BUSINESS ETHICS (MGMT 3006)

Case Study 2

“PHRONETIC INQUIRY:
USE OF COLTAN BY MULTINATIONAL
CORPORATIONS”

Name: Ory Kinara Arsi

Student ID: 18467253
Lecture: Dr. Boon Yeow Lim
Tutorial Time: Monday, 9am-11am

Word count: 2262 words

(excluding cover page, table of content, executive summary and reference list)
Table of Content

Executive Summary………………………………………….…….…………………………i
1. Introduction…………………………………………………….……………………...1
2. Overview of the Problem…..….………………………………………………………1
3. Analytical Framework of Phronetic Inquiry…………………………………………..2
3.1 Where are we going? ..……………………………………………………………2
3.2 Is this development desirable? ………..…………………………………………..3
3.3 What, if anything, should we do about it? ………...………………………………4
3.4 Who gains and who loses, and by which mechanisms of power? ………...………5
4. Conclusion and Recommendation……….………………………………………….....6
Executive Summary

The primary purpose of this essay is to criticize the case study of the Coltan mining in the

Democratic Republic of Congo. Coltan is one of the main elements used by multinational

companies to produce electronic devices. However, the mining of this mineral has led to

several unethical practices. In this essay, Flyvbjerg’s phronetic inquiry will be applied to

criticize and present scenario for value rationality. Firstly, it starts by identifying the problems

in the case study. Second, analysis based four value-rational questions will be presented.

Lastly, conclusion will then be garnered and recommendations will be provided to improve

the current situation and stop this issue from happening again in the future.
1.0 Introduction

The primary social responsibility of business entity is to maximize profit for its shareholders
(Friedman 1970). To automate this purpose, however, business tend to merely focus on
economic gain and oversight the second and third responsibility of businesses, which is to
obey the law and be ethical (Caroll 1991). According to (Boatright 2003), to maximize these
utilities, business considerations should be based on four major ethical perspectives, which
are utilitarian, deontology, libertarianism, and virtue ethics. Based on Bent Flyvbjerg’s theory
(2004), in order to be ethically responsible, businesses are required to do an evaluation of
how the practice of ethical theory will affect their various stakeholders. Phronetic social
science or phroneric research is a method to the study of social phenomenon based from
intellectual virtue, on what is right or wrong.

Flyvbjerg (2004), further elaborates that in such an investigation, there are four value-rational
questions to be asked for specific instances of planning. The first question of Flyvbjerg’s
(2006) guide, “Where are we going?”, examines the consequences of the firm’s current
practice, including the business objectives (Flyvbjerg 2004). The second question, “Is this
development desirable?” aims to address the positive or negative implications of the current
practice. The following question, “What, if anything, should we do about it?” identifies the
corrective actions that need to be taken to remedy the bad outcomes of the current praxis.
Lastly, the fourth question of “Who gains and who loses, and by which mechanisms of
power?” aids to determine the impacts of the praxis to the companies, business partners, local
communities, and other stakeholder groups.

2.0 Overview of the Problem

According to Ross (2001), the Democratic Republic of Congo (DRC) is on the list of the
world’s most diversely mineral rich countries, with gold, copper, diamond, and coltan being
the most common minerals. However, having such valuable natural minerals have fueled
a terrible conflict in the country, known as Africa's first world war, in which had caused the
death of 5.4 million lives (Moszynski 2008).

The most common mineral that is mined in the DRC is coltan, which is used in making
electronic devices such as smartphones and computer. Aside from the DRC, world’s coltan
supply is also sourced from Brazil, Australia, Ethiopia, and Brazil (Ross 2001). In the DRC,
minerals are extracted with bare hands, resulting in harm to the health of the locals
(Moszynski 2008). Moreover, some workers are forced to work for 24 hours, day and night,
merely equipped with head-mounted lamps (Heath 2015), as a result, many of the miners
were reported to die of fatigue (Moszynski 2008).

Valuable minerals in the DRC have also been exploited by the neighboring countries that
have greater power than the DRC (Montague 2002). Countries that exploit minerals in the
DRC include Burundi, Rwanda, and Uganda. According to (Montague 2002), in fact,
countries like Uganda and Rwanda, made over 200 million US dollars yearly from minerals
exporting although those countries have little to no mineral resources (Montague 2002).

Even though this conflict has been regarded as the deadliest quarrel in the world since World
War II, however, most electronic devices used globally are still sourcing the minerals from
this conflicted country.

