International Engineering Professionalism

Learning objectives:
 Boundary-crossing Issues: economic, social, cultural
 Limitations of Engineering Codes
 Guidelines and Middle Way Solutions
 Payments and Gifts: avoidance of impropriety
 Lessons from Case Studies

• Reading assignment: Fleddermann 4th Ed Section 4.6 &

Harris 4th Ed. Chp 10

EG 2401 - K. G. Neoh 1
 1. Introduction: Bhopal Disaster
• Prior to 1984, UC’s safety record with all its
chemical plants worldwide was exemplary
• It was known as a very reputable company and its
former CEO, Warren Anderson was a person of high
moral character
• In 1991, the local authorities from Bhopal charged
Warren Anderson with culpable homicide (max 20
yrs in prison)
• In 1992, he was declared a fugitive from justice for
failing to appear at the court hearings
• US turned down requests for Anderson to be
extradited
• Anderson passed away in US in 2014
EG 2401 - K. G. Neoh 2
• In June 2010, 7 top executives (all from India) of UC
plant in Bhopal sentenced to 2 yr jail + ~S$3000 fine
• Allowed to appeal, remained free on bail
• Issues:
- Is the sentence “too light and
too late”?
- Despite UC’s expertise in safety,
why the Bhopal plant did not
follow many of UC’s own safety Abandoned plant Nov 2018
standards?
 do different ethical and safety standards apply in
industrialized and less developed countries?
 if the disaster had occurred in US, would the
consequences for UC be similar?
EG 2401 - K. G. Neoh 3
 Example
• UC paid US$470 million as
compensation in the Bhopal disaster
where > 2000 died and many
thousands more suffered injuries
• Contrast with the following:
[1] Ford settled for a few million $ in
damages to a victim who suffered
disfiguring burns as a result of an
explosion in an accident involving
the Ford Pinto (1970s)
[2] For the Exxon Valdez oil spill in
Alaska, Exxon had to pay a few
billion $ in settlement and cleanup.
In that incident no human life was
lost but thousands of wildlife
perished (1989) EG 2401 - K. G. Neoh 4
 2. Problems in International Engineering
Professionalism
• What factors can cause “boundary-crossing”
problems and difficulty in interpretation of
codes in the international environment?
- different countries involved: home and host
- values and practices
- economic conditions
- background institutions
- corruption
- non-citizen status
- vulnerability

EG 2401 - K. G. Neoh 5
• Values and practices
- cultural/religious practices
- giving and receiving of gifts as a way of forming
personal/business relationships
- nepotism as a way of fulfilling family obligations
• Economic conditions
- differing levels of economical development results
in differing wages
- lower health and safety standards

EG 2401 - K. G. Neoh 6
• Background institutions
- less industrialized countries (LIC) may not have
the laws and regulatory agencies under which
businesses operate in IC
- dilemma whether to follow the less than
adequate standards in host countries
• Corruption
- may be widespread in a number of sectors
• Non-citizen status
- is it appropriate for non-citizens to lobby or
speak out on public issues in host countries?
EG 2401 - K. G. Neoh 7
• Vulnerability
- citizens of LICs may be more vulnerable due to
a lack of education and knowledge
- may not be familiar with safety hazards
- may lack economic and political power
Example: inappropriate use of infant formula
in LICs
?

 Moral obligations NOT to exploit the vulnerable

EG 2401 - K. G. Neoh 8
 3. Interpreting and Applying Codes
• Many society codes are assumed to apply
internationally, eg IEEE, ASME and NSPE
• Many code requirements can lead to troublesome
problems in the international context
- Welfare requirement
Fundamental canon of engineering codes: Hold
paramount the safety, health, and welfare of the public
Concern for public welfare in LIC host may be greater
due to lower level of economical development or
greater vulnerability of its citizens.
But this may lead to unjustified paternalism

EG 2401 - K. G. Neoh 9
- Environmental aspects
Countries differ in the importance they attach to
environmental concerns or how such concerns should be
balanced against the need for economic development
- Non-discrimination
Sec 7.8 of IEEE code requires members to treat fairly all
persons regardless of such factors as race, religion, gender,
disability, age or national origin. Culture/practice in some
countries would not support this
- Bribery and conflict of interest
Most codes contain prohibitions against undisclosed conflicts
of interests and bribery.
How about grease payment or gifts?
What if government officials in host countries expect “fees”?
EG 2401 - K. G. Neoh 10
- Promoting knowledge and avoiding deception
Several codes specifically state this requirement. If a
product is inappropriately used in the host country due
to the people’s low level of technological
sophistication, is there an obligation to address this?

