4 11936, Standard Oil Company of California (Socal) found oil in Ssudi Arabia and the following year 7 it joined with Texaco to form Casoc—renamed [Aramco in 1845—s jointly owned subsidiary staffed bby American managers and formed to drill for oll in Saudi Arabia. Saudi Arabia's oil became. and re mains today, an economic necessity for the United States. The managers of Socal and Texaco, however, were unsure how much of Saudi culture they should ‘accept or go along with. ‘Saudi Arabia isthe birthplace of Islam, and its legal, political, and social systems, which are based fon the “Sunni” version of Islam, are viewed by Saudis as divinely inspired. For the Saudis, Islam is the only legitimate source of morality. This morality however, does not recognize basic rights such a5 freedom of speech, freedom of the press, the right 0 vote. or the right to run for office, It does not reco: ize the right to 2 tral By jury: crimes are tied before Islamic judges who base their decisions on the teachings of Islam. it does not recognize freedom of religion: Every Saudi must be Muslim under penalty of death, The Saudi brand of Islam treats women in ways that Westerners would label discriminatory. Women cannot supervise men, must wearin public a black veil covering the entire body including the head and face, must have a husband's or father's permission to travel and must be accompanied by a ‘male relative, and must enter buses by the rear door Business Ethics in Saudi Culture ‘and sit in special sections. Men can have up to four wives but women only one husband. Although men, can divorce without giving cause, women can a, vorce only for cause. Saudi Arabia does not recog. nie the right of free association nor the right to ‘Saudis repeatedly asserted that Saudi morality did not accept Westerners’ understanding of human fights. Saudis claimed that Islam set the moral rhorms people should follow, and apart from these, other moral standards have no validity. 1. Should company managers in Saudi [Arabia abide by Saudi norms governing the treatment of women? Should they accept the culture's refusal to recognize human rights or should they try to initiate } reform? Why? 2, Should company managers raise objec- tions to those practices that appeared highly immoral to them or should they uietly go along with these practices? 3. Does the case support ethical relativism ‘or does it suggest that there are certain things that are wrong no matter what, or neither of these positions?WorldCom’s ing to Mc 202, when WorCom ws stugaling © ‘dinate and integrate the complex ‘ er it had acquired, World: ated by the 65 companies 4 chiet financial officer, Com’s then highly respecte eee Scot Sulvan, moved $400 milion from a reserve ac count and recorded it as “income” in the company’s public financial reports, Alerted to this, Cynthia Cooper, the perfectionist head of WorldCom's internal audit department, began to secretly examine the company's books at night. She soon discovered that Scott Sulivan (named a “best CFO” by CFO Maga- zing in 1998) and David Myers, WorldCom's con- troller, for years had publicly reported billions of dollars as “capital expenditures” when they wore feally operating costs, ignored uncollectible receiv- ables, and reported as “income” what were really reserve funds, and did allthis with the holp of Arthur Andersen, the company’s auditor and accounting firm. Though angrily threatened by Sullivan, and risk. ing her job and career, on June 20, 2002, an appre- hensive Cooper courageously met with the audit committee of WorldCom’s board of directors and told Whistleblower them what had been going on. On June 25, wi, Com's directors announced the company haq inflateg its profs by over $38 billion—en amount ater aes to 9 billon—In the greatest accounting fraud ig tory Sullivan and Myers were arrested; Worigcn shareholders lost $2 billion; 17,000 Worrgce”” workers lost their jobs; Arthur Andersen was ghry down for shredding evidence of other accounting frauds at other firms. Today, many WorldCom mae agers and employees do not speak to her and ery sometimes cries. Says Cooper: "There isa price toe paid. [But] it comes back to the values and ethic, that you learn. .... The fear of losing my job wes secondary to the obligation I felt.” k= 1. What does WorldCom's experience teach us about corporate wrongdoing? 2. What does Cynthia Cooper's expe teach us about courage? AceWas National Semiconductor Morally Responsible? few years ago, the U.S. Department of De- / \ fense charged that National Semiconductor had sold the department computer parts ‘without testing them properly and then had falsified its records in order to hide the fraud. The computer, parts were installed in ships, planes, weapons, and. rnuclear bombs around the world and so could no longer be tracked down. An official of the Depart- ment of Defense was quoted as saying that if acom- ponent was defective end malfunctioned, “We're talking about lives. You could have a missile that would end up in Cleveland instead of the intended targ ‘Although National Semiconductor was indicted ‘and fined for the crime as @ corporation, no individu- als within the company were ever charged with any imes in the case. The Department of Defense ob- jected that since “a corporation acts only through the employees and its employees and officers, managers who make up the company and who participated in the crime should have been held ‘Source: “How Tests Were Faked at National to Scheme,” San Jose Mercury News, 7 March 1984, p.1- ‘San Jose Mercury News, 3 June 1984, p.1 and “National Se responsible for it. National Semiconductor's chair- ‘man felt differently: "We totally disagree with the De fonse Department's proposal. We have repeatedly stated that we accept responsibility as @ company only] and we steadfastly continue to stand by thet statement.” According to the chairman, the corpora: tion and not its members was responsible for these criminal act. +1. Who i right in this dispute, National Semi- conductor or the Department of Defense? Explain your answer. 2. What are the practical consequences of ‘accepting the position of the Department ‘of Defense? Of accepting the position of National Semiconductor? In light of these practical consequences, which position do you think society should adopt? Pleads GuiltyGun Manufacturers and Responsibility ng 22, Joh Alar Muara nS D= sv shot an ited apt oon i nseme, Grong Luise, Nerd vine orion 8 Tey wed some ve colt emanated by Buenas Fine. The oo lls baught the ie om butt ye Shooter Supp gunhop in Tacomo, tual otnugh cram probed ne shop tcmaningne gun sther Mutua ne hea ‘ord of dantcer Mato, who wos tino Sunn ofthe vtne have ined tha Crush Munonatond Moto wore ec spon she the death othe vicina both Bushmaster Fresrme ne and Bulls Eye Sheer Supt od ther one) ao “should be ed vesponsie” Ao ti yite Bure of al enc, ea rooms showed tht Bus Eye hed “os gue 38 no Bryer pera) o “lon” documentation ineuding ie rcode of tho Muhammad Meio sao Bushmaster Firearms coninaed tel ts gun te the shop. Survivors ofthe vieime claimed that Bushmaster rearms had an olgaon note erat tnumreasonble ik of foreseeable harm rm the dition of ts guns. The company, they ced fet adequtly investigator cee is dels Fecord of weapons handling, failed to adequately ‘monitor and supervise how ite dealer wos selling its ‘Guns, and failed to provide training or incentives for ts dealer to comply with gun laws. If Bulls Eye and Bushmaster had acted as they had an obligation to act, Muhammad and Malvo would have been prevented from obtaining the assault rifle they needed to kill their vietims since federal laws prohibited both from buying guns. Bull's Eye and Bushmaster helped cause the deaths, the wife of a victim claimed, and so “they share the responsibility for my husband's desth and many others. 1. Are Bull's Eye and Bushmaster morally responsible for the Washington, D.C. vic tims’ deaths? Why or why not? 2. Are gun manufacturers or gun dealers ever morally responsible for deaths ‘caused by the use of their guns? Explain. 3. Are manufacturers ever morally responsi- ble for deaths caused by the use of their products? Why or why not? Source: Chris Megan, “Families of 2 Sniper Victims Sue Arms Dealer, Manufacturer,” Seatle Post-Intaligencer, 17 Janvary, 2003,p. 1A