IRENE W.

KARARI

MCS8301: BUSINESS ETHICS AND GOVERNANCE

CAUGHT BETWEEN A ROCK AND A HARD PLACE: ETHICAL DILEMMA OF A YOUNG OFFICER IN THE CIVIL SERVICE IRENE W.KARARI 61065

“Relativity applies to physics, not ethics”
BEG Term Paper: MCS8303: Business Ethics and Governance Page 1/ 19

KARARI Albert Einstein BEG Term Paper: MCS8303: Business Ethics and Governance Page 2/ 19 .IRENE W.

Being a former CU chairman in the university. which is why it is essential that employees have a fair understanding of ethics and how they apply to business.2 Million. which are used in businesses during the decision-making process (DecisionMaking-Solutions. A fresh graduate from the university was appointed to head the Lucrative ICT department in one of the government ministries.KARARI INTRODUCTION Firms face dilemmas daily. BEG Term Paper: MCS8303: Business Ethics and Governance Page 3/ 19 .IRENE W. fewer than the number quoted and fleece the government of cash amounting to Ksh. 2008). The study of ethics involves the approaches of principles or standards. the head of procurement introduced him to a scrupulous merchant with whom they planned to collude and procure low quality computers. he found himself caught between a rock and a hard place as to whether he would throw his morals to the wind together with a good name he had built over the years and seal a 3 million shilling deal oblivious of the danger of the prickly pangs of the Kenya anti-corruption commission. A few days later.3.

In of the president’s speeches.KARARI PROBLEM STATEMENT A few years ago. BEG Term Paper: MCS8303: Business Ethics and Governance Page 4/ 19 . Many officers at that time were ignorant of the cost of Computer hardware and software.IRENE W. the government of Kenya came to a realization that ICT was an important tool that could drive the economy to greater heights. This would improve the way the government offers its services to its citizens. took advantage of the decree andinflated the prices of these items. This being a new technology also contributed to a greater extent in misuse of government funds. The ICT officers and those in the procurement department worked in cohorts with these merchants and fleeced the government of millions which could hardly be justified. the ministry of finance was directed to increase budget allocation to facilitate all ministries to procure ICT equipment so that Government dream of “better service to the common mwananchi” is achieved. Merchants in collaboration with other civil servants spread across state corporations and other ministries therefore.

He always had his smooth way in winning contracts even in categories where he had not been pre-qualified to supply good and services. it became very hard to probe these setback. auditors and the accountants were also working in collaboration. Previously. This was his first job ever.IRENE W. he had worked with the head of ICT and that of the procurement department. he was eligible to head an ICT department. both of whom had been transferred through the normal transfers of officers that normally take place so often in the public service.KARARI Since the. An officer of high repute who had just graduated from the university was hired by the public service commission and going by his academic qualifications. BEG Term Paper: MCS8303: Business Ethics and Governance Page 5/ 19 . This he did by bribing other heads of department who would then find it difficult to question his deals. a merchant has been supplying various items in various ministries and he had been blacklisted in others due to supplying items of low standards or not supplying any at all yet he had received payment. CASE PRESENTATION: Ethical Dilemma Over the years.

He was then introduced to this merchant who informed him of how he had done business with his previous boss and how they could also work together and make a kill without anybody’s knowledge. He arrived in a short while and was briefed on how the ministry could improve its operations by use of computers. Out of this. The Merchant’s proposal to the two officers: For every computer bought. the ICT head would get 17% of the savings in addition to part of the 10% which is the share given to the BEG Term Paper: MCS8303: Business Ethics and Governance Page 6/ 19 . the above mentioned merchant approached the head of procurement with the intention of getting a tender to supply 100 computers. the head of procurement called the head of ICT and asked him to avail himself in his office.32000.IRENE W.KARARI So this officer was appointed to head this ministry while another officer was promoted and posted to the same ministry to head the procurement department to fill the positions that had fallen vacant. This would mean that he would not supply the specified computers because if he did. This being an ICT requirement. the merchant would make ksh. A few days after. then they would not save the large amount of money they had anticipated to.