• The problems highlighted above show that codes are

often insufficient to guide engineers in the area of
international professionalism

 There is a need to strike a balance between

various extremes  Creative Middle Way Solutions

(i) Between moral absolutism and moral relativism

(ii) Between moral laxism and moral rigorism

EG 2401 - K. G. Neoh 11
 4. Striking a Balance
• Moral absolutism and moral relativism
Moral absolutism – assumes the values and
practices of home country are the only correct ones
and should be followed without compromise in every
situation
Not advisable since (i) the requisite knowledge,
technology, economic resources and social
structures are not always available in host countries,
(ii) standards/practices in other countries may not be
better or worse, just different
Moral relativism – when in Rome, do as Romans do
Not advisable since (i) it may lead to illegal action, (ii)
may be harmful or morally repugnant
EG 2401 - K. G. Neoh 12
• Moral laxism and moral rigorism
Moral laxism – in a situation where a moral
principle cannot be strictly applied, one can take any
action one desires
Moral rigorism – moral principles must be strictly
applied in every situation regardless of the
circumstances

 Suppose the social and economic conditions in

the host country are such that a plant cannot be
operated without polluting the environment. When
all considerations are taken into account, including
the effect of the host country losing the plant,
building and operating the plant may still be justified.

EG 2401 - K. G. Neoh 13
5. Guidelines for Creative Middle Way Solutions
• Principal guidelines in addition to the Engineering
Codes:
(i) Respect human rights
(ii) Avoid paternalism and exploitation
(iii) Apply the Golden Rule
(iv) Promote overall welfare of host country citizens

(i) UN’s International Bill of Human Rights (Chp 10

Harris) – useful but not completely free of a
Western orientation (eg the right not to enter into
arranged marriages, the right to non-discriminatory
treatment, the right to participation in government)
 Appeal to rights is not sufficient
EG 2401 - K. G. Neoh 14
(ii) Paternalism vs exploitation
Paternalism: excessive/misplaced concern for welfare of
the public
Exploitation: too little concern for welfare of the public
• Consider the following:
CopX is the most powerful copper mining & smelting
company in the world. It controls world prices and keeps
competitors away from lucrative sources of copper.
In Country Z, CopX buys copper at prices well below the
world market and pays its workers the lowest wages in such
industry in the world, and hence CopX makes enormous $$.
CopX pays off government officials to keep other copper
companies out of Country Z. Country Z is desperately poor
and copper is virtually its only source of foreign revenue

 does this constitute

exploitation?

EG 2401 - K. G. Neoh 15
• Exploitation arises when the following are present:
1. Asymmetrical balance of power
2. Subordinate party needs the resources provided
by the exploitative relationship
3. The exploitative relationship provides the only
source of such resources
4. Dominant party exercises discretionary control
over the needed resources
5. Resources of subordinate party are used without
adequate compensation
• Exploitation is usually wrong
- violates moral standards (eg rights of others)
- violates Golden Rule (see later slide)
Some degree of exploitation may be justified if there
is some greater good
EG 2401 - K. G. Neoh 16
• Consider the following:
PineX operates a large plantation in Country A and requires
its workers to live in company villages. These villages
provide sanitary conditions and PineX provides complete
health care for the workers.
The workers however prefer their older villages where they
can preserve their traditional way of life but PineX refuses to
relent since they believe that the workers will be healthier
and happier in the company villages.

 does this constitute paternalism?

• Weak paternalism may be justified if a person is

- too young to fully comprehend relevant
factors
- ignorant of consequences of his actions
- under undue emotional pressure
EG 2401 - K. G. Neoh 17
(iii) The Golden Rule
Do not do to others what you would not want
them to do to you (Confucian version)
- requires putting oneself in the position of a host
country citizen, whose culture, economic status,
living conditions, and values may be very different
 Not easy!

