Case 1, Chapter 1 Slavery in the Chocolate Industry

1.) What are the systemic, corporate, and individual ethical issues raised by this case?

The most prevailed ethical issue of the case is slavery. The ethical issue of slavery is
systemic in nature because farmers in the Ivory Coast resorted to slavery and child
labor/trafficking to avoid high labor costs that cannot overcome by the declining prices of cocoa
beans. Though there are so many products in the food and beverage industry that use chocolates
as main ingredient, cocoa beans farmers still hardly get profit from their harvests caused by the
external changes on the trends of cocoa prices. Other systemic ethical issue that has been seen
in the case was the poor enforcement of the laws concerning child labor. The willingness of
local officials to accept bribes from people trafficking children has become a systemic ethical
problem of the Ivory Coast government. Local officials are expected to uphold the security and
rights of the children aggrieved rather than letting the system of slavery to continue exist.

Corporate ethical issues are also evidently seen in the case. Corporations like Archers
Daniels Midland Co., Barry Callebaut, and Cargill Inc. that stand as middlemen for the big and
well-known manufacturing companies are aware of the slavery happening in the Ivory Coast
since they are the ones that buy directly from the farmers. Since 2001, despite the efforts to
publicize children slavery and to prohibit the use of the beans from countries with existing
slavery started, U.S. chocolate manufacturing companies like Hersheys, M&M Mars Inc., Nestle
USA, Kraft Foods and others disagreed with these efforts and continued to use cocoa beans from
the middlemen. Instead they fund the establishment of a certification system that was reported to
be unprogressive. The mere awareness of these companies of the existence of child slavery is a
serious ethical issue given that there were no concrete actions successfully made by the
companies to save children directly or indirectly.

The individual ethical issues raised by the case could mainly be attributed to the farmers
and traffickers involved and to the individual consumers/customers who are aware of the
problem, that buy products from the said companies as well. Kidnapping children, causing them
physical abuse, and preventing them to enjoy their rights as children are clearly morally wrong.
With the consumers who are aware of it, the continued patronization of the products causes the
problem to still exist. Buying products from these companies is somehow approving and
disregarding the company practices that victimize children for the sake of business.

2.) In your view, is the kind of child slavery discussed in this case absolutely wrong no matter
what, or is it only relatively wrong, i.e., if one happens to live in a society (like ours) that
disapproves of child slavery? Explain your view and why you hold it.

The child slavery discussed in the case study was absolutely wrong no matter what. It is
because of how they treated the children with ages 11 to 16: some of them were locked in
solitary confinement, they were forced to work 12 hours a day for no salary, many of them were
regularly beaten, and none of them received any schooling; the way they handle the children it
was very abusive. The group also agrees with the stand. In the context of Philippine culture, child
slavery is common but it is viewed mostly as child labor. Our state prohibits this kind of labor
but we cannot prevent this due to the poor economic status of our country that the government
could not provide funds to numerous poor people.

And because of the aforementioned problem, the poor people try to make their own way
to provide for themselves such as working at an early age of 5 years old for them to earn living
and get through each day. But here in our country, poor people at any age, it is a must for them to
work because poverty is prevalent. Although there are some cases that children are being
trafficked here in our country and being shipped to another place to work in a tobacco and cotton
plantations and some are being sold to syndicates for child prostitution which is also a form child
slavery. The children who are being trafficked are being mercilessly whipped and in extreme
cases, hanged. To sum it up, the moral issue here is the maltreatment of the young people. The
young people, especially in their formative years, they should be studying for their future and not
out in the streets or in some places doing heavy responsibilities beyond their abilities in a
hazardous environment while being treated like animals.

3.) Who shares in the moral responsibility for the slavery occurring in the chocolate industry?

People have the notion that they will be responsible for anything that happens as a
consequence of something they had control over and which they could reasonably be expected to
have anticipated, and thats when moral responsibility comes in. For this case, there are many
groups that share moral responsibility for the slavery that is occurring in the chocolate industry.
There are three factors that determine moral responsibility. One is causality, this is when an
individual initiated the event that produced grievance and failed to prevent what he/she could
have prevented. The other two factors are, knowledge that the grievance would happen as a result
of the action he/she committed, and freedom to do it in his/her own free will.

