Deck 5: Ethics in International Business

Question 1

Ethical codes for companies cannot apply internationally.

Answer 1

False

Question 2

Most companies do not have international labor and human rights policies.

Answer 2

False

Question 3

A living wage is not necessarily a part of human rights issues in labor practices.

Answer 3

False

Question 4

Selling products banned from sale in the United States in other countries is not an ethical violation.

Question 5

Dumping a product that has been outlawed in the U.S. in other countries is legal.

Question 6

Yahoo did not experience a drop in share price as a result of the congressional hearings on its business in China.

Question 7

Product dumping does not present ethical problems in those countries without product liability recovery systems.

Question 8

Bribes to government officials are only unethical if the culture of a country does not believe they are unethical.

Question 9

"Grease" or "facilitation payments," which are legal under the Foreign Corrupt Practices Act can be considered ethical.

Question 10

Sweatshops are not an issue of human rights.

Question 11

If I worked in purchasing in my company, it would be unethical for me to accept season tickets for my city's NBA team from the company that has supplied catering for the company's training sessions.

Question 12

Freedom from physical abuse is a basic fair employment practice.

Question 13

Sweatshops are ethical so long as they are in compliance with the laws of the country in which they are located.

Question 14

The penalties imposed for FCPA violations have been increasing.

Question 15

There are not ethical issues in the use of child labor if the children's families approve of their jobs.

Question 16

The failure to follow U.S. safety standards in foreign operations constitutes an ethical lapse.

Question 17

Equal treatment and opportunity is generally a part of labor policies and principles.

Question 18

Selling component parts that could be used to construct weapons to a nation against which an embargo on direct weapons sales is in place would be an ethical breach.

Question 19

No officers at Chiquita can be held criminally responsible for the Chiquita payments to mercenary groups.

Question 20

Chiquita stopped its mercenary payments in Colombia immediately after officials met with the Justice Department.

Question 21

What are the risks of marketing infant formula in third-world countries?

A) Customers cannot afford the formula
B) Customers may mix the powdered formula with bad water
C) Customers may water down the formula
D) All of the above

Question 22

There was bribery involved in the award of the Winter Olympics 2002 to Salt Lake City.

Question 23

What company was recognized for its disclosure of foreign factory conditions and its promise to improve?

A) Nike
B) Gap
C) Wal-Mart
D) All of the above

Question 24

Guanxi is an example of a facilitation payment.

Question 25

Suppose that AmTrain, a U.S.-based company, is submitting bids for the construction of a high-speed rail system in India by the Indian government. AmTrain has met with and wants to hire Josh Griffin, an international consultant who has worked with many Fortune 100 companies in their foreign business operations. AmTrain requires all of its agents, consultants, and contractors who work with it on its international operations to sign a statement in which they promise to comply with the FCPA. Griffin has refused to sign the AmTrain FCPA form. Which of the following best describes AmTrain's position when it receives the refusal?

A) The refusal is a red flag that would require AmTrain to at least do additional due diligence on Griffin
B) AmTrain has not violated the FCPA if it hires Griffin and he does something its agreement prohibits
C) AmTrain is not subject to the FCPA when contracts are with government agencies and not private foreign companies
D) AmTrain has violated the FCPA by attempting to deal with Griffin

Question 26

Ikea's solution to obtain electrical power for the grand opening of its flagship store in Russia was:

A) To pay the bribes demanded by the government officials running the electric company because it was a facilitation payment.
B) To lease generators.
C) To shut down its operations in Russia.
D) To use an agent to pay the officials so that it was not violating the law.

Question 27

Many International Olympic Committee members had to resign after accepting bribes in connection with the Salt Lake City Olympics.

Question 28

Dumping a product that has been outlawed in the U.S. in other countries is ethical.

Question 29

When Ikea was poised to open a flagship store outside Moscow in 2001, its executives were approached by employees of the public local utility. If Ikea wanted electricity for its planned grand opening, the public utility officials needed individual cash payments.

A) Ikea could pay the money as a facilitation payment and not violate any anti-bribery laws
B) Ikea and other companies from Sweden do not follow the OECD requirements on bribery so Ikea could pay the officials and not violate any laws
C) The payment to the public officials would be a bribe and would violate Swedish law
D) The anti-bribery provisions apply only when a company offers to pay them, not when public officials request payments

Question 30

What happened to the Union Carbide plant in Bhopal?

