Monday, November 23, 2015

Hewlett Packard's (HP): Bribing Karma (2014)

HP headquarters in Palo Alto, CA

Ethics Case Controversy
Hewlett-Packard is finally going to pay. Over the last 16 years, HP has been paying millions in bribes to subsidiaries in Mexico, Poland, and Russia to secure multi-million dollar contracts. As the dust settles HP is going to have to pay over 76.8 million dollars in criminal penalties and forfeitures. The first bribe dating back to 1999 was sent to the Prosecuting general of Russia by an anonymous subsidiary. The Prosecuting general is the signal most powerful position in the Russian judiciary system and at the time their offices were due for an upgrade. The subsidiary knowing full well that he was breaking the Foreign Corrupt Principals Act (FCPA) paid upwards of 2 million dollars from an HP slush fund to a government official to secure the contract. The slush fund was funded by an elaborate buy back scheme that tried to cover up the illegal transfer of money. HP Russia pleaded guilty in San Francisco federal court and was sentenced to pay 58.8 million dollars. The HP Poland branch was also charged with breaking the FCPA but after negotiation with the justice department got their charges reduced to just a violation. HP Poland bribed a polish police agency's director of information with 600,000 worth of cash, vacations, and material goods to win a similar contract. There was no elaborate cover-up the scheme for this scandal, HP kept two different sets of books, one for the public to see and the real one with where the money was actually going. The third and final scandal in Mexico was also bargained down to a violation. In Mexico, HP bribed Pemex, a Mexican state-owned petroleum company with a net worth of 415.75 billion dollars. With a contract up for grabs, HP paid 1.4 million dollars in commission to a subsidiary who used a portion of that money to bribe a good friend of the board members. All said and done HP brought in an incredible amount of revenue through contracts that they shouldn't have even gotten in the first place.

When ever a company as large as Hewlett Packard commits a scandal there are massive amounts of people effected. Obviously HP its self is effected, their stock precise tumbled and all the stockholders lost money as more and more people found out that there was no ethics in the once dominant computer company. As their company spiraled downward their employees lost faith in their employers because there was no reason to think that some day they might do something to hurt them too. Another category of stakeholders would be the people who looked up to Pemex or their law officials. Those people now know that even the high level in government can be bribed rather easily. The family's of the people got fired were effected, they are now in debt because of the court costs and no longer have that income which will be troubling. The last group of stakeholders was the companies that could have gotten the contract if they were not illegally obtained by HP.

An Individualist believes that a person should have the right to choose what he or she is interested in and should be able to pursue that but at the same time, they can not get in the way of others. Clearly, the decisions made by the HP officials affected thousands of people and not in a positive way.
Milton Friedman, an American economist, was well known for his theory on individualism. He believed that a company reported to only one group of people and that was its stockholders. If the business was not making the maximum amount of profit available then they were doing a disservice. He also thought that all of the profits should go directly to the stockholders and they could do with it as they please, rather than the company making one large donation. If Friedman were to look at HP during the time frame of this scandal he would be happy to see that the company was trying to make as much profit as possible but the other part of his theory states that it must be done within the law. So Friedman would have no choice to call Hp an unethical company.

Meg Whitman, CEO of HP
In this HP scandal, the Utilitarian could look at it from a couple different perspectives. The first would be from the eyes of the people taking the bribes in Russia Mexico and Poland. If they were able to except the bribes with out any harm to anyone else then it would be viewed as an ethical move because it made them happy. Happiness is the number one priority to a Utilitarian. The business needed a computer company anyway so they were just making the selection for them. If they were unable to accomplish that then it would be unethical. As for the officials at HP, they took their corporate greed and only helped them selves. They did not consider how bribing people would effect their employees or their company and they ended up getting caught in the end so it didn't end well for them either. Due to the outcome of the situation from this point of view, a Utilitarian would see the HP scandal as an unethical action and an unethical company.

A very important factor for a Kant to decide whether something is ethical is if the decision that was made was an informed decision. When these companies took the bribes they took these informed decisions and threw them right out the window. HP could have had a lesser product that didn't benefit the company but it didn't matter they had a little extra cash on the side. Another important aspect that a Kant would look at would be if the action in question was rational. If HP went around and bribed every person with millions of dollars to get every contract they would run out of money faster than they were making it so that isn't plausible at all. The last and possibly the most important belief of a Kant is the formula of humanity. According to the formula of humanity, HP is unethical because they used people as a means and not as an end. They used these people as ways to gain a big contract, doing whatever they felt necessary to get more money and not caring what happened to the people. All of those reasons are why a Kant would view HP's actions unethical.

Virtue Theory
Hewlett Packard's logo
Anyone that believes in the Virtue Theory will argue that HP as a company does not posses any of the four main virtues it takes to be ethical. They clearly lacked self-control because they knew they could make more money but they also knew it was illegal and they did it anyway. There was absolutely no honesty anywhere in these transactions and fairness was nowhere to be seen the other companies didn't have a chance. The only argument for one of the four virtues that HP might have had would be courage. They needed the courage to go out break a law and try to bring in these big contracts. The stockholders and employees had potential to benefit if HP got away with it but we all know that isn't what happened and they got hurt instead. It is a long shot to think that HP officials did it for any other reason than to pad their pockets with even more money and because of that no one that believes in Virtue theory would think anything good of HP after this scandal.

Justified Ethics Evaluation 
In my opinion, there is no place in business for bribery. It enables the rich to make more and more money and gives no chance for new competitors. The best product should be the one that is being purchased and if a small company has that good product it is good because it will force the big business to do more research and in the end, the buyer wins. Besides breaking the law HP hurt a lot of people, they should have known that they would get caught in the end and when they did it would be a disaster. I'm sure that HP is not the only large company out there that is bribing people for contracts, they are just the one that got caught and has to pay for it.


Carroll, D. (2014, September 12). USA TODAY: Latest World and US News. Retrieved October 22, 2015.

Petróleos Mexicanos. (n.d.). Retrieved October 22, 2015.

La Monica, P. (n.d.). CNNMoney. Retrieved October 22, 2015.

Hewlett-Packard Russia Pleads Guilty to and Sentenced for Bribery of Russian Government Officials. (2014, September 11). Retrieved October 22, 2015.

Garside, J. (2014, April 9). Hewlett-Packard to pay $108m to settle scandal over bribery of public officials. Retrieved October 22, 2015.F

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