Question

Business ethics are concerned with accepted principles of right or wrong governing the conduct of businesspeople. Identify and discuss the common examples of unethical decisions that businesspeople have made.

Answer 1

Walmart – Lack of Compassion

Tip of the iceberg can describe the story below. Wal-Mart is company No. 1 in the world. It has the most revenue over any other company ($421 Billion). But its riches equal its controversies. This story is probably the most apt at describing the unethical treatment of its workers, because of the sheer senselessness of it.

In 2000, a collision with a semi-trailer left 52-year-old Deborah Shank with permanent brain damage and in a wheelchair. Her husband and three sons were fortunate for a $700,000 accident settlement from the trucking company. After legal costs and other expenses, the remaining $417,000 was put in a special trust to care for Mrs. Shank. However, six years later the providers of Mrs. Shank’s health plan, Wal-Mart, sued the Shanks for the $470,000 it had spent on her medical care.

Wal-Mart was fully entitled to the money; in the fine print of Mrs. Shank’s employment contract it said that money won in damages after an accident belonged to Wal-Mart. A federal judge had to rule in favor of Wal-Mart, and the family of Mrs. Shank had to rely on Medicaid and social-security payments for her round-the-clock care. Wal-Mart may be reversing the decision after public outcry.

However this case pinpoints Wal-Mart’s often criticized treatment of employees as a commodity and its sometimes inhuman business ethics.

Trafigura: Dumping Toxic waste on the Ivory Coast and gagging the media

Earlier in the year, there was media frenzy in the U.K. over celebrities getting court injunctions to silence the press from reporting on their various misdeeds and grubby encounters. This story actually stems from a far more serious beginning, in 2006.

Trafigura is a multinational formed in 1993, trading in base metals and energy, including oil. It makes almost 80 billion USD a year. In 2006, it caused a health crisis affecting 108,000 people, after a ship leased by the company was told that, due to toxicity levels higher than expected, the price of transferring the waste on board to the processing plant in the Netherlands had increased twenty-fold. To avoid the charge, Trafigura ordered the ship to dock at other seaports until they could find someone who would dump the waste. At Abidjan, Côte d’Ivoire, one of Africa’s largest seaports, the waste was handed over to a newly formed dumping company, Compagnie Tommy, which illegally dumped the waste, instead of processing it. Many people there became sick due to exposure to the waste, and investigations began to determine whether it was intentionally dumped by Trafigura. Trafigura said in a press statement that their tests showed the waste not to be as toxic as had been claimed.

This was proven false by a 2009 UN report posted by Wikileaks.

When newspapers came to publish their own findings, which proved that Trafigura was guilty of releasing toxic waste, they “lawyered up” and started firing legal notices to all news outlets which were saying there was a connection between the dumping and the injuries reported in the Ivory Coast. The Guardian newspaper had conclusive evidence that Trafigura knew of the dumping, and had a report they were ready to publish, however the libel firm hired by Trafigura, Carter Ruck, applied for a super-injunction so that the paper couldn’t publish the report until a court decision was made. This caused MP Evan Harris to question the freedom of the press in the country. However, after a twitter campaign that spread the story in a matter of hours, the libel firm responsible backed down and allowed the report to be published.

Carter Ruck are still pursuing a libel case against BBC Newsnight for allegations made on television (later proven true by an independent report).

Thomas Edison/Radio Corporation of America: Attempting a monopoly of patents

The ability for inventors and aspiring minds to call an idea their own, and theirs alone, is a very important mark of a fair society. Unfortunately, history is littered by examples of intellectual property being swallowed up by big corporations. In particular, Thomas Edison and the companies he formed with his vast wealth (RCA, General Electric) have always had a habit of trying to abuse the patent system for profit. The reason that Hollywood is the home of the movie industry is that film-makers in the 1920s were forced to abandon the east-coast because of the high royalties that Edison charged them for use of camera technologies. Edison even had hired goons to harass them for money.

But it was a policy of the RCA (Radio Corporation of America) that caused untold damage for inventors of the 20th century. The official company policy was that “The Radio Corporation doesn’t pay royalties” and, allegedly, David Sarnoff, the proud general manager of the company, boasted “we collect them [royalties]”. They repeatedly steamrolled inventors and small businesses to acquire their patents without licensing them, forcing the companies to collapse into the RCA’s arms because of the mounting legal fees. However, there is one notable exception – the inventor of electronic television, Philo T. Farnsworth, had his patent for electronic television and other components (notably the image dissector) approved in the early 30s, and no matter what the RCA did, they couldn’t get round Farnsworth’s patents. In 1939, a month after the war had started, the RCA accepted to pay, for the first time in their corporate history, a $1,000,000 patent license for Farnsworth’s electronic television. Legend has it there were tears in the eyes of the RCA men as they signed the document.

This whole practice was extremely unethical in terms of the technologies these companies prevented from reaching the market. Farnsworth hoped that “television would bring people together and prevent war”, but because of the RCA’s actions and endless lawsuits, television never got going until the 50s.