1. Cultural Relativism, Ethical Absolutism, and Bribery
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Cultural Relativism, Ethical Absolutism, and Bribery

2. What is “ethical and cultural relativism”
Are you an ethical relativist?
Sources

3. Results of Survey

4. Rachels’ Analysis Cultural Relativism Claims
Different Societies have different moral codes
No objective standards in ethics
Moral code of one’s society has no special status
Every moral standard is culture-bound
No universal moral values or norms

5. A Distinction Cultural relativism vs. Ethical relativism
Cultural relativism: there are differences and norms from among cultures
Ethical relativism: there is no objective standard or test among the moral standards among cultures. There are no universal or objective standards of conduct.
Rachels: cultural relativism = ethical relativism

6. Cultural Differences Argument
General Form
Premise: Different codes and practices exist.
Conclusion: Therefore, there is no objective “truth” in morality.
Fallacy
What is believed to what is reality.
Counterexamples: earth is flat, center of universe

7. Unacceptable Consequences of Cultural Relativism
Criticizing other cultures
e.g. apartheid, Nazi Germany
Criticizing one’s own culture
e.g. slavery, discrimination

8. Differences in Belief Systems; Commonality of Ethical Values
Beliefs about physical environment/ factual understanding of the world
e.g. Callatians and Greeks beliefs about death
commonality as respect for parents
Pressures of physical environment
e.g. Eskimos and role of males as hunters
commonality as value for offspring

9. Common Values Society and Business
Back to fundamental principles of a social contract: Rules necessary for society to exist and for business to function
Society
Protecting offspring
Murder
Truth telling
Business
Honoring contracts and agreements
Trust and credibility

10. A Test Case: Excision or Genital Mutilation
Cultural difference or violation of a culturally-neutral norm?
Reasons for the practice?
Possible Test Principle: Does the practice promote or hinder the welfare of people whose lives are affected by the practice?

11. Lessons and Insights of Cultural Relativism
Tolerance
of customs and alternative practices
fundamental values or principles may be similar
Open mindedness
examining prejudices and biases
Danger of assuming absolute standards
conviction of beliefs can lead to hubris (arrogance, excess, pride), the worst of the Greek vices

12. Donaldson’s Framework
What standards or ethical theory should apply when doing business in other countries?
Cultural relativism
Ethical imperialism
Inadequacies of both approaches
Relativists—tolerates the intolerable (e.g. violation of human rights of fundamentals of social contract)
Imperialists—intolerant of tolerable, i.e. legitimate differences (e.g. gift giving or relative value for fundamental values such as equality or liberty)

13. Principles of Balanced Approach (Guidelines for Businesses)
Respect for Core Values – moral threshold for all business activity
Respect for Local Traditions
Context Matters

14. Defining Core Values
Respect for human dignity: Not treating others simply as tools or means (recognize value as human)
Respect for basic rights
Good citizenship: Support and improve institutions in communities

15. Principled (Creative) Judgment
Principles (e.g. Codes and Credos) can provide clarity and direction of value commitment
But judgment of implementation requires flexibility and latitude
Example: Levi Strauss and Child Labor in Bangladesh

16. Moral Free Space and Types of Conflicts
Conflict of relative development
Would the practice be acceptable at home if my country were in a similar stage of development?
E.g. wage rates
Conflict of cultural tradition
Is the cultural tradition in conflict with core human values?

17. Guidelines for Ethical Leadership
Treat corporate values and formal standards of conduct as absolutes
Design and implement conditions of engagement for suppliers and customers.
Allow foreign business units to help formulate ethical standards and interpret ethical issues
In host countries, support efforts to decrease institutional corruption
Exercise moral imagination

18. Bribery
What is it?
“…bribery of public officials as the voluntary giving (promising or offering) of something of value to a foreign public official in order to obtain or retain business or other improper advantage in the conduct of international business.” (OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions)

19. Another definition
“Bribery: An offer or receipt of any gift, loan, fee, reward or other advantage to or from any person as an inducement to do something which is illegal or a breach of trust, in the conduct of the enterprise’s business.” (Transparency International’s Business Principles for Countering Bribery)

20. Bribery
Cultural difference violation of core business values. Is it ethically wrong, i.e. apart from the law? Why?

21. Extent of Problem (Transparency International 2004)
$400B annually in government procurement
106 of 146 countries score less than 5 on scale of 10 as “clean”
60 countries score less than 3
U.S. about 17th from the top

22. NGO Efforts Transparency International(
See Business Principles for Countering Bribery
Organisation for Economic Co-operation and Development (OECD) (

23. U.S. Legal Framework Foreign Corrupt Practices Act (FCPA)(
“The FCPA makes it unlawful to bribe foreign government officials to obtain or retain business.”
Sanctions:
Criminal: $2M for corporations; $100,000 and 5 yrs prison for directors, officers, agent, and employees
Alternative Fines Act: Up to twice the amount of corruption payment
Sarbanes-Oxley Act
Accounting fraud and whistleblower protections

24. A Recent Case (Titan)
San Diego military intelligence and communications company
In 1998 Titan entered into joint venture to build “satellite based telephone system” in Benin, Africa.
At same time, Titan entered into agreement with Titan Benin Agent, a business advisor to President of Benin. The consultant was retained to “assist Titan in marketing and identifying potential business.”

25. Consultant Agreement 5% of value of equipment installed in Benin
5 days after agreement invoice for $399,000 submitted.
One week later Titan official approved $400,000 wired to Benin to account of relative of Titan Benin agent.

26. Further Payments
2% were to go for “social payments” for schools, health care, etc.
Expedited “social payments” went to the account of Benin Agent rather than government ($2M) and invoiced as consulting services
Further payments broken into smaller amounts.
$1M to offshore account of agent in Monaco
5 payments ($1.1M) in cash to agent

27. And More Payments funneled to the re-election of Benin President
T-shirts for election campaign
Total of $3.5M paid to Titan Benin Agent

28. Settlement SEC sues Titan in violation of FCPA
Titan pleads guilty in 2005
Agrees to pay over $28M in fines and penalties
Agrees to retain independent consultant to review FCPA compliance
Merger with Lockheed Martin nullified