Introduction
Glencore is an Anglo-Swiss firm that deals with commodity trading and mining and has its headquarters in Baar, Switzerland. The company’s oil and gas production is based in the UK and serves globally. According to The Guardian newspaper publication dated Tuesday 21 June 2022, an affiliate of the commodity trader pleaded guilty in UK court to more than five counts of bribery in oil operations in various African countries. The Serious Fraud Office (SFO) charges were brought against the company after undertaking a probe concerning that matter. The sentencing would take place later in November 2022. Glencore, through the management, was willing to pay more than $1.1 billion, equivalent to 900 million euros, as a settlement after falling short of the ethical issue (Kollewe, 2022). The main ethical matter, in this case, is bribery offenses aimed at securing preferential access to oil between 2011 to 2016 (Kollewe, 2022). Through the SFO, Glencore Energy (UK) was convicted on the charges of bribery which is a sensitive ethical matter in any company.
The investigation by SFO shows that Glencore, through its employees and some agents, paid bribes for favored access to oil. The total amount paid for the conspiracy was about $28 million for the intentions that comprised increased cargo, first-grade oil products, and preferred delivery time (Kollewe, 2022). The unethical operations were approved by the firm’s executives across the oil plants in Nigeria, South Sudan, Equatorial Guinea, Cotedivore, and Cameroon (Kollewe, 2022). It is important to mention that this issue is linked to corruption which is one of the unethical behaviors within the business line. The investigations were started in 2018, and the matter escalated earlier in 2022. Glencore is confirmed to have set about $1.5 billion to cater for any incurred costs regarding the investigations in other countries such as Brazil and the US. The company assured the investigators that it had conducted ‘substantial investments’ to advance its ethics and compliance issues.
Ethics of the Business Practice
Making illicit payments to the interested countries regarding oil points is unethical. A series of issues are associated with bribery, such as sabotaging the free competitive advantage and creating gluttony and other forms of vices. Bribing foreign officials in the countries mentioned above shows a lack of conformity to business ethics, portraying unclean practices that are unethical. One of the instances alleges that the company paid a significant amount of money to bureaucrats to prevent audits and bribed legal minds to paralyze the lawsuits that would follow (Kollewe, 2022). Therefore, it is important to determine how the business practice was unethical by applying the theories below.
Consequence-based Ethical Theory
The consequence-based ethical theory is also known as utilitarianism. It focuses on the consequences and the outcome or impacts, which means the key determinant is the usefulness or utility. According to Arnold et al. (2020), an action is morally correct if it leads to ‘most good’ and a low amount of suffering for the majority. Therefore, it means the common good should be centered on the majority and not a minority. That means there should be no selfish moves that are based on a few individuals or parties at the expense of many people. Glencore paid an illicit amount of money in several African foreign countries to secure more business moves than other companies offering similar services and products. Basing the practices on consequence-based theory was unethical. The reason is that corruption is one of the major issues that has led to financial damage. First, other companies will not get fair consideration to win business with the said countries. It means that the competition will be limited, which leads to impunity, a disastrous measure that can sabotage the economy. When there is financial damage, inflation will occur, and the price of basic commodities will rise, affecting the common citizen who will find it hard to make ends meet (Svoboda, 2022). Therefore, in this case, the majority will be citizens of the countries where the bribery is conducted and companies with similar or better potential than Glencore produce the same.
Second, bribery is known to undermine the equitable distribution of resources. The Guardian mentions that Glencore was guaranteed high-quality resources in the oil sector. There were “separate criminal and civil charges alleging that one of the company’s trading arms manipulated fuel oil prices at two of the largest US shipping ports” (Kollewe, 2022 par. 9). The manipulation of price means that conspiring to gain illicit profits at the expense of other stakeholders in the industry. According to the prosecutors, the practices were made to defraud the countries. The consequence at this point is economic sabotage and distortion of the countries’ oil business to other potential investors who would form collaborative bases in the regions. Due to the metrics explained above, Glencore’s bribery scandal was unethical.
Right-based Ethical Theory
The right-based theory maintains that society must protect its citizens and allow them to undertake personal goals. For example, the theory can apply whereby rights tell that every person has the right to life, which means killing is prohibited (Svoboda, 2022). However, there may be a lack of reason why killing an individual is morally wrong. Concerning this case of Glencore, the management had no right to conduct business with the countries without obstruction from the oversight authorities. First, it means the payment of money to secure lucrative oil deals was made with consent towards the same. The practice was unethical as long as no one was forced to engage in the fraudulent matter.
