Improving Management to Prevent Corruption

Republic of the Philippines
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

INTERNATIONAL HOSPITALITY MANAGEMENT
Brgy. Namunga, Rosario, Batanga
MIRED IN CORRUPTION: KELLOG BROWN AND ROOT IN NIGERIA
MGT 304 - INTERNATIONAL BUSINESS AND TRADE
GROUP 4 - CASE STUDY
Prepared by
Macatangay, Eijzabeth
Baldoza, John Aldren
Estoya, Jessa Mae
Sanchez, Aira Mae
Navarro, Jenelyn
Latina, Erika
Ducay, Joel
BSBA- HRDM -3101

November 24, 2021
1

Identify the Business Problem
There are number of issues that have an impact on the organization's

performance.
1. The majority of the company's leaders are corrupt.
The case alleges that the CEO and management are corrupt. Bribery has
been used to secure the majority of the firm's contracts. To acquire the contracts,
the company had to bribe General Abacha and other government officials.
2. The company lacks adequate management which as hampered its ability to

realize its strategic objectives.
The organization's management is corrupt, as evidenced by the case. The

majority of the company's top leaders were clearly corrupt.. It is claimed in the
case that Wojciech Chodan, a Kellog executive, was implicated in the scandal.
General Abacha was planning to give Tesler a sum of money, which Wojciech
discussed. Albert Jack and other firms leaders were also involved in the scandal.
a. There are no effective strategies in place at the organization: The

organization's management is unable to device the appropriate strategies and
plans for expanding into new markets and guiding the company in its external
environment.
b. The management are unable to deploy resources as required by the

situation: This has had a negative impact on the company's productivity and
competition. Failure to develop a strategic plan and strategies has forced the
company to engage in corrupt deals.
c. There are no competitive advantages for the organization either: Due to

lack of appropriate competing strategies, this has made it difficult for the
company to compete with other firms in the industry and function successfully in
2

external environment. As a result, the company has chosen to obtain contracts

through bribery and other unethical means.
3. The firm violated the Foreign Corrupt Practices Act by being involved in
malicious deals.
The US justice department launched an investigation into the firm and other
people connected to it as a result of an increase in corruption and bribery. The
purpose of the investigation was to see if the company had a history of corruption
with government officials and other leaders.
I. Identify the Alternative Solutions
SOLUTION 1
Instead of relying on bribery, the management should properly allocate

cash to help them reach their goals. The corporation has already lost a significant
amount of money on bribery that could have been better spent on achieving the
objectives. The company should adopt policies to prevent unethical activities
within the company. For example, the organization should have explicit policies
prohibiting corruption. This will ensure that the company's top executives are not
corrupted.
SOLUTION 2
The management in the corporation should be improved. Improving

management will help the organization in achieving its goal of gaining the
competitive advantage and improving performance. In strategic management, the
manager is important. Managers are responsible for ensuring that existing
resources are properly utilized in order to achieve the company's goal. This
makes it simple for the business to succeed in its external environment. The
3

mission, vision, and objectives of the organization should be stated by the

managers. They must also develop policies and plans that will guide them in
attaining their objectives and properly allocating resources. So that they will have
a progressive organization that will surely grow and become successful.
SOLUTION 3
To avoid making unethical decisions, managers should involve other

employees and stakeholders in decision-making. This will ensure that managers
operate in the best interests of the stakeholders rather than their own. As a result,
the organization will be free of corruption. This will eventually boost the
organization's performance and protect its public image. Bad leadership and poor
decision-making lead to corruption in the workplace.
II. Recommend a Preferred Solutions
To achieve company’s objectives and goals, the organization should strive

to improve its management. The managers should be open to new ideas not just
from the management level but also from their subordinates. They should be
gathering data to help them in decision-making. Management should prioritize
identified opportunities for improvement. Determine which problems should be
addressed first based on what will help further for key firm goals. Create a plan
that lays out what processes will be analyzed for improvement. Management
should publicize positive results gained by process improvements efforts both
internally and externally, Clients will be pleased that the firm they hired to help
them is working improve process.
Through its company challenges, it is recommended that the company

shall promote a regulation in preventing its corruption. By managing conflicts of
interest, Conflicts of interest could lead to corruption, therefore such conflicts
4