The African farmers are one of the groups that share the moral responsibility of slavery,
because they are the ones doing it even though they know that should not be done. It is clear that
they know what they are doing but instead of preventing and stopping child slavery, theyre
continuously doing it and what's worse is that, they are the ones abusing the children and forcing
them to work. Another is the African government who has the control over Ivory Coast and its
people but does not enforced law to stop it. The government is aware that slavery is illegal in
Ivory Coast but laws are poorly enforced. The American chocolate companies are also
responsible for this event even if they are not directly inflicting the grievance in this case, they
are still aware of the nature of the cocoa farms. Other chocolate companies started to adopt
measures immediately after knowing the slavery thats happening to the cocoa farms in Ivory
Coast. Many of the smaller companies avoided using chocolate from Ivory Coast and turned to
using chocolates that are processed. Therefore, the companies have control over the grievance-
they can pressure the farmers to stop what theyre doing- and may have prevented and stopped it.
Anyone that has read this case and is reading the case has a depth awareness and knowledge of
the unethical behavior- child slavery- happening in the chocolate industry. Surely, it will make
people think twice about their moral obligations just with the thought of buying a chocolate from
the companies responsible for slavery.

4.) Consider the bill that Representative Engle and Senator Harkin attempted to enact into a law,
but which never became a law because of the lobbying efforts of the chocolate companies. What
does this incident show about the view that to be ethical it is enough for business people to
follow the law?

In the case study, it was stated that the companies do know that there is child slavery
happening even before a documentary was made. The ethical action would be to think of ways to
stop it and there are numbers of ways to do it. But even after finding out the situation, nothing
was done, nothing at all. It may be because they can purchase cocoa beans for a really low price,
therefore it is considered as beneficial for them. Or it may also be due to the fact that taking
actions would cost a lot of money, time and manpower. When U.S. Representative Eliot Engel
sponsored a bill that aims to ensure that the chocolates purchased by the consumers, majority
voted in favor of it. This was later followed by the introduction of the same bill by Senator Tom
Harkin. But before the Senate could consider this bill, the companies Mars, Hershey, Kraft Foods
and Archer Daniels Midland and lobbyists Bob Dole and George Mitchell started a lobbying
effort to fight the slave-free labeling system. Given the kind of companies involved, it is likely
that they do have enough money to make action. The Chocolate Manufacturers Association,
World Cocoa Foundation and the major chocolate producers signed to an agreement to establish
a system of certification that would ensure that the cocoa beans they used were not produced by
the use of child slaves. Though there was an agreement, the companies werent able to fulfill
their part. As the years went by, less and less effort are being exerted by the companies. It was
also stated in the report that there is only one staff member working in the Ivory Coast. One
person doing the seminars and other activities that are not even sufficient to address the problem
cannot really make an impact. To many, their actions only serve as a lip-service. The companies
clearly only wanted to protect their image by showing the people that they follow the law and are
ready to take action.

By stating all that, we want to say that this incident tells us that following the law is not
enough to be ethical. Ethics and compliance to law or the law itself are not the same. It can be
said that compliance to the law is a minimum requirement, it must be followed by all but it is not
an all-encompassing ethical principle. Compliance is about what a person must do but ethics is
about what a person should do. A person does something not because the law says he must do it
but because he knows it is the right thing to do- this sets compliance to law and ethics apart.
Child slavery is illegal in Ivory Coast, as well as in many countries in the world, so it is clearly
that it is unethical to continue patronizing the products that was produced as a result of child
slavery. There are companies, smaller than the well-known major chocolate companies, who
stopped buying the tainted cocoa beans. It can be said that what they did is following the rules
and is ethical, but not completely ethical. We say this because although they stopped buying the
tainted cocoa beans, they did not help in stopping the slavery. If those smaller companies are able
to stop patronizing the cocoa beans from Ivory Coast, it is not impossible for the bigger
companies to do so. The ethical way to go is to help in solving the problem rather than only
stopped being involved because it will not solve the problem that is affecting many, including
them. This proves that being legal does not always mean it is ethical and being ethical does not
always mean it is legal. Moreover, following the rules is not always enough.

CASE STUDY 1: AARON BEAM AND THE HEALTH SOUTH FRAUD

QUESTION 1
Which of the obstacle to moral behavior do you see at work in Aaron Beams behavior and thinking? In
Scrushys?

Under the first step, leading to ethical behavior Recognizing or becoming aware that we are
faced with an ethical issue or situation. The first obstacle was that Beam saw this issue as a business
issue rather than a legal issue. He thought it would hurt people if he did not adjust the books and helped
the figures, and he was certain that he was going to do it only this one time. This caused him to not
frame this fraud as ethical. However, it didnt start here. It started the first time he primped the ledgers
to look better. He rationalized his behavior by using the utilitarian view on the matter and justified the
process by doing what he thought would better the largest amount of people. Beam diffuses the
responsibility to Scrushy. He feels as though he doesnt have enough of a backbone to stand up to
Scrushy even though he persuaded others to follow them and he himself only had to be persuaded the first
time, even stating that it got easier the second time. In the second step leading to ethical behavior
making a judgment about what the ethical course of action is, Beam has a biased theory of the world
in that his thinking is that the adjustments are so small that no one would notice. However, he did not
think about the FBI and what would happen to those involved, especially the investors, when they did get
caught. Beam showed a willingness to obey Scrushy even though he did know what they were doing
was wrong. Whether he framed it ethical or not he still knew that it wasnt exactly right and did not
have enough moral character to object.

