Ethics as a Road Map Through Difficulty
Bribery is a criminal activity that involves an act involving money or gift exchange which results in the altered behavior of the receiver. An assessment of the bribery case involving IBM and Latin America will be explored as well as the litigation involving Bridgestone Tires. IBM’s business ethical theory and corporate social responsibility theory will be evaluated and summarized along with the adverse effects IBM suffered as a result of its’ actions. Finally, the course of action implemented will be outlined.
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IBM believes a company must be true to its values in all of its activities, both internal and external. While the world is ever-changing, IBM states that their core values have remained consistent, and are embedded in all their actions. These values are a dedication to every client’s success, an innovation that matters for their organization and the world, and trust and personal responsibility in all their established relationships. IBM is committed to corporate responsibility that is fostered throughout the company and led by senior management, which is ultimately responsible for their economic, environmental, and societal performance, as well as compliance with laws, regulations, and our corporate policies that govern our operations and practices worldwide.
Ethics Employed by IBM
Different cultures may have differing views on business practices; what is acceptable and what is not. However, bribery is a universally unethical practice. IBM states the organization committed to business ethics and lawful conduct in all matters. All employees of the organization are expected to comply with the guidelines and any employee who does not, risk being terminated. IBM employees bribed South Korean and Chinese officials to win contracts. IBM also states that the organization and its’ employees will voluntarily report violations of procurement laws to the appropriate authorities CITATION IBM l 1033 (IBM Policies, n.d.). IBM’s business conduct guidelines state that they apply to all past, present, and, future personnel. Failure to comply with IBM’s compliance guidelines could result in fines, lawsuits, loss of business privileges, and imprisonment CITATION IBM11 l 1033 (IBM Business Conduct Guidelines, 2011). a letter from Chairman Samuel J. Palmisano declared that the instructions are regularly reviewed and updated. He also states that trust and personal responsibility is the core of their relationships with clients, investors, colleagues, and the community in which they live and work CITATION IBM11 l 1033 (IBM Business Conduct Guidelines, 2011).
Challenges Faced by IBM
In 1995, allegations surfaced that in 1993 IBM paid $37million dollars in kickbacks and bribes to land a $250million dollar contract to supply Banco de la Nacion with a computer network CITATION IBM1 l 1033 (IBM’s last tangle in Argentina, n.d.). Former director of Banco de la Nacion testified that he was paid $1.5 million which were deposited in a Swiss bank account, (IBM’s last tangle in Argentina, n.d.). for approving the IBM contract Arrest warrants were issued for four executives who had been working for IBM in 1994.
The warrants were based on charges of bribery, came from Adolfo Bagnasco, the federal judge who headed the investigation CITATION IBM1 l 1033 (IBM’s last tangle in Argentina, n.d.). Banco de la Nacion canceled the contract in 1996 and sued, with IBM counter-suing, but later, in an out-of-court settlement, returned half of the $82m it had been paid. Argentina’s authorities decided not to renew two contracts worth over $500m, claiming it could save $120m a year by setting up a computer system CITATION IBM1 l 1033 (IBM’s last tangle in Argentina, n.d.) on its’ own. IBM said it would no longer bid for government contracts in Argentina, nor would they be the sole bidder for government contracts in Latin American countries.
Bridgestone Americas sued IBM for $600 million alleging that when the new $75 million-plus SAP-based invoicing, accounting, and product delivery system went live in January 2012, it was found to have extremely critical defects in the IBM SAP design. Those which Bridgestone had no reason to expect and for which IBM offered no explanation consistent with the purported concerns IBM had raised CITATION Cha13 l 1033 (Charette, 2013). Bridgestone claims to have suffered damages in excess of $200,000,000, from injury to its reputation and customer relations. Bridgestone alleged that IBM assigned individuals who were not qualified to perform the services necessary for the successful design and implementation. The lawsuit also states that work was outsourced to IBM workers in India and China who possessed less than stellar develop ment skills and practices. Bridgestone’s lawsuit alleges (1) fraud in the inducement and contract performance; (2) misrepresentation in business transactions; (3) constructive fraud; (4) violations of the Tennessee Consumer Protection Act; (5) gross negligence, and (6) breach of contract CITATION Cha13 l 1033 (Charette, 2013).
Response to Challenges
IBM attacked Bridgestone’s credibility by disputing claims in the lawsuit. However, There were things that both parties could have done differently. Bridgestone says that IBM did not supply qualified resources throughout the project. If this is the case, then IBM bears at least partial responsibility for the failure CITATION Cha13 l 1033 (Charette, 2013). IBM’s claims seem equally unrealistic and one-sided Bridgestone’s. IBM states that Bridgestone failed to meet critical deadlines. Bridgestone’s repeated failures had a considerable influence on the cost and schedule of the project. The decision to prematurely roll-out the implementation across its entire business negatively impacted its operations. Bridgestone understood that this would be a challenging project. It had tried several times with other vendors and failed to upgrade its system. IBM was the only vendor to succeed in completing the upgrade to
SAP CITATION Cha13 l 1033 (Charette, 2013).
IBM’s business ethical theory and corporate social responsibility theory does not appear to be as concrete a foundation as the image one may perceive IBM to be. Although IBM’s guidelines are arranged in detail for current, past, and future to view and carry out in the workplace; domestic and foreign. There are those who believe that IBM is less than honest, trustworthy, communicative, or law-abiding as their policies state. The aforementioned lawsuits are not the only documented legal actions that were pursued against IBM.
BIBLIOGRAPHY Charette, R. N. (2013, November 22). Bridgestone Sues IBM for Fraud in $600 Million Lawsuit over Failed IT Implementation. Retrieved from IEEE Spectrum: https://spectrum.ieee.org/riskfactor/computing/it/bridgestone-sues-ibm-for-fraud-in-600-million-lawsuit-over-failed-it-implementation
IBM Business Conduct Guidelines. (2011, February). Retrieved from IBM: HTTP:// www.ibm.com//pdf/bcg_Feb_2011_english_CEpdf
IBM Policies. (n.d.). Retrieved from IBM: Https://www.ibm.com/ibm/responsibility/policy2.shtml
IBM’s last tangle in Argentina. (n.d.). Retrieved from www.economist.com: read:https://www.economist.com/node/169939
Our Values at work. (n.d.). Retrieved from IBM: https://www.ibm.com/ibm/values/us/
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