(iv) Promoting overall welfare of host country citizens

Engineers must engage in projects whose good
outweighs the harm
- many technological innovations produce some
harm, eg building of a dam
 Can more be reasonably done to eliminate the
harmful features of the situation?
EG 2401 - K. G. Neoh 18
• Applying (iii) and (iv):
- If we are the host country citizens, would we consent
to the action?
- Start with presumption that it is better to follow host
country practices unless there is good reason to reject
• Consider the following:
SteelX Co. in a LIC has a policy of partially
compensating its employees with a promise to hire one
of the employee’s children. This policy of providing jobs
for one’s family is a tradition in that country and is very
popular with the employees, but to a foreign engineer,
this may look like nepotism
 should you comply with this policy?
In order to decide, it is best to review the moral
considerations discussed earlier
EG 2401 - K. G. Neoh 19
• Pertinent questions to ask:
- Does the policy constitute a violation of human
rights?
- Does it involve unacceptable paternalism or
exploitation?
- Does it violate Golden Rule?
- Does it promote overall well-being of the country?
- Does it involve you in any violation of home country
or host country laws?
- Does it severely violate your conscience?
 although the policy may not contribute
maximally to economic development and cause
some injustice to better qualified job applicants, is
there anything seriously wrong with it?
EG 2401 - K. G. Neoh 20
6. Bribery, Extortion, Grease Payments and Gifts
Definition
• Bribery – 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. Presupposes an agreement that
the bribe is in exchange for a certain type of conduct
• Extortion – act of threatening someone with harm to
obtain benefits to which the extorter has no prior rights
• What are the important differentiating factors?
 Who initiates transection?
 What is the intent of the giver?
Sometimes may be difficult to differentiate
EG 2401 - K. G. Neoh 21
 Class Discussion: Bribery or Extortion?
A large quantity of goods imported by Company A is held up
by the customs officers of Country Z. Company A offers $ to
the customs officers to expedite clearance
Is it bribery or extortion?

Scenario 1
Company A does not want its goods to undergo thorough
inspection because there are may be irregularities which
would result in confiscation of the goods

Scenario 2
Company A’s goods are highly perishable and the customs
officers persist in delaying clearance of the goods without
good reasons
EG 2401 - K. G. Neoh 22
• Giving and receiving bribes are forbidden by Eng Codes
- corrupts professional judgment
- tarnishes the reputation of the profession
- violates obligation to act in the best interest of
employer/client/citizenry
- undermines the efficiency of the market
- gives unfair advantages over competitors

• Moral status of paying extortion is different from bribes

- will not usually corrupt professional judgment
- may not tarnish the reputation of the profession as much as
paying a bribe
- will not usually cause one to act contrary to the best interest of
employer/client
- does not undermine the efficiency of the market
- does not give unfair advantages over others, except those
who cannot pay the extortion
EG 2401 - K. G. Neoh 23
• Grease payments – offered to facilitate
routine bureaucratic decisions
Not made to get someone to violate his duties

• Grease payments do not give an unfair advantage

over others if others make the same payment

• May be viewed as petty extortion or fees

for services rendered

• However, grease payments can lead to payments

intended to gain special consideration over others

• Best if eliminated

EG 2401 - K. G. Neoh 24
• Gifts – usually given to cement personal relationships, and
business relationships may in turn be built on personal
relationships
• In many cases there is a fine line between a gift and a bribe.
The distinction comes from the intent of the gift and
sometimes the value of the gift
• Company’s policy should be consulted to ensure that
accepting a gift does not cross the line into bribery. For
example, IBM’s Business Conduct Guidelines 2019:
(https://www.ibm.com/investor/att/pdf/BCG_accessible_2019.pdf)

• In the absence of any corporate guidelines, consult Anti-

corruption Guide for Businesses in Singapore from Corrupt
Practices Investigation Bureau
(https://www.cpib.gov.sg/files/pact_2018.pdf)

Basic philosophy – avoid any conflict of interest and any

appearance of impropriety
EG 2401 - K. G. Neoh 25
Actual Case from CPIB

EG 2401 - K. G. Neoh 26
 7. Case Study 1: The Lockheed Scandal
• In 1970s, it was discovered that Lockheed paid
millions of dollars to foreign government officials to
sell its planes
• In particular, the president of Lockheed, Kotchian,
was accused of making secret payments of US$12M
in 1972-1973 to representatives of the then Prime
Minister of Japan, Tanaka, in return for having
Japan’s airlines purchase the L-1011 TriStar aircraft
• Lockheed was in financial trouble and in competition
with Boeing and McDonnell Douglas to sell its planes

