Ethics can closely be defined as a set of rules to justify right from wrong, describe moral obligations towards the community, and to protect the rights of people. These models are put in place to decide whether a person or an organization are in violation of the ethical standard. In the current case study, BHP Billiton had signed a Memorandum of Understanding (MOU) with the Cambodian Prime Minister (PM) to explore the land for Bauxite. The company while conducting business on international grounds, must adhere to some ethical decision-making models as following:
The model is one of the most widely used moral theories that the researchers use in order to prove and assess the causes and impact of unethical practices. Utilitarian theory is primarily a consequence-based approach where the best possible solution is selected based on the factor of the greatest good for all and least harm caused (Cooper, 2012). The theory advocates the balance between all the stakeholders involved in this agreement.
This is another consequential model which see to the wellbeing of everyone around. Culiberg and Bajde (2013) suggest that it emphasize the relationship of people in a society and the compassion for fellow men and women.
As the name suggests, this model designed to respect the right of all the person affected by the ethical decision and protect them. The citizens of Cambodia and the employees of the company must be treated with dignity and not as a mean to achieve something. Right theorists advocate the human right and the same may extend to non-civilian like prisoners and even the animal rights as well.
This is a non-consequential approach which narrates that every person must be treated equally irrespective of their position or stature in the society (Tsalikis and Peralta, 2014). It enforces that law and justice should be equal for the owners of BHP and the PM as for the citizens.
The theory of virtue argues that ethics does not comprise the consequence of a decision only, but is the sum of a certain virtue of compassion, courage, honesty etc. of a person. This is an agent-based approach placing the essential human characteristics as a driving factor (Saunders and Wenzel, 2011). In this context, it may be noted that the theory of virtue is very much individual and does not necessarily apply to all contexts where the human psychology plays a major role in determining what is right or wrong.
In this given situation, two different nations are involved. In one hand there is the Cambodian PM, Hun Sen, and his government; on the other hand, there is BHP and the Australian authorities. Some important principles that both the involved parties must have followed are briefly mentioned below.
The principle of the fidelity and responsibility dictates that the BHP Billiton and the Cambodian PM must take the decision to proceed with the exploration project considering the factors of trust, accountability towards the citizens and moral actions (Murphy, 2009).
This principle guides the involved parties towards any ethical decision that will cause benefit to them without misusing their rights or hurting the people. The principle propagates the message of involvement and corresponding compliance criteria (Murphy, 2009).
The principle of justice provides emphasis on the obligation of the PM and the board members of BHP Billiton to provide the people what they deserve and treats them equally and fairly. Sama and Casselman (2014) suggest that it also binds them under the same laws and make them answerable towards the people.
According to the principle of integrity, the mining company and the PM must not involve in any activity that is deceptive and otherwise exploit the rights of people (Karata?, 2015). The overall integrity of all the stakeholders must be intact.
Finally, the principle of respect for people’s right and dignity enforces that the rights of people must be respected and protected while taking an ethical decision (D’Aquila and Bean, 2011). The company or the PM for self-interest must not take any biased decision.
Primary stakeholders
The Cambodian PM, Mr Hun Sen and his involved department under his government are among the primary stakeholders in this given situation. Along with them, the board members of BHP Billiton are also the prime stakeholders. The then Australian PM John Howard and his diplomats could also be considered as primary, as the MOU was signed in his supervision. These persons are the chief parties to the given scenario as the actions and impact of the operation of the project is directly bearing upon those only.
The citizens of Cambodia especially the people living in the territories near the Bauxite mining land are the secondary stakeholders in this situation as they are supposed to be benefited from the mining process. The employees of BHP Billiton and indirectly the people of Australia are also among the secondary stakeholders.
In this context, it may be worth to note that the identification of both primary and secondary stakeholder is utmost important for the purpose of analysis of the case involving the issues of unethical practices. This is because the human aspects and the intention of the project may be subjected to the human intervention and thereof, the respective interest groups must be identified in order to assess the extent and nature of unethical actions.
The case study shows a clear case of bribery and corruption. It signifies misuse of a public power of personal interests. Theaustralian.com.au (2010) posted that, US$3.5 million money given as part of a contribution to the growth of Cambodia, went missing from the government departments. Part of the money was also to earn the liberty of tax-free mining. This situation violates the Common Good and Justice models of ethical decision making. Here the primary stakeholders have considered their personal profitability on and misused their rights of decision making on behalf of people. The PM has ignored the principle of Fidelity and Responsibility by not being accountable towards the Cambodian people.