need to be disclosed and addressed in a manner that will prevent a descent into
corruption. In general, conflicts of interest are addressed through financial and
asset disclosure requirements, codes of conduct and other regulations, such as
prohibiting public officials to work in the private sector for a certain period of time
after they leave the public service. Moreover, managing human resources
management, the rules and procedures for hiring, rotation, promotion,
professionalization, and training of civil servants also play a role in the combating
of corruption in the public sector. For example, staff rotation in jobs that are
vulnerable to corruption is expected to assist in preventing corrupt relationships
from forming and in disrupting established corrupt relationships. Rotation may
also lead to reduced incentives to engage in corruption for private sector actors,
as there might not be the future guarantee of the corrupt partner's continuation in
a particular position.
III. Describe the Implementation Approach
The first problem that was identified was most of the leaders in the
organization are corrupt as an alternative solution the company should have a
clear policy that prohibited corruption in the organization and they should have
established policies to fight back unethical behaviors in the organization. The
second problem that was identified was the company lacks adequate
management which as hampered its ability to realize its strategic objectives. As a
solution the company should improve the management in the organization.
Improving it will help the company to achieve the objectives and goal to gain
competitive advantage and improve company’s performance. Lasty, the firm
violated the Foreign Corrupt Practices Act by being involved in malicious deals.
As a solution the management should involve some employees and stakeholders
5

in decision making to ensure that they will not act in their own interest, but with
interest of the stakeholders.
As proven by the Alleged corruption case, a number of concerns affect

Kellogg Brown and Root's performance and competition. The organization's
administration is poor, which has influenced decision-making and resource
allocation. The majority of managers take advantage of the organization's
resources. The primary issue in the company is corruption.
Favoritism and corruption have helped the company obtain contracts. It

also lacks a competitive edge because it is unable to compete with other
businesses in the field. The company possesses a variety of strengths. That's a
lot of money in terms of operational capital, technology, and business potential.
Politics, the legal environment, and industry competitors are all dangers.
Changes in management should be made in order to improve performance and
gain a competitive edge.
Bibliography
Luzvi,.( 2018) Mired in Corruption: Kellogg. Brown and Root in Nigeria
Mired in Corruption: Kellogg. Brown and Root in Nigeria, (2021,January,23)
Marylet, I., Mildred. Z., M., Vernalyn, U & Nelvin, V., (2017).
https://www.academia.edu/22156396/Case_Mired_in_Corruption_Kellogg_Brown
_and_Root_in_Nigeria
Hill, Charles (2007). International Business: Competing in the Global Marketplace.

Boston: McGraw-Hill
6

Sonali. C. (2021). https://www.transtutors.com/questions/case-study-mired-in-

corruption-kellogg-brown-and-root-in-nigeria-could-the-alleged-p-81075.htm
Angelica, Bernardo (2011). https://www.scribd.com/doc/239666278/global-case-

Mired-in-Corruption
US Department of Justice (2009). https://www.justice.gov/opa/pr/kellogg-brown-

root-llc-pleads-guilty-foreign-bribery-charges-and-agrees-pay-402-million
1. Jeffrey Tesler's alleged payment of bribes to Nigerian government officials

is a qualifying act under the Foreign Corrupt Practices Act since it is illegal
for American firms to bribe foreign authorities, and it is also prohibited for
third parties to bribe foreign public officials. The activities of Jeffrey Tesler
in moving 2.5 million dollars to Dan Etete's account (under a phony name)
and paying General Abacha are classified as fast money. Furthermore,
the corporation did not authorize or recognize the payments as part of
their accounting records. The Foreign Corrupt Practices Act also requires
companies to have correct books and records and to have a system of
internal controls in place to prevent, among other things, bribery.
2. Regardless of the legality of Tesler's payment, it is not rational for KBR to

engage him as an intermediary with an initial cost of $60 million that
subsequently ballooned to $132.3 million, which is much too expensive for
7

the company's budget. For the contract discussions, KBR may have sent
someone from the corporation to deal legally with Nigerian officials.
3. Yes, Kellogg and its successor should have had a policy in place to deal
with bribery and corruption.The policy should focus on making every effort
to deal with bribery and corruption in a legal manner first, but if that is not
possible, such payments should be documented and recorded in the
company’s books. Another thing is it would also impose sanctions on
employees and third-party agents who deal with bribery and corruption on
behalf of the corporation.
4. Yes, KBR should be able to pull out of the Nigerian LNG project, knowing
that the transaction is in peril in Dan Etete’s hands, and that further
investigation will prove that Mr. Etete is simply utilizing his position in the
company for personal advantage. They should also walk away from the
agreement because KBR’s code of business ethics prohibits commercial
bribes and unethical business actions.
5. These events of Led French and Swiss officials to investigate of Tesler’s

