Ethical Question Presentation(!!!)

Final Decision: why Unethical? Legally economically morally

Although facilitating payments are legal under the FCPA, and therefore ethically legal in the United States, they are unethical when measured against the Stakeholder economic outcome, and they are unethical morally when measured against the Distributive Justice ethical duty system. Therefore, facilitating payments are unethical overall.

Ethical Duty decision: Unethical

After applying the ethical issue to all of the principles of distributive justice, facilitating payments are found to be unethical.

Economic Decision: Unethical

After testing the ethical issue against the staeholder theory economic outcome, facilitating payments are found to be unethical.

The Employees of the Company: Benefits

Any long-term benefits that the company receives could, in theory, trickle down to the employees.

The Employees of the Company: Harms

Employees can experience harm due to facilitating payments, as payments such as these may become normalized for them, and lead to a deeper corruption.

"Extra" payments

Facilitating payments give certain parties advantages and others disadvantages that are not deserved; grease payments are extra, unnecessary payments, which is bound to lead to unfairness.

Does Not Equalize

Unlike a regular business deal, and although legal for US companies to do, facilitating payments are often made in private, kept secret from most parties besides the company representative and the foreign official. By this merit, it seems fairly obvious that not all parties are getting their fair share; if some stakeholders within and without the company do not even know that the dealings are going on, one must wonder how they can be benefitting in its operation.

Fails to Properly Operate and Serve

Upper management is only serving themselves and the company in making this secretive deal.

Distributive Justice: Goes along w stakeholder

I believe that this ethical duty system flows naturally from the stakeholder theory economic outcome - both value justice for all, for everyone reaping benefits and having rights, but only what they deserve.

Ethical Question

Is it ethical for a manager in the United States to provide payments in order to expedite services/permits to foreign officials in countries where such payments are considered normal?

Decision of Upper Management

It is important to look at this in terms of the three main steps of Freeman's Stakeholder Theory, which are to identify stakeholders and their interests, determine each stakeholder's fair share, and operate and serve based on these principles and the conclusions drawn from the previous two steps. Managers within the company issuing the facilitating payments do not identify the various stakeholders involved, and certainly do not take their interests and goals into account. Rather, these managers are only focused on maximizing profit for the company, in possibly new overseas markets, instead of thinking of the economic effects on their employees, the reputation of the company, or any other interests of important stakeholders.

principle of equal liberties

One of the two main principlels of distributive justice is called the Principle of Equal Liberties, and states that each person has an equal right to extensive basic liberties, which are similar for all. As we have already discussed with the Stakeholder Theory, there are many parties who are left out of the deal, and do not receive the same liberties within the company, such as the right to know what is going on and the right to give their input in the decision.

The Managers of the Company: Harms

Managers may be harmed as a result of using facilitated payments, especially if they are the ones who make the decision to take this action. In addition to this near corruption, their reputation as ethical businesspeople may be harmed.

The Managers of the Company: Benefits

Managers may benefit from the payments in much the same way as the employees, through the company's overall success.

The Employees of the Company: Rights Denied

Often, facilitating payments are carried out in secret, denying many employees the right to know what their company of employment is doing - especially since facilitating payments are unethical in many peoples' personal views.

Tension exists in defining facilitating payments, and also as a result of the long-term effects of facilitating payments to unknown parties.

Tension exists in defining facilitating payments because a certain list of routine government practices are specified as acts that legally can be "bought" by facilitating payments, however, there are similar practices that are left off of the list, which could easily lead to accidental illegal bribery. Tension also exists as a result of the long-term effects of facilitating payments to parties which are often unknown or go unnoticed. Some of these effects may seem insignificant, however, some have more of an impact.

(Issuer of facilitating payment) benefits, rights exercised, harms

The company itself pays the grease payment and receives the direct and most obvious benefit from the interaction. The benefits gleaned directly from the facilitating payment, such as a permit obtained or a service expedited, may lead to increased profit or business. The company exercises their right, as defined by the FCPA, to pay facilitating payments in order to get what they want from foreign officials. depending on the perspective and moral standards of other individuals and companies, facilitating payments can "sap the ethical foundations of organizations [in the long run]". Many may view whoever authorized the decision as having "corrupt intent". Therefore, harm may come to the issuing company in the form decreased ethical credibility.

The Difference Principle

The difference principle proposes that things should be arranged so that they are to the greatest benefit of the least advantaged. Upper management or shareholders within the company, who would make the decision to pay a facilitating payment, are certainly not the least advantaged, but rather the most advantaged, while the lower-level employees, who may not benefit, are some of the least advantaged stakeholders in this situation.

Ethical (Importance)

The ethicality of facilitating payments is widely debated; many within and without the United States see facilitating payments as a widespread, yet unavoidable form of corruption. Many different countries hold different legal stances on whether facilitating payments are ethical or not. For example, many developing countries accept facilitating payments as a regular part of doing business. When this is the case, it is important that US companies balance what they can legally do and what are normal practices in the country they are dealing with. Some countries, on the other hand have banned facilitating payments as a whole and see them as no different than bribes, such as in the United Kingdom.

Foreign Officials Accepting the Money: Benefits and Rights Exercised

The foreign official accepting the payment exercises their right to do so, often being in a country where such payments are considered routine. Additionally, they benefit, because the payment is often unnecessary, since the company already had the service legally coming to them.

The Issuer of the Facilitating Payment

The issuer of the facilitating payment; the US company who is paying the foreign official.

The Principle of Fair Equality of Opportunity

The second part of this principle, the Principle of Fair Equality of Opportunity, states that social and economic inequalities should be rearranged so that they are both attached to positions and offices open to all under condition of fair opportunity. This principle doesn't directly apply to facilitating payments, since they are not dealing directly with change of position and office. However, it is possible to say that the position of the payer of the facilitating payment was not offered to all.

Social and Economic Inequality

The second principle of Distributive Justice deals with social and Economic Inequalities, and is split into two subsections.

Use FCPA

There is such a thin line between facilitating payments, which are legal in the US, and bribes, which are illegal, and this makes it very important that US companies carefully understand the legal requirements set out by the Foreign Corrupt Practices Act, or the FCPA, when taking part in international business.

"Exception" to Bribery

These payments are called facilitating or "grease" payments. They are often considered the exception to bribery. Bribes are a form of illegal or dishonest persuasion to get someone, often a non-US government official, to act in one's favor, based on money or another gift. Facilitating payments are made to achieve the goal of obtaining a favor or speeding a process that was already due to happen, often a routine government action. The important distinction to make here is that the bribe allows something new to happen, while the facilitating payment is made when the company already has the favor coming to them.

Freeman's Stakeholder Theory: Fair share for each stakeholder

This economic outcome was selected because the stakeholder theory looks out for all deserving parties involved, unlike the shareholder view that Milton Friedman proposed, which only serves the interests of the owners. Additionally, this outcome caters to those directly and visibly involved with the business/decision, whereas under the Corporate Social Responsibility economic outcome, overall societal influences often make a difference.