Titan Corporation, based in San Diego, California, has about 12,000 employees di

Question

Titan Corporation, based in San Diego, California, has about 12,000 employees dispersed across 60 countries. In 2005, it was found guilty of bribing the president of Benin. The combined penalties of $28.5 million are the largest imposed on a company in the history of the Foreign Corrupt Practices Act. Titan, with $2 billion in annual sales, mainly from military, intelligence, and homeland security contracts with the U.S. government, pleaded guilty to three felonies before a federal judge in San Diego. According to the Securities and Exchange Commission (SEC), Titan's misconduct was global. Though Titan does business in more than 60 countries, the company has no policy on overseas bribery and failed to monitor its 120 international agents. The SEC said Titan underreported commission payments in its business dealings in France, Japan, Nepal, Bangladesh, and Sri Lanka.

Paul R. Berger, an associate director at the SEC's enforcement division, said that the evidence in the case showed "the virtually complete lack of internal controls" at Titan, along with the company's inability to operate with policies and procedures that would help them detect and deter such problems.

Critical Thinking Questions

1.    Do you think that Titan is an isolated example or that many companies engage in similar behaviors overseas but are never caught? Do you think it is acceptable for a firm to take the risk and pay a bribe if the firm believes that the chances of getting caught are small and that in the worst-case scenario the fine imposed will be an insignificant fraction of total operating costs? Explain.

2.    Shortly after Titan pleaded guilty to the bribery charges, it hired Daniel W. Danjczek under a new position title of "vice president for compliance and ethics." Danjczek's job is to "instill ethical behavior at the company." Do you think this is a wise and sincere attempt to redress the company's ethical problems or a public relations gimmick? What would you do to ensure that such an appointments not perceived by employees as a superficial "quick fix" to improve the firm's ethical reputation? Explain.

3.   When a company operates in many different countries with widely diverse legal systems and ethical standards how can it develop and enforce a global set of criteria as to what is right and wrong? Explain

Explanation / Answer

1. No, i don't think that Titan is an isolated example. In fact many companies must be engaging in similar behaviors.

No, it is not acceptable for a firm to pay bribes just because the chances of getting caught is low. This is because such an action is both unethical as well as illegal. The long term ramifications will develop unfavorable and undesirable situations for the company if they get caught. Even though the penalty may not be large or significant, it may lead to significant business losses in future as other countries and companies would not like to associate with and buy from Titan which has a blemished track record and a tarnished image.

2. It could be a wise and sincere attempt but Titan should do more than just appoint a vice president for compliance. Titan should have a culture that promotes and encourages ethical practices. In order to ensure that employees do not perceive it as a "quick fix", Titan should start taking concrete steps to eradicate all type of unethical business practices being followed in the company. The company should start by communicating with employees on the importance of ethics while dealing in business transactions. This can be done through seminars, townhall meetings, trainings etc. Secondly, the company should immediately fire all employees guilty of such unethical business practices and remove guilty international agents. The company should establish strict standards and implement policies so that future cases of unethical business practices are dealt strictly.

3. Even though legal systems are diverse across the world, the company should base its criteria on the basis of its own defination of right and wrong. For example, in many countries giving token gifts to government officials for business contracts and tenders is considered a standard practice. However, it is unethical. Titan should develop its global set of criteria according to the general defination of right and wrong. This will make the practice of giving gifts unethical as a standard company policy and will deter any illegal or any unethical practice being followed in the company on a global scale. This may lead to loss of business in the short run, but in the long run it will enhance the reputation of the company as a follower of fair business practices. Thus, the company should overlook the prevalence of unethical practices in some countries and base its policy on a broader platform. These policies will serve as a standard and uniform set of guidelines for all its employees and agents accross the globe.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.