Ethics and compliance program: Case Study

For the most part, the ethics and compliance program is meant to provide general guidance on behavior, ethical standing, and following the prevailing rules.
Ethics and compliance program

Ethics and compliance program

Case Study 1

The first case presents a scenario where the company is in talks with the government of Vindalubia regarding the contract to construct a number of solar panels. In the course of the discussions, the Minister in the Ministry of Energy requests for payment of a “motivation fee” in order to facilitate the signature that will allow for awarding of the contract with the government in Vindalubia.

The discussion below is presented to the company’s CEO as an explanation of whether or not the firm should pay the “motivation fee” requested by the minister, implications of actions, a legal view of the scenario, as well as a recommendation of the decision the firm should make.

The meaning of a “motivation fee”

The Minister, by asking for a “motivation fee”, is asking for something of value to them in exchange for the signature. In this case, the term fee implies something of monetary value i.e. legal tender, is expected to change hands. The sole purpose of the exchange being as a means to influence the Minister of Energy to carry out a given action, whether legal or otherwise.

In this regard, therefore, the “motivation fee” is understood to be a bribe to influence the Minister to act in favor of the company by rewarding the tender to construct the solar panels in Vindalubia in exchange for a given amount of money.

Possible decisions and implications

Given the prevailing scenario, as well as the firm being in need of the contract, it is evident a decision is needed. The decision involves a choice of whether or not to present the Minister with the required “motivation fee”. Both choices have implications, and they ought to be addressed prior to making the decision.

If the firm chooses to offer the Minister of Energy the requested “motivation fee”, they will outrightly have secured the contract. This, however, at the cost of breaking the law, and, therefore, exposing the firm to possible litigation arising from the illegitimate transaction.

On the other hand, the firm may choose to ignore the minister’s request to pay the “motivation fee”. This decision drastically reduces the chances of the firm being awarded the contract to almost nil. This decision, however, maintains the ethical standing of the firm, and it may also choose to file a lawsuit against the minister for illegal activities of a public official in a public office. The prevailing recommendation is not to pay the Minister of Energy the prescribed “motivation fee” since it is not only unethical but also illegal.

Legal perspective and justification for the decision

As per Section 18 code 201 of the US code, ‘Bribery of public officials and witnesses’, bribery is understood to be the act of offering, promising, or giving, directly or indirectly, anything of value to a public official. In the context of the Minister of Energy as a public official, the above described act of bribery is committed in a bid to either influence the performance of an official act or to influence the official in an act of collusion or knowingly allow the committing of fraud.

In addition, the act of bribery may be committed when the exchange is done to influence the official to knowingly act in omission or commission of an action that is in violation of the law (Legal Information Institute, n.d.).

Case Study 2

The second case represents a scenario where the Government of Vindalubia has awarded the company a contract to construct solar panels. The firm has gone through the required process and signed the contract. However, in a bid to secure the contract, the company paid a “motivation fee” to facilitate the signature to award the contract as requested by the Minister of Energy in Vindalubia.

In spite of the payment of the “motivation fee” as agreed, the Government of Vindalubia terminated the contract a few months later. Below is a discussion that expounds on the scenario, shows a number of methods of solving the arising dispute, provides a legal perspective of the issues in the scenario, and provides recommendations on the choices and implications of the same.

The arising dispute and possible methods of resolving

The prevailing dispute regarding the given scenario between the company and the Minister of Energy in Vindalubia stems from the premature termination of the awarded contract to construct solar panels by the government. The firm may decide to address this dispute in a number of ways. Key among these is the use of contract law. This is the preferred approach proposed to the Chief Executive.

Possible decisions and implications

The use of contract law as proposed to the CEO of the company would suffice as an effective method of addressing the dispute between the company and the government. If the Chief Executive upholds this decision, the firm may choose either to handle the matter amicably between the parties involved out of court or to file a lawsuit.

The lawsuit may serve to expose the illegitimate and unethical transaction between both parties involving the payment of a “motivation fee”. On the other hand, the amicable settlement may result in a much better result that favors both parties.

Legal perspective and justification for the decision

The use of an amicable settlement, which is the decision of choice among both, should start with a review of the contract. This step allows both parties to review the terms of the signed contract that proves the existence of an agreement between the parties. For the company, an area of focus during this face should be the determination of contractual clauses within the agreement that stipulate the terms of termination of the contract.

Owing to the value of the contract, it should contain a clause or clauses describing the suitable provisions of the process of the termination of a contract (Legal Information Institute, n.d.). Any disputes should be handled, therefore, as per the clauses of contract termination.

