Reference no: EM133017088

Marine Recovery System (MRS) was recently shortlisted for a high value contract for the development of a coastal defence system for another country. This was contingent on the payment of a facilitation fee to an official in the defence ministry. Despite being an unusual request, it was made very clear that MRS would not be awarded the contract, worth $2 billion over 10 years, unless the relatively modest sum of $1 million was paid immediately.

Recently, MRS has been facing very low level of business activities, and is about to announce around 500 staff redundancies. Therefore, news that this contract was about to be awarded came as a great relief to the board of MRS, as the jobs would now be secured. However, only the chief executive officer (CEO) and operations director knew about the facilitation fee, so an emergency meeting of the board was convened with only one item on the agenda.

Due to the very sensitive nature of the matter at hand, it was decided not to make a formal record of the discussions at the board meeting. This was more likely to result in a frank exchange of views and encourage all directors to express their opinions openly. The CEO, Ray explained the dilemma to the board, making it very clear that without this contract there would be no way to protect jobs. The finance director, Nelson, said that he was personally very uncomfortable with the idea of paying a facilitation fee, which was in effect a 'bribe'. As a professional accountant he was bound by a code of ethics which strictly prohibited making such payments, therefore he could not sanction the payment under any circumstances. The HR director, Sue, took a far more pragmatic stance. She acknowledged that any form of corruption was utterly deplorable; however, it was a fact of life in many countries. She asserted that if the board of MRS decided not to make the payment and forego the contract, then it could be assured that a competitor would not adopt such a high-minded position. The net effect was that by avoiding a relatively small payment, the firm would be doing a disservice to both its employees and its shareholders, who would undoubtedly suffer a reduction in their shareholder value. She maintained that sometimes it is necessary to take difficult decisions in business that are for the greater good, and so suggested that the payment to the official should be made.

Required:

a) Compare relativism and absolutism and explain the significance of individual or personal differences in guiding ethical behaviour under each approach in a given scenario such as the situation at MRS.

b) Explain the ethical theories of deontology and teleology or consequentialism, and analyse which of the approaches have been adopted by Sue and Nelson.

c) The involvement of directors in bribery and corruption can seriously undermine the relationships of trust upon which corporate governance is based.

Required:

Describe best practice measures which could be employed by MRS to combat bribery and corruption.