In this cases, it have strongly evidence that Scrushy lacked moral character altogether. Moral is
defined as the standards that an individual or a group has about what is right and wrong or good and
evil. This writing made it sound as though Mr. Scrushy enjoyed all the luxuries of the lifestyle he
afforded himself and did not care too much about what he had to do to keep it. He was worried about
image and image alone. Unless Beam was lying and Scrushy really didnt know about it, Beam used a
little euphemistic labeling by saying that the company just needed to get through the quarter which
also rationalized this fraud in his mind. He also tried to put the responsibility of the situation on Beam,
which backfired and sent him down the hole much quicker. Directing blame where it is not due seems like
only trouble. He believed the lies he was telling himself, instead of choosing to do the right thing and
cease his wrongful actions.
QUESTION 2
Explain how Aaron Beam might have used the loyal agents argument to defend his actions. Do you
think that in Aaron Beams situation the loyal agents argument might have been valid? Explain.

Under the loyal agents argument Aaron Beams defense would be that Scrushy had ordered
him to manipulate the accounting records or more specifically the general ledgers. He was seen as
reluctant to comply, but was pressured by Scrushy and a bit intimidated by him to the point at times of
fear. We do not believe Aaron Beam could have actually used the loyal agents argument. The
information shows that Scrushy and Beam already knew. From the beginning Scrushy and Beam both
knew that the company had to appear profitable to satisfy investors and lenders and to later succeed in
issuing and selling the company stock to the public. Therefore, Beam had to know Scrushy would be
asking or ordering him to make it happen. Based on Beams reluctances, it could be argued he knew this
to be wrong but did it anyway.

QUESTION 3

In terms of Kohlbergs views on moral development, at what stage of moral development would you
place Aaron Beam? Explain. At what stage would you place Richard Scruchy?

In terms of Kohlbergs views on moral development, Aaron Beams moral development would be
a Level Two stage three which is Interpersonal Concordance Orientation. This stage explains about good
behaviour that is living up the expectations of those for whom the persons feels loyalty, affection, and
trust such as family and friends. At this stage, the young person wants to be liked and thought well. Aaron
Beams in this stage because he knows right and wrong both conventionally and what the law says. He
have to follow the Scruchy decision which is he have to manipulate the general ledgers of account. Aaron
do this because he is in awe of Scruchy, and appears to want to please him as a person in authority, and
shows his loyalty to after all Scruchy picked Beam to start the company with.

For Richard Scruchy, in terms of Kohlbergs views on moral development, he is in level one stage
two which is Instrumental and Relative Orientation. It is because he only thinks about what he need and
own point view without think other person. The evidence why he is in this stage are we can look at his
lifestyle, he has been married three times, lives extravagantly, while charitable it appears he threw money
around for self- recognition. The pleasures he gains by all of this gives him reason to assume he is right in
his own mind.
QUESTION 4

Was Aaron Beam morally responsible for engaging in the aggressive accounting method he used?
Explain. Was his responsible mitigated in any way? Explain. Was he morally responsible for changing the
clinic reports to increase the companys earnings? Was his responsibility for his mitigated? Explain. Were
those who cooperated in his actions morally responsible for those actions? Was their responsibility
mitigated? Do you think Richard Scrushy was morally responsible for the accounting fraud? Explain.

Yes, Aaron Beam is morally responsible for engaging in the aggressive accounting methods he
used to change financial reports so the net profit look larger. The decision is from himself even someone
force him to do something was wrong such Scrushy told him to do whatever he could to make their
financial reports look even better. In this case Beam not responsibility mitigated in any way because he
continued to commit fraud when the company revenue fall short by 50 million dollar in 1996, then again
fall short by about 70 million dollar and until he retired in 1997. But he must responsibilities with the
other Owens, Martin, Livesay and a few others to alter the financial reports.

Aaron Beam was not morally responsible for changing the clinic reports to increase the
companys earnings. His responsibility was mitigated due to the fact that he as well as others was
included in reporting false records. Based on Loyal Agent Theory, employee must follow what the
employer said. Related to this case, Scrushy told Beam that he should do whatever he could to make their
reports look even better. Therefore, Beam has to make sure that company net profits look larger are
achieved. Hereby, Beam can tell that Scrushy are the ones who are responsible for the fraud because
Scrushy ordered Aaron to do what he did.

