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The Business Conduct of BAE Company Report (Assessment)

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Updated: Feb 13th, 2021

Introduction

This paper is going to look at the business conduct of BAE Company. The author is going to look at a case study where the company is alleged to have conducted business in an unethical manner. The paper is going to be divided into four tasks. Each of the tasks will address a different aspect of the case study. The first task will look at laudable decisions on the part of BAE. The second task will look at the standard ways of placing blames in the context of the case study. The third task will look at the standard normative doctrines while the fourth task will look at corporate misconduct.

Laudable Decisions from BAE Systems’ Case Study

The decision by the Serious Frauds’ Office to prosecute British Aerospace should be applauded. This is given the fact that the decision will deter big companies from exploiting poverty-stricken communities that cannot afford to pay for their education and medical bills. The company (BAE) sold air traffic control systems to the Tanzanian government where the latter used money meant for social services such as education and health to pay for the systems (Burrows 2003).

BAE’s support for premier elections and other businesses by the company is not a crime. Tony Blair was to become a salesman for the BAE products. His premiership would allow him to negotiate effectively on behalf of the firm.

The anti-bribery bills would regulate the conduct of firms in the country. BAE will adhere to the ethical standards set down. If the company happens to deviate from these standards, proposed penalties such as the maximum 10-years’ jail sentence will be applied (Coates 2010).

Culpable Decision

SFO’s decision to drop investigations into Al-Yammah’s conduct is unacceptable. The UK government in this case feels that continued investigations will negatively affect its relationship with the Saudi Arabian government. The implication here is that the UK wants to safeguard her economic interests by maintaining a good relationship with the buyers. The government does not care about the welfare of those who are hurt. On the contrary, it is only interested in the business conducted by the company.

BAE is willing to compensate the affected countries but it is not willing to accept the fact that it has breached the corporate code of conduct. The company is trying to avoid blame. To this end, the payments made by the company to the Tanzanian government are in form of ex-gratia and not penalties (Coates 2010). A director of forensic accounting known as Mr. Gavin Cunningham revealed that the payments were not criminal. On the contrary, they can be considered as a form of a civil arrangement between the company and the government.

It is culpable for the British government to use its power and authority to coerce other nations to adopt its policies. This is another form of bribery and corruption. The largest arms manufacturer in Britain is guilty of corruption in the sense that it is using millions of pounds to obtain contracts from other countries including those from the third world. BAE has admitted that it is guilty of the corruption charges leveled against the company (Burrows 2003).

Using middlemen and advisors to win deals is inappropriate. The use of offshore companies to carry out illegal practices is a breach of the corporate code of conduct.

Ranked Culpable Decisions

The first decision touches on espionage. To this end, BAE has been criticized for hiring independent security personnel to investigate and control their political and military enemies.

Human rights activists as well as anti-arms campaigners postulate that BAE has abused human rights by selling arms to countries in the civil war. The production of cluster bombs is a threat to human rights.

Standard Ways of Placing Blame

Concession

The appointment of Lord Woolf to oversee BAE affairs is not effective. Placing blame is evident given the fact that he is only making recommendations touching on the future of the company while not addressing the mistakes committed in the past. It appears that BAE is indeed hiding something questionable. The effectiveness of the recommendations is affected by past misconducts. Mr. Oliver suggests that Woolf needs to look into the past as well.

Concession as a way of placing blame is also evident when the Tanzanian MP claims that they did not need the radar for air traffic control. It is a poor country that cannot afford such technology. The government agrees that BAE has taken advantage of the situation by hijacking the funds meant for social welfare (Pinningtone 2002).

Justification

It is important to make the individual feel that he is indeed wrong by providing suggestions on how to operate in the future to avert such cases. It is important to note that the company has been blamed for avoiding the problem. This is given the fact that administrators delegate tasks that are likely to create controversy while at the same time performing activities that will earn them credit. It is noted that the administrators can place the blame on another person or another party even when it is obvious that the blame lies squarely on them. They do this by adopting complex strategies that shift the blame to another person or make it disappear altogether. A defensive mode is evident when holders of certain offices are moved from one office to the other.

Refusal and Excuse

BAE retaliates after discovering that it has been exposed and the authorities have discovered the illegal dealings (Duska 2007). The company makes excuses by inventing strategies to cover up evil deeds. For example, the CEO of BAE supported Tony Blair’s premier campaigns. This was meant to ensure that those in power will suppress attempts to stop BAE from selling arms to other countries. Also important to note is that Turner denies that the company has done anything wrong (Schaler 2008). He states that the company is complying with SFO’s request.

Constructive reprimanding is the best way to place blame on another individual or a country for that matter. In this case, one should not use strong words on those in power since it can boomerang on the one placing the blame. This may harm the individual placing the blame and the society at large. For example, SFO terminates the investigations conducted on Al-Yammah for security reasons. BAE is involved in the manufacture of dangerous weapons that are a threat to humanity.

Mishandling such blame can make the company adopt uncontrollable measures to safeguard its business interests. Instead, one should positively inform the company about the dangers posed by its business activities. The Saudi Arabian government states that if it is not cleared of the allegations, it will not help the UK government in fighting terrorism (Greenfield 2006).

Standard Normative Doctrines

Ethics is an integral part of any business transaction. It is noted that there are normative and descriptive aspects of business ethics. In the corporate world, it is the normative dimension that is usually applied. Business ethicality is normally exhibited when the company is increasing profits in non-business areas. This is evident today under the ethics, codes, and responsibility charter. Norms are criteria with practical significance that are capable of influencing action. This is as opposed to norms as an abstract concept. Normative scenarios include assertions of certain passive statements. In this case, the normative doctrine comprises of commands, permissions as well as prohibitions. The concept of abstraction as far as ‘normative’ is concerned involves sincerity, justification, and honesty (Hansmann & Kraakman 2000).