the conscience would not allow him to do that.3.KARARI head of procurement. there was a force reminding him of his morals as an individual.IRENE W. that as per the government rules and regulations. the ICT officer envisioned how his life would suddenly change for better. However at the back of his mind.In total the ministry would be fleeced of KSH. The ICT head with the support of head of procurement would then be required to convince the members of the ministerial tender committee that the price quoted is good enough and that the computers to be bought would be of high quality. He/she also advices the committee on the pricing or on any other question that may arise. But who else knew of his background in the ministry? It’s important to note at this point. Being a former chairman of the Christian union in the university and a strong believer of Christ. BEG Term Paper: MCS8303: Business Ethics and Governance Page 7/ 19 .2M. which would be shared among the three master minds of this plan. The 10% is from the total amount quoted in the LPO . the ICT department’s advice is deemed the best as far as technical advice on ICT equipment is concerned. Being a fresh graduate from campus.

The KACC officials conducted an audit in the regions where the computers were purportedly distributed. Soon afterwards an external auditor blew the whistle that a few officers had colluded to misappropriate government funds and raised a few queries on some cash purchases and some payments made for selected ICT items.KARARI He could choose to approve the quotations if he has an agreement with the merchant or he could otherwise reject it. Later on. The KACC officials spent some time in that particular ministry and soon the hidden plot was unearthed. BEG Term Paper: MCS8303: Business Ethics and Governance Page 8/ 19 . the Kenya anticorruption commission (KACC) released a report that embezzlement of funds was rampant in some government ministries and that the commission was embarking on investigating some adversely mentioned ministries in a bid to catch the big and small “fish”. the merchant was paid in full and the loot was divided as earlier agreed. Having the assurance of his part of the cake. Immediately afterwards the long process of payment began and in one month.IRENE W. The equipment was half of the consignment but the documents in the stores showed that they were supplied in full and distributed to other regional offices. the head of ICT decided to give in to the merchants and the head of procurements’ master plan.

• The officers involved were aware of their actions and the dire consequences but chose to ignore and satisfy their own ill desires. KACC recommendations Officers were found to have committed a criminal offence because they forged documents to cheat their own employer. • They were of low specifications than those recommended by the ministry.KARARI KACC findings • Computers bought were half of the number requested by the ministry. • The officers did not act in an upright manner oblivious of the code of regulations (COR) in place for civil servants BEG Term Paper: MCS8303: Business Ethics and Governance Page 9/ 19 . • The computers were supplied and distributes rather too fast. • The documents in used for processing of the payment were not the same as those retained in the store. In fact the serial number of the LPO used for payment was not from our ministry.IRENE W.

where was the head of administration when all these were happening? BEG Term Paper: MCS8303: Business Ethics and Governance Page 10/ 19 . there is no proper accountability. culture.g.KARARI Eventually. most of us are taught what is right and wrong. but with differences in values and perspectives. It’s about promoting fair. efficient.IRENE W. and also as “The rules of conduct recognized in respect to a particular class of human actions or a particular group. Governance and Ethical problems of this case From birth. The Random House Dictionary (1999) defines ethics as “a system of moral principles". it may be hard to achieve. They also lost their benefits and were charged and each jailed each for 5 years. etc. E. In this case. transparent and accountable administration of corporations to meet well defined goals. Ethics is a trait that most human beings acquire."  Corporate governance is the manner in which power is exercised in the management of economic and social resources for sustainable human development and it’s a vital ingredient in the maintenance of a dynamic balance between the need for order and equality in the society. disciplinary action was taken by the public service commission and the officers were interdicted.

the whole community of taxpayers. They chose to abuse power oblivious of the trust the ministry has bestowed in them hence this leadership is one that is not representative and conscious of its obligation.Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of their BEG Term Paper: MCS8303: Business Ethics and Governance Page 11/ 19 .  The principle of the common good states that “the good of each human person is intimately related to the good of the whole community” The two officers listed above did not work for the common good of the ministry and even to a larger extent.KARARI Accountability means there must be leadership that must be ready to account or are accountable which is evidently lacking in this case. These officers are not honest and faithful hence putting their integrity into question. The “good” of the two officers is certainly not in tandem with the good of the whole community.  In general.  The leadership of the ICT and Head of procurement is questionable.IRENE W. They were out to fleece the government of funds which may have been used for other development projects for the good of the common mwananchi.