The moral responsibility is a when a person performs or fails to perform a morally significant
action we sometimes think that a particular kind of response is warranted. Praise and blame are perhaps
the most obvious forms this reaction might take. For example, one who encounters a car accident may be
regarded as worthy of praise for having saved a child from inside the burning car, or alternatively, one
may be regarded as worthy of blame for not having used one's mobile phone to call for help.

To regard such agents as worthy of one of these reactions is to regard them as responsible for they
have done or left undone. In this case, this means that Beams responsibility were not mitigated for his
action of aggressive accounting, because others were involved for changing the financial report, he can
share the responsibility with the rest of the people but everyone involved basically has some moral
responsibility involved. Beam responsibility was mitigated because they all knew they were committing
fraud and continues their bad habits even after Beam retired.

Yes. We think that Richard Scrushy was morally responsible for the accounting fraud. It is
because, even though he did not work in the financial department, but he is the boss, he is the people that
responsible to the cases why Beam becomes unethical in work. He is fully aware of the consequences and
directed Beam to make adjustment to the financial report.

TRAIDOS BANK AND ROCHES DRAG TRIALS IN CHINA

QUESTION 1
Explain how utilitarianism might provide a defense for Roche and how a rights-based ethic
might instead condemn Roches drug trials in China. Which of these two approaches is stronger
or more reasonable? Explain the reasons for your answer.

ANSWER

Utilitarianism is a general term for the view that action and policies should be evaluated
on the basis of the benefits and cost they produce for everyone in society. Specifically,
utilitarianism holds that morally right course of action in any situation is the one that, when
compared to all other possible actions, will produce the greatest balance of benefits over costs for
everyone affected. The inclusive term used to refer to the net benefits of any sort produced by an
action is utility. Hence, the term utilitarianism is used for any theory that advocates selection of
that action or policy that maximize utility.

i. Might provide a defense for Roche by stating that the organs taken from the prisoners
with their consent for the purpose of Roches drug trials is acceptable because of:

A utilitarian would argue that Roche was respecting the Chinese laws by first
testing the drugs on Chinese patients. One could argue that prohibiting the research that
Roche was performing could inhibit future Chinese patients from receiving a drug that
 could be necessary to sustain life. Roches CellCept had a beneficial plan for the Chinese
society in creating a drug to help sustain life for their specific ethnicity.
As a utilitarian, finding a resolution for the greater good is the most ethical and
just decision. The utilitarian might argue that Roche had no control over how the organs
were harvested. Knowing or not knowing where the organs were originating from
wouldnt be as important, as long as their end goal of saving lives would be completed.

ii. Might instead condemn Roches drug trials in China because of:
Rights are defined as an individual entitlement to freedom of choice and well-
being. This may lead a rights-based ethic to say that the prisoners from which the organs
were being harvested could not be consenting because they were being held against their
free will. An ethic may also argue that there is no way to know under what conditions the
organs were being removed from such executed prisoners. However, since rights are up
to the individual, it cannot be determined if the individual is deceased. The conditions of
this study are questionable since there is no way of knowing if the prisoner would have
volunteered or declined to be a part of this study. More so, if the organs are being sold for
a monetary profit instead of research, then this decision would be defined unethical by
moral standard.

iii. Which one is stronger and reasonable?

In reference to which viewpoint being the strongest and most reasonable, this is
an extremely controversial issue. Lives are on the line in both situations. Views differ
from person to person and legitimate arguments can be made for both utilitarianism and
rights-based. When it comes to the right-based ethic, Roche was in violation of the
prisoners human rights. The company knew that up to ninety percent of organs came
from executed prisoners. The company should have looked into why the prisoners were
executed because some of them were there because of their religious belief and the
different opinions between them and the governments. One view is that of the rights
based ethic. A utilitarian measures utility of the benefits produced by an action. An ethic
could prove that many prisoners being held were not criminals. They could also prove
 that many organs were being harvested only for money. The ethic has a strong and more
reasonable case in this situation. Even though most people in China would have benefited
by keeping the drug, the process of testing the drug was tainted by the violation of basic
human rights that even the people using the drug would have despicable. However, on the
other hand, utilitarianism provides a defense for Roche because the company was looking
to benefit the country of China as a whole given that they were in favor of the medicine
that prevented patients from post-transplant organ rejection. This view would have been
a strong decision for society even though if you would only jeopardize the prisoners. The
company felt that the greater good would be served by going ahead with its drug tests
even though many of the transplanted organs in its test patients were harvested from
prisoners.

QUESTION 2

Is it ethical for Roche to continue testing CellCept on its Chinese transplant patients?

