The Understanding of the Business Ethics - Essay Example

Business Ethics Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Instructor Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Executive summary BAE systems, the UK government and that of Saudi Arabia found themselves in some ethical dilemmas which involved corruption activities by BAE Company with and aim of securing deals for their business. The two governments where involved in the same due to their cooperation and interest in BAE business for it concerned the national security. It was hard to deal with the corrupt cases or even investigate them bearing in mind that, it was an issue that was very sensitive and could compromise security issues of the community. BAE and UK government however, are working hard towards having ethical business to build back their reputation. Having policies and regulations are the only way out to resuscitate their reputation. Table of Contents Table of Contents 3 Introduction 4 Government - Business relations 4 BAE, the UK and Saudi part of the alleged bribery 8 Recommendations and Conclusion 10 Work cited 12 Introduction BAE system is a company which deals with multinational defense and security items which has its headquarters in London. This organization however has been involved in various unethical activities which have resulted to it being investigated by the serious fraud office. In other words, this firm has not been paying much attention to ethical standards in their business conducts. BAE was reported to have conducted deep frauds with Saudi Arabia, Tanzania and Zimbabwe. There is the involvement of both the governments in UK and the countries which the arms were being sold or the company was vying for a contract. This is due to the fact that, any issue to do with security, has to have government involvement. In conclusion therefore, all the stakeholders took part in the corrupt activities which marred the business in BEA. However, all parties have been working very hard to redeem their reputation and incorporate ethics in their activities to the common good. Government - Business relations There are peculiarities that are associated with the defense industry. First of defense is very crucial in any given government and therefore there is a tendency to have very close relations that are accurately natured by the defense industry (Crane & Matten 2010). This is further attributed to the fact that, whatever the manufacture can ultimately be sold to government entities where by in some countries deliberate on the amount they are going to spend with the perchance of these equipments. Governments are concerned with the local labor markets and in most cases they intervene in defense industry whereby the work towards having the some of the equipments being developed locally to cater for the labor market as well as to leap some economical benefits from the same (Crane & Matten 2010). It is noteworthy that, governments get involved in every area of arms business when it comes to international transactions (Crane & Matten 2010). For instance, BAE has to go through the a government department for UK trade and investment which is aimed at promoting the local defense companies while else all deals involving these companies involves the government export and credits guarantees department which guarantee exporters that they will get their due payments. This in the long run culminates to the facts that, government always have an upper hand in handling the transactions that pertains defense industry. This being the case, there are very high chances of involving in corrupt deals and unethical practices when it comes to securing deals locally and even across the bounders (Crane & Matten 2010). For instance, the most powerful buyers of their products are the governments and there are a few or limited competitors in the same industry and this have given rise to a situation whereby free market is non existence. This being the case, defense industries have to find their way and make their business progress which solely relies on the consent of the government and this creates a loophole for unethical dealings or corrupt deals. For instance, BEA Chairman Evans stated that, long term business relations and strong personal relations, where everybody knows everyone else and everything is connected means that, for their company to achieve the desired goals and objectives, which in this case are maximizing profits, then they will have to know and be connected with the government authorities and this may in the long run result to corrupt deals to be given a tender (Crane & Matten 2010). This is totally unethical. In regard to deontologist corruption in BEA was a total neglect and repudiation of the dignity, sensibility and even the socio economic rights of other companies. This means that they did consider or care for any other company. In regard to sensitivity that revolves around security issues, there are high chances that most deals cannot be made public. These being the case, chances are high that these deals can be marred by unethical conducts given the fact that they are done in secret. Additionally, these contacts are few but very valuable which means that every transaction counts to be a very major business critical even. This being the case, there are high probabilities of hiding some payments and commissions. Getting these deals is critical and therefore defense companies have to use any mechanism to maneuver, including the use of corrupt public officials whereby they record the payments as commissions or marketing services to conceal everything with their funding coming from slight overcharging in the contracts (Crane & Matten 2010). Ethical Dilemmas Faced by Stakeholders. The dealing which happened in BAE systems involved several stakeholders so that it can be implemented and sustained. First and foremost, BAE systems management was actively involved in the whole action for they were the main players. In this case, they spent money amounting to approximately £60m on Saudi loyal family so that they can secure the installment in the AL Yamamah project (Crane & Matten 2010). This was bribery for it is unethical to spend such amounts of money so that they can secure a contract. Consequently, they have also been accused of making illicit payments like the payments made to South African politicians so that they can purchase a fleet of war planes which was marred with diverse controversies bearing in mind that the country was currently heavily burdened by the issues related to HIV and unemployment (BBC News 2009). This was totally unethical. In addition to this, they had association with authorities like Tanzania and Zimbabwe, which were at that time facing criticism allover the world, resulting to speculations that, their dealing were unethical (Hosken, 2009). Teleological theory, the goodness or the badness of an act is correlated to the consequence of that action. This action was unethical because these governments were not buying weapons for the common good of all, but to push their agendas through. BAE has also been involved in unethical issues for they are allegedly to have tried to sell electric shock fit for torturing in Saudi Arabia, delivered fighter planes to Indonesia that were used in Timor to incapacitate freedom fighters (Crane & Matten 2010). Government also has its own share of ethical dilemma in this case. When BAE indulged in unethical activities with other nations, the government of UK was involved for they had to go through government departments. It is also noted that, the government plays a very vital role in the internationals co operations for BAE must get government consent and support, this therefore means that, they consented the transaction of equipments which were a matter of national security which were rather handled in quite unethical manner (Crane & Matten 2010). For instance selling war planes to mitigate