going to be tough for the person who will be making the decision. An
individual can make either a right or wrong decision, depending on how it will affect his life and
work status. In view of the fact that ethics are moral issues your beliefs and values will definitely
be tested.
A business will react accordingly to its moral guidelines and principles if the owners and
executives do not lose sight on the essential value of fairness. However, if they choose to use
legality and profitability as their measurement in determining what is right from wrong then
business ethics will surely becomes irrelevant.
A discussion of ethics is actually a subjective issue. Everyone will always have their own
concept of righteousness; therefore a one definition of business ethics can be difficult. Moral
standards are created by home environment, religious
beliefs and traditions and thus making ethics hard to
define, but not impossible to make.
We have already seen that there is a lot of room for
corruption when government tenders for goods or
services. To address this, the Act requires the Minister
of Finance to create a Register of Tender Defaulters.6
This Register should be kept by the National Treasury.
Whenever a person or business is convicted by a court of
law of crimes involving contracts or tenders, their names and details, including the names of
Directors, are recorded in this Register (together with details of the crime). This creates an
additional 'penalty' for these people or businesses:
6Cory, Jacques (2004-09-29).Activist Business Ethics. Boston: Springer.
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Existing government contracts or tenders that they have can be cancelled immediately
and they might have to pay any costs that result from this.
Their names remain on the Register for between 5 and 10 years. While their names are on
the Register, they are not entitled to any new contracts or tenders.
It won't help anyone convicted of these crimes to simply change the name of their business or to
start a new business to try and get around this. Instead, the details of any new businesses that
these people start must also be entered on the Register.7
Lastly, the Act requires a person or business convicted of these crimes to say this in any future
applications for contracts or tenders. If they don't, they will be guilty of another crime and can be
fined or imprisoned.8
While preparing this code of ethics to particular situation the following factors should be
considered:
Disclosure of information: The employees should not disclose the company information to
third parties and other outside organizations. However the employers should reveal the
various policies of the organization to their employees and make them aware about the code
of conduct and other policies.
Conflict of interest: An employee should not indulge into other professions or services or
other interests which might conflict with the interest of the company. This means personal
interests should not overshadow organizational interests.
Confidentiality: Employees should protect companys confidential information. The
financial records and unpublished data should be kept within the organizations and should
not be spread outside the organization.
7Kelly, Eugene. 2006. The Basics of Western Philosophy. Greenwood Press: 160.
8Ellis, C. (2007). Telling secrets, revealing lives: Relational ethics in research with intimate others. Qualitative
Inquiry, 13, 3-29.
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Equal opportunity employer: This factor expects the employer to be an equal opportunity,
that is, no discrimination should be done on the basis of caste, color, race, gender, religion or
physical disabilities.
Misusing company resources: Employees should not misuse company resources,
intellectual property, time and other facilities. They are provided to them for business
purposes and thus, should be used in a cost effective way.
Payment and gifts: The employees should neither accept nor offer any kind of illegal
payments, donations, remuneration and gifts from outsiders.
Illegal payments
It is expected that suppliers do business in an ethical and transparent manner. Suppliers must not
offer bribes, kickbacks or improper payments of any kind to government officials or other third
parties for the purpose of obtaining or retaining business or gaining an improper advantage. 9
Commitment to the suppliers
Relationships with its suppliers must be characterized by honesty and fairness. We are guided by
the following standards of behavior:
We will not make payments to any employees of suppliers to attain lower prices.
We will not reveal a suppliers pricing, technology or other confidential information
without prior written permission.
We will not make false or misleading remarks to others about suppliers or their products
or services
9Phillips, R., Robert; Edward Freeman (2003). Stakeholder Theory and Organizational Ethics. Berrett-Koehler
Publishers.
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After saying all these, we must conclude that, as long as they are being legal,Managers are to
exercise reasonable care in the performance of duties to put the employers interest ahead. This
is their duty of service, obedience and loyalty to their stockholders.