Question

AN ETHICAL DILEMMA* Dun and Ready (D&R) Company is a retail firm that started out in the United Kingdom. It recently expanded into Mexico. D&R management is excited about the expansion because they anticipate a large market for their goods in Latin America. They hired Raul to negotiate contracts for getting the necessary permissions to begin building retail stores in Mexico City. Although Raul graduated from Cornell University, he spent his childhood in Mexico and knew the country well. Raul’s manager, Ian Menkin, stressed to Raul the importance of getting the new locations approved as soon as possible so the company could begin building their stores. Unfortunately, Raul ran into some difficulties receiving permissions in the required time frame. Due to unforeseen circumstances, the permissions process took longer than originally thought. When Raul explained to Ian that the building process would likely be delayed due to these problems, Ian was not pleased. “Look, Raul. We have a schedule to keep. The people here at headquarters will not take kindly to any delays.” “But what should I do, Ian?” Raul asked. “Just do whatever it takes to get those permits approved,” Ian said before hanging up the phone. Raul called up Pedro, his main government contact that worked on approving zoning permits. Raul explained the situation, but Pedro would not budge. “I’m sorry, Raul. But I can’t make the process go any faster.” Raul, knowing his job could be on the line, begged Pedro to reconsider. Finally, Pedro agreed to meet with Raul to “talk things through.” Later that day, the two men met. Raul again presented his case. Pedro listened and finally spoke. “I understand your predicament. And although it’s against policy, I believe I can help you get those permits approved. However, I’m going to need 6,000 pesos to complete the job.” Raul was uncomfortable with the idea. Again, he called up Ian in London. Raul explained the situation. “Unfortunately, this is really going to be the only way to get this process done quickly.” Ian was quiet for a little while. Then he spoke. “The money isn’t that important. It amounts to less than £300. Go ahead and pay him.” “But Ian, what if anyone at the company finds out?” Ian replied, “It’s our policy to respect the different cultures in which we do business. It is one of our core values. If giving small payments is the only way to get things done quickly, then that’s what we have to do.” Raul agreed and paid Pedro the money. The permits were approved, and the first store was built. The success of the store convinced the company to expand to more locations in the area. Unfortunately, Raul ran into the same problem. Management at D&R wanted their building permits to be approved in a reasonable time period. Raul explained that gaining approval could be a long process in Mexico, but D&R assumed since he had gotten approval quickly once before, he could do it again. Raul was in a bind. So whenever Pedro offered to speed up the process in exchange for a small amount of money, Raul agreed. As a result of Raul’s success, he was promoted and relocated to the United Kingdom to the corporate offices. His pay tripled since from when he had first started. Raul enjoyed London and loved his new job responsibilities. Everything seemed to be going well. Then one day Raul got a frantic call from Ian. “We have a problem. Somehow someone figured out about the payments made to secure building permits in Mexico. They are launching an investigation.” Although Raul was nervous, he could not understand Ian’s panic. “But the payments we made were not extensive. It’s just the way things work in Mexico. You said everything would be fine.” Ian’s voice was sharp. “You fool! It doesn’t matter whether the payments were small! Any type of bribery can be prosecuted under the U.K. Bribery Act. It doesn’t matter whether the bribery took place in Mexico— any company with operations in the U.K. can be held liable.” Raul swallowed. “So what do we do?” he asked. “Listen carefully to what I’m telling you,” Ian said. “I want you to find any documentation that might be incriminating and destroy it. If anyone comes asking, deny any payments. Also, contact the person you made the payments to. Do what it takes to make sure he denies that D&R made any improper payments to him.” Raul hung up the phone. He knew if found out the company could face massive fines. Perhaps he and Ian could get into legal trouble. However, he also knew covering up the bribery would make it worse for everyone if discovered. On the other hand, Raul thought there was a good probability that the payments would not be noticed. He knew that almost all companies have to make these payments to get transactions done in different countries, and many have not been caught. QUESTIONS | EXERCISES 1. What are the ethical issues in this situation? 2. Identify the pressures that caused the ethical issues to develop. 3. Discuss the advantages and disadvantages of each decision Raul could make.

Answer 1

In this situation the ethical issue is that of giving a bribe to the officials for getting the work done faster. The issue that comes under consideration is whether it is ethical to pay money to get the permits required. The other issue that has come into consideration in this scenario is weather destruction of evidence is ethical to protect the company and to avoid prosecution under the UK bribery act.

The primary pressure that caused the ethical issue to develop was the speed required to obtain the permits and to begin the work. The Other pressure that brought the ethical issue of destruction of evidence to the forefront was the law in United Kingdom. However the main root of the pressure was the lack of understanding from the head office.

The first decision that could have been taken was of not making the bribes to get the permits. The advantage of this decision is that the company and Raul would have been clear of legal hassles. The disadvantage of this decision is that they would have been a long delay in the building process. This would have cost to the company substantial amount of money. The advantage of paying the bribes is that the work was done as per schedule while the disadvantage of paying the bribes is that the company has come under legal pressure. This will now cause the company more money in terms of fines.

The Other decision is weather the evidence should be destroyed and the situation should be concealed. The advantage of concealing the crime is that the company will be able to maintain its goodwill while the disadvantage is that there is a huge risk of getting uncovered.