insecurity in another country. The ambassador and the loyal family accepted to be bribed and therefore were accomplices in the ethical dilemma. Moreover, politicians in South Africa also accepted to indulge in deals while their government was having issues to deal with AIDs and unemployment. in this case, according to utilitarianism, this corrupt deals were a jeopardy to the common good and inflicted pain to a large group of people who had Aids and were living below the poverty line. BAE, the UK and Saudi part of the alleged bribery BAE, UK and Saudi Arabia authorities have a stake in the alleged bribery. This therefore means that, they were also accomplices in unethical activities. For instance, Issues to do with security matters have to be approved by both governments. For the case of UK government, they took part in authenticating the deal through their departments; UK Trade and investment and most importantly the Government’s Exports Credits Guarantee Department which guarantees payments to the exporters (Crane & Matten 2010). This in the long run means that, the government knew that there were deals which were being transacted between the two countries and that payment s were not done in accordance to the procedures and therefore approved some unclear circumstances. Moreover, whenever there is such a deal, both governments must have had consensus which approved every occurrence. O the other hand, the Saudi Arabian government was very much aware of the unethical activities that they were culminating together with BAE. When BAE paid more than £60m to the welfare of the loyal family with an intention of securing AL Yamamah project was totally unethical because it was a kind of bribery. BAE on the other hand used bribes to secure a project and therefore all the three entities were to blame for the occurrence (Crane & Matten 2010). All this governments were victims to contractriansim. This theory depicts that, moral responsibility acts should be based on rational choice, done with empathy without any partiality, with considering fairness and justice to other companies or persons. Their actions could have been right if the respects of the rights of others were observed and cohesion maintained. BAE and the UK Problem of corruption The UK government has come to understand that, only regulating businesses can result to a successful incapacitation of unethical practices like bribes. For instance, the government introduced an anti bribery regulation in the year 2001 with an aim to curb corruption and this made it illegal for any company to pay any bribe. However, this has never taken off completely for there is no single corruption case has ever been prosecuted since then. However, the UK government have continued to put laws in place so as to ensure that unethical activities are none existence, by setting up an anti corruption squad in 2006 and funding it (Crane & Matten 2010). The government has also put in place mechanisms to have the case of BAE in Saudi Arabia investigated, however; they never reached a conclusion citing that, the wider public interest outweighed the need to maintain the rule of law with much emphasis being on the issue of national security. This was attributed by the statements that the Saudi Arabia government have refused to share security information regarding the this therefore means that, the UK government have tried as much as they can to fight against corruption in the region, but lack of cooperation with the involved stakeholders have made it impossible to bear any substantial fruits (Crane & Matten 2010). However, there should be policies in place to monitor how companies transact globally, with an aim of alleviating corrupt deeds as it was the case of BAE systems, through having tough penalties ort even closure of companies with corruption allegations. BAE systems on the other hand have worked towards redeeming back their reputation. For a long time, they have been hostile towards its critics in the past but they are now adapting to conciliatory approach in the late 2000s (Crane & Matten 2010). One of the most substantial change is when the employed the former justice Woolf so that he can be the leader of the ethical conduct. They have consent to the notion that, they have not been paying much attention to ethical standards and they are now opting for those activities that are directed to reputational change (Crane & Matten 2010). The new hired employee to handle ethics docket has proved the firm has a greater culture of secrecy which has culminated to unethical activities but they are working towards implementing business ethics aspects in the entire organization. They have put in place all the techniques required to bring their firm back to rail. This also includes the appointment of a managing director in charge of corporate responsibility, the implementation of global code of conduct, and aggressive systems to vet external agents who in the past have been the avenues to unethical activities. The organization is working hard towards fighting corruption from the roots. This will happen if they cut off the middle men by moving their manufacturing, engineering and sales departments to countries where they can deal directly with the governments. Currently, BAE counts among the models of ethics and compliance practice and although their reputation stands destroyed, they are working hard so that they can operate in the most professional ways (Crane & Matten 2010). Recommendations and Conclusion The only way out to restore BAE systems is only by the use of ethics in every business transaction that they undertake. This being the case, there is a vital need to have a clear code of conduct in place that must be observed by everybody in the company regardless of then level of management (Crane & Matten 2010). All employees should develop a culture of having an ethical business and therefore should conduct their business fairly, impartially, in an ethical manner, with the full compliance of the set rules and regulations. Failure not to comply should be punishable to an extent that one can be dismissed if found to be opposed to the regulations. In BAE, all businesses must be conducted in integrity which must touch all the company’s relationship including customers, suppliers and even among employees. Employees and agents working with the company must not engage in activities that may raise questions as to company’s honesty, impartiality or even reputation that can lead to the questioning of the ethics of the business. One of the things that must be adhered to is the signing of a document biding every employee or agent to the code of conducts that govern the organization. Employees or agents dealing with customers or governments must be familiar with the laws and regulations and therefore should abide to all the obligations of confidentiality and thus improve on the reputation of BAE. Any deals which may result to corrupt activities must be prohibited completely and any undertaking that may lead to corruption or bribing must not be practice in all transactions. In other words there must be the implementation of policies that state clearly that, it is unlawful for BAE employees, director, or agent to corruptly offer, pay, give or even authorize payment of gifts or valuable to a foreign government official with an intention of influencing or even securing a deal for BAE. Imprisonment and penalties should go hand in hand with anyone who fails to adhere to these policies. Work cited BBC News, (2009) Murky path of BAE¶s South Africa deal. BBC. UK. [Online]Available at: http://news.bbc.co.uk/1/hi/world/africa/8285406.stm [Accessed on27-10-2010] Crane, A and Matten, D (2010) Business ethics, 3rd edn, Oxford University Press, Oxford, UK. p. 539 - 541 Hosken, A., (2009) BAE: The Tanzanian connection. UK. [Online] Available at:http://news.bbc.co.uk/today/hi/today/newsid_8284000/8284510.stm [Accessedon 26 10-2010] Read More