Professional Ethics

( Engineering )
EG 2501

Week - 11

Edmodo.com
Class code: ve9vei
RECAP last week 8 -10

What have we learnt in week 8-10 ?

Law , Ethics and Personal Choice : overlap and consequences

Distinction between Law and Ethics

Introduced to Brunei Legislation; Prevention of Corruption Act

Tutorial – when is a gift a bribe and be aware of other forms of gratification

 Ethical Behavior
The Five Cornerstones of Ethical Behavior

Here are some examples of codes of personal ethics. At this

point you might want to compare your own personal code of
ethics with the ones listed here.

1. Do what you say you will do.

2. Never divulge information given to you in confidence.
3. Accept responsibility for your mistakes.
4. Never become involved in a lie.
5. Never accept gifts that compromise your ability to perform
in the best interests of your organization.
 Which side of the circle would you rather be?...

Ethics Individual
Law Choice

Legal Standard Social Standard Personal Standard

But is everything legal ethical? No right or wrong in ethics Individual choices could be both
Example: Although most things ethical illegal & unethical
Euthanasia, Abortion are legal
 Distinction Law vs Ethics

Law is a SYSTEM of RULES that govern a society with the intention of

maintaining social order, upholding justice and preventing harm to individuals
and property.
Ethics:
• Principles of conduct governing behavior of an individual or a group
• Principles of right and wrong

Parameters Law Ethics

Source External Internal

Concerns Conduct and Actions Motive, attitude, culture

Interests Society Individual or

Organisation
Enforcements Courts Ethics Committee and
professional
organizations
 Commencement: The Act REVISED EDITION 2002
1st January 1982 (15th September 2002)

Prevention of Corruption Legislation @Brunei Darussalam

Consists of 7 parts This Act Governs Us:
- As Individuals
- As Engineers (or other Professionals)
A BRIBE is a payment of money (or something of value) to another person in exchange
for his giving special consideration that is incompatible with the duties of his office,
position or role .
A BRIBE also induces one person (the person given the bride) to give to another person
something that he does not deserve.

Other form of bribes

Extortion Grease money Commission
Gifts Discounts Sponsorship
Nepotism Cronyism Privileges
kick back Disclosure Gratuities

Both acts of GIVING and RECEIVING bribes are forbidden by LAW and Professional
Engineering codes
 Definitions and Clarifications of The Act

Gratification or bribe includes…

a. Money or Gifts , loan fee or reward

b. Any office , employment , contract or services

c. Any payment , release or liquidation or loan

d. Any valuable consideration of any kind – discount ,commission, bonus

e. Any forbearance to demand any money or valuable thing

f. Any aid, vote, consent or influence , holding out of any expectation of gift

g. Any other service, favour or advantage of any description

h. Any offer , undertaking or promise of any gratification of above a-g.

If in DOUBT – NEVER accept – Reject , Declare or Report

 Other consideration

- Corrupt transaction with agents ; agrees to accept or attempts to obtain on behalf

- Guilty notwithstanding the purpose carried out or not ; reason to believe

- Corruptly procuring withdrawal of tender

- Public officer in possession of unexplained property or maintains standard of living

above that commensurate with present or past emoluments

- If charged under this Act ., you are said guilty unless proven the contrary (innocent)

Presumption of corruption in certain cases.

25. Where, in any proceedings for an offence under this Act it is proved that the accused
gave or accepted a gratification, the gratifications hall be presumed to have been given
and accepted corruptly as such inducement or reward as is alleged in the particulars of
the offence unless the contrary is proved.

- If you are an Officer , it is an offence if you don’t report attempts of bride offered

If in DOUBT – NEVER accept – Reject , Declare or Report

 Topics Schedule (guide)
The module covers the following topics:

•W1-2 intr Aug General Introduction

•W2-3 Aug Basic Concepts of Ethics, Values, Virtues and Trust
•W3-6 Aug Theoretical Ethical Framework W4 issue assign#1 23/8 Done

•W7-9 Sept Duty of Care and Obligations of (Engineering) Professional

- Public Safety, Health and Welfare
- Sustainability and Environmental Ethics
• W9-10 Sept/Oct Ethics and Law
- Code of Ethics For (Engineering) Professionals W7 issue assign #2 13/ 9 Done
- Prevention of Corruption Legislation W7* assign #1 due 15Sept Done
Sept16-23 semester break
• W 10-11 Oct Common Ethical Issues and Concerns
•W 11 Oct Ethical Dilemmas and Moral Reasoning
• W12 Oct Ethics and Compliance W12* coursework #2 due 20Oct
- Creating Ethical Excellence
- Employee Code of Conduct
- Compliance Program
- Ethics Audit

