I would like to ask this question about ethics inbusiness. Thank you.
Maurice Stokes was one of the best classmates of Roy Russellwhile he studied his MBA in the USA. Maurice grew up in AddisAbaba, the capital of Ethiopia. Ethiopia’s GDP per capita ranked187 out of 191 countries due to adverse geopolitics and civil warsin the past. Maurice is talented and hard working. He went throughhis bachelor degree in Ethiopia and luckily won a scholarship tostudy an MBA in the USA. Right after he got his MBA degree, Mauricejoined AB&T, the world’s biggest mobile phone service provider,as a management trainee. After 5 years’ working in the USA, Mauricewas assigned to work as the Vice President in Addis Ababa, whereAB&T’s African headquarter is located, to oversee all Africanoperations.
After his MBA graduation, Roy Russell joined his father’s familybusiness– a medium size mobile phone service provider in Hong Kong.Three years later, AB&T acquired Roy’s family business andretained all existing staff. Roy then became an employee ofAB&T and he was happy to work for a multinational company withgood reputation. After 3 years’ working as financial controller inAB&T’s Singapore office, Roy was offered an opportunity forpromotion to work as chief financial officer (CFO) in its Africanheadquarter in Addis Ababa. Eager to get more internationalexposure, Roy said yes to this offer. This is how Roy came to areunion with Maurice.
AB&T provides its senior employees in Addis Ababa with amonthly housing allowance of up to $2,500. Compared with the USstandard, most of the housing in Addis Ababa is of low quality, andin many regions the law and order are bad. By giving a generousallowance, AB&T aims to ensure that its senior employees livein areas that are safe, convenient and comfortable to ensure thatsenior executives can have good rest, that they live in a districtthat is appropriate to the company’s reputation. For housingallowance claim, senior executives need to hand in their monthlyreceipts for reimbursement. Every month Maurice submits a bill of$2,500 from his landlord to the finance office for re-imbursement.Roy suggested paying a visit Maurice’s house for a few times.However, every time Maurice rejected this suggestion, claiming thathe had never entertained any coworkers at home so that his familymembers would not be distributed. Roy considered thisunderstandable and so did not insist.
After working for six months in Addis Ababa, Roy had a businessdinner with a supplier. The supplier mentioned that Maurice was aneighbor in a district called Winter Town. Winter Town is adistrict quite far from AT&T’s African office and is well-knownfor its high crime rate in Addis Ababa. Roy was surprised to hearthat, as Maurice told him that he lived in Spring Town, a districtthat many foreign ambassadors lived and a lot more expensive thanWinter Town. Through some connection, Roy verified that what thesupplier said was true.
Roy decided to confront Maurice about the housing allowanceissue. Maurice at first denied but later admitted that hisapartment was in Winter Town and the rent was less than $2,500. Hedefended his action by saying that “Every AB&T senior executivegets $2,500 a month. If I live in an economically way, why should Ibe penalized? I just receive the same as others”. As a reply, Roystressed that “It is AB&T objective to let senior employees tolive in a safe place and have good rest for the challenging dutiesduring office hours. Besides, the districts that the company’ssenior executives live in represent the image of the company.Moreover, the company’s housing allowance policy is reimbursementon an actual basis, i.e. the amount of monthly claim should be thesame as the rental value of the apartment and not to allow staff tomake a profit. As the regional CFO, I have to maintain myprofessional standing”. When Roy challenged Maurice for usingfalsified rental receipts for disbursement claims, Maurice admittedbut replied that this is a common and well-accepted practice inEthiopia.
Later in the discussion, Maurice tried to convince Roy regardinghis housing allowance claim practice. Maurice explained hissituation that “You may not understand my situation. I have to saveevery dollar to pay school fees for my ten nephews and nieces. Igot my family members’ great support to finish my education. I oweit to my brothers and sisters to give their children the samechance to study as I did. My parents can never understand why Ilive in a big apartment instead of helping their grandchildren. Iam just doing what I should do. The company has no extra expense toreimburse me $2,500 housing allowance per the monthly receipt Isubmit. As my old classmate and my best friend, please pretend youknow nothing and pay me $2,500 housing allowance as before. As aperson grown up in Ethiopia, I know all business practice here andhave good connection in this country. I know many senior executivesin the government tax department and that will be helpful to yourwork here. I will fully support you to do an excellent job to savesome tax for the benefit of our company. You will be compliment byyour boss for paying a lower tax than other companies here”.
Roy does not want to lose his friendship with Maurice and hebelieves it will make his working life easier if he can make use ofMaurice’s connection in Africa. Roy is not sure what should be hisnext step.
Required
- Identify the ethical issue, if any, involved in this case?
- Who are the stakeholders in this situation? How are theyaffected?
- What are Roy’s alternatives?
- What course of action will you suggest Roy Russell to take andjustify your suggestion?
