Japanese Bribe Case Study

THE CASE OF THE JAPANESE BRIBE I. BACKGROUND OF THE CASE 1976 moveor lacquerese Prime Minister Kakuei Tanaka was arrested on charges of taking bribes amounting to $1. 8 billion Dollars from Lockheed stationcraft Company. Tanakas secretary and several other regime officials were arrested to birthher with power Prime Minister Tanaka. Takeo Miki was ousted from office on suspicion of concealing Tanakas dealings with Lockheed Aircraft Company. In Holland, Prince Bernhard resigned from 300 dictatement positions held for allegedly having received $1. meg in bribes from Lockheed Aircraft Company in connection with the purchase of 138 F-104 Starfighter Jets. In Italy, Giovanni Leone, the Italian President in 1970 together with Prime Ministers Aldo Moro and Mariano Rumor were also acc employment of accepting bribes from Lockheed in connection with the purchase of $100 billion price of aircraft during the late 1960s. S postdinavia, S show uph Africa, Turkey, Greece and Nigeria were a lso among the 15 countries in which Lockheed admitted to having handed out payments and that at least $202 zillion in commissions were fasten by the beau monde since 1970.Lockheed started using bribes since 1958 in modulate to outsell Grumman Aircraft, a competitor, for the Japanese Air Force iron out. As per his testimony, William Findley of Arthur Young & Co. the auditors for Lockheed, engaged the services of Yoshio Kodama to act as middleman between Lockheed and the Japanese Government in pronounce to secure the government contract for the purchase of military aircrafts. Several bribes were make by the friendship to ensure the contract in its favour.In 1972, Lockheed rehired Kodama as advisor to sell its aircraft to Japan. Lockheed was in dire need to sell its aircraft owing to a series of pecuniary disasters, cost overruns, pushing the companion to the brink of bankruptcy in 1970. A controversial loan promise awarded the beau monde amounting to $250 Million helpe d the aircraft company in averting the bankruptcy. Lockheed President, Mr. Carl Kotchian anxiously anticipated making the gross revenue since the company has not been making its projected sales of aircraft worldwide.Mr. Kotchian believed that Japan is a largely-untapped market and if Lockheed penetrates the Japanese market, the company can generate $400 Million and thus, improve the companys financial status and ensure the jobs of thousands of the soakeds employees. Kodama eventually succeeded in engineering a contract for Lockheed with the both Nippon Airways, beating McDonnell Douglas, its active competitor. For the sale, Kodama askes and received $9 Million as pay-off bullion from 1972 to 1975. everyegedly, much of the bullion went to then Prime Minister Tanaka and other government officials for interceding with All Nippon Airways on behalf of Lockheed Aircraft Company. Mr. Kotchian admitted full k instanterledge about where the money was handout and that he was persuaded by the assurance that in making the payoff, Lockheed was sure to get the contract with All Nippon Airways. Subsequently, Lockheed netted $1. 3 Billion from the contract. Mr.Kotchian defended the payoff as in keeping with Japanese business organization practices, meaning that I order to do business in Japan, one has to make payoffs, further, Kotchian reiterated that the transaction did not violate any American Laws and that Lockheed needed to adjust to the existing surgical operation systems in order to be competitive and guarantee the jobs of thousands of its employees, as intimately as ensure continuing profitability. Otherwise, the company would be bankrupt and thousands pull up stakes lose their jobs. In August 1975, after investigations conducted by the U. S.Government, Lockheed admitted to making $22 Million in secret payoffs and in subsequent Senate investigations in 1976, the deals were made public, causing Japan to cancel the billion dollar contract with Lockheed. In 1979, Lockheed pleaded guilty to concealing the bribes by writing them off as merchandise costs. Lockheed was not charged with bribery since the law took effect solely in 1978. Mr. Kotchian was not indicted but was forced to resign from his office tour in Japan, Kodama was arrested together with Tanaka. II. STATEMENT OF THE PROBLEM 1. What were the moral and legal implications of the actions of the Lockheed attention? . What is the effect of the transaction with delight in to fair competition in business? III. AREAS OF CONSIDERATION 1. The need to ensure the profitability of the company. 2. The need to ensure the eudaemonia and well-being of thousands of employees of the company. 