• W12-13 Oct Ethical Leadership

• W13/14 Nov Corporate Social Responsibility
• W15 Nov Revision Week
• W16 Examination (good luck) 19 Nov – 1 Dec
 Intended Learning Outcome ( ILO lecture # 11)

1. Understand common ethical issues – its legal implication . Group discussions on some
examples to distinguish

2. Understanding concept of Common Morality : Rules and Duties and Levels

3. Further tutorial on differentiation of gifts v bribe ., when is a gift a bribe.

 Common Ethical Issues
Engineers & Other Professionals Encounter
Tutorial

Legal Issue?
❑ Safety ✓
❑ Health ✓
❑ Environmental protection ✓
❑ Acceptable risk
?
❑ Compliance
❑ Confidentiality ✓
❑ Data integrity ?
❑ Conflict of interest ?
❑ Honesty/Dishonesty act (e.g. Bribery) ✓
❑ Societal impact ?
❑ Fairness (e.g. Insider Information, Gender Treatment , discremination ) ✓
❑ Accounting for uncertainty (e.g. Impact of new medicine, new process). ✓

Lets discuss /give examples of when is an ethical issue becomes a legal issue
 Formulation of Common Morality - Virtues

One of the oldest formulations of common morality → virtues

Virtues = character traits that motivates morally desirable actions

Example of virtues in Engineering :

❖ Honesty (in professional works)

❖ courage (in protesting actions that harm people)

❖ Loyalty (to clients and employers)

❖ striving for excellence (in one’s professional work)

❖ Respect for natural world ( in motivating Environmentally friendly engineering)

❖ compassion or benevolence ( for those who can be helped by engineering works

 Formulation of Common Morality : Rules and Duties

WD Ross…list of basic duties or obligations

R1 . Duties based on our acts

a. Duties of fidelity (to keep promises and not to tell lies)
b. Duties for reparation for wrong done
R2. Duties of gratitude ( e.g to parents and benefactors)
R3. Duties of justice (e.g to support happiness in proportion to merit)
R4. Duties of beneficence (to improve condition of others)
R5. Duties of self-improvement
R6. Duties not to injure others

These moral beliefs are reflected in Engineering codes

❖ faithful agents of their employees – duties of fidelity R1 and gratitude R2

❖ protects health , safety and welfare of public – duties of justice R3 ,beneficence R4 and
no injury to people R6

❖ Improve professional skills – duty of self improvement R5

 Formulation of Common Morality : Rules and Duties

Bernard Gert…10 “moral rules: that capture basic elements of common morality

G1 Don’ kill G6. Don’t deceive

G2 Don’t cause pain G7. Keep your promise
G3 Don’t disable G8. Don’t cheat
G4. Don’t deprive of freedom G9. Obey the rule
G5 Don’t deprive of pleasure G10. Do your duty

According to both Ross and Gert :

Moral precepts are NOT “absolute” in the sense of being without exception.
Exceptions to moral duties and rules , however, MUST have a justification or
a good reason for doing so.

❖ Eg…Usually it is wrong to lie..however if the only way to save a person being hurt is to lie.,
then lying is morally justified.

Deciding to walk , going to a movie or read a book instead of doing house chores does not
call for a justification. Breaking a promise, injuring others ,do call a justification.
 A GIFT can be a BRIBE ., but A BRIBE can never be a GIFT

When does a GIFT becomes a BRIBE ??

When does a friendship /relationship becomes ABUSE of POWER

When does a close personal relationship with subordinates becomes cronyism ?

When does discounts becomes inducement ?

When does structure mentoring becomes favouratism ?

 Determination criteria : A gift or a Gratification

Following Questions to avoid entrapment into accepting a bribe

1. Is this a gift from a blood relation ?

2. Does the written internal policy listed this item /practice as acceptable ?

3. Is this a promotional product - item with permanent company logo affixed and
reasonably low priced ?

4. Is the “perceived” value of gift below the threshold of allowed value ?

5. Is the item offered to all staff and not just exclusively to you/your team only ?

6 . Is the gift given outside the black-out period (=sensitive period) of tendering or
contract negotiation with gift giver. ?

If answer is YES to all above ., you may accept , however declare and report nature of gift.

If answer is NO to any of the questions; reject and report. A bribe is being attempted.
 Tutorial Bribe or Just Business relation

1. During a sales visit, a sale’s representative offers you a coffee mug with his company’s
name and logo on it. Value of mug is less than B$10. Can you accept this ?
Does your answer change if this item is B$350 crystal bowl with the company logo engraved
on it ? How about if there is no logo engraving on it ?