ANSWER

Before we continue to answer this question, we must know the more important question
than Roches ethical responsibility over drug testing CellCept. The important question is if
Roche move back or stop the testing CellCept will people in China also stop their unethical
organ donations? So, the answer to this question will prove how more or less Roche has control
and influence over the unethical use of organs. Secondly it is proven that Roche is indirectly
taking advantage of executed prisoners organs as the case states that Up 90 percent of all
transplant organs in China come from executed prisoners. We can held Roche responsible for
not putting restrictions over patients who doesnt have proper documents of their organs that
proves the rightful owners information, but on the other hand even if Roche put an effort to
make sure they check the legal documented of the transplant organ. The Chinese law on the
matter of organs donation in so weak that people are massively misusing it to justify their illegal
use as legal, as mentioned in the case the China government banned the sale of human organs
and require that living donors could donate their organs only to spouse, blood relative or step and
adopted families. Nevertheless, the organ trade continued to flourish in China.

Furthermore if we look at ethical responsibility more from the economic point of view
compare to the individualist point of view, as medical transplants an ongoing day-to-day activity
that cant be stopped because of individual concerns or opinions, as this organ transplant matter
is connected to thousands of patients life risk. On a big picture one can say Roches CellCept is
saving more innocent peoples life than guilty executed prisoners whose organs are donated, and
as per utilitarian ethics it is less important to consider guilty prisoners death-will decision over
their organs than to consider transplant patients life risk at clinic. Morally it can be considered as
wrong if one doesnt care about transplant patient before its own death as eventually his or her
organs are going to be wasted in the grave.

QUESTION 3

Is Traidos Bank ethically justified in excluding Roches stock from the funds it offers its
customers? Consider your answer in light of the banks duty to invest money wisely and in light
of its own conclusion the Roche was among the best performing 50% of pharmaceutical
companies in Europe. was transparent about sustainability issue had a comprehensive position
regarding genetic engineering and clear ethical guidelines for clinical trials, enforced high
standards for its suppliers, and stove to reduce energy consumption and greenhouse gas
emissions.

ANSWER

From the commercial interest point of view the companies are made on positioning of
their branding strategies and creating factor that differentiate them from other, those factors has a
great influence on their sales. Similarly Traidos Bank has drop down Roche from their
investment list just to maintain their brand images or else they will lose their sales. Traidos Bank
has more concern about its brand image or else then to the ethical solution required for Roches
transplant patient drug testing they just do not want to associated themselves with a company
that has received Public Eye Award. It is a responsibility of Traidos Bank to further carry an
independent investigate and evaluation under the laws of ethical relativism on Roche case in
China, as in this case it is less about universal right or wrong and more ethical complex the issue,
they will have to come up with their ethical justification report that has no connection with the
Public Eye Award. The Trados Bank should have think twice before banning a reputable brand
like Roche, as Roche service has direct influence over human life, lake of CellCept drugs
available in the market can create serious health risk to many Chinese patients lives. There
should be a dialogue between two parties in which they will have to redefine the boundaries of
its ethical guidelines for clinical trials before even putting the bam on Roche funding as this
can create serious damage to Roche as they might not be financially prepared for such sudden
actions. Success means different thing to different people because they normally think within
their boundaries instead of looking outside to other people performance, in reality success comes
from achieving mutual interest between producer , client, customer, and society. Traditionally
Traidos Bank is looking at its own ethical criteria measures instead of Roches performance or
outcomes.

QUESTION 4
Are Traidos Banks ethical standards set too high?

ANSWER

According to Traidos Bank closes social investment fund (2010), the bank said the fund,
known as the Triodos Opportunities Fund, had been set up to make equity investments in
growing social enterprises, but that there were not enough businesses that met its criteria. They
were looking for mature, scaleable businesses in United Kingdom that were looking for equity to
grow and most number of propositions also did not meet their requirements. Based on the article,
the ethical standards of organization is too high because risky for client getting disqualify by
Traidos Bank for anytime. Traidos might have to redefine their six principals in order to make
fund available for social enterprise. It main focus should be less on principle but more on
outcomes, in utilitarian ethics most of the ethical decisions are prised by their outcome rather
than cooperates standing up for principles. High ethical standards always require continuous
attention and support. Businesses nowadays do not always needs fixed rules and regulations, the
smart people at the top of organisations, who knows how to adjust the business in the ever
changing commercial environment, who are able to consistently redefine the values the
organisation that they agrees to follow, who needs to practices for promotion that reflect and
strengthen those values, who need an open cultures in its cooperate environment where staff can
discuss ethical issues in more depth and help to identify potential problems without destroying
the relationship with their clients. Ethical issues in businesses need to new features as regular
items on board agendas (Christopher.K, 2013).

