CASE STUDY 16 THE MOZA ISLAND PROJECT The American Accounting Association (AAA) Model: STEP 1: What are

the facts of the case? Habib, the governments supervisory consultant for the project has been delaying and rejecting the work of Gulf Sargam for their refusal to bribe him. In a desperate move to avert huge losses, The General Manager instructed Ben to endorse the payment of the bribe.

STEP 2: What are the ethical issues in the case? Whether or not to endorse the payment of bribe. In endorsing the payment, Ben would be acting illegally and also, in negligent of his professional duties; conversely, non-payment will result in huge, crippling losses for the company.

STEP 3: What are the norms, principles, and values related to the case? Ben has always taken a strong position against bribery in line with company policy because he feels it is wrong, immoral, unlawful, hence taking part in corruption perpetuates it. As a director, he also owes a moral duty of integrity to his shareholders.

STEP 4: What are the alternative courses of action? Option 1: Endorse the payment of bribe. Option 2: Refuse payment and expect consequential losses.

STEP 5: What is the best course of action that is consistent with the norms, principles, and values identified in STEP 3? Refuse paying the bribe. This may lead to the imposition of the contract penalty of $300,000; increasing the net loss of $575,000 to a total loss of $875,000.

STEP 6: What are the consequences of each possible course of action? Under Option 1, Ben endorses the payment of bribe; Habib will be encouraged to approve their workdone and also their variation claims. This will enable Gulf Sargam to recover its losses and even make a reasonable profit, but Ben exposes himself to the risk of being in professional and legal trouble if his payment of bribe was ever uncovered.

Under Option 2, Refuse paying, this will lead to the imposition of the contract penalty of $300,000. The resultant loss will now amount to $875,000; which spells severe consequences for the operating capability of the joint venture.

STEP 7: What is the decision? Ben should decline paying the bribe. Emphasis should be geared towards managing the after-effect of disclosure. Disclosure of the loss will have a devastating effect on the operating capability of the joint venture.