Analyzing Ethical Issues: A Case Study of BHP Billiton's Practices

This case study examines the ethical issues surrounding BHP Billiton's operations in Cambodia, focusing on a Memorandum of Understanding (MOU) for bauxite exploration. It analyzes the situation through various ethical decision-making models, including utilitarianism, common good, rights, fairness/justice, and virtue ethics, and identifies key stakeholders such as the Cambodian Prime Minister, BHP Billiton board members, and Cambodian citizens. The study reveals potential bribery and corruption, misuse of public power, and violations of ethical principles like fidelity, responsibility, beneficence, non-maleficence, justice, integrity, and respect for people's rights. The analysis concludes that BHP Billiton's actions represent unethical practices, emphasizing the importance of ethical guidelines and transparent business approaches for long-term sustainability. Desklib offers more resources for students to explore similar case studies and solved assignments.

ETHICS CASE STUDY
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Table of Contents
1.0 Overview of an ethical decision making model...............................................................3
2.0 Overview of ethical principles...........................................................................................5
3.0 Stakeholders in the present case study.............................................................................7
4.0 Ethical issues involved.......................................................................................................8
5.0 Comments...........................................................................................................................9
References...............................................................................................................................10
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1.0 Overview of an ethical decision making model
Ethics can closely be defined as a set of rules to justify right from wrong, describe moral
obligations towards the community, and to protect the rights of people. These models are put
in place to decide whether a person or an organization are in violation of the ethical standard.
In the current case study, BHP Billiton had signed a Memorandum of Understanding (MOU)
with the Cambodian Prime Minister (PM) to explore the land for Bauxite. The company
while conducting business on international grounds, must adhere to some ethical decision-
making models as following:
Utilitarian
The model is one of the most widely used moral theories that the researchers use in order to
prove and assess the causes and impact of unethical practices. Utilitarian theory is primarily a
consequence-based approach where the best possible solution is selected based on the factor
of the greatest good for all and least harm caused (Cooper, 2012). The theory advocates the
balance between all the stakeholders involved in this agreement.
Common Good
This is another consequential model which see to the wellbeing of everyone around. Culiberg
and Bajde (2013) suggest that it emphasize the relationship of people in a society and the
compassion for fellow men and women.
Rights
As the name suggests, this model designed to respect the right of all the person affected by
the ethical decision and protect them. The citizens of Cambodia and the employees of the
company must be treated with dignity and not as a mean to achieve something. Right
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theorists advocate the human right and the same may extend to non-civilian like prisoners and
even the animal rights as well.
Fairness or Justice
This is a non-consequential approach which narrates that every person must be treated
equally irrespective of their position or stature in the society (Tsalikis and Peralta, 2014). It
enforces that law and justice should be equal for the owners of BHP and the PM as for the
citizens.
Virtue
The theory of virtue argues that ethics does not comprise the consequence of a decision only,
but is the sum of a certain virtue of compassion, courage, honesty etc. of a person. This is an
agent-based approach placing the essential human characteristics as a driving factor
(Saunders and Wenzel, 2011). In this context, it may be noted that the theory of virtue is very
much individual and does not necessarily apply to all contexts where the human psychology
plays a major role in determining what is right or wrong.
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2.0 Overview of ethical principles
In this given situation, two different nations are involved. In one hand there is the Cambodian
PM, Hun Sen, and his government; on the other hand, there is BHP and the Australian
authorities. Some important principles that both the involved parties must have followed are
briefly mentioned below.
Fidelity and Responsibility
The principle of the fidelity and responsibility dictates that the BHP Billiton and the
Cambodian PM must take the decision to proceed with the exploration project considering
the factors of trust, accountability towards the citizens and moral actions (Murphy, 2009).
Beneficence and non-maleficence
This principle guides the involved parties towards any ethical decision that will cause benefit
to them without misusing their rights or hurting the people. The principle propagates the
message of involvement and corresponding compliance criteria (Murphy, 2009).
Justice
The principle of justice provides emphasis on the obligation of the PM and the board
members of BHP Billiton to provide the people what they deserve and treats them equally
and fairly. Sama and Casselman (2014) suggest that it also binds them under the same laws
and make them answerable towards the people.
Integrity
According to the principle of integrity, the mining company and the PM must not involve in
any activity that is deceptive and otherwise exploit the rights of people (Karataş, 2015). The
overall integrity of all the stakeholders must be intact.
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Respect for people’s right and dignity
Finally, the principle of respect for people’s right and dignity enforces that the rights of
people must be respected and protected while taking an ethical decision (D'Aquila and Bean,
2011). The company or the PM for self-interest must not take any biased decision.
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3.0 Stakeholders in the present case study
Primary stakeholders
The Cambodian PM, Mr Hun Sen and his involved department under his government are
among the primary stakeholders in this given situation. Along with them, the board members
of BHP Billiton are also the prime stakeholders. The then Australian PM John Howard and
his diplomats could also be considered as primary, as the MOU was signed in his supervision.
These persons are the chief parties to the given scenario as the actions and impact of the
operation of the project is directly bearing upon those only.