Swiss bank accounts. They discovered that Tesler was “returning” part of
the money he had received to Group executives and contractors. One of
the alleged bribes was wire transfers of $5 million from Tesler’s account to
Albert J. “Jack” Stanley, who was the Director of MW Kellogg, then the
Halliburton KBR unit. Tesler also transferred about $2.5 million into Swiss
bank accounts run by Nigerian Oil Minister DanEtete under a false name.
Other payments included a $1 million wire transfer to an account
controlled by Wojciech Chodan, a former Kellogg executive whose
numerous handwritten notes suggest page. Following these incidents,
officials French and Swiss authorities began investigating Tesler’s Swiss
bank Accounts. They discovered knowing Tesler was “returning” some of
8

the money he had received Corporation leaders and contractors A bribe

allegedly paid as part of one of the bribes exposed – supposedly fake
alcohol. $5 million was transferred from Tesler’s account to Albert J.
“Jack” Stanley was a character from the movie “Jack and the Beanstalk”.
Leaders of M.W. Ke Llogg, then Halliburton’s KBR unit. Tesler also made
a $2.5 million wire transfer. Nigerian Petroleum Minister DanEtete
deposited millions of dollars in a Swiss bank account under a fictitious
name.
6. Jeffery Tesler's actions were indeed "speed money" based on two reasons
first is transferring $2.5 million into Dan Etete account. Lastly a formally
written notes from Kellogg's former executive recommending the bribe.
Yes they should be held liable based on these conditions: (1) Being the
parent company they are responsible for controlling the operations within
the subsidiary. (2) Executive members were aware of the issue. (3) The
company distanced themselves from the actual bribe by hiring a third party.
Also we believe that Halliburton should be held fully responsible for their
subsidiary’s unethical practices even though some were initiated before
their ownership.
BALDOZA, JOHN ALDREN
9

PERSONAL DETAILS:
Gender: Male
Date of Birth : January, 23, 2001
Place of Birth : Macalamcam B, Rosario,
Batangas
Age : 20
Civil Status: Single
Citizenship : Filipino
Religion : Roman Catholic
Language Spoken : English and
Filipino
Mobile
CHARACTER REFERENCES
0910-155-3270
Address
Mrs. Fely Sales
Macalamcam B, Rosario, Batangas
Barangay Captain
Macalamcam B, Rosario, Batangas
Email address
Johnaldren.baldoza@g.batstate-
Mrs. Luzviminda Abacan
u.edu.ph
Instructor
Batangas State University Rosario
Sto. Nino, Taysan, Batangas
EDUCATION PROFILE
Batangas State University

Bachelor of Science in Business
Administration Major in Human
I hereby certify that the above
Resource Management
information is true and correct to the
2019 – Present
best of my knowledge and belief.
Secondary Education
Macalamcam National High School
2013-2019
Elementary Education BALDOZA, JOHN ALDREN

Macalamcam Elementary School Researcher
2007-2013
DUCAY, JOEL
10

PERSONAL DETAILS:
Gender: Male
Date of Birth : February, 25, 2001
Place of Birth : Namunga, Rosario,
Batangas
Age : 20
Filipino
Mobile
0926-250-3117
Address
Mr. Virgilio Salazar
Namunga, Rosario, Batangas
Barangay Counselor
Namunga, Rosario, Batangas
Email address
joelducay25@gmail.com
Instructor
EDUCATION PROFILE
Resource Management
2019 – Present
Secondary Education
Rosario National High School
2013-2019
Elementary Education
Rosario West Central School DUCAY, JOEL
2007-2013 Researcher
ESTOYA, JESSA MAE P.
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PERSONAL DETAILS:
Gender: Female
Date of Birth : September 21, 1999
Place of Birth : Mapulo, Taysan,
Batangas
Age : 22
Religion : Born Again
Filipino
Mobile
0930-437-9263
Mr. Marcelino Comia
Address
Barangay Captain
Mapulo, Taysan, Batangas
Mapulo, Taysan, Batangas
Email address
jessamaeestoya21@gmail.com
Instructor
EDUCATION PROFILE