According to the MOU, the parties were hopeful towards the success and long-term operation. However, after three years of tax-free business, the mining company shuts the operation commenting Bauxite was not worth mining due to the economic crisis. This action dis-balances the Utilitarian and Rights models by suddenly closing operations and undermining the rights of the Cambodian citizen as workers in the mines. Both the parties are in violation of the principles of Beneficence and non-maleficence and Justice, looting benefits and ignoring what people deserve (Cordelli, 2018). In other words, it may surely be asserted that the actions by the company are construed to be unethical, violating the ethical theories that contradict the basic accomplishment of the intended project in terms of its goals and objectives.
The Australian Public Service Commission provides some guidelines for ethical decision making which follows the models mentioned in this report. The Australian Criminal Code Act 1995 states that any multinational company must not offer benefits in any form to an employee of the government body to extract business gains (Kyriakakis, 2007). In the given case study, the mining giant BHP Billiton has directly violated this law. If the company dares to bribe the officials of a foreign country, it is likely they can do the same in their own country. On top of this, it creates an ill reputation of the company and the business ethics they follow. Wenhao (2011) states that the principles of ethics originate from the culture of a region, corruption harms the image of the country as a whole. Therefore, ideally, a company must not indulge in corruption on international orders even though it is a common practice in the country where the business is taking place. Finally, it may be concluded that the case study of BHP Billiton is one of the classic case studies on unethical practices where the business has been involved in the immoral activities in conjunction with the Government approval and therefore, the same may raise the question on the integrity of the structured and civilised society and governance system. The management should act as an agent to the owner groups and hence, should act in their fiduciary capacity on behalf of the shareholders. A transparent and truthful approach towards the business may contribute towards the long-term sustainability of the business in the market.
References
Cooper, R. (2012). Making the case for ethical decision-making models. Nurse Prescribing, 10(12), pp.607-611.
Cordelli, C. (2018). Prospective Duties and the Demands of Beneficence. Ethics, 128(2), pp.373-401.
Culiberg, B. and Bajde, D. (2013). Consumer recycling: An ethical decision-making process. Journal of Consumer Behaviour, 12(6), pp.449-459.
D’Aquila, J. and Bean, D. (2011). Does A Tone At The Top That Fosters Ethical Decisions Impact Financial Reporting Decisions: An Experimental Analysis. International Business & Economics Research Journal (IBER), 2(8), pp.11-19.
Karata?, A. (2015). Importance of Ethical Principles for Eco-friendly Management. China-USA Business Review, 14(6), pp.37-44.
Kyriakakis, J. (2007). Australian Prosecution of Corporations for International Crimes: The Potential of the Commonwealth Criminal Code. Journal of International Criminal Justice, 5(4), pp.809-826.
Murphy, P. (2009). The Relevance of Responsibility to Ethical Business Decisions. Journal of Business Ethics, 90(S2), pp.245-252.
Sama, L. and Casselman, R. (2014). Ethical Foresight in Business: Interpreting Societal Cues for Better Ethical Management. Proceedings of the International Association for Business and Society, 25(3), pp.71-81.
Saunders, G. and Wenzel, L. (2011). Ethics Principles, Personal Values, And Ethical Judgment. Journal of Business & Economics Research (JBER), 6(5), pp.13-19.
Theaustralian.com.au. (2010). BHP faces .7m Cambodia graft claim. [online] Available at: https://www.theaustralian.com.au/business/mining-energy/bhp-faces-investigation-into-27m-cambodia-graft-claim/news-story/9171a4501b7e6946390236df21085952 [Accessed 4 Sep. 2018].
Tsalikis, J. and Peralta, A. (2014). Priming effects on business ethical decision making. Priming effects on business ethical decision making, 01(01), pp.21-28.
Wenhao, C. (2011). Implementing international laws to fight business bribery: Case of the Organization for Economic Co-operation and Development (OECD) anti-bribery convention. AFRICAN JOURNAL OF BUSINESS MANAGEMENT, 5(32), pp.40-52.
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