Secondary stakeholders
The citizens of Cambodia especially the people living in the territories near the Bauxite
mining land are the secondary stakeholders in this situation as they are supposed to be
benefited from the mining process. The employees of BHP Billiton and indirectly the people
of Australia are also among the secondary stakeholders.
In this context, it may be worth to note that the identification of both primary and secondary
stakeholder is utmost important for the purpose of analysis of the case involving the issues of
unethical practices. This is because the human aspects and the intention of the project may be
subjected to the human intervention and thereof, the respective interest groups must be
identified in order to assess the extent and nature of unethical actions.
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4.0 Ethical issues involved
The case study shows a clear case of bribery and corruption. It signifies misuse of a public
power of personal interests. Theaustralian.com.au (2010) posted that, US$3.5 million money
given as part of a contribution to the growth of Cambodia, went missing from the government
departments. Part of the money was also to earn the liberty of tax-free mining. This situation
violates the Common Good and Justice models of ethical decision making. Here the primary
stakeholders have considered their personal profitability on and misused their rights of
decision making on behalf of people. The PM has ignored the principle of Fidelity and
Responsibility by not being accountable towards the Cambodian people.
According to the MOU, the parties were hopeful towards the success and long-term
operation. However, after three years of tax-free business, the mining company shuts the
operation commenting Bauxite was not worth mining due to the economic crisis. This action
dis-balances the Utilitarian and Rights models by suddenly closing operations and
undermining the rights of the Cambodian citizen as workers in the mines. Both the parties are
in violation of the principles of Beneficence and non-maleficence and Justice, looting
benefits and ignoring what people deserve (Cordelli, 2018). In other words, it may surely be
asserted that the actions by the company are construed to be unethical, violating the ethical
theories that contradict the basic accomplishment of the intended project in terms of its goals
and objectives.
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5.0 Comments
The Australian Public Service Commission provides some guidelines for ethical decision
making which follows the models mentioned in this report. The Australian Criminal Code
Act 1995 states that any multinational company must not offer benefits in any form to an
employee of the government body to extract business gains (Kyriakakis, 2007). In the given
case study, the mining giant BHP Billiton has directly violated this law. If the company dares
to bribe the officials of a foreign country, it is likely they can do the same in their own
country. On top of this, it creates an ill reputation of the company and the business ethics they
follow. Wenhao (2011) states that the principles of ethics originate from the culture of a
region, corruption harms the image of the country as a whole. Therefore, ideally, a company
must not indulge in corruption on international orders even though it is a common practice in
the country where the business is taking place. Finally, it may be concluded that the case
study of BHP Billiton is one of the classic case studies on unethical practices where the
business has been involved in the immoral activities in conjunction with the Government
approval and therefore, the same may raise the question on the integrity of the structured and
civilised society and governance system. The management should act as an agent to the
owner groups and hence, should act in their fiduciary capacity on behalf of the shareholders.
A transparent and truthful approach towards the business may contribute towards the long-
term sustainability of the business in the market.
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References
Cooper, R. (2012). Making the case for ethical decision-making models. Nurse Prescribing,
10(12), pp.607-611.
Cordelli, C. (2018). Prospective Duties and the Demands of Beneficence. Ethics, 128(2),
pp.373-401.
Culiberg, B. and Bajde, D. (2013). Consumer recycling: An ethical decision-making
process. Journal of Consumer Behaviour, 12(6), pp.449-459.
D'Aquila, J. and Bean, D. (2011). Does A Tone At The Top That Fosters Ethical Decisions
Impact Financial Reporting Decisions: An Experimental Analysis. International Business &
Economics Research Journal (IBER), 2(8), pp.11-19.
Karataş, A. (2015). Importance of Ethical Principles for Eco-friendly Management. China-
USA Business Review, 14(6), pp.37-44.
Kyriakakis, J. (2007). Australian Prosecution of Corporations for International Crimes: The
Potential of the Commonwealth Criminal Code. Journal of International Criminal Justice,
5(4), pp.809-826.
Murphy, P. (2009). The Relevance of Responsibility to Ethical Business Decisions. Journal
of Business Ethics, 90(S2), pp.245-252.
Sama, L. and Casselman, R. (2014). Ethical Foresight in Business: Interpreting Societal Cues
for Better Ethical Management. Proceedings of the International Association for Business
and Society, 25(3), pp.71-81.
Saunders, G. and Wenzel, L. (2011). Ethics Principles, Personal Values, And Ethical
Judgment. Journal of Business & Economics Research (JBER), 6(5), pp.13-19.
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Theaustralian.com.au. (2010). BHP faces $2.7m Cambodia graft claim. [online] Available at:
https://www.theaustralian.com.au/business/mining-energy/bhp-faces-investigation-into-27m-
cambodia-graft-claim/news-story/9171a4501b7e6946390236df21085952 [Accessed 4 Sep.
2018].
Tsalikis, J. and Peralta, A. (2014). Priming effects on business ethical decision
making. Priming effects on business ethical decision making, 01(01), pp.21-28.
Wenhao, C. (2011). Implementing international laws to fight business bribery: Case of the
Organization for Economic Co-operation and Development (OECD) anti-bribery
convention. AFRICAN JOURNAL OF BUSINESS MANAGEMENT, 5(32), pp.40-52.
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