The head of ICT and procurement chose to ignore their responsibilities and satisfy their own wishes at the expense of the taxpayer’s money. These responsibilities include: • Acting solely in the interest of their employers and their beneficiaries and with the exclusive purpose of providing benefits to them and carrying out their duties prudently. failed to act accordingly and were selfish enough to ignore their duties and responsibilities. The duty to act prudently is one of a fiduciary’s central responsibilities of every leader. They approved not so reasonable project hence cheating the rest of their colleagues. these two senior officers. BEG Term Paper: MCS8303: Business Ethics and Governance Page 12/ 19 .IRENE W. The organization expects them to advice them accordingly since they know better. and more so to the ministry in which they are posted. in conjunction with many other officers not mentioned. especially those who are professionals in area where they are an authority. Oblivious of their fiduciary duties to the government of Kenya.KARARI organizations and their beneficiaries.

1. Officers whom the management i. Subordinate sections deemed to be in a better position to make good decision so authority is correctly “pushed down” to them. The individuals who the management deems fit to handle decision making are empowered to do so. the central government. has entrusted with management of taxpayers’ money are in total disregard of it and are out to satisfy their own selfishness. total abuse of this principle is evident.e. This is a complementary principle that must be respected to have good governance. Some of the issues pinpointed above can be outlined as follows.IRENE W. in this case.KARARI  Principle of subsidiary is also known as the “principle of appropriate Decentralization”. Wrong projects: government programs are sometimes dictated by senior officers. In this case it may not have been really necessary to buy computers while the officer continues sitting in BEG Term Paper: MCS8303: Business Ethics and Governance Page 13/ 19 . However. rather than being based upon sound commercial judgment.

In many cases this is just paying someone to do the job that they were supposed to do anyway.KARARI shifts in the offices due to lack of furniture. the official concerned expects to receive a payment for doing this. 3. Such funds could be redirected to more serious projects. Systematic high level corruption. The payment of this money is hidden in various ways. it has become regular practice that the contractor who wins a construction project needs to pay a percentage of the contract price as a condition of being allowed to work. progress may be deferred indefinitely. but the costs can add up and there is no accountability for the delays caused. justified by the official concerned as a delay caused by bureaucratic procedures. Facilitation payments: government institutions have a tradition of "facilitation" payments. If the money isn't paid. that when a signature is needed or a decision needs to be approved. Poor quality of goods and services: this is clearly seen in this case as poor quality computers BEG Term Paper: MCS8303: Business Ethics and Governance Page 14/ 19 . 4. 2. or other methods which disguise where the money is actually going.IRENE W. In Government institutions. This is called "speed money". because it speeds up the approval or decision.

KARARI were bought yet the price quoted was for the specifications given by the IT department. Schoorman & Donaldson (1997) as “a steward protects and maximises shareholders wealth through firm performance. more taxpayers’ money will still be injected to the ministry to facilitate operations. This theory has its roots from psychology and sociology and is defined by Davis. Most of these problems are easily observed by senior officers. This i as result of a shortage of trained staff to supervise the work properly. when left on their own. or in more serious cases a bribe might have been paid to supervision staff to ignore failings such as not meeting the specifications approved by the technical department. Too much time and money is spent doing the same thing. will indeed act as responsible stewards of the assets they control. the steward’s utility functions are maximised”. Since those computers will not last for long. The governenment does not engage an agency to look after its own affairs but rather empowers its own officers BEG Term Paper: MCS8303: Business Ethics and Governance Page 15/ 19 . yet they still regularly occur.IRENE W. because by so doing. ANALYSIS OF THE PROBLEMS IDENTIFIED Stewardship theory is a theory that assumes that managers.