2. Your meeting with client’s representative is running into lunch hour.. She invites you for
lunch. You go to a fast food restaurant and pays for own food. Is this practice acceptable.?
Does the answer change if you go to an expensive seafood restaurant? If she pays for lunch?

3. A contractor representative whom you deals on regular basis invites you to a round of
golf at local RBC Golf course. Should you go ? Is the answer going to be different if he invites
you to a weekend golf at Kota Kinabalu Country and Country club where his Company has a
Corporate account/member ? What if he pays the club’s guest fee for you ?

4. An equipment supplier representatives would like you to attend a day technical seminar
locally on equipment you company have bought. Would you attend. How about if the more
advance seminar is to be held regionally in Supplier’s regional HQ in HongKong. , and since
your company is a major user., the supplier company will pay for you to go ? What if your
family is invited as well?
 Why Corporate or Business Ethics?

❖ The public is increasingly concerned about the way industries, professions, companies
and organisations conduct their business.
❖ These industries, professions, companies and organisations are equally concerned that
their employees could erode their values, thus tarnish their reputation and hence affect
their standing or business.
❖ More importantly, unethical behaviour by any employee could affect the
competitive business (performance) or even survival of that organisation

Corporate or Business Ethics provides direction to employees and establish a public image
of good behavior, both of which benefits businesses .

✓As engineers (or other professionals), we are often employed by these companies
and organisations.

✓ We are thus obliged to conduct ourselves in accordance with our employers ethics programs

Note:
Even when we are self-employed engineers, we would still benefit from an ethics program.
It could serve as a solid marketing tool for potential business partners or clients,
who may only do business with a company that takes business ethics seriously.
 In summary, Business Ethics influence and contribute to:

Reputation and image.

Employee’s sense of belonging, commitment and loyalty.
Relationship with stakeholders
Shareholders’ confidence.
Customer satisfaction.
Legal problems and penalties.
Overall and Bottom Line Performance

❑ Companies experience ‘social blowback’ when stakeholders perceive that they have
breached their deal with society

❑ Good business ethics is a prerequisite for good strategic management

Businesses could collapse when employees behave unethically

 Business Ethics

If ethics deals with the choices (the morality of right vs wrong) that individuals make in their
personal and professional lives,..

then…Organisational business ethics is the application of these morality related choices,

guided by:
❖ policies
❖ values
❖ standards
❖ rules
❖ principles
❖ strategies
which are associated with the organisation’s business objectives and activities.
 What’s in a typically strong organisation?

Ethics must co exist and complement Governance and Risks Management to

effect positive bottom line for businesses

(Strong ) Governance Strategy, Direction, Controls

S

(Effective) Risks Management Identify, Assess, Control, SRecover

(Enforced) Ethics Adherence, Discipline, Assurance

S

Strong Governance, Effective Risks Management and Strong Ethics in An Organisation

= Assurance +Compliance
= Strong Performance
 To instill a more consistent ethical behavior and sustain high standing in society, successful organisations:

❑ have their ethical*mission defined, along with those of Health, Safety and Environment (HSE), social
and competitive ( e.g profits, market share etc) position.

❑ make ethics a core value

In these organizations, ethics is part of their culture where employees lean on their ethical
consciousness, when making their actions and taking their decisions.

What happens when:

✓ employees do not abide by the code of ethics or
✓ when organisations do not have an effective ethics program (in conjunction with effective
Governance and Risks Management)? Or
✓ the ethics program is not enforced or is abused or violated (esp. by senior employees)?
 DEMISE OF ENRON

Formed in 1986
By early 2000, was 6th biggest energy company in the world with market valuation ~ $100bn
Power
Stock price steadily
 Where is Enron today?

What happened to Enron?

Enron was wiped out in 2001 together with ~$62bn in assets and ~15,000 workers
It also brought down big auditing firm, Arthur Andersen along with its ~ 28,000 employees
 What Happened At Enron?

Executives created complex and secret (and unconventional) accounting practices and vehicles
(or tools) to cover or beef up poor profitability
These practices and practices remained unnoticed because and while stock price was riding
high

Arthur Andersen should have only functioned as auditor.

Instead it also played the role of a consultant to Enron

What is one ethical issue and potential concern out of this dual roles?

Conflict of Interest
Why was this ethical issue and its potential or underlying concern not addressed?

Ethics related cause for the collapse of Enron

Senior management (the board of directors) is at fault for permitting the suspension of
Enron's own code of conduct to permit the conflicts of interest (by Arthur Anderson) and
by Enron’s CFO (Mr. Fastow) who was instrumental in creating the complex and secret
(and unconventional) accounting practices and vehicles
Senior Executives (insiders ) sold their shares here
How Did Enron Collapse?
How Did The Public Respond To Enron When Its Unconventional Practices Were Discovered?

