Business Ethics

MMM343

ARTICLE 2

Abstract

This article gives a deeper analysis into a scandal conducted by Sundance company in Congo where the company’s officials bribed the government officials including the president to gain an economic advantage in their field of interest. The mining company is claimed to have involved the mining minister and the president in the illegal dealing to gain access to the World Bank funded project in Congo. This being a case that has not been so rare with Australian companies, the Australian Authorities have been called upon to act accordingly to make sure that they establish foreign policies that govern such dealings. the article as well makes an attempt to outline the ethical issues that are related to the business. the article explains that the business has expectations from the government and the society as well. After the analysis, recommendations on the most appropriate steps are suggested in the best possible way.

Ethical issues and stakeholder impact

i) Bribery

The international administrative bodies assume the role of directing business conduct by controlling the behavior of corporates and individuals who engage in any kind of business. Bribes and bribery are their main concerns when it comes to good business conduct. As defined by (Ferrell et al. 2008, p.23), bribery can be characterized as “the act of offering something of monetary value with a specific end goal to earn an illegal advantage” (Ferrell, Fraedrich and Ferrell 2009). Thusly it is an unlawful act and as well as an ethical, where in the situation at hand, Sundance has purportedly utilized its financial position and energy to pick up a monetary and competitive advantages. The affirmed international bribery scandal encompassing the Australian excavator Sundance Resources has drastically extended. Evidence claims that the firm influenced Congo’s Mines and Geology Minister and additionally the nation’s President. Leaked records acquired by Fairfax Media uncover Sundance gifted millions of dollars’ worth of shares to an organization coordinated by the brother of Republic of Congo mining minister Pierre Oba (Fisher & Lovell 2009, p.46). The evidence has uncovered that two Sundance delegates guaranteed a reward to the mining minister and the family of the President to win government backing for the Australian organization.

Sundance had remunerated the decision administration in a way that raised genuine defilement and human rights worries in a nation filled with oppression and graft. It is a break of Australian remuneration laws to give a monetary advantage, in this case shares, to a foreign government official, or any individual fronting for them, in an aim of a business advantage.

A different Fairfax Media research has found proof, likewise now in the hands of the AFP, that an offshore staff of the Snowy Mountains Engineering Company professedly paid off authorities to secure a sewerage project in Sri Lanka and, in association with a Canadian organization, a power plant project in Bangladesh. This case, as well, scopes to the exceptionally top of government; organization messages uncover Sri Lankan President and one of his counsels purportedly requested a political “gift” to be paid by the organization. All things considered, has dependably had a notoriety for what may be portrayed as negligible debasement. The most serious offenses, in this case are defilement at a top bureaucratic level where monies are paid by organizations, necessarily foreign organizations, to secure extremely profitable contracts. The SMEC email recommended the decision administration needed the Australian organization to bank roll the decision party before marking the bureau papers for the World Bank supported dam project.

In the light of this, the company and its board of directors needs an outlined report to illustrate transparency in its reporting practices and proactively comply with the SEC in order to illustrate it has not breached the law – it is to say that in this case Sundance may have been making an effort to being socially responsible by donating to the Congo government in exchange for its mining exploration initiatives.

ii) The role of governments in regulating business

The stakeholders

The Stakeholders include: The unethical people in the organization that orchestrated the bribery, employees, customers, shareholders, family members of those involved, the government officials who accepted the bribes, suppliers and competitors. The organizations unethical employees will come under scrutiny from the government for being involved in unethical bribery. Other employees in the organization will be unhappy with them from bringing the company in to disrepute. In the future, the unethical employees may have to leave the organization to seek work elsewhere. This could prove difficult for them as it may be very hard for them to find an employer who will want to employee them after all the bad press that Sundance has had. No company will want to hire someone who has an unethical track record. This could also prove to be very difficult for their family’s as the three will be a significant drop in income.

This could in turn affect shareholders as the price of share will go down because if people stop purchasing the company’s products the profit margin will be lower. The government officials that accepted the bribes will have been brought it to disrepute. The public may now view them as unethical and not trust them anymore. This can be extremely damaging for anyone’s reputation as trust and is an extremely important part of being a government official. Some may lose their jobs and this will be devastating for their families who need and income to survive. Suppliers may not want to have anything to do with an unethical company who has a bad reputation and they may pull out. This would make things very difficult form Sundance to run the business at the level that is expected of the companies.

Part two

discussion of ethical issues linked to theory

i) Bribery + theory

Australia has not generally been viewed as a nation that has not had issues with debasement, and since 2003, was in the top ten evaluated countries in the Global Corruption Perception Index (GCPI) and in this manner one of the “cleanest” countries on the planet but has now begun getting grimy. (Ferrell et al. 2008, p.23) This has changed people groups impression of Australia.

Particular illustrations incorporate pay off installments to governments, attempted by these companies incorporate assistance installments to accelerate forms set up, redirecting cash given to philanthropy with the goal that it benefits others, for example, degenerate authorities, and IRS evasion.

BHP Billiton, which is a mining giant may soon confront punishments over its exercises in the field where it remunerated to get endorsement for one of Africa’s most aggressive iron metal activities. Leighton Holdings too suffers a similar fate.

Under the Criminal Code, it is an offense to state that one has paid a little fix to an administration official to influence them to carry out their employment, given that that payoff is a little installment and y kept a record of it has been kept (Ferrell et al. 2008, p.23). Despite the fact that the installments made may be in little sums or paid frequently, they can aggregate to being a significant substantial sum.