This is the opposite of most officers in government. BEG Term Paper: MCS8303: Business Ethics and Governance Page 16/ 19 . The freedom to make decisions on behalf of the central government is normally abused and officers disregard the fact that they are stewards of all government affairs.KARARI through ministries and other state corporations to utilize funds and generate revenues on its behalf. The following recommendations provide a proactive stance for leaders and educators. they should be committed to make the ministry succeed. leaders must employ ethical and moral codes as a standard.IRENE W. In this case. Reshaping an unethical organizational culture requires all individuals to look beyond themselves and focus on higher purposes. These officers are expected to act for the collective good of the government which is their employer. the management assumes that the head of ICT.head of procurement and all the civils serants will make the right decisions in the interest of the shareholders who are taxpayers. To reshape an unethical organizational culture. even at personal sacrifice. The officers being stewards are also expected to identify with the organization and embrace its objectives.

such as the exercise of sound judgment or ethical considerations. Senior officers in government should always support ethical practices within the ministries.IRENE W. and Robbins (2000). Immediately officers are employed. 4.they should sign a statement acknowledging the value of workplace ethics and practices. The result is a faulty decision that may become the basis for adverse outcomes. Aranda. Personal ethics must start at the top. groupthink occurs in situations when team consensus is placed above other factors in the decision-making process. A culture like that of the military should be established within the organization where officers are personal encouraged to be responsible for ethics. discrimination. Group think cultures should be avoided. and double standards. courageously and dependably and to inspire others to do the same. 2. All this should be highly discouraged and officers should be BEG Term Paper: MCS8303: Business Ethics and Governance Page 17/ 19 . 3. individuals should be taught to act ethically. According to Thompson. The officers should be warned by probably having warning signs within the culture of potential unethical practices that might include harassment.KARARI 1.

” http://www.jstor. 1998). 330-339. “Manipulation of Human BEG Term Paper: MCS8303: Business Ethics and Governance Page 18/ 19 . REFERENCES JSTOR: The Academy of Management Journal.IRENE W.org/pss/256911 Kelman. Those in leadership positions have a fiduciary duty to the government and to the larger public to turn this around and create ethical workplace cultures. CONCLUSION The crisis of poor ethics in kenya has jeopardized public trust. 3 (Jun.KARARI cautioned to be ready to bear thier own cross in case of any negative eventuality. These ethical issues have also caused loss in competitive standing. Vol. 41. Herbert C. further deterioration of the kenyan economy and living standards. No. caused an erosion of organizational cultures. 1965. Its high time the government relaized that its institutions are rotten ethically and should therefore develop a course in their own institutions where officers are taken for more sensitization after serving for a time and before they join the civil service. pp.. caused unemployment and more so profit losses. created human suffering.

leader-values. C. (1996) Ethical Decision Making and Information Technology: An introduction with Cases New York: McGraw-Hill Inc.A. and Grillo.IRENE W.” http://www.htm Kallman.” Journal of Social Issues 21(2): 31-46. J. and Martin. 88-92 BEG Term Paper: MCS8303: Business Ethics and Governance Page 19/ 19 . 24(2).ericdigests.html Resolving Ethical Dilemmas in the Workplace: A New Focus for Career Development.Results focused Leadership thinking and practice from around the Globe. D.gov/ebsa/publications/fiduciaryresponsibilit y. H. E. Martin. (2009). “ Leadership Development . Middle Eastern Finance and Economics.” http://www.KARARI Behavior: An Ethical Dilemma for the Social Scientist. 112.H.org/pre-9220/focus.P. pp21-26 Abdullah.asp? ContentDetailID=966 “Meeting Your Fiduciary Responsibilities. ERIC Digest No.dol. Fundamental and Ethics Theories of Corporate Governance . (1994) Thematic Analysis of the new ACM Code of Ethics and Professional Conduct Computer & Society.com/Content/detail.” http://www.D.

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