Friday, November 21, 2014

Daimler: Leaked Government Documents (2012)

Daimler Car Manufacturing Company logo

Daimler, who is a major German car manufacturer of one of the world’s most luxurious cars, the Mercedes Benz, is in the spotlight again. This time though it is not for a good reason. They go themselves caught up in a scandal which involved them viewing leaked government documents. This scandal occurred because Daimler offered Eckart von Klaeden, who had a position in the Christian Democratic Union at the time, a position on their management team. Klaeden provided Daimler with government documents that he was able to get his hands on. This documents were about CO2 regulations that if put in place, would have detrimental side affects to Daimler. These CO2 regulations would make Daimler fix their cars so that they would release fewer emissions into the environment. This would cost Daimler a lot of money and it would take away from the power of their cars, which is an image they would like their company to keep. Daimler took this information and used it in their favor by using Klaeden to lobby in the government to get these regulations to be changed and or forgotten. This worked in their favor because they were then able to make their products they way they wanted without having to follow any regulations that would hurt their business. The primary allegation by the prosecution in this case is that von Klaeden gave Daimler’s board access to his inside information on the EU’s proposals, which gave them enough time to apply pressure and get the proposals overturned. Following the German government’s pressure on the EU, was a €700,000 donation to the CDU by the BMW’s major shareholders, the Quandt family. This all makes Daimler look very guilty and it makes them look like they are a company who is willing to bend the law to make a profit, which is something that can have very negative results for Daimler now and into the future.

Klaeden, the German politician who leaked
government documents to Daimler

There are several stakeholders that are affected by this situation. One of the stakeholders is Eckart von Klaeden who was hired as Daimler’s chief political lobbyist and showed them the secret government documents. This case could cause Klaeden to end up in jail due to the fact that he leaked government documents to a company to benefit them. He could also get fined a lot of money because of this. Dieter Zetsche, who is the CEO of Daimler, is also a stakeholder in this case because if Daimler loses a lot of money and gets in trouble because of this situation, he could lose his job or lose money himself. The stockholders of Daimler are also stakeholders in this case because they have their money invested in Daimler and if Daimler loses money in this lawsuit then the stockholders will lose money also. Customers of Daimler also are stakeholders because if Daimler loses reliability because they are getting in trouble for a scandal, their products may lose their credibility, which would