Time,
Feb 23,
1976 EG 2401 - K. G. Neoh 27
• Kotchian explained his actions as follows:
- the only way to make the sales was to make the payments
- no US law forbade the payments
- the payments were financially worthwhile for Lockheed
which expected $430M in income
- the sales would prevent Lockheed layoffs, provide new jobs,
and thereby benefit workers’ families and their communities
and stockholders
- he himself did not initiate any of the payments which were
requested by Japanese negotiators
- in order to give the TriStar a chance to prove itself in Japan,
he had to follow the “functioning system” of Japan
 He viewed the payments as the accepted practice in
Japan’s government circles for this type of sale
EG 2401 - K. G. Neoh 28
 Fallout from Lockheed Scandal
• Tanaka and other Japanese officials were found guilty
of corruption. Tanaka died in 1993 and in 1995 after
the appeals process came to an end, Japan’s
Supreme Court reaffirmed the guilty verdict
• Kotchian and other top officers of Lockheed were
forced to resign
• The Foreign Corrupt Practices Act (FCPA) was signed
into law in the US in 1977 largely based on the
Lockheed scandal. It makes it a crime for American
corporations to accept payment from, or offer
payments to, foreign governments for the purpose of
obtaining or retaining business
Does not forbid “grease” payments paid to facilitate
routine government action
EG 2401 - K. G. Neoh 29
 Among Top 5 FCPA Settlements in 2017
• - Paid > US$35M in bribes to various countries including
Thailand, Brazil, Kazakhstan and Iraq in exchange for
officials’ assistance in providing confidential information
and awarding contracts to RR
 Agreed to pay US$800M global resolution to
investigations (~US$170M to US for FCPA violation)

• - Engaged in a scheme from 2001-2014

to pay millions in bribes to officials in Brazil to win
contracts. US subsidiary involved
 Agreed to pay >US$422M to resolve criminal charges of
violating FCPA and related charges from authorities in
Brazil and Singapore
https://constantinecannon.com/whistleblower/top-5- https://www.reuters.com/article/us-keppel-corp-
foreign-corrupt-practices-act-fcpa-settlements- settlement-idUSKBN1EH035
2017/#.W4384-gzaUk EG 2401 - K. G. Neoh 30
 Case Study 2: Siemens Bribery Case
• Dec 2008 – Siemens paid >US$1b fine to settle a
long-running bribery and corruption scandal
- US$800 million to US authorities
~US$1.4b
- 395 million euros to German authorities

EG 2401 - K. G. Neoh 31
• The Accountant’s Story: NY Times Dec 21, 2008
• Reinhard Siekaczek, a former accountant at Siemens,
oversaw an annual bribery budget of ~$40-50 million
• Arrested in 2006, he cooperated with authorities, was
sentenced to 2 years’ probation and a $150,000 fine
• His views on the payments:
- Economic necessity - vital to maintaining Siemens’
competitiveness overseas
- “I was not the man responsible for bribery.”
“I organized the cash.”
- “..we all knew what we did was unlawful”
- “The 11th Commandment is: ‘Don’t get caught.’”
Story and Video:
http://www.nytimes.com/2008/12/21/business/worldbusiness/21siemens.html?_
r=1&pagewanted=2
EG 2401 - K. G. Neoh 32
• After the scandal surfaced, Siemen’s integrity came under
intense scrutiny
• New CEO implemented measures to rebuild trust:
- strict new anti-corruption/compliance processes
- change its internal culture thru’ comprehensive training
and education
- avoid competing in known hotspots for corruption
- 900 internal disciplinary actions, including dismissals
• The lessons learned
- Unethical behavior can be very costly
- The timescale for a major ethics overhaul is long - years,
not months EG 2401 - K. G. Neoh 33
 Class Discussion: Win-Win?
Lockheed Scandal: the president of Lockheed at
that time, Carl Kotchian, paid US$12 million to
Japanese government officials to secure a sales
contract for the L-1011 aircraft.
Your friend argued that based on utilitarian
grounds, Kotchian’s actions were justified since
this payment benefitted the Japanese officials and
at the same time saved his company from
bankruptcy, prevented the layoff of Lockheed’s
employees, and created jobs for the community
and wealth for the company shareholders.
Do you agree? Is it a win-win situation?
EG 2401 - K. G. Neoh 34
Consider the argument from the following
angles:

[1] How about Lockheed’s competitors, Boeing and

McDonnell Douglas?

[2] How about the Japanese public? Did they

benefit?

[3] How would this practice affect future business

dealings? In Japan? In the aircraft industry?

EG 2401 - K. G. Neoh 35
 Summary of Take-away Points

• Economic, cultural, and social differences between

countries produce ‘‘boundary-crossing problems’’

• Competing moral obligations, and need for creative

middle way solution

• Respect for fundamental moral norms eg the Golden

Rule and Human Rights

• Gifts and payments – moral issues and differentiating

factors

EG 2401 - K. G. Neoh 36