BAE defends itself by stating that it is operating its business under the standard ethics. This is not so given that it has breached the law by bribing to win contracts. Those who have been affected by the illegal conduct of the company seek legal redress (Huevel et al. 2009).

Deontological Norms

It is important to discuss deontic norms. This is the same as permissions and obligations. These are norms postulating the duties that should be performed. Such norms also form symbols such as those used in a country. The BAE’s unethical deeds are unearthed and precautions are put in place to behave morally right (Cory 2004). The norm will become irrelevant if such consequences are omitted.

For example, BAE becomes ethically incorrect when it violates the corporate code of conduct. Bribing to win contracts is unlawful. Denying citizens social services to get funds for weapons is an abuse of the dignity of the Tanzanians. Tolerating corruption and bribing by BAE is unethical. All those involved in the arms trade have tolerated corruption either by bribing or being bribed. All of these attributes can be conceptualized under the auspices of competence (Richard 2005). In short, deontological doctrines provide guidelines on how a particular firm should behave towards another firm and the public as well.

Consequentialist Doctrines

These doctrines hold that an improper course of action will cause untold consequences. These include happiness as well as harm to the individual. To this end, proper actions are improvised to improve the working conditions. It is the moral worth of actions. For the best conditions to be achieved, utilitarian principles should not be abused. BAE Company abuses this principle and the happiness of existing clients is affected. SFO comes in to investigate BAE and other organizations to restore the utilitarian principle. This principle is divided into two categories; act and rule. Act determines consequences when choosing a particular option whereby the pleasurable option is preferred. The rule also determines what will cause harm or happiness.

Corporate Misconduct

There are agencies that control and regulate business and commercial activities in a given country. This is to be found in many nations that have embraced comprehensive civil codes of conduct (Armstrong 2002). Under corporate governance laws, individuals are protected from the provisions of standard ethical norms as far as business ethics is concerned. The government is in a position to safeguard interests that are normally beyond its control. Regimes of ethics are developed to govern large corporations which may compromise the welfare of the communities within which they are operating (Enderle 2009).

Counter Personnel Measures

Individuals are held responsible for the illegal practices that they are involved in. Fines are imposed on the culprits and in some cases damages, as well as imprisonment, are meted out. These measures are extremely important but less effective. The personal liability of the individual should be highlighted. This option makes it difficult to regulate high profile corporations (Eichengreen 2001).

Fines and other forms of punishment are more often used in place of imprisonment. It is also noted that individuals who are affected by the misconduct of the corporations are always compensated or indemnified using the funds generated by the business entity. However, it is also important to note that it is the consumers and the creditors who pay for such expenses. In most cases, insurance companies will protect these companies from such claims (George 2009).

Some Common Problems

Commerce and technology are some of the sectors which are difficult to handle as far as the collection of evidence is concerned. To compound the problem, the time taken to collect the evidence is very long (Cory 2004).

Regulating the corporate structure can be used to prevent the individual from engaging in unethical practices. For example, a firm can be autonomous as far as the administration is concerned. However, the implementation of such policies becomes unlawful. The firm involved in fighting misconduct should not shy away from this. For example, SFO’s withdraw from the case is an indication of the fact that it is unable or unwilling to fight corporate misconduct. This is especially so when the corporation is involved in a unique transaction such as the sale of weapons. In such a case, the government would require the contractor to provide high-quality products that are compatible with the national defense systems (Montiel 2003).

In conclusion, it is noted that the measures outlined above can help in averting corporate misconduct. If the measures are harsh enough, the possibility of corporations engaging in misconduct will be reduced. BAE will not engage in corruption and bribery as well. The measures can be used to complement ethical norms in fighting corporate misconduct. This can be used in other corporations apart from BAE. For example, the norms can be used in regulating the conduct of other business entities involved in the transactions conducted by BAE. This should not be viewed as harassment of the business entities. On the contrary, it should be viewed as an effort to provide an environment conducive for business.

References

Armstrong, MB (2002), Ethical issues in accounting, Oxford, Blackwell.

Burrows, G (2003), Out of arms ways, London, Thimble.

Coates, D (2010), “Admit: Corrupt arms deal,” The Times, 17.

Cory, J (2004), Activist business ethics, Boston, Springer.

Duska, R (2007), Contemporary reflections on business ethics, Boston, Springer.

Eichengreen, B (2001), “Capital account liberalization: What do cross-country studies tell us?” The World Bank Economic Review, 15(3), 341.

Enderle, G (2009), International business ethics, New York, University of Notre Dame Press.

George, R (2009), Business ethics, London, McGraw-Hill.

Greenfield, K (2006), The failure of corporate law fundamental flaws & progressive possibilities, Chicago, The University of Chicago Press.

Hansmann, H & Kraakman, R (2000), “The end of history for corporate law,” Georgetown Law Journal, 89, 439-468.

Huevel, K et al., (2009), Meltdown: How greed and corruption shattered our financial system and how we can recover, New York, Nation Books.

Montiel, PJ (2003), Macroeconomics in emerging markets, Cambridge, Cambridge University Press.

Pinningtone, AH (2002), Human resource management, Melbourne, Oxford University Press.

Richard , T (2005), History of business ethics, Georgia, Free Press.

Schaler, JA (2008), Corruption, New York, Free Press.

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