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Case Study 1: Nicolo Pignatelli and Gulf Italia

Case Study: Nicolo Pignatelli and Gulf Italia


1. What should Pignatelli do? What would you do and why?

Pignatelli should choose option 2 and ask his-more influential partners, like Mobil, to put pressure on government officials to grant quickly the two needed permissions: a “production” permission to operate at capacity and “authorization” permission to implement the approval. The reason why Pignatelli should choose this option is because out of the four options he can choose from, option 2 seems the most ethical and efficient. Considering the situation, it is best that Pignatelli takes the strategic corporate social responsibility approach. The reason being is that this approach allows the manager to focus on social areas where there is the highest possibility of creating shared value for the business and society. Despite the fact that he is facing the choice of operating at low capacity as many jobs are on the line, Pignatelli should still understand to take the inside out, outside in, and outside out approach in analyzing his choices and consequences. Overall, he must think in terms of what is best for his business and society in the most ethical way possible.

If I were in this situation, I, too, would choose option 2. Choosing option 1 would simply put the company in jeopardy from operating at low capacity and would immediately put my employees at risk. Option 3 and 4 both involve bribery, which is completely unethical. The magnitude of the consequences could be immediate and large if outside sources were to find out that my company was involved in bribery in order to keep running at its optimal. Rather, a utilitarian approach is necessary when making this decision where ethics and common good is in place.

2. 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?

            Even if Pignatelli does not pay the bribe directly, he is still involved in the course of actions by the consultant. A bribery is a bribery, directly paid or not, so Pignatelli is not absolved from such responsibility. Also, it violates the Foreign Corrupt Practices Act (FCPA) where it prohibits employees of U.S. firms from corrupting the actions of foreign officials, politicians, or candidates for office. Bribery is simply considered unethical, especially when done to carry out unlawful duties. If Pignatelli were to choose this option, he would immediately be held responsible because as an employee, he has reason to know that the payment is used to corrupt the behavior of officials. Thus, doing so can hurt his company and employee further more. It would be better that he refrains from making this choice.

3. Bribes are illegal in Italy. Even if bribes are common practice there, does this justify paying them?

            Even if bribes are common practices in Italy, it is still not a reason to justify paying them for they are still considered unlawful and unethical. When one is involved in making the decision to bribe or not, he or she should consider the moral intensity of the decision and consequence. You would be assessing the magnitude of consequences, social consensus, probability of effect, temporal immediacy, proximity, and concentration of effect. By considering these different factors of moral intensity, the manager is accessing the repercussions of his choices by considering how ethical it is on various levels. For example, the magnitude of the consequences is one thing to consider because of the anticipated outcome of bribery, such as further loss of money or actions taken by law.

4. 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 the extra money and essentially take it away from shareholders?

            I would say that Pignatelli does have a responsibility to Italian citizens to build an environmentally friendly refinery. Considering that Pignatelli is taking the strategic corporate social responsibility approach, he is focusing on areas that are of shared value for the company and society. He would be assessing all three levels of this strategy, such as the “outside in” approach. Pignatelli would be looking at issues that the company has an impact on; in this case being the environmental safety of building the refinery. Even if Pignatelli would be spending extra money to ensure the safety of the environment when constructing the refinery, in the end the company has an obligation to also return to stakeholders. The reason being is that companies also have a responsibility to society and not simply to shareholders. There must be a balance of returns that both shareholders and stakeholders earn.

5. How would you feel if you were a lower-level employee in the company and learned that Pignatelli intended to pay bribes to get things “debottlenecked”? What would your ethical obligations be? Should you ignore the situation or confront Pignatelli? Should you inform your direct boss or go to the media?

            If I were a lower-level employee and learned that Pignatelli intends to pay bribes, I would certainly be uncomfortable with this decision. Assessing the outcome of his actions, I would immediately see the negative impact it will have on both the company and employee. Also, I would not trust him anymore based on his ethics. It just shows that he is not assessing the consequences for he would be putting the whole company at risk, especially the employees. As an employee, I could immediately lose my job if the public were to find out because ultimately, the company would very likely face failure. More so, I would not want to be associated with him and the company because of the bad reputation it will likely gain.

            Upon learning of Pignatelli’s decision to bribe, my ethical obligations would lead me to confront Pignatelli and inform him of how unwise it would be to involve him and the company in such decision. By taking the utilitarian approach, I would focus on the consequence and relay them to him in hopes of bringing light on the negative outcome of his decision. I would advise him to consider the different levels of moral intensity and think of how the outcome of bribery will only bring more damage to the company and employees. Perhaps, with this personal discussion, proximity would come into play as a major factor in deciding against to bribe the consultant when realizing how he is affecting many employees like me.

            I would directly inform my boss without even thinking of taking the chance to go to the media. By going to the media first, I would only be making the situation far more problematic without there being any senior managers to be already aware and ready to handle it. Also, the company’s reputation would be seriously damaged if news breaks out. So it is far better to inform the boss. Doing so, they’ll be able to handle and assess the situation and be ready to address the media when the time comes.