Unocal in Burma

QUESTIONS

1. Answer whether from utilitarian, rights, justice and, caring perspective, Unocal
did the right thing in deciding to invest in the pipeline and then in conducting the
project as it did. In your view, and using your utilitarian, rights, justice, and
caring assessments, did Unocal do the right thing? Assume there was no way to
change the outcome of this case and that the outcome was foreseen, was Unocal
then justified in deciding to invest in the pipeline ?
Ethics is a kind of investigation and includes both the activity of investigating
and the results of that investigation - whereas morality is the subject matter that
ethics investigates (Velasquez 2006, p.8). Simply put - ethics deals with
understanding and differentiating right from wrong. The validity of Unocal
activities in engaging in the Yadana field project can be discussed from 4 (four)
moral principles point of view, which are : the utilitarian, rights, justice, and
caring perspective.

a. Utilitarian Perspective :
Utilitarian is a moral principle that claims that something is right to the
extent that it diminishes social costs and increases social benefits. In any
situation, the right action or policy is the one that will produce the greatest
net benefit or the lowest net costs (Velasquez 2006, p.59 & 61). The core
concept of utilitarianism is the focus of good consequences for all
stakeholders and not just the individual. To understand if Unocal decision to
invest in the Yadana project from a purely Utilitarian perspective, we can see
 the costs and benefits of the project, such as : Unocal and other companies
built schools and roads along the pipeline, small businesses were also
growing, the project provided Burma citizens with employment, infant
mortality along the pipeline dropped, Thailand was able to enjoy cleaner
natural gas from the 500-600 million cubic feet of gas that was piped in daily
through the pipeline instead of using dirtier fuel oil and Unocal was expected
to earn $2.2 billion dollars throughout the life of the contract. However, the
projects also causing the costs, as follows : hundreds of Karen were used as
forced labour and also forced to relocate to accommodate the pipeline
project, allegations of abuse and even murder by the Burmese government
for those who opposed the project. Considering the above mentioned
benefits and
costs, a pure Utilitarian perspective would say that it was right for Unocal to
investing in the Yadana pipeline. By conducting the project, there were a far
greater number of people got benefits from the project, as opposed to the
costs.

b. Rights Perspective:
In general, a right is an individuals entitlement to something (Velasquez
2006, p.72). When an entitlement is a result of a legal system, then it is
known as a legal right. However, there is a far greater right that
encompasses all human beings or better known as moral rights. The most
famous foundation for moral rights requires that everyone be treated as a
free and equal person (Velasquez 2006, p.78), as it is stated at Imanuel
Kants theory of Principle of Ends, which is : never treat a person as a means
to advance ones own interest but rather as an end in themselves. Moreover,
Manuel Velasquez in his Business Ethics Concept and Cases book also
mentioned that :

- Humans have a clear interest in being provided with work, food, clothing,
housing and medical care when they cannot provide for these themselves
(Velasquez 2006, p.81);
- Humans have a clear interest in being free from injury or fraud and in being
free to think, associate, speak and live privately as they choose (Velasquez
2006, p.81);
 - Humans have a clear interest in preserving the institution of contracts
(Velasquez 2006, p.81);
From the case study, we find that references are made to the rights
perspective of ethics violation, including : the report that throughout 1993
to 1996, the Human Rights Watch and Amnesty International issued reports
claiming that the Burmese army was using forced labour and brutalising the
Karen population to provide security for Unocal workers and
equipment. Subsequently, a 1995 report commissioned by Unocal also
stated that human rights violations have occurred and continue to occur. All
of reports were proves of indirect conflict with the rights perspective of
ethics. It appeared that based on the rights perspective, Unocal was not
correct in investing in the Yadana project and conducting in the ensuing
project as there was information at hand prior to Unocal entering the
contract and again during the time of the contract which showed that
unethical violations against human rights existed in Burma both directly
and indirectly related to the project.

c. Justic e Perspective :
Justice is giving to each that which is his due. In essence, the justice
approach to ethics is ensuring that all are treated fairly, with equal
distribution of benefits and risks. Taking into consideration the information
gathered under the Utilitarian and Rights perspective, it can be examined
Unocals position from the three different categories of justice, as follows :

- Distributive justice : distributive justice is concerned with the fair

distribution of societys benefits and burden (Velasquez, 2006, p.88).
From a distributive justice viewpoint, it did appear that Unocal made the
wrong decision to invest in the Yadana project due to the fact the various
reports from the US State Department, non-profit organisations and even
Unocals own commissioned study shows that although the benefit of the
project could have in theory been distributed to all of Burma via
government development, it appears that the burden of the project has
been focused on those living within the pipeline corridor;
- Retributive justice : proportionate punishment is morally acceptable for
breaking a rule or a law. From a retributive justice viewpoint, it appears
 that Unocal was not correct in its decision to invest in the Yadana project
as it was sued in both the Federal and State courts in the US and the
ensuing bad publicity and boycotts by consumers in the US eventually
forced Unocal out of business by way of a merger with Chevron.
- Compensatory justice : the just way to compensate people for what they
have lost when they were wronged by other. (Velasquez, 2006, p.88).
From a Compensatory Justice viewpoint, Unocal was right in investing in
the Yadana pipeline as the Karen population who had suffered as a result
of the project were adequately compensated through the out of court
settlement.