Final Landing – Fatal

Collapsed when companies or partners refused to continue doing business with it.
When No banks or other institutions came to rescue.

Its AAA rating became junk , share price fell to the floor ($0.67, highest at peak was $90.75)
in Jan 2002
 How Did Enron’s Collapse Affect The Public?

When Enron was wiped out, ~15,000 workers lost their jobs and pensions

Along with it, big auditing company, Arthur Anderson lost its operating license and
~28,000 workers lost their jobs!

Thousand s of shareholders (pensioners included) lost their investments

Key Leaders, Criminal Charges and Their Verdict

Died before sentencing

24 yrs prison

6 yrs prison
 Exercise
@ Code of Conduct for Employees (Code of Business Ethics)
 Tutorial:

Q) Your employer is a newly set up engineering company in Brunei Darussalam. It

wants to roll out a code of conduct for its employees ( code of business ethics).

List inappropriate behaviours that should be addressed by the code of conduct

o Drugs , Alcohol and smoking - Fraud and embazzlement

o Conflicts of interest - Graft and bribery
o Theft - Dishonest conduct
o Harassment (sexual , physical and verbal) - Horseplay
o Abuse of IT - Misuse of property /asset
o Abuse of Power - Vandalism
o Racism - Gambling
o After hour interference - Traunt / absentism
o Extortion - Misrepresentation
o Copy right infringement - insider trading
o Leaking confidential information - etc…
“APPRECIATION” GIFT
Tutorial
• You are the team leader of your company’s negotiation team in a price negotiation of
electrical gadgets with an established electronic supplier XYZ-Electronics Co.

• After concluding a hard and successful price negotiation, XYZ-Electronics Co gave each
and every member of your team a “gift of appreciation”. As team-leader you received a
mini laptop and rest of your team member all received a hand phone. You are made
aware that these products are common items stock and supplied by XYZ-Electronics co,

• Which of the following options would you take and why

1. Since these are normal stock items of XYZ-Electronics Co, you accepted their gift of
appreciation and thank XYZ-Electronics Co on behalf of team OR

2. Return gifts and advise XYZ-Electronics Co to give similar type of gift to all team member to
be fair OR

3. Collect all gifts and return them to XYZ-Electronics Co on behalf, decline respectfully and
raise report internally within your organisation of the offer of high value gifts. OR

4. None of the above. Share your rationale,

preQual result : 27 %
WORK INTERVIEW: A RELATIVE
Tutorial

• You are part of the recruitment panel of 4 for selection of new staff. Earlier in the week,
your mother casually mentioned that one of your mother sister’s daughter (your niece)
has applied for one of the vacant positions in your company. Your mom believes she is
adequately qualified., and told you to “look out’ for her and help her however you can.

• Your niece’s CV is in your hand and she is in the batch of candidates for you to interview.
She meets the basic criteria for the position however there are also many similarly
suitable candidates applying for the limited position/s.

• What should you do and why

1. Let her proceed with the interview process and act casually (since nobody knew you are
related) reserving your bias. You assure yourself since there are other interviewing panel
members and final outcome is not dependent on your views alone .You believe if she is good
, she will shine and thus deserves the appointment OR

2. Declare your potential conflict of interest (that she is a relative) and excuse yourself from
the interview or send her to the other interviewing panelist. OR

3. Proceed with the interview, casually informing the other panelist that she is a distance
relative OR

4. None of the above preQual result: 35%l

WEDDING GIFT Tutorial
You are the contract holder/company representative responsible for a number of
contracts in your department. On the occasion of your wedding, in addition to relatives,
close friends and office colleagues, you also invited all the contractors /vendors that you
have business dealings in your works though you don’t normally have any non-business
contact with them
All the contractors you invited attended bearing gifts and packet of “tolong’ khawin
(envelopes bearing contributions). One vendor offered honeymoon package to Bali which
includes flight and hotel, one supplier offered 48inch TV to be collected from a local
electric shop, most contractors gave envelopes containing contribution of $500 and
$1000 . Incidentally none of your close relatives offered beyond $100 in their tolong
khawin.
Which action would you take and why
1. Upon return to work, you plan to send personal letter thanking your contactors/vendors who
attended your wedding and acknowledged their generosity OR

2. You are feeling grateful for the contributions and personally called those contractors/vendors who
contributed. OR

3. You felt awkward and embarrassed on the size and value of the gifts. You seek advise from your
Supervisor how to deal with the gifts. OR
4. None of the above Prequal result: 28%