Team Licence
subjects
cpd types
licence
about

Considering the question of ethics – a matter dear to all accountant's hearts – there are two schools of thought.

The hardliners believe that every step along the way in a course of action must be ethical in order for the outcome of those actions to be ethical. An alternative approach is to decide that if the outcome of a course of action is ethical then de facto the steps leading up to that outcome must also be ethical.

So, for example, on the latter basis it can be argued that shooting a serial killer – thus taking one life to save many more- is ethical because saving lives is ethical and the more lives saved the more ethical the action is – the greatest good of the greatest number. Nonsense say the hardliners – killing is unethical so killing a serial killer is not ethical in any way.

And so we come to Glencore, the Anglo-Swiss commodity trading and mining company.

In the UK the company has admitted to five counts of bribery and two counts of failing to prevent bribery of officials in Africa amounting to $27 million. Apparently , at one stage, they were flying suitcases of cash out in private jets as part of what was later described as 'endemic corruption' in the company.

For this Glencore was fined £281m by a UK court. It had previously been fined $1.1billion by the US for commodity price manipulation and bribery violations.

This is just the latest case involving bribery and corruption on a massive scale. Naturally company managers vow to do better, to change the culture, to learn lessons etc etc but this begs two questions i.e.

  • Is it possible in some fiercely competitive industries to do business without paying bribes? and
  • Can paying a bribe to obtain business ever be ethical?

If the culture of the country in which the bribes are paid see receiving such payments as part of the normal course of doing business the recipients clearly see nothing immoral in it. It may be technically illegal but that is a different issue as they see it.

In the USA bribes paid for 'oiling the wheels' are not illegal – only those paid for obtaining the contract in the first place but in the UK and many other countries all such payments are illegal. If 'oiling the wheels' is OK why isn’t it OK to pay bribes to get the work in the first place? – a bribe is a bribe after all.

So is what Glencore did morally justifiable even if it is actually illegal? Is paying bribes to government officials in various African countries an immoral act even if the officials themselves consider it reasonable, or even necessary, and see nothing wrong with it? On a smaller scale in countries such as, for example, India bribery in one form or another is considered a normal part of day-to-day life – everybody does it so it is seen, in society, as normal behaviour even if it is deplored by commentators and, some, politicians. So is it ethical?

It all depends on where you stand in a way. A hard-line view would be that, for example, government officials are there to protect the country and its people and to ensure that deals made are what is best for the country – not to enrich themselves or their friends.

A more pragmatic view is that paying the bribe has, say, enabled a company to develop an oilfield or sell lithium or whatever thus creating jobs and improving the life of workers in poorer countries through the simple matter of paying off some officials. So it's okay then is it – if bribery encourages commerce it has to be , if not a good thing, at least acceptable?

But this is a false argument.

Paying bribes encourages corruption in these countries and promoting and even encouraging officials to be corrupted is, of itself, unethical. The end does not justify the means because the end is not a contract or a supply of materials but the spread of corruption in government.

Committing criminal acts to obtain business is probably more widespread than commentators would care to admit but can never be justified on any grounds.

It behoves businesses to behave in an ethical manner over the long term. Of course this may lose them business from time to time, particularly against competitors less scrupulous than they are, but over the long term research indicates that a reputation for honesty, fair dealing and ethical action can pay off to a much greater extent than by indulging in rather sordid and irresponsible criminality.

Short term gain can result in long term pain.

John Taylor is an author for accountingcpd. To see his courses, click here.

    You need to sign in or register before you can add a contribution.