Question 1: Total 8 Marks 2017 December witnessed the governmentof Bandara inviting bids from eligible parties. The contract wasabout cell phone network construction. Youphone management gotinterested in the bid. Bandara had a poor land-line infrastructureand hence had a good potential for cell phone companies. IfYouphone could successfully land few of these contracts, it wouldaccomplish a high reputation for relevant expertise in themarketplace. Youphone management conducted extensive analysesbefore preparing and submitting a bid. Under the bid, the companykept only 50% of its normal profit margins and undertook aguarantee to complete the proposed project, worth several milliondollars, in a maximum period of 2 years. The bid was submitted bythe due date and the government acknowledged a timely receipt ofit. Following this, despite lapse of the company did not receivedany news from the government, although it sent several reminders.The Director Operations at Youphone, Mr Joe Parker, sought advicefrom the relevant Australian High Commission representative in thecountry, who advised him to contact Bandara’s relevant minister andmeet him in person. Joe went on for the meeting making sure he isfully prepared for it. The meeting was arranged in the AustralianHigh Commissioner’s office. Joe was fully committed to win the bid.The minister after asking a couple of questions left the meeting,leaving his deputy with Joe. The assistant informed Joe aboutseveral other competitive bids that his office had received fromseveral countries. However, towards the end of the meeting, theassistant told Joe that he will guarantee the acceptance ofYouphone’s bid, without any change whatsoever, if Joe pays acommission of $900,000. From the discussion Joe clearly understoodthat the commission the assistant was asking for was actually abribe. It was clear to Burns that the ‘commission’ was, in fact, abribe. Joe, in a very subtle manner, signalling to the Australianapplicable laws and regulations that strictly prohibited suchpayment transactions. The meeting was concluded with no positiveoutcome for Joe.

1. If you were a shareholder in Youphone, what would be yourstance on the payment of the ‘commission’ to the governmentofficial by Joe? What may be the likely effect on the company’smarket shares when shareholders come to know of any such paymentsmade to secure such business contracts abroad? Which principle ofethical conduct for management accountants relates to thissituation?

2. Joe discussed the whole issue with his friend Mark, anexecutive at another company, Mark said that he would have agreedto the payment of the commission as he treats such payments were inaccordance with the country’s overall business/government culture.What would be your stance on Mark’s business approach in terms ofthe effects of such bribes on the overseas country? Explain. Whichprinciple of ethical conduct for management accountants relates tothis situation?

3. Why you think Youphone should have a clear corporate policyin place to guide its executives in such situations?

4. If you were Joe, what actions would you take next, withinAustralia as well as in Bandara?