Prabhat was working as Vice President (Marketing) at Sterling Electric Ltd., a reputed multinational company. But presently the company was passing through the difficult times as the sales were continuously showing downward trend in the last two quarters. His division, which hitherto had been a major revenue contributor to the company’s financial health, was now desperately trying to procure some big government order for them. But their best efforts did not yield any positive success or breakthrough.
His was a professional company and his local bosses were under pressure from their London-based HO to show some positive results. In the last performance review meeting taken by the Executive Director (India Head), he was reprimanded for his poor performance. He assured them that his division is working on a special contract from the Ministry of Defence for a secret installation near Gwalior and tender is being submitted shortly.
He was under extreme pressure and he was deeply perturbed. What aggravated the situation further was a warning from the top that if the deal is not clinched in favour of the company, his division might have to be closed and he may have to quit his lucrative job.
There was another dimension which was causing him deep mental torture and agony. This pertained to his personal precarious financial health. He was a single earner in the family with two school-college going children and his old ailing mother. The heavy expenditure on education and medical was causing a big strain to his monthly pay packet. Regular EMI for housing loan taken from bank unavoidable and any default would render him liable for severe legal action.
In the above backdrop, he was hoping for some miracle to happen. There was sudden turn of events. His Secretary informed that a gentleman Subhas Verma wanted to see him as he was interested in the position of Manager which was to be filled by him in the company. He further brought to his notice that his CV has been received through the office of the Minister of Defence.
During interview of the candidate-Subhash Verma, he found him technically sound, resourceful and experienced marketeer. He seemed to be well-conversant with tendering procedures and having knack of follow-up and liaising in this regard Prabhat felt that he was better choice than the rest of the candidates who were recently interviewed by him in the last few days.
Subhash Verma also indicated that he was in possession of the copies of the bid documents that the Unique Electronics Ltd. would be submitting the next day to the Defence Ministry for their tender. He offered to hand over those documents subject to his employment in the company on suitable terms and conditions. He made it clear that in the process, the Sterling Electric Ltd. could outbid their rival company and get the bid and hefty Defence Ministry order. He indicated that it will be win-win situation for both-him and the company.
Prabhat was absolutely stunned. It was a mixed feeling of shock and thrill. He was uncomfortable and perspiring. If accepted, all his problems would vanish instantly and he may be rewarded for securing the much awaited tender and thereby boosting company’s sales and financial health. He was in a fix as to the future course of action. He was wonder-struck at the guts of Subhash Verma in having surreptitiously removing his own company papers and offering to the rival company for a job. Being an experienced person, he was examining the pros and cons of the proposal/situation and he asked him to come the next day.
(a) Discuss the ethical issues involved in the case.
(b) Critically examine the options available to Prabhat in the above situation.
(c) Which of the above would be the most appropriate for Prabhat and why?
Prabhat was working as Vice President (Marketing) at Sterling Electric Ltd., a reputed multinational company. But presently the company was passing through the difficult times as the sales were continuously showing downward trend in the last two quarters. His division, which hitherto had been a major revenue contributor to the company’s financial health, was now desperately trying to procure some big government order for them. But their best efforts did not yield any positive success or breakthrough.
His was a professional company and his local bosses were under pressure from their London-based HO to show some positive results. In the last performance review meeting taken by the Executive Director (India Head), he was reprimanded for his poor performance. He assured them that his division is working on a special contract from the Ministry of Defence for a secret installation near Gwalior and tender is being submitted shortly.
He was under extreme pressure and he was deeply perturbed. What aggravated the situation further was a warning from the top that if the deal is not clinched in favour of the company, his division might have to be closed and he may have to quit his lucrative job.
There was another dimension which was causing him deep mental torture and agony. This pertained to his personal precarious financial health. He was a single earner in the family with two school-college going children and his old ailing mother. The heavy expenditure on education and medical was causing a big strain to his monthly pay packet. Regular EMI for housing loan taken from bank unavoidable and any default would render him liable for severe legal action.
In the above backdrop, he was hoping for some miracle to happen. There was sudden turn of events. His Secretary informed that a gentleman Subhas Verma wanted to see him as he was interested in the position of Manager which was to be filled by him in the company. He further brought to his notice that his CV has been received through the office of the Minister of Defence.
During interview of the candidate-Subhash Verma, he found him technically sound, resourceful and experienced marketeer. He seemed to be well-conversant with tendering procedures and having knack of follow-up and liaising in this regard Prabhat felt that he was better choice than the rest of the candidates who were recently interviewed by him in the last few days.
Subhash Verma also indicated that he was in possession of the copies of the bid documents that the Unique Electronics Ltd. would be submitting the next day to the Defence Ministry for their tender. He offered to hand over those documents subject to his employment in the company on suitable terms and conditions. He made it clear that in the process, the Sterling Electric Ltd. could outbid their rival company and get the bid and hefty Defence Ministry order. He indicated that it will be win-win situation for both-him and the company.