Failure of the clauses within the contract to provide an amicable settlement of the matter, prevailing codes of contract law governing the US are useable. This step may invoke the need for an external expert regarding contract law. The law of contracts should provide sufficient guidance on the various violations committed in terminating the contract without communication between both parties (Legal Information Institute, n.d.).

In addition, the notice of termination section of the US code should provide guidance on the requirements and process needed to terminate the contract (Legal Information Institute, n.d.). If these terms are not sufficient to warrant an agreement between both parties, the company may choose to file a lawsuit against the government in spite of the prevailing choices discussed earlier.

Case Study 3

The third case presents a scenario where the Chief Executive Officer has concerns over the lack of a Ethics and compliance Program at the firm. The CEO tasks me, as the new Chief Compliance Officer at the company, to propose and develop a new ethics and compliance program for the firm.

Proposal for a new ethics and compliance program

For the most part, the ethics and compliance program is meant to provide general guidance on behavior, ethical standing, and following the prevailing rules. The introductory segment of the ethics and compliance program for the firm stipulates the need and importance of following all rules and regulations outlined in the various company statutes. In addition, the introduction section also outlines the individuals and stakeholders covered by the various codes of ethics and rules of conduct of the firm.

The ethics and compliance program outlines the offices where an aggrieved employee, distributor, supplier, or other stakeholder covered by the relevant rules is supposed to access help and have their concerns addressed. The ethics and compliance program outlines all the necessary laws that are to be adhered to strictly by all. In addition, the ethics and compliance program identifies and classifies all areas covered by the various policies. This allows for easier navigation and access to specific rules as needed.

Some areas of importance in the ethics and compliance program include the outlining of laws and regulations covering intellectual property, privacy, conflicts at the workplace, integrity and dealing fair, provision of equal opportunities, and laws that relate to safety, health, and the environment. These laws will relate to not only the firm, but must also fall within the legal framework established in Riyadh, and other laws that govern the operation of the construction industry in the country.

Proposal for corporate governance

The corporate governance section is meant to provide an overview of the managerial and staff structure of the firm and the roles of each level of authority. In addition, the corporate governance model delimits the communication structure regarding the information flow within the firm.

This corporate governance structure ties in to the proposed ethics and compliance program by availing information about the flow of communication from the various managers. In addition, the corporate governance helps by providing a representation of the various officials where a member of staff in the firm can access help about the various rules and regulations outlined in the ethics and compliance program.

Objectives of the ethics and compliance program

The ethics and compliance program serves to provide guidance to the employees of the firm concerning the various applicable laws at the workplace. The program creates a framework where the members of staff in the organization can understand the various applicable laws in a simple manner that is usually categorized and focused for their specific industry and region. In this case, for example, the US law would not suffice in the creation of the ethics and compliance program for the middle-sized construction firm in Riyadh (Peterson, 2013, pp. 1029, 1031 – 1032).

The ethics and compliance program creates a model that is useful for the successful integration of corporate culture and legal background on various issues regarding the firm. In this regard, the inclusion of a well-rounded ethics and compliance program and an intricate corporate governance structure provides a combination that provides guidance to employees on the various issues about the firm and the industry from both a legal and operational point of view (Walker, 2016; Verschoor, 2015).

Therefore, the introduction of the proposed ethics and compliance program as outlined earlier should serve to streamline operations, ensure communication flow, and provide the employees with sufficient knowledge of the existing rules and regulations that govern them in the workplace.

References

Legal Information Institute. (n.d.). § 1470.27 Contract violations and termination. Retrieved from Legal Information Institute – University of Cornell School of Law: https://www.law.cornell.edu/cfr/text/7/1470.27

Legal Information Institute. (n.d.). § 635.125 Termination of contract. Retrieved from Legal Information Institute – University of Cornell Law School: https://www.law.cornell.edu/cfr/text/23/635.125

Legal Information Institute. (n.d.). 18 U.S. Code § 201 – Bribery of public officials and witnesses. Retrieved from Legal Information Institute – University of Cornell: https://www.law.cornell.edu/uscode/text/18/201

Legal Information Institute. (n.d.). 48 CFR 49.102 – Notice of termination. Retrieved from Legal Information Institute: https://www.law.cornell.edu/cfr/text/48/49.102

Peterson, E. A. (2013). Ethics and compliance programs: competitive advantage through the law. Journal of Management & Governance, 1027 – 1045.

Verschoor, C. C. (2015). Tools for ethical success. Journal of Strategic Finance; Montvale, 19 – 21.

Walker, R. (2016). International corporate compliance programmes. International Journal of Disclosure and Governance, 70 – 81.

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