A) Union Carbide still operates it
B) Dow acquired Union Carbide and now operates the plant
C) The plant has been mothballed
D) The Indian government now owns the plant and produces dry-cell batteries

Question 31

The Foreign Corrupt Practices Act does not apply to U.S. companies when they have operations outside the United States.

Question 32

AES's solution to the increasing demands of the Kazakh government was:

A) To lease generators.
B) To make facilitation payments to government officials.
C) To offer political donations instead of bribes.
D) To shut down its operations there.

Question 33

Whom did Nike send to Vietnam to monitor its factories?

A) Andrew Young
B) Michael Jordan
C) Ernst & Young
D) a and c only
E) All of the above

Question 34

PwC, one of the "Big 4" accounting firms, was involved in a scuffle with Russia's Federal Tax Service over one of its clients, Yukos. PwC did not want to turn over confidential information about its client. However, the failure to cooperate with the Federal Tax Service could result in the loss of its license to do business in Russia. What questions should other companies consider before expanding their operations into countries in which they have never done business?

A) Companies should consider the legal and cultural backdrops and customs in a country before undertaking expansion into that country
B) Companies need to adapt to differing legal systems and simply comply with government requests
C) Companies should turn to the International Court of Justice when country leaders and agencies are violating professional standards
D) Companies should realize that doing business without engaging in bribery in certain countries is not possible

Question 35

Bribery of foreign officials is prohibited by U.S. companies.

Question 36

Robert J. Stein was hired as the CFO for the American occupation effort in Iraq. As someone who had the authority to award lucrative contracts to companies seeking portions of the reconstruction efforts there, Mr. Stein wielded a great deal of power. Mr. Stein had served time for felony fraud in the 1990s, but either the background check was not completed or his criminal activity was deemed irrelevant for this position of power. Mr. Stein and his wife have been accused of being involved in the following transactions:
-Philip H. Bloom, the owner of several U.S.-based construction companies seeking Iraqi business wired $140,000 to allow Mr. Stein to purchase real estate in North Carolina.
-Other contractors spent $65,762.63 to purchase cars for Mr. Stein and his wife (a Chevrolet and a Toyota).
-One contractor gave $44,471 for home improvements for the Steins' home.
-$48,073 for jewelry paid for from funds totaling $258,000 that had been transferred into the Bragg Mutual Federal Credit Union account begun by the Steins.
-A donation of $7,151.58 to the Steins that was used by Mr. Stein's wife to purchase a "towing service".
-Ironically, $200 of the credit union fund was transferred to the clerk of a Federal District court for restitution payment for his earlier conviction.
Mr) Bloom was awarded a significant number of contracts in Iraq. Which of the following best describes the conduct of Mr. Bloom and Mr. and Mrs. Stein?

A) The conduct is not a violation of the FCPA because Mr. Stein is a U.S. government official and Mr. Bloom owns a U.S. company, but the two may have violated U.S. laws that prohibit bribery
B) The conduct is a violation of the FCPA because the money and gifts were given with the idea of being awarded contracts
C) The conduct is a violation of the FCPA because the money and gifts related to transactions in international operations
D) The conduct, while ethically dubious, is perfectly legal

Question 37

How did Siemens accomplish its long history of paying bribes to government officials in exchange for obtaining contracts from those governments?

A) It used business consulting arrangements in all of the countries
B) Siemens was not involved in any bribery activities but it was found to have been involved in useful expenditures
C) Siemens is not subject to the FCPA because it is a German company
D) Siemens used NGOs to funnel the money into the various countries

Question 38

Why is Transparency International's Corruption Perception Index important for economic systems?

A) Because it shows economic systems function perfectly well without any attention to ethical issues
B) Because it shows that bribery and corruption are a necessary part of economic growth
C) Because it shows that economic growth increases at the same pace as political corruption
D) Because it shows that economic growth requires a level playing system for all risk-takers

Question 39

Facilitation and grease payments are two different things.

Question 40

On April 1, 2008, about 20,000 workers in Vietnamese factories that make Nike shoes walked off the job. The workers at the plants (managed by a Taiwanese company) were demanding higher wages. At the time of the strike, the Nike workers were being paid 14% above the minimum wage for Vietnam. However, consumer prices in Vietnam have risen 19% in one year. The inflation rate has been the impetus for a number of labor strikes over the past year. By April 2, 2008, the strike was settled. The workers were given a 10 percent raise to their $5 hourly wage. If Nike's wages that it was paying were legal, why did it settle the strike by agreeing to pay more?