3.0 Analytical Framework of Phronetic Inquiry

According to Flyvbjerg (2004), there are four value-rational questions to be asked for specific
instances of planning. The questions are: 1.) Where are we going? 2.) Is this development
desirable? 3.) What, if anything, should we do about it 4.) Who gains and who loses, and by
which mechanisms of power?

3.1 Where are we going?

While minerals in DRC carry great monetary value and have the potential to boost the
economic growth in the DRC, in fact, the country failed to obtain these benefits since the
companies, rebels, and neighboring countries who operate in DRC refuse to operate
according to the guidelines of utilitarianism, deontological, libertarianism, and virtue ethics
(Heinze 2009). Consequently, instead of the DRC enjoying the profits of its natural resources,
the profits have been misplaced to the rebels, neighboring countries, and multinational
companies whose interests are conflicting with those of the DRC. The consequences of this
would be their mineral resources, such as coltan, that were supposed to be tremendous assets
of DRC, eventually become the instruments of their misery, especially because the process of
extracting the minerals is extremely noxious and the sale of the minerals contribute to
repressive regimens.
Although mining industry in DRC should result in better quality of life for the locals, this is
not reflected in this case because of the shortcomings of the system in place to supervise the
mining industry (Hilson 2009). As mentioned earlier, the quarries, particularly those who are
not supervised by the regulatory bodies, pose harmful hazard that are dangerous for the life
for the workers. Moreover, the working environment in the mines are contemptible, with
lives of the workers being put in jeopardy due to potential of infections and accidents. Thus,
instead of mines providing a better quality of life for the citizens of DRC, the locals are in
fact, exposed to fatal health risks and deaths. Moreover, valuable minerals in the DRC have
also been exploited by the neighboring countries that have greater power than the DRC. On
the other hand, multinationals, neighboring countries, and rebels are tremendously profiting
from the mining process.

3.2 Is this development desirable?

In order to question whether this development is desirable, it is very important to see this
from the perspective of the local community and the various types stakeholder groups.

According to (Moszynski 2008), often involves 7 neighboring counties at once thus caused
over 5.4 million deaths. War Child (2016) further elaborates that over 2.7 million of the lives
who have lost were children, whereby a fifth of all the children in the DRC died under the
age of 5, such that the DRC, which has a population of 60 million, has more child deaths than
China, which is the most populous country in the world (War Child 2016). Further
unfavorable consequence from the mining is that more than 1 million lives have been
desolated from their houses, and more 200,000 women had been sexually abused (Kelly,
KingClose and Perks 2014).

Moreover, some locals are forced to work for 24 hours, day and night, merely equipped with
head-mounted lamps (Heath 2015), as a result, many of the miners were reported to die of
fatigue (Moszynski 2008).

Valuable minerals in the DRC have also been exploited by the neighboring countries that
have greater power than the DRC (Montague 2002). Countries that exploit minerals in the
DRC include Burundi, Rwanda, and Uganda. According to (Montague 2002), countries like
Uganda and Rwanda, made over 200 million US dollars yearly from minerals exporting
although those countries have little to no mineral resources (Montague 2002).

While the local citizens have been traumatizing over deaths, ill health, and poverty, countries
like Rwanda and the rebels have been tremendously profiting from the mining process.
Moreover, multinationals have also been benefiting as they get a conductor for their devices,
which is coltan. Based on all these aspects mentioned, it can be concluded that this
development is far from being desirable.

3.3 What, if anything, should we do about it?

This aspect pertains to the matter of obligation; imposing. According to Flyvbjerg (2009), the
primary objective of business entity is to maximize profit. While the multinational companies
benefit from the DRC’s coltan and other minerals, the DRC has been facing unfavorable
consequences that resulted in the defunction of country’s economic, legal and political
systems (Heath 2015). With that said, strategies to solve this problem need to soon be
generated. However, one party alone will not be able to stop this issue. Hence, parties that
are involved in this situation need to work together to crack this issue.

One possible strategy to reduce wrongful practices in DRC would be to implement whistle
blowing practices. Whistle-blowing can be described as practice to report to the public or
government agencies concerning an action that is wrong, unethical, or illegal (Beauchamp
and Bowie 1979). Implementing such practice will allow the workers to inform any
wrongdoings in the workplace without disclosure of reporter identity. This will enable the
workers to express their problem without fear of suppression. Consequently, the local
authorities will be able to make corrective action faster when problem happens.

