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Case Studies
Profit-splitting
Daphne, a purchasing officer in a watch manufacturing company, was responsible for recommending spare parts suppliers. One day, a supplier, Simon, invited her for a lunch and made a business suggestion. If Daphne recommended her company continuing to use Simon’s company as a supplier, Simon would mark up the quotation price by 4% from the next purchase order and they could equally split the profit by having 2% each.
Daphne was scandalized when hearing the suggestion. Although Simon’s suggested mark-up price was still by far the lowest among the lot, the quality of his products was not as good as the others and only just met the company’s required standard. On a second thought, she needed an extra income at the moment because she had just made the down-payment for her new flat. After all, her company would still get a good bargain price.
Would Daphne commit an offence if she accepted Simon’s suggestion? What factors does she need to consider when making a decision?
Case Analysis
Daphne might violate Section 9 of the Prevention of Bribery Ordinance (POBO) if she (as an employee), without the approval of her principal (the watch manufacturing company) accepted an advantage (i.e. 2% profit from the mark-up price offered by Simon) for recommending Simon’s company to her watch manufacturing company. Simon might also violate POBO for offering bribes.
Daphne was facing a dilemma that might put her personal values such as responsibility and honesty to challenge. In handling the situation, Daphne should identify the relevant facts and take stock of all stakeholders concerned. The following factors should be taken into consideration when identifying viable alternatives and choosing the best course of action:
- Any violations to her professional, industry specific, or company code of conduct.
- Is it against the Law?
- Does it correspond with her self-values such as responsibility and honesty?
- Can she disclose her decision to others openly and honestly without misgivings?
The ETHICS PLUS ethical decision making model might be helpful for her in solving the dilemma.