Transcript Cultural Relativism, Ethical Absolutism, and Bribery

Cultural Relativism,
Ethical Absolutism, and
Bribery
What is “ethical and
cultural relativism”
• Are you an ethical relativist?
– http://ethics.sandiego.edu/ActiveW
ebSurvey/Theory/Survey001_Relati
vism.asp
• Sources
– http://ethics.sandiego.edu/theories/
Relativism/index.asp
Results of Survey
•
http://ethics.sandiego.edu/Activ
eWebSurvey/SurveyReport.asp?
nSurvey=18&From
Rachels’ Analysis
• Cultural Relativism Claims
– Different Societies have different moral
codes
– No objective standards in ethics
– Moral code of one’s society has no
special status
– Every moral standard is culture-bound
– No universal moral values or norms
A Distinction
• Cultural relativism vs. Ethical relativism
– Cultural relativism: there are
differences and norms from among
cultures
– Ethical relativism: there is no objective
standard or test among the moral
standards among cultures. There are no
universal or objective standards of
conduct.
• Rachels: cultural relativism = ethical
relativism
Cultural Differences
Argument
• General Form
– Premise: Different codes and practices
exist.
– Conclusion: Therefore, there is no
objective “truth” in morality.
• Fallacy
– What is believed to what is reality.
– Counterexamples: earth is flat, center
of universe
Unacceptable Consequences
of Cultural Relativism
• Criticizing other cultures
– e.g. apartheid, Nazi Germany
• Criticizing one’s own culture
– e.g. slavery, discrimination
Differences in Belief Systems;
Commonality of Ethical Values
• Beliefs about physical environment/ factual
understanding of the world
– e.g. Callatians and Greeks beliefs about
death
– commonality as respect for parents
• Pressures of physical environment
– e.g. Eskimos and role of males as
hunters
– commonality as value for offspring
Common Values
Society and Business
• Back to fundamental principles of a social contract:
Rules necessary for society to exist and for
business to function
• Society
– Protecting offspring
– Murder
– Truth telling
• Business
– Honoring contracts and agreements
– Truth telling
– Trust and credibility
A Test Case: Excision or
Genital Mutilation
• Cultural difference or violation
of a culturally-neutral norm?
• Reasons for the practice?
• Possible Test Principle: Does
the practice promote or hinder
the welfare of people whose
lives are affected by the
practice?
Lessons and Insights of
Cultural Relativism
• Tolerance
– of customs and alternative practices
– fundamental values or principles may be
similar
• Open mindedness
– examining prejudices and biases
• Danger of assuming absolute standards
– conviction of beliefs can lead to hubris
(arrogance, excess, pride), the worst of
the Greek vices
Donaldson’s Framework
• What standards or ethical theory should
apply when doing business in other
countries?
– Cultural relativism
– Ethical imperialism
• Inadequacies of both approaches
– Relativists—tolerates the intolerable (e.g.
violation of human rights of fundamentals of
social contract)
– Imperialists—intolerant of tolerable, i.e.
legitimate differences (e.g. gift giving or relative
value for fundamental values such as equality or
liberty)
Principles of Balanced Approach
(Guidelines for Businesses)
• Respect for Core Values – moral
threshold for all business
activity
• Respect for Local Traditions
• Context Matters
Defining Core Values
• Respect for human dignity: Not
treating others simply as tools
or means (recognize value as
human)
• Respect for basic rights
• Good citizenship: Support and
improve institutions in
communities
Principled (Creative)
Judgment
• Principles (e.g. Codes and
Credos) can provide clarity and
direction of value commitment
• But judgment of implementation
requires flexibility and latitude
• Example: Levi Strauss and
Child Labor in Bangladesh
Moral Free Space and
Types of Conflicts
• Conflict of relative development
– Would the practice be acceptable
at home if my country were in a
similar stage of development?
• E.g. wage rates
• Conflict of cultural tradition
– Is the cultural tradition in conflict
with core human values?
Guidelines for Ethical
Leadership
• Treat corporate values and formal
standards of conduct as absolutes
• Design and implement conditions of
engagement for suppliers and customers.
• Allow foreign business units to help
formulate ethical standards and interpret
ethical issues
• In host countries, support efforts to
decrease institutional corruption
• Exercise moral imagination
Bribery
• What is it?
– “…bribery of public officials as the
voluntary giving (promising or offering)
of something of value to a foreign public
official in order to obtain or retain
business or other improper advantage in
the conduct of international business.”
(OECD Convention on Combatting Bribery of Foreign
Public Officials in International Business
Transactions)
Another definition
• “Bribery: An offer or receipt of
any gift, loan, fee, reward or
other advantage to or from any
person as an inducement to do
something which is illegal or a
breach of trust, in the conduct
of the enterprise’s business.”
(Transparency International’s Business
Principles for Countering Bribery)
Bribery
• Cultural difference violation of
core business values. Is it
ethically wrong, i.e. apart from
the law? Why?
Extent of Problem
(Transparency International
2004)
• $400B annually in government
procurement
• 106 of 146 countries score less
than 5 on scale of 10 as “clean”
• 60 countries score less than 3
• U.S. about 17th from the top
NGO Efforts
• Transparency International
(http://www.transparency.org)
See Business Principles for
Countering Bribery
• Organisation for Economic Cooperation and Development
(OECD)
(http://www.oecd.org)
U.S. Legal Framework
• Foreign Corrupt Practices Act (FCPA)
(http://www.usdoj.gov/criminal/fraud/fcpa.html)
– “The FCPA makes it unlawful to bribe foreign
government officials to obtain or retain
business.”
– Sanctions:
• Criminal: $2M for corporations; $100,000 and 5 yrs
prison for directors, officers, agent, and employees
• Alternative Fines Act: Up to twice the amount of
corruption payment
• Sarbanes-Oxley Act
– Accounting fraud and whistleblower protections
A Recent Case (Titan)
• San Diego military intelligence and
communications company
• In 1998 Titan entered into joint
venture to build “satellite based
telephone system” in Benin, Africa.
• At same time, Titan entered into
agreement with Titan Benin Agent, a
business advisor to President of
Benin. The consultant was retained
to “assist Titan in marketing and
identifying potential business.”
Consultant Agreement
• 5% of value of equipment
installed in Benin
• 5 days after agreement invoice
for $399,000 submitted.
• One week later Titan official
approved $400,000 wired to
Benin to account of relative of
Titan Benin agent.
Further Payments
• 2% were to go for “social payments”
for schools, health care, etc.
• Expedited “social payments” went to
the account of Benin Agent rather
than government ($2M) and invoiced
as consulting services
• Further payments broken into
smaller amounts.
– $1M to offshore account of agent in
Monaco
– 5 payments ($1.1M) in cash to agent
And More
• Payments funneled to the reelection of Benin President
– T-shirts for election campaign
• Total of $3.5M paid to Titan
Benin Agent
Settlement
• SEC sues Titan in violation of FCPA
– Titan pleads guilty in 2005
– Agrees to pay over $28M in fines and
penalties
– Agrees to retain independent consultant
to review FCPA compliance
• Merger with Lockheed Martin
nullified