In 2011, the Federal Government proposed Australia join the UK and Canada in banning assistance installments. However, the thought met furious resistance, especially from 220 medium sized Australian mining organizations working crosswise over Africa. (Fisher & Lovell 2009, p.46). Australia is therefore, in the interim, in threat of turning into a dumping ground for filthy cash from Asia and Africa.

ii) Role of Government in regulating business + theory

Governments play a large part in the daily operation of business in every country. The role governments play in business operations are dynamic and come in many forms. Laws and regulations that are imposed on business operations by the country that they operate in are established so as to set a standard for responsible behavior (Ferrell, Fredric & Ferrell 2009, p.93).

The disclosures started a government police investigation and constrained Sundance to dispatch its own particular examination concerning the share bargains, which were handled somewhere around 2006 and 2008 and prompted to substantial packages of Sundance shares being given to Cominvest somewhere around 2008 and 2012. (Ferrell et al. 2008, p.23). The government likewise reported that it was propelling an anti-foreign bribery taskforce, which is examining Sundance however will have obligation regarding different organizations blamed for corporate corruption. (Ferrell et al. 2008, p.23).

The essential reason the administration must try harder to stop graft by Australian organizations is as basic as it is significant; it builds the destitution and hopelessness of a portion of the world’s poorest individuals. It is a wrongdoing with ethical, monetary and legal measures. Not only does it hurt defenseless individuals and enrich corrupt reprobates, it besmirches Australia’s image and business validity.

On a worldwide scale, in spite of better implementation and new anticorruption enactment as of late, remuneration issues keep on infiltrating a developing number of companies over an extensive variety of areas and geographic areas. It is on this note Sundance have been blamed for pay off and defilement in their endeavors outside Australia. These organizations, work in high risk segments, have powerful frameworks and therefore strategies and systems need to be set up to counter this inadmissible business conduct. This has come about to negative consequences on their reputation, respectability and authenticity to work.

Part three

Recommendations to address ethical issues

Bribery recommendations

Australia earnestly needs to change both its authoritative structure and its way of dealing with authorization to receive significantly more effective anti-bribery schemes such as ones in the United Kingdom and the United States. The government ought to, also recognize that facilitation payment is still a payoff. On the other hand, companies can fortify their anti-corruption programs by building up implicit rules or ethics arrangement that entirely restricts rewards to be made by, or got by, organization staff and precludes, or at least control, bribery or executing a gift policy’ which characterizes what a reward is and requires anything over a specific add up to be accounted for. Additionally, the company could as well guarantee execution of the code, alongside a strong framework to support and screen consistence. This incorporates awareness raising, execution checking, surveys and proposed activities strategies in case of any rebelliousness. Actualizing straightforward practices for employing senior officials, compensation, administration and risk administration would as well serve to solve the issue facing the company.

Other measures that could as well be suggested include partaking industry-related activities, which requires signatories to straightforwardly unveil installments made to foreign authorities trying to dispense occasions of pay off, setting principles that are not only for material gain but for provision of lasting representatives of the association, additionally any contractual workers, operators, providers and business accomplices with fitting techniques for correspondence utilized;

Again, Sundance ought to look for rebuild its accounts to keep its African venture – a colossal iron metal wander spreading over the Congo – alive.

ii) Role of Government in regulating business recommendations

In conclusion, the article raises two important issues: that of regulatory bodies and their importance in controlling and disciplining unlawful acts, as well as the importance of the basic values of honesty and integrity in business context where in this case individuals (especially business leaders) have perhaps put their need to achieve shareholder profits ahead of their need to remain ethical in terms of all stakeholders concerned.

The article raises two important ethical issues; what role should government play in regulating and controlling business activities, and should businesses operate with the view of being social responsible. Although many believe that the market is best at directing businesses to make ethical decisions and that government regulation is largely unnecessary, at what cost does this come at? In this case, stricter government regulation may have prevented some bribery cases.

In any case, Australia’s laws encompassing foreign ventures are insufficient; there has not been conviction. There is a solid contention the Parliament ought to solidify Australia’s anti-bribery laws, aligning them with Britain’s Bribery Act and the US Foreign Corrupt Practices Act.

Any Australian company involved in graft ought to be sought after to the absolute limit in connection to the enactment and moral obligation. Making ethical business decisions with social responsibility in mind will not only assist the community, but offer advantage to the company. The ultimate struggle seems to be the battle between acting in their self-interest and doing what is right, legal and just.

Reference list

McKenzie N, Freudenthal E, Bachelard, M., Baker R., August 25, 2016, Australian firms in bribe scandals – Exclusive- Investigation- Top companies embroiled in graft. Sydney Morning Herald, p.1

Books:

Ferrell, O.C., Fredrick, J. and Ferrell, L., 2008. Business Ethics: Ethical Decision-Making and Cases Centage Learning.

Fisher, C.M. and Lovell, A., 2009. Business ethics and values: Individual, corporate and international perspectives. Pearson education.

Journal Articles:

Baucus, M.S. 2007. Paying the piper: An empirical examination of longer-term financial consequences of illegal corporate behavior. Academy of Management Journal, 40(1), pp.129-151.

Waddock, S.A. and Graves, S.B., 2006. The corporate social performance-financial performance link. Strategic management journal, pp.303-319.