Resource Management
2019 – Present
Secondary Education
Dagatan National High School
2012-2018
Dagatan Elementary School ESTOYA,JESSA MAE
LATINA, ERIKA
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PERSONAL DETAILS:
Gender: Female
Date of Birth : September 16, 2000
Place of Birth : Valenzuela City
Age : 21
Filipino
Mobile
0915-104-4274
Mrs. Nancy Latina
Teacher
Address
Mahanadiong, Taysan, Batangas
Mahanadiong, Taysan, Batangas
Email address
erikalatina016@gmail.com
Instructor
EDUCATION PROFILE

Resource Management
2019 – Present
Secondary Education
Taysan Senior High School
2013-2019
Bitik Elementary School LATINA, ERIKA
MACATANGAY, EIJZABETH
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PERSONAL DETAILS:
Gender: Female
Date of Birth : February 04, 2002
Place of Birth : Deo Medical Clinic,
Taysan, Batangas
Age : 19
Filipino
Mobile
0916-981-1781
Mr. Mario Maranan
Address
Owner of Sari-sari Store
Pinagbayanan, Taysan, Batangas
Email address
macatangaybeth7@gmail.com
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EDUCATION PROFILE
Resource Management
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2007-2013 MACATANGAY, EIJZABETH.
Researcher
NAVARRO, JENELYN
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PERSONAL DETAILS:
Gender: Female
Date of Birth : June 04, 2000
Place of Birth : Pinagbayanan, Taysan,
Batangas
Age : 21
Filipino
Mobile
0905-949-9059
Mrs. Myra N. Mayo
Address
Owner of Sari-sari Store
Mayamot, Antipolo, Rizal
Email address
jennavarro81@gmail.com
Instructor
EDUCATION PROFILE

Resource Management
2019 – Present
Secondary Education
2013-2019
Elementary Education NAVARRO, JENELYN

Pinagbayanan Elementary School Researcher
2007-2013
SANCHEZ, AIRA MAE

15

PERSONAL DETAILS:
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Place of Birth : Ibaan, Batangas
Age : 21
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0945-544-6429
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SK Chairman
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Improving Management to Prevent Corruption

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Republic of the Philippines

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

MIRED IN CORRUPTION: KELLOG BROWN AND ROOT IN NIGERIA

MGT 304 - INTERNATIONAL BUSINESS AND TRADE

GROUP 4 - CASE STUDY

BSBA- HRDM -3101

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

Identify the Business Problem

There are number of issues that have an impact on the organization's

1. The majority of the company's leaders are corrupt.

2. The company lacks adequate management which as hampered its ability to

The organization's management is corrupt, as evidenced by the case. The

a. There are no effective strategies in place at the organization: The

b. The management are unable to deploy resources as required by the

c. There are no competitive advantages for the organization either: Due to

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

external environment. As a result, the company has chosen to obtain contracts

I. Identify the Alternative Solutions

Instead of relying on bribery, the management should properly allocate

The management in the corporation should be improved. Improving

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

mission, vision, and objectives of the organization should be stated by the

To avoid making unethical decisions, managers should involve other

II. Recommend a Preferred Solutions

To achieve company’s objectives and goals, the organization should strive

Through its company challenges, it is recommended that the company

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

III. Describe the Implementation Approach

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

As proven by the Alleged corruption case, a number of concerns affect

Favoritism and corruption have helped the company obtain contracts. It

Luzvi,.( 2018) Mired in Corruption: Kellogg. Brown and Root in Nigeria

Mired in Corruption: Kellogg. Brown and Root in Nigeria, (2021,January,23)

Hill, Charles (2007). International Business: Competing in the Global Marketplace.

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

Sonali. C. (2021). https://www.transtutors.com/questions/case-study-mired-in-

Angelica, Bernardo (2011). https://www.scribd.com/doc/239666278/global-case-

US Department of Justice (2009). https://www.justice.gov/opa/pr/kellogg-brown-

1. Jeffrey Tesler's alleged payment of bribes to Nigerian government officials

2. Regardless of the legality of Tesler's payment, it is not rational for KBR to

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

5. These events of Led French and Swiss officials to investigate of Tesler’s

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

the money he had received Corporation leaders and contractors A bribe

BALDOZA, JOHN ALDREN

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

Batangas State University

Elementary Education BALDOZA, JOHN ALDREN

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

ESTOYA, JESSA MAE P.

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

Batangas State University

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

Batangas State University

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

Batangas State University

Elementary Education NAVARRO, JENELYN

SANCHEZ, AIRA MAE

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

Batangas State University

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