A) Nike had an ethical dilemma that fit into the category of organizational abuse
B) Nike was considering its stakeholders in resolving ethical dilemmas
C) Nike was exercising social responsibility
D) All of the above are correct

Question 41

Who conducted investigations into what happened at the SLCOC?

A) Congress
B) U.S. Justice Department
C) International Olympic Committee
D) b and c only
E) All of the above

Question 42

Which of the following would be both legal and ethical acts in an international operations?

A) Offering to pay a regulator for a favorable inspection report
B) Offering to pay a police officer for not writing a ticket
C) Offering to pay a government employee extra to speed up phone service connections
D) None of the above

Question 43

Which of the following practices best helps prevent sweatshop conditions in factories?

A) Company training
B) Independent monitoring
C) Exclusion of outsiders
D) Varying country standards
E) None of the above

Question 44

The Fair Labor Association:

A) Is a group of companies with international labor pools.
B) Is a group of colleges and universities dedicated to human rights issues in employment.
C) Is a federal agency in the United States.
D) Does not count Nike as a member.
E) None of the above

Question 45

What are the Sullivan Principles?

A) A series of principles on diversity in the workplace
B) A series of principles on environmental respect
C) A series of principles on labor conditions and human rights
D) A series of principles that have been uniformly rejected
E) None of the above

Question 46

Who eventually revealed the gifts and issues at the SLCOC?

A) Rod Decker, a reporter
B) Officials from Olympic committees in competing countries
C) The governor of Utah
D) An anonymous letter from a SLCOC member

Question 47

Chiquita Banana was required to pay a $25 million fine to the U.S. government because:

A) It violated the Foreign Corrupt Practices Act.
B) It made grease payments to customs officials by declaring extra weight on its banana shipments.
C) It made security payments to a terrorist organization.
D) None of the above

Question 48

How much did the Salt Lake City Olympic Committee spend in 1966 trying to win the Winter Olympics location?

A) $3,000,000
B) $7,000,000
C) $24,000
D) None of the above

Question 49

Which of the following was not a result of the Salt Lake City Olympics scandal?

A) Criminal indictments
B) Changes in Olympic rules on bidding for the Olympics
C) Changes in the members of the International and Salt Lake City Olympic committees
D) Salt Lake City losing the right to bid on future Olympics
E) All of the above are results of the scandal

Question 50

What information did Yahoo turn over to the Chinese government?

A) The name of a Chinese dissident who was posting information on the net
B) Its list of customers
C) Yahoo's proprietary information on its systems
D) All of the above

Question 51

Who conducted the IOC investigation?

A) Mitt Romney
B) Rod Decker
C) Paul Warner
D) George Mitchell

Question 52

In trying to win the 2000 Olympics, how much did the SLCOC give out in scholarships to the children of the International Olympic Committee members?

A) $3,000,000
B) $24,000
C) $100,000
D) None of the above

Question 53

With respect to #28, what types of charges were brought?

A) RICO
B) State charges only
C) No charges were brought
D) Only ethics violations

Question 54

What does the statement, "The IOC allowed this sucking up," mean?

A) The gift-giving was an accepted part of the IOC bid process
B) There can be no legal violations if the IOC knew about the activities
C) The IOC had an exemption from state and local laws
D) None of the above

Question 55

Who took over as head of the SLCOC when the gifts and issues were discovered?

A) Jack Nicholson
B) Mitt Romney
C) Rod Decker
D) None of the above

Question 56

The UN Declaration on Human Rights:

A) Includes provisions on privacy.
B) Includes prohibitions on slavery.
C) Protects freedom of association.
D) Provides for property ownership rights.
E) All of the above

Question 57

Who of the following is being investigated for their role in the Chiquita Banana payments case?

A) Colombian officials
B) Chiquita board member Roderick Hills
C) Chiquita general counsel Robert Olsen
D) Both b and c
E) All of the above

Question 58

With respect to #28, why did the Foreign Corrupt Practices Act apply to the conduct?

A) The payments were all made in the United States
B) NGOs were not covered at that time
C) These were not bribes; they were grease payments
D) None of the above