d. Caring Perspective :
Ethics from a caring perspective emphasises the importance of
relationships. Since caring about other persons is the heart of the moral
life and, thus ethics. It is suggested that by demanding that we show care
towards those who depend on us, be it our family, community or even
country, we as individuals run the risk of burn out and self sacrifice. Again
drawing on the various reports from the US State Department, non-profit
organisations and even Unocals own studies, it appeared that Unocal was
not correct in investing in the Yadana project from an ethics of care
perspective. This is due to the nature of the ethics of care which
emphasises compassion, kindness and the development of relationship.
Since the Karen people was treated badly or without compassion by the
Burmese army, and with the awareness of Unocal, it violated the ethics of
caring perspective .

2. In your view, is Unocal morally responsible for the injuries inflicted on some of
the Karen people ? Explain.

To analyze whether Unocal is morally responsible for the injuries inflicted on

some of the Karen people, it is necessary to review the principles of ethical or
moral that had been violated and how the four main principles of ethical
translated into standard moral of the Yadana field project. In his Business Ethics
Concepts and Cases book, Velasquez showed that ethical principles
 (utilitarianism, rights, justice and care), provide a systematic basis of moral
standards that can be used to determine and evaluate the moral value of a
decision or assessment. In the case of Unocal, before the investment was made,
Unocal had conducted socio-political analysis of the State of Burma. In fact,
Unocal contracted a consulting firm to review the 1991 Amnesty International
report, which documented abuses against the Burmese by the army. Although it
had received an explanation of human rights violations in Burma, as well as the
risks that might occur, Unocal continued investing into the project.
Subsequently, in 1995, Unocal hired consultants to investigate conditions in the
Yadana region and again obtained a report on the existence of various human
rights abuses during the pipeline installation. The violation of ethics or morals
that obviously occurred related to the case of Unocal in Burma, including:

- Violation of rights principle, given the reports that show the existence of
human rights had been widespread;
- Violation of justice principle, because the benefits and the costs were not
evenly and equally distributed;
- Violation of caring principle, because the loss of basic compassion for the
people of Karen by the Burmese army;
Since Unocal proceeded with the project based on the Utilitarian principle of
Ethics in which the consequence of continuing the project outweighed the social
costs involved, it was justifiable to continue. As such, Unocal should be held
morally responsible and accountable for the injuries inflicted on the Karen

people.

3. Do you agree or disagree with Unocals view that engagement rather than
isolation is the proper course to achieve social and political change in
developing countries with repressive governments? Explain
The options between engagement and isolation became the questions that the
global community has put forth with regards to Burma. However, Unocal had
consistently chosen engagement since they believed that they could affect
better social and political change than via isolation policies. I agree with the
Unocals preference of engagement rather than via isolation, to affect changes
 in a country. Historically, isolation (isolation occurs when a country is isolated by
another country or group of countries in the form of sanctions usually in the
form of trade embargoes and/or travel & immigration bans) or unilateral
sanctions have proven to be ineffective. For example, commercial and financial
embargo imposed on Cuba by the US Government for more than 40 years was
the reason why Cuba became one of the poorest countries in the world.
Nevertheless, despite continued pressure from the US, Cuban president Fidel
Castro remains in charge of the country.
Likewise, sanctions against Iraq after the Persian Gulf War suggests that as
many as 567,000 Iraqi children may have died since the end of the first Persian
Gulf War because of economic sanctions imposed by the UN Security Council
(Thawnghmung & Sarno 2006, p.42). The Myanmar Times & Business Weekly at
its website suggests that the US ban on textile imports from Myanmar in 2003
resulted in tens of thousands of the estimated 350,000 workers employed in the
garment industry in losing their job. Whereas, the Clinton administration
switched from a policy of isolation to one of engagement (engagement is where
a country or a group of countries actively engage with a specific country with
hopes that dialogue and bi-lateral communication would serve as a more
effective platform to affect change for local, regional or global interests) allowed
Vietnam to grow towards liberalisation and has become an active trading
partner with the US. The Unocal Yadana project can also be considered as an
engagement policy. Among the benefits derived were :

- reduced infant mortality rates from 87 per 1000 to just 13 per 1000;
- provided improving medical care, new and refurbished schools, electrical
power, and agricultural development in the pipeline region;
- created of employment along the pipeline region which was and remains an
extremely poor and underdeveloped region of Burma;
In summary, although occasionally isolation policies have produced point
specific result, it is however usually accompanied by greater social, political and
economic fallout typically suffered by the general population. In contrast, a
policy of engagement does provide better overall outcomes socially, politically,
and economically, although sometimes it takes longer to provide visible results.

