Caltex Case Study

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Case Study #4 – A South African Investment
Organizational Ethics
May 9, 2011

Case Study #4 – A South African Investment
In your judgment, were the possible utilitarian benefits of building the
Caltex plant in 1977 more important than the possible violations of moral
rights and of justice that were involved?
The general reason businesses seek to conduct business in other countries is for increased profit margins or some other type of tax break. Caltex was no different. Depending on what perspective one chooses to examine, whether Caltex’s utilitarian benefit is more important than violations of moral rights and justices is subjective. From a profit standpoint, Caltex’s building and expanding made sense because their existence as a business alone would not politically change apartheid laws that had been in place since 1948. Twenty five percent of the South Africa’s economy relied on the energy sector. Foreign dollars is what the government of South America wanted for its economic stability and in exchange Caltex would be able to conduct business with an attractive profit margin. Apartheid as a political institution inflicted great distress on blacks (80% of the South African population) and violated their human rights. However, Caltex wasn’t conducting business in the name of apartheid, but was going to be partaking in that political institution by its mere existence in South Africa. Not building in the name of abolishing apartheid to give blacks freedom wasn’t going to instantly change the minds of the government and make them stop immediately as the roots of racial inequality ran very deep and long: therefore, not doing business in South Africa would not have politically given blacks any more freedoms than they had before.

I am not convinced that Caltex’s direct goal for building in South Africa was to even approach these political issues. However, I do think though, that from a utilitarian perspective, to conduct business in South Africa, with all of its enormous issues, Caltex’s decision to build would benefit all over the harm it would cause, in the long run. Caltex could stand to benefit by mere expansion, yielding high profits while giving foreign dollars for the South African’s government’s goal while increasing capital into country in high inflation. Caltex building in South Africa would help the black majority afford more of everyday costs due to additional jobs it created for them. As a matter of fact, Caltex added 60,000 jobs by 1977. In general, because Caltex was going to follow the Sullivan code of conduct, Caltex would assist blacks in obtaining a “beginning” in the road to political freedoms and fair treatment. Caltex had insisted on equal pay for equal work, and the advancement of some into higher level jobs furthering equality for blacks and getting the South African government to give in to the furtherance of the human rights of blacks. Additionally, foreign aid allowed for less retaliation on blacks.

Conversely, from a moral standpoint alone, not expanding its productions to South Africa would not advance the objectives of apartheid, but it would contribute to the regimes cause. Whenever the government didn’t get what they wanted, blacks were retaliated against. Caltex, by not building, would have not given the government or South Africa’s military foreign aid, thereby enabling the oppression of apartheid laws to continue, and mostly likely, the victims would be the blacks of the nation. This factor alone would make it immoral. Additionally, the whites would have lost revenue as well.

What must be understood is that apartheid in and of itself was a violation of rights: apartheid unfairly apportioned burdens to blacks and gives benefits to the whites. In order for Caltex to morally justify doing business in South Africa, it need to insist that fairness be exercised in apportioning equality between the races. Additionally, if Caltex were to build or not to...
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