Question

SUBJECT: BUSINESS LAW

The old saying is that "the fish stinks from the head down." In other words, it's the tone at the top or the leadership of an organization that sets the ethical standards for an organization and its employees. If a company's senior level management is more concerned with share price and profits than following legal and societal values what kind of example does that set for the lower level employees? Should we turn a "blind eye" if a co-worker violates company rules or the law to maximize shareholder returns? What does this say about our society and what does this teach our children?

Enron was a multi-billion dollar company in the energy trading business employing thousands of people in the early 2000s. Enron's chief executive officer, chief financial officer and other employees together with partners from the accounting firm of Arthur Anderson "cooked" the books by improperly moving liabilities from the balance sheet to expenses on the income statement (you may learn about it in an accounting class). Needless to say, it was improper and illegal and caused the collapse of Enron causing the loss of jobs and many people's life savings. Partly as a result of the collapse of Enron Congress passed Sarbanes Oxley (SOX) and Internal Revenue section 409A to curb and prevent corporate frauds and defalcations. How did we find out about Enron? A "whistleblower" reported the fraudulent transaction to the authorities and the rest is history.

Which now lead us to your dilemma.

You work for a seafood broker that buys and sells seafood products all over the world. This means that you have to deal with many different business customs, habit, and laws from the U.S. and various other countries. About three or four months ago you sold six tons of row (fish eggs) also known as caviar to a despotic ruler in Terrabowlland. The value of the deal to your company was approximately $1.5 million and to date, your company has not been paid. It's unlikely that your company can survive if you don't collect the account receivable and the pressure is starting to mount on you. Recently, you were speaking with another fish broker who is based outside of the U.S and does no business in the U.S. and therefore is not subject to U.S. laws. The broker told you about troubles he had collecting on a transaction with Terrabowlland and that eventually, he had to pay a fee of 19% of the total transaction to an "administrator" in Terrabowlland. He said it was really a bribe but they called it a transaction fee. Under U.S. laws you are prohibited from paying bribes (see Foreign Corrupt Practices Act for example among other statutory provisions). In the terms of Star Trek, this is your "Kobiyashi Maru" no-win scenario test. If you pay the bribe you could go to jail and if you don't the company probably goes bankrupt. What do you do?

Please fully explain your position and actions in a minimum of 200-300 words but you can go over the word limit.

Answer 1

The no win situation can be tackled by taking a action where the company should agree to find some other, legal ways to get its money back. Since the law of the land in Terrabowland is different from the US, and bribing might not be a legal offence which it is here back home as per FCP act.

The person should speak to the "administrator" about the other ways which are legal according to the US laws and could help to get the money back. ( Though first attempt should be to get the payment back in full without any conditions, and the opportunity should be given to the "administrator" to reveal more about his intentions. It is very much possible that on mention of the FCP, he might agree to co operate.) One of such legal favour can be to contribute to the development of the society, protection of the natural habitat or the fishes and other efforts for the cause of the environment to name a few. The contribution, which would go towards the help of the people and resources of the country would be  a consideration for continuity of business. If the "administrator" is convinced of the situation, the things would most probably work, as the Terrabowland would see merit in he proposal, where an alliance with an ethically running company would be beneficial in the long run in terms of fair terms, high product quality and contribution to sustainability of the homeland.