Second, ethics show the standard ways of acting in business or corporate fields. The right to transact with foreign officials did not allow interference from the public due to the privilege begotten by the application of right-based theory. Glencore was literarily supposed to be independent while acting from various management capacities. Corruption is a key limiter of freedom, health, and human rights. Buying contracts means that the management of Glencore did not accord freedom to people in their respective countries.
Duty-based Ethical Theory
In ethics, duty-based theory suggests that some acts or practices may be wrong or right depending on what matters. In this case, the theory puts that people must act accordingly, holding all factors constant despite the preferred or adverse results that may be produced. Referring to the Glencore scandal, the executives who approved the payment of bribes did not act accordingly because they intended to gain significant profit regardless of the harm it would have caused to the African countries involved. The theory is also known as deontological ethics, whereby deontologists apply universal moral rules such as it is wrong to kill an innocent individual and it is right to keep promises, among others. For example, Immanuel Kant, one of the ancient philosophers, though it would be wrong to deceive to prevent someone from being lynched by a mob.
The right measure regarding the oil contracts was to follow the right procedure even if the company may have had financial constraints. At this point, the right surpasses the act of accordingly since it saves the company from poor reputation and uncontrolled access to the property in unclean ways. The duty-based theory has the basis of human rights and imposes due respect to be granted to the single individual despite interest from the majority (Arnold et al., 2020). Glencore wanted to make profits at the expense of financial damage globally. There is more concern for the act itself since a person can be justified as morally upright if they did something costly by mistake. “A priority at sentencing must also be Glencore’s obligation to compensate the victims of its corruption in west Africa.” (Kollewe, 2022 par. 14). That statement means the people of Nigeria, Cameroon, and other involved African countries suffered from corruption by having their property taken cheaply hence, lack economic gains. Thus, this theory suggests that Glencore’s bribery saga was unethical.
Justice-Based Ethical Theory
The theory of justice in ethics holds that every party has the equal right to primary liberties. It means that a person should be given opportunities and chances like other individuals with similar abilities. Glencore’s misdeeds affected the fairness to a significant range. By avoiding audits, it meant the company conspired to manipulate prices. Additionally, the preferential business perspective denied other competitors’ equal opportunity to explore oil in the West African countries. The common citizen was affected since the price was hiked tremendously to gain profits. “First, Emilio Jose Heredia Collado of California admitted to conspiring to manipulate the price of marine fuel oil in Los Angeles and Houston ports.” The basic liberty to conduct business freely and fairly was not taken as expected, which is why the practice was unethical. There were many fraudulent payments in Venezuela Democratic Republic of Congo, where bribes were paid in millions of dollars. The practice was jeopardizing business more so for the young entrepreneurs who might have faced difficulty penetrating the market.
It was unethical to corrupt foreign officials and use the justification that the money was made for media coverage, as was the case in Nigeria. In 2014 Stimler, according to DOJ filings, was told to contribute an “advance” of $300,000 toward the reelection campaign of a Nigerian official” (Kollewe, 2022 par. 10). The statement is critical in that the bribe contributed to the intention to elect corrupt leaders in Africa. There are many resources in the region, but practices such as those of Glencore paralyze the economic stability, which marks an epitome of a long journey towards an industrial revolution in Africa. Under justice theory, utilitarianism and Kantian perspectives are challenged as the key focus is to bring a well-ordered society through liberty and equality. Having corrupt deals bars justice to the people, affecting their lives adversely for a long time.
Relationship-based Ethical Theory
Also known as ethics of care, the relationship-based theory is a philosophical aspect that is more feminist and applies a relational and context-bound framework regarding morality and decision making. At this point, it refers to the matters that concern the nature of morality and normative ethical perspectives (Arnold et al., 2020). In this theory, the ideas appear in stark contrast to other theories mentioned above, such as deontology and utilitarianism, among others. Designed by Nel Noddings, the theory argue that caring is the first consideration of morality. Noddings provided that caring is an attribute that can be universally associated with human beings (Arnold et al., 2020). A relationship in which individuals act caringly is a caring relationship for this matter.
