February 1, 2012
Closing Case: Nicolo Pignatelli and Gulf Italia
What should Pignatelli do? What would you do and why? In this situation, Pignatelli should go with his second option: asking his more influential partners to pressure government officials to quickly grant the two needed permissions. If his partners are unsuccessful then he should play it straight and try to gain government authorization. This is his best option because it is much less threatening to his company and personal reputation than committing bribes would be. Even though playing it straight would likely take several months and possibly years before the government authorizations could be obtained, it is still the best, and most ethical, option in the long run for the company since his refinery will be still able to eventually flourish and be successful. If he were to bribe the government officials or hire the consultant he would be putting his company and reputation on the line. If either of those plans were to fail, he would be exposed to the public and his reputation and business would become corrupt. It is best that Pignatelli do things the morally correct and most ethical way in order for his business to properly prosper. I would do the same as Pignatelli because it is the most ethical decision that benefits myself, my shareholders, and my employees throughout the long run. Either of the other two options are much to unethical and risky for me to choose. I would want my company to be successful and not have anything to hide from the public. Pignatelli seems to be leaning in the direction of hiring a consultant who might use part of the money for bribes. If Pignatelli does not pay the bribes directly, does this absolve him of responsibility? It does not absolve Pignatelli of responsibility since he made the decision to hire the consultant knowing that the money would be going towards a bribe in his favor. If the consultant he hires happens to leak word to the media or government officials that Pignatelli was the source of the bribe, then he would be in a lot of trouble and his refinery would be on the line. Even though he was not the one to physically transfer the bribe money, just having his name linked to the bribery would threaten his very career. Bribes are illegal in Italy. Even if bribes were common practice there, would this justify paying them? No, just because bribes are common practice in Italy does not mean Pignatelli is justified in paying them. Bribery is still considered illegal and can get him in trouble with the law and threaten his employment. The government fosters unethical behavior, such as bribes, through the Foreign Corrupt Practices act, which monitors everything that Pignatelli does to ensure that he does not commit illegal acts. If Pignatelli complies with the laws set by the government then all should be well with him and his refinery. Does Pignatelli have a responsibility to Italian citizens to build an environmentally friendly refinery above and beyond what the law requires? Is it appropriate for Gulf to spend this extra money and essentially take it away from shareholders? No, Pignatelli does not have a responsibility to Italian citizens to build an environmentally friendly refinery above and beyond what the law requires. According to Alex Smith’s conclusion from nearly 200 years ago: “the best way to advance the well-being of society is to place resources in the hands of individuals and allow market forces to allocate scarce resources to satisfy society’s demands” (pg 37). If Pignatelli does not follow society’s demands in terms of environmental impact, safety, and many other issues, then he may be forced out of business. So if the Italian society demands an environmentally friendly refinery, it is in Pignatelli’s best interest that he build one, which deems it necessary for Gulf to spend the extra money, taken from the shareholders, to put towards building a refinery that satisfies the demands...