Empress Luxury Lines Case Analysis

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To provide background regarding the Empress Luxury Lines case, in the case Kevin Pfeiffer, a computer technician initially told Antonio Melendez that it appeared that top management found a way to fund the computer system upgrade that he requested two years prior. The beginning of this originated from problems incurred with the computer system when it was hit by a power surge from fierce thunderstorms from the night before. When this occurred, Phil Bailey, who was Kevin Pfeiffer’s supervisor was instructed to observe the damage to the system from the thunderstorm and report back to him. Once this request was made, Kevin Pfeiffer reported back to Phil Bradley and instructed that the damage to the underground wires and computer circuits could be repaired for about fifteen thousand dollars. Once Kevin Pfeiffer made these observations, Phil Bradley did not appear happy and simply instructed Kevin Pfeiffer to go to the reception area while he called Roger, who was the chief financial officer, and also Antonio Melendez’s superior. After this was done, Phil Bradley called Kevin Pfeiffer back into his office and instructed him to dig up nearly all of the underground wire and cable and then haul it all off prior to the arrival of the insurance adjustor. Carrying out this task would result in a damage estimate of roughly five hundred thousand dollars, which of course is much higher than the amount Kevin Pfeiffer estimated based on the true damages. Phil Bradley’s primary purpose for instructing Kevin Pfeiffer to do this was to simply help obtain insurance funds for damage to the current system to help cover the costs of a new system. In response to Phil Bradley, Kevin Pfeiffer refused to carry out the task, though he was a new hire and technically on probation. Antonio Melendez congratulated Kevin Pfeiffer for his refusal, though in the end, it did not really matter since another individual, Matt, was called upon to do the task. Antonio Melendez saw the motivation behind the whole scam that Phil Bradley was trying to pull. From Antonio’s observations, during the 1990’s, Empress increased its fleet of ships in respond to a healthy demand for its luxury cruises during the stock market bubble. As one knows, due to environmental factors such as the stock market bubble and terroristic events that occurred on September 11, 2001, demand decreased. In addition to this, in 2005 many hurricanes hit which caused Empress to refund many of the checks for their Caribbean and Gulf cruises, while coping with steep increases in fuel costs at the same time. With this being said, the sagging of earnings was the primary reason why Antonio Melendez’s request for a computer system upgrade went unnoticed. Antonio Melendez was faced with a difficult situation in that he realized that he could face consequences about the measures being taken by Phil Bradley and Roger. One thing that Antonio Melendez did know was that since taking the job, Empress had successfully defrauded insurance companies before, though he dismissed these in the past due to the fact that the occurrences happened before his arrival. Now, Antonio Melendez was not so sure these concerns should be dismissed. Within the company, no mechanism was in place to report wrong-doing internally, and no protections were available for whistle-blowers. Antonio Melendez did not feel confident that, even if bypassed by the chief financial officer that he would find upper level management all that eager to thwart the scheme. His gut feeling told him that the person most likely to be penalized internally was the whistle blower. Kevin Pfeiffer was faced with a difficult task as well. He debated as to whether just call the insurance company and inform them of the situation; however, he decided to go to Antonio Melendez first. Antonio Melendez was faced with the situation, being Kevin Pfeiffer’s superior as to whether to instruct Kevin Pfeiffer to report Empress to the insurance company, or rather, to treat...
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