Glencore’s scandal on whether the practices were unethical can be answered using this ethical approach. As learned earlier, the impulse to care being universal means that the company’s top executives did not consider the responsibility for moral relativism and hence, lacked virtue ethics. Therefore, conspiring with mentioned countries was unethical since the ill-gotten profits mean a lack of financial equity (Svoboda, 2022). Hence, the particularity of the actions defaulted the fundamental ethics since the one to care for did not ostensibly maintain the ethical values of the one cared for.
The situation here is that Glencore management which is supposed to be ‘one-caring,’ failed to meet the desires of the ‘cared-for’ in providing an opportunity for consideration in the oil business that the company indulges in. In ideal reality, the reasons for Glencore to engage in corrupt deals would only be justifiable for disinterested parties which may have had low interest in the business. There might be a notion that Glencore wanted to raise revenue to have a well-established enterprise in the world, but in this case, the well-being of the African states and business competitors was not factored (Arnold et al., 2020). Thus, the practice of engaging in illicit acquisition of oil business expansion did not show care from the top management. Hence, it was unethical.
Character-based Ethical Theory
The theory is also called virtue ethics and focuses on growing a specific character or human trait ideology to be responsive to proper business practices. Some of the traits commonly associated with virtue ethics comprise honesty, courage, and empathy. Glencore lacked honesty about the conspiracy by top management and employees to acquire preferential oil business in West Africa, Brazil, and Venezuela. “Glencore admits now that its traders bribed foreign officials to secure contracts and cargoes, bribed bureaucrats to avoid audits, and bribed judges to make lawsuits disappear” (Helman, 2022 par. 5). The statement shows a lack of empathy minding that the African countries mentioned are still in under industrial revolution and adding corruption means sabotaging their economies more. For example, Emilio Collado agreed to wrongfully manipulate the marine fuel price in various ports, an act that can be termed as dishonest, compromising the virtue ethics in business.
Many practices in the case lacked virtue because leaders are seen having deceitful contributions that may have led to a poor reputation in the oil business and discouraged other investors from getting into the victim countries for the oil business. The country may destabilize when there is low engagement in producing a key energy item since the foreign exchange will have reduced. If a company engages in acts of impunity, the free will to do business for other companies go down. Thus, when virtue ethics were applied, Glencore’s actions regarding the oil business were unethical.
Conclusion
Glencore was found guilty of illicit payments made to have preferential access to resources in various countries. According to consequence-based theory, the practices by Glencore were unethical since the impact sabotaged the economy of the involved countries and other competitive partners in the energy business. When using right-based theory, Glencore’s top management deprived the competitors and consumers of the right to experience a comfortable business perspective due to impunity and conspiracy to defraud the victims. It was unethical to pay bribes according to duty-based ethical theory since the approval to pay illicit funds is wrong. The justice-based theory calls for equality in basic matters. It was unethical to pay bribes since that barred the countries and business community from fair enterprise conduct that may have led to increased cost of life after manipulating fuel which is a key determinant in primary aspects of life. Relationship-based theory embraces caring, and Glencore’s scandal did not show care to the common citizens since it allowed room for economic deterioration; hence, unethical. Based on virtue ethics theory, Glencore’s practices lacked honesty and empathy, which is a key determinant of wellbeing among all parties involved.
Based on what the course has offered concerning ethical business, I agree that Glencore’s corrupt practices were unethical. I agree on what The Guardian has put regarding the matter as one of the major unethical behaviors spearheaded by the company’s top management. The reason why I am convinced that Glencore was unethical is due to the potential impact the practice had on the economic development within the company and other growing firms. The course has taught me that ethical constraint leads to organizational liability and that has been matched by what Glencore will pay as fine for falling short of complying with business ethics. I believe that the West African countries involved in the saga contributed to low development in terms of industrialization and that is why the entire matter was unethical.
References
Arnold, D., Beauchamp, T., & Bowie, N. (2020). Ethical theory and business (10th ed.). Cambridge University Press.
Helman, C. (2022). Bribery scandal to cost Glencore $1.1 billion, while billionaire execs avoid blame—for now. Forbes.
Kollewe, J. (2022). Glencore pleads guilty to bribery-related to African oil operations. The Guardian.
Svoboda, T. (2022). Philosophical defense of misanthropy. Routledge.