The GM Bailout
1. Locke, Smith and Marx would evaluate the events of this case in the following manner.

GM applying for money out of the TARP funds

Locke would believe GM (owners) have a right to property, but at the same time each
individual is allowed to dispose of what they own however they see fit, without
government interference. If the company is suffering from huge losses because the
owners didnt act responsibly, they have no right to ask for the governments help.

Smith would disagree with the fact that GM asks for money from the U.S. government.
Smith believes interventions into the market by government are undesirable and that
human planners cannot allocate resources as efficiently as the invisible hand of the
market.

Marx would also disagree with the fact that GM (investors) ask for money from the U.S.
Government (citizens). The fact that the investors already spend the money on shares, lost
the money and are now asking for new money to cover up their losses is against the idea
of a fair distribution of wealth. In this case the bourgeoisie suppresses the proletarians
and Marx wants to free the proletarians. He was against the idea of social hierarchy.

The U.S government approves the loan money out of the TARP funds

Locke believes the right of freedom and property is violated, because the tax payers did
not agree with GM borrowing money from the government. The bill didnt pass the
senate, so its indeed a violation of both rights.

Smith would disagree with the fact that the U.S. government approves the loan out of the
TARP funds. This is because he too believes the right of freedom and property is violated,
because the tax payers did not agree with GM borrowing money from the government
and it is conflicting with the whole idea of the American economic system which he
supports. Smith believes in the invisible hand theory which states that markets will heal
themselves. Companies fall while others are rising and this is all part of a well-
functioning economy.

Marx would be conflicting in opinion. On the one hand the U.S. Government uses tax
money to save the bourgeois company. On the other hand proletarian workers are saved
from unemployment. In socialism government is obliged to provide a job for each
citizen. There is no unemployment.

The U.S. Government owning 61% of the shares of GM

The fact that the U.S. Government owns 61% of GM shares violates Lockes theory.
Locke would state that the right of property is violated because the government took it
away from the investors. The right of property is important in his theory.
 Smith would again disagree with the fact that the U.S. government owns 61% of GMs
shares. Governments should not interfere in economic systems and should not own any
part of a company.

Marx would approve of this but he would prefer to see the government owning100% of
the shares. Marx believes that property should be owned by the people and not by the
private few. Since 10% of the shares are still left with the old shareholders, Marx would
see this as an oppression of the proletarians by the bourgeoisie.

2. The ideologies implied by the statements signed are that moving the free market based
economy is a dangerous step closer towards socialism. Socialism is characterized and defined
by government ownership/control of capital or a forced pooling and redistribution of wealth.

3. I believe that the bailout should have been done. The costs to society are likely to be higher
without the bailout than with the bailout. Without the bailout GM would not have been able to
borrow money from the banks and it would have gone bankrupt. GM employs more than
200,000 workers and finances more than 400,000 retirees. As such its bankruptcy would
directly harm millions of people. It may also seriously distress the stock market and economy as
a whole. Moreover, GM has been a largely profitable company for many years. If the company
can reorganize itself, the government may start earning a profit in the future.

I believe the bailout was mostly ethical in terms of utilitarianism because it focused on
maximizing the overall good; the good of others as well as the good of ones self.

Justice (looks how benefits and burdens are distributed among people) is not ethical because the
managers of GM were allowed to enjoy its profits during its healthy years while the taxpayers
have to bear the losses. As economist Joseph Stiglitz states, The profits are privatized and
losses are socialized. It is also not ethical from a retributive justice viewpoint because the
managers are not held responsible for the wrong decisions they have made, for example the
choice to lock GM into the SUV market.

Rights (looks at individual entitlements to freedom of choice and well-being) is not ethical
because government money is the citizens money; their right of freedom of choice may be
violated here because the citizens cannot choose whether to bailout GM or not. In this sense, the
bailout is not ethical in terms of rights. However, the bailout may defend the rights of well-
being of GMs employees as they can maintain their salary which would be ethical.

Caring about the employees or people who are otherwise dependent on GM the bailout seems
ethical. However, when caring about citizens in general it may not be ethical because the profits
of GM were not redistributed to citizens either.

4. In your judgment, was it good or bad for the government to

take ownership of 61% of GM? Explain why or why not in terms
of theories of Locke, Smith, and Marx.
I think it is wise to say that it is better for the government to take 61% of
GM, which make the government take the most control over the
company. Because with the government intervention, it could avoid free
market monopoly which means the government holds highly as regulator
of the market. The government is also help the company financially and
since it was the government the finance could be more stable rather than
being held by a certain company or public.