Prabhat was absolutely stunned. It was a mixed feeling of shock and thrill. He was uncomfortable and perspiring. If accepted, all his problems would vanish instantly and he may be rewarded for securing the much awaited tender and thereby boosting company’s sales and financial health. He was in a fix as to the future course of action. He was wonder-struck at the guts of Subhash Verma in having surreptitiously removing his own company papers and offering to the rival company for a job. Being an experienced person, he was examining the pros and cons of the proposal/situation and he asked him to come the next day.
(a) Discuss the ethical issues involved in the case.
(b) Critically examine the options available to Prabhat in the above situation.
(c) Which of the above would be the most appropriate for Prabhat and why?
Introduction This case highlights the precarious position of Prabhat, torn between professional duty and personal exigencies, echoing the Satyam scandal where fraudulent activities were driven by pressure to maintain a facade of success. The central ethical dilemma revolves around Prabhat's choice between accepting stolen information for personal and company gain versus upholding ethical conduct and professional integrity, mirroring insider trading cases like the Harshad Mehta scam; the Deontological approach, emphasizing moral duty irrespective of consequences, offers a robust framework for navigating this situation.
Stakeholder Identification Prabhat, Sterling Electric Ltd., Unique Electronics Ltd., Ministry of Defence, Subhash Verma, Prabhat's family, Sterling Electric's employees, and the public.
(a) Ethical Issues Involved:
- Breach of Confidentiality and Intellectual Property Rights: Subhash Verma's possession and proposed sharing of Unique Electronics' bid documents constitute a severe breach of confidentiality and a violation of intellectual property rights. This act undermines fair competition and trust in business dealings.
- Conflict of Interest: Prabhat's personal financial difficulties create a conflict of interest, potentially influencing his decision-making regarding the offer. His desperation might lead him to prioritize personal gain over ethical considerations and professional duty.
- Bribery and Corruption: Subhash Verma's offer to exchange stolen information for a job can be construed as a form of bribery and corruption. This unethical practice distorts fair competition and erodes trust in institutions.
- Potential Legal Ramifications: Accepting the offer exposes Prabhat and Sterling Electric to legal repercussions, including charges of corporate espionage, unfair competition, and conspiracy. The legal consequences could be severe, damaging reputations and leading to financial penalties.
- Erosion of Professional Integrity and Moral Righteousness: Prabhat's decision will directly impact his professional integrity and moral standing. Accepting the offer would compromise his ethical values and set a negative precedent.
(b) Options Available to Prabhat:
- Reject the Offer and Report Subhash Verma: This upholds Prabhat's professional ethics, respects the rule of law, and protects Unique Electronics' rights. It aligns with the Deontological approach, emphasizing moral duty. This option demonstrates integrity and reinforces ethical conduct within the industry.
- Reject the Offer but Not Report Subhash Verma: This avoids legal entanglement but fails to address the underlying ethical violation. It represents a passive approach to ethical responsibility, neglecting the potential harm to Unique Electronics.
- Accept the Offer: This benefits Prabhat and Sterling Electric in the short term but carries significant ethical and legal risks. It prioritizes personal gain and company profits over fairness, justice, and the rule of law. This option violates the rights approach and disregards the virtue of integrity.
- Negotiate with Subhash Verma to Obtain Information Legally: This option seeks a compromise but still involves engaging in unethical behavior. It attempts to circumvent the ethical dilemma without fully addressing the core issues of confidentiality and fairness.
- Report the Matter to His Superiors and Seek Guidance: This option demonstrates a commitment to ethical conduct and transparency within Sterling Electric. It allows for a collective decision-making process, considering the broader implications of the situation.
(c) Most Appropriate Course of Action:
The most appropriate course of action for Prabhat is to reject the offer and report Subhash Verma to the appropriate authorities. This aligns with deontological ethics, prioritizing moral duty over potential consequences. It upholds Prabhat's professional integrity, respects the rule of law, and protects Unique Electronics' rights. While this option might have negative short-term consequences for Prabhat and Sterling Electric, it demonstrates a commitment to ethical conduct and strengthens the long-term health of the industry. It is also consistent with the Justice approach, ensuring fairness and impartiality in the bidding process. Further, Prabhat should inform his superiors about the incident and the pressure he was facing, fostering transparency and accountability within Sterling Electric. This approach mitigates the conflict of interest and allows the company to address the underlying issues that led to the situation.
Conclusion This case study underscores the importance of ethical decision-making in business. The Infosys whistleblower case highlights the positive impact of individuals upholding ethical principles despite personal risks. An ethical way forward involves implementing robust internal controls, promoting ethical awareness training, and fostering a culture of transparency and accountability within organizations. This proactive approach can prevent similar ethical dilemmas from arising in the future, ensuring fair competition and upholding the integrity of the industry. Like the Tata Group's commitment to ethical business practices, prioritizing integrity can lead to long-term success and build public trust.
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