3. The ethical and legal standpoint that binds entities in the conduct of their business. IV. analytic thinking OF THE CASE The subject field revolves around several issues that confront todays modern business practice/s basically, every company aspires to hit continuing growth and profitability as its ma jor policy.Secondly, the company as an organization is augmented and composed by people who are performing each of their respective tasks in order to achieve the goals and objectives of the firm. In the case of Lockheed Aircraft Company, there is a dire need to rebound from near bankruptcy and the mover by which it can be achieved is to get hold of the contracts for the company to build and supply aircrafts to their think buyers. The Japanese market offers a electromotive force target for the aircraft company, much as the other companies are likewise alive(predicate) of.The flight path and aircraft industry is a highly competitive industry. Each company needs to update its existing technology, requiring continuous investments in retooling and research. Such an bodily process requires continuous flow of funds considering the immense requirement for funding the expenditures. Should the company let up on continually improving its product and technology, the solvent would be disa strous for the company since competitors could easily overtake the company and its market. All of these predicaments compounded the financial woes of Lockheed Aircraft Company during the 70s.It is under this duress that focusing was forced to find a means by which the company can stay afloat, make profit and support its large workforce. The decision to make extraordinary means to ensure sales was at the moment, imperative for management. utilise the argument that during those days, a business sub-culture existed in Japan, that is, that the company needed to stand by the functioning system to get the All Nippon Air Contract. In simple terms, payoffs are needed to facilitate the sale of the companys aircraft to the Japanese airline company.Ethically, a payoff to facilitate a contract at the expense of other competitors deviates from existing moral values that should govern the conduct of business. However, assuming that a system of patronage existed in Japan during the time such a system constrained the management of Lockheed to use extraordinary means to go by means of channels as conduits to their intended client in order to seal the contract. Prior to investigations conducted and the subsequent admission charge of the company regarding the payoffs, landing the contract with All NipponAirways, did not only guarantee profits for Lockheed but also, a continuing support for its thousands of employees. V. CONCLUSION found on the foregoing, it is established that Lockheed acted within the sphere of bodily culture general of the times. From a business mans point of view, the payoffs could indeed be classified as selling costs since from the point of view of the company, the money that was used was take offly in promotion of its product, by todays standards. However, the crux of the problem was that those who received the payoffs were government officials who had control of the affairs of their country.As such, these officials were in a position to exert un due influence on the airline company to purchase the aircraft from Lockheed. It is this undue influence that made the act wrong and from a legal standpoint, criminal in nature since, the resulting transaction is now a case of bribery on the part of Lockheed and extortion on the part of the government officials who received the payoff. As for Mr. Kotchian, I believe that as chief executive officer of Lockheed Aircraft Company, he acted in the best interest of the company and for everyone who are direct involved with the company (employees, technicians, management, etc. As CEO, he is tasked with ensuring a productive direction for the company and provide a continuing means of alimentation for all those employed by the company. Likewise, it is his duty to ensure the competitiveness of the company. VI. pass Despite the arguments of utilitarianism in this case, wherein the interest of the majority is deemed primordial over the interests of the few, I/We believe that Mr. Kotchian, i n behalf of the management of Lockheed Aircraft Company acted within the bounds of incarnate culture prevalent of the time.Arguably, using ethics and morality as a gauge, I/We perceive that Lockheed and Mr. Kotchian were guilty of unfair competition as they undermined their competitors through the use undue influence instead of marketing a original product. Although the immediate results could have benefitted all those concerned within the sphere of the company, the means by which it was achieved were tainted with fraud and the wilful distortion of facts (reporting payoffs as marketing costs), hence, providing the other stakeholders such as its investors and stockholders a false representation of the financial affairs of the company.Although, bribery was not yet classified as corporate crime prior to 1978, the act of Lockheed Aircraft Company and Mr. Kotchian should be regarded as unethical, scrofulous and illegal as well as promoting unfair competition with respect to other airc raft manufacturers in the industry. The decision of the Board of Directors to force the resignation of Mr. Kotchian as CEO of Lockheed Aircraft Company is deemed proper herein and the subsequent arrest of Mr. Kodama and spring Prime Minister Tanaka is likewise appropriate under the circumstances.