Thursday, March 14, 2019
SNC Lavalin Reaction Paper
The investigation nominate of age(p) sync executives guilty of breaching the firms code of ethics and charged them with bribery, gold laundering and fraud amounting to over $56 million. More specifically, Mr.. Pierre Daytime, Zincs president, and Mr.. capital of Saudi Arabia Ben Sass, a former executive vice president, were accused of secretly funneling come with m unrivalledy to Labias Gadding family in companionship of magnitude to secure projects in Libya and subsequently strengthen Zincs presence in North Africa. Ethical Model The primary honourable question that is to be addressed is Is it acceptable forCanadian companies to engage in facilitation wagements to ready business in developing nations? The active agents argon Zincs major(postnominal) management, who wittingly participated in blatant acts of bribery and fraud, as well as the Libyan facilitation agents. I will analyze SYNC Lapins actions using the utilitarianism model. The theory of Utilitarianism states that hoi polloi should act in a manner that maximizes the total, collective utility of their actions. Zincs senior management would argue that they had to maximize shareholder value in order to maximize the total collective utility. Sing this OIC, the senior management felt up it was grave that they sourced work in all possible regions, in order to beef up their portfolio of projects. The senior management then expected this to right off translate into improved profits and higher share values that would make shareholders and the panel of directors happy. However, the senior management was also aware that certain nations, such as Libya, demanded facilitation payments for awarding projects in their countries. The management also knew that these payments were considered to be bribes and that they are deemed iniquitous in Scandal.While these measures resulted in an 87% appreciation in share price in the short run, (share price grew from $31. 92/share in April 2009 to $59. 8/share in January 201 1) Zincs stock then proceeded to nose dive to a low of $35 once news of the bribery broke out(p) 1. This dramatic fall in share price was almost alone attributable to the negative emotion towards and loss Of report suffered by SYNC Laving as a direct result of their decision to engage in bribery. These executives did non account for the significance of upholding their firms reputation before providing facilitation payments.Moreover, as a result of their fraudulent behavior, SYNC is now also prohibited from project projects funded by the World Bank for 10 years Consequently, contrary to senior managements intentions, SYNC suffered a reduction in share price sustain with a loss in reputation. The above facts prove that Zincs management did not maximize the collective utility of their shareholders but rather proceeded to ruin their reputation by partaking in actions of bribery. The above analysis clearly shows that SYNC failed to do good by its shareholders by en gaging in facilitation payments.It is also important to consider and evaluate Syncs alternatives to bribery in this case. Bribes tend to have different definitions depending on the part of the world you are dealing with. While these bribes (aka facilitation payments) are considered a part of doing business in developing nations, such as Libya, they are illegal in Canada. An interesting perspective was brocaded in class defending Zincs actions. What if Syncs facilitation payments were being used to build basic foundation and provide basic amenities such as schools and hospitals in the developing nation?This now raises the question as to whether facilitation payments are acceptable found on the activities being funded by these bribes. A number of valuable points were raised in class both defending and abhorring SYNC Lapins actions. I am of the perspective that companies must always adhere to the stricter of their surface area or the country where they are doing business rules as a guide for making ethical decisions. Consequently, I believe that firms should not elect to work in regions where they are agonistic to bribe local officials to gain projects.Moreover, having irked as a project organise at a competing engineering and construction firm, know that my company refused to do business in countries, such as Libya, where bribery was a fatality to gain projects. Our senior management and C-level executives were sticklers for winning and executing projects based on a fair and competitive bidding process that ensured the best aspect was awarded the contract.. While this approach to decision making might cause companies to put up out on certain projects, It will ensure that the firms reputation is neer tarnished.In the long run, company reputation, bit being a soft measure, is one of the key factors in ensuring sustainability. Many world renowned companies have refused to pay bribes in foreign countries and have still managed to attain burgeoning profits while maintain a sterling reputation. For example, Shell refused to pay Venezuelan officials $35 million to maintain their license over a nickel mine It is interesting to note that Shell still owns and operates this mine in Venezuela and have never been threatened with any such facilitation payments since.