The second recommendation would be to reinforce business to do corporate social

responsibility (CSR). Sustainable business can be acquired through numerous operating
methods. In terms of environment, CSR is mostly used to ensure sustainability. Stakeholders
and societies standard of living are satisfied by companies that adopted a set of actions which
is known as CSR without excluding profit maximization (Holme and Watts 1999). There are
four level in CSR, the first one being a focus on profits that company need to procure. The
next one is company need to uphold and abide by the laws and regulation. After that company
needs to do the right thing and be highly ethical in its practices. Lastly the society needs to
received something back from the company. In order to practice an ethical business
cooperation the company needs to upheld the four level of CSR. The case study indicates that
an implementation of the CSR is pertinent in labor problems in Congo due to the fact that the
problem is in violation of the third level of CSR. Hence putting CSR into use could result in
the change of the entire supply chain of Coltan.

3.4 Who gains and who loses, and by which mechanisms of power?

The local citizens’ power to make their lives better has been deprived, particularly because
the majority of their works involve extensive working hour with no comparable increase in
their earnings (Mullen and Rothe 2008). Moreover, as the mining process involve scraping
and extracting coltan, workers are exposed to harmful dirt, which may cause health issues due
to pollutant contamination and respiratory complications. The daily wage of the worker
depends on the quantity of the minerals that the person managed to extract. Moreover, the
mining area is located in a very isolated district that made transferring the minerals to the
distribution centre very difficult. According to (Heath 2015), the distribution centre is up to
50 kilometers far, thus the minerals need to be carried on men’s back. In the extracting
process, women and children labor were used too. In addition, having such valuable natural
minerals have also fueled a terrible conflict in the country, known as Africa's first world war,
in which had caused the death of 5.4 million lives (Moszynski 2008).

Although mining industry in DRC should result in better quality of life for the locals, this is
not reflected in this case because of the shortcomings of the system in place to supervise the
mining industry (Hilson 2009). As mentioned earlier, the quarries, particularly those who are
not supervised by the regulatory bodies, pose harmful hazard that are dangerous for the life
for the workers. Moreover, the working environment in the mines are contemptible, with
lives of the workers being put in jeopardy due to potential of infections and accidents. Thus,
instead of mines providing a better quality of life for the citizens of DRC, the locals are in
fact, exposed to fatal health risks and deaths. Moreover, valuable minerals in the DRC have
also been exploited by the neighboring countries that have greater power than the DRC. On
the other hand, multinationals, neighboring countries, and rebels are tremendously profiting
from the mining process.
While the local citizens have been traumatizing over deaths, ill health, and poverty, countries
like Rwanda and the rebels have been tremendously profiting from the mining process.
Moreover, multinationals have also been benefiting as they get a conductor for their devices,
which is coltan.

With that said, parties who gain from this scenario are multinationals, neighboring countries,
and rebels. On the other hand, parties who are unbenefited in this scenario are the
government and local communities.

4.0 Conclusion and Recommendation

According to the analytical framework of Phronetic inquiry above, multinational corporations
have been profiting from minerals exploitation in the DRC although the local citizens have
been traumatizing over deaths, ill health, and poverty. Moreover, valuable minerals in the
DRC have also been exploited by the neighboring countries that have greater power than the
DRC. Countries like Uganda and Rwanda, made over 200 million US dollars yearly from
minerals exporting although those countries have little to no mineral resources. In addition,
having such valuable natural minerals have fueled a terrible conflict in the country, known as
Africa's first world war, in which had caused the death of 5.4 million lives.
Even though this conflict has been regarded as the deadliest quarrel in the world since World
War II, most electronic devices used globally are still sourcing the minerals from this
conflicted country. Thus, it is crucial to develop a strategy to protect the welfare of the DRC
and fight for the rights of its citizens. One possible strategy is to switch to alternative sources
of minerals until the DRC is able to settle its political matters and regain their power over the
neighboring county in order to enable the DRC to have full control over its mineral resources.
Another strategy would be to reinforce the multinational corporations to comply the 10
principles of the United Nations Global Compact. Multinational corporations must only
partner with subsidiaries whose countries are conflict-free. Moreover, the global community,
including ILO, UNICEF, UN, and other related organizations could put relevant sanctions on
unethical multinational corporations that gain advantage from the misfortunes in the DRC.
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