Business Ethics - Ge in Iran

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Since the terrorist attacks of September 11th, 2001, the United States has had growing concerns about national security and terrorism. The War on Terror was initiated in response to those attacks and the concerns involved with terrorism. In President George W. Bush’s State of the Union address in 2002, Iran was identified as a country that sponsors terrorism and threatens America. There have been trade sanctions in place against Iran since 1980, in addition to more recent political divisiveness with Iran, making most U.S. business there illegal. Iran is a member of the President’s “Axis of Evil” because it is widely considered to be the top state sponsor of terrorism worldwide. However, there are still dozens of U.S. corporations operating in Iran. General Electric Company (GE), one of America’s largest corporations, has been heavily scrutinized in the media for their continued business there. Although GE’s business involvement in Iran has proven to be legal, there are serious ethical implications that must be considered. The ethical issues surrounding GE’s continued business practices in Iran must be analyzed in order to understand how well GE has addressed this issue and how GE’s reputation can be improved in the eyes of Americans. General Electric Company currently consists of four businesses: Technology Infrastructure, Energy Infrastructure, GE Capital, and NBC Universal. Their products and services range from industrial equipment and power supplies to financial services and media content. Due to GE’s survival and success since it was founded in 1892, their stocks have become one of the most popular with investors. GE has customers in 160 countries and boasts on their website that their “businesses fuel the global economy and improve people’s lives” (GE, 2008). Although U.S. law prohibits American companies from doing business in states designated as sponsors of terrorisms, GE was able to conduct business legally in Iran through foreign subsidiary companies. The Canadian subsidiary, GE Hydro, was contracted to manufacture hydroelectric generators for a hydro power plant in Iran. The Italian subsidiary, Nuovo Pignone, provided pipeline equipment for certain oil and gas fields in Iran (GE, 2003). In 2003, shareholders from the New York City Police and Fire Department Pension Funds proposed a request to GE’s Board of Directors to review General Electric’s operations in Iran and the potential financial and reputational risks involved with those operations. The Board of Directors voted against this proposal stating, “We are compliant with U.S. law and regulations which recognize that foreign subsidiaries of U.S. companies can and will do business in Iran” (GE, 2003). While GE should have been considering the ethical implications of doing business in Iran since the start of the War on Terror, this proposal was the first formal documentation that the public at large did not agree with GE’s business practices and felt that continuing to do business in Iran was in conflict with U.S. policy and public opinion. GE’s lack of action in this matter serves as an indicator as to which direction the company’s moral compass was pointed. Michael Ledeen, a scholar of terrorism in Iran, claimed in a CNN (2003) report that doing business in Iran, especially the companies working in the oil industry, indirectly funds terrorism. Ledeen further explained that the oil companies in Iran are owned by the government and the Iranian government is the primary sponsor of terrorism. In addition, Iran’s government has other organizations that help funnel profits into the terror network. With the ongoing media reports of GE continuing to do business in Iran, many Americans have become extremely concerned about GE supporting Iran’s economy, and have gone so far as to call it ‘blood money’ because the funding helps kill American soldiers. In response to these allegations, GE spokesman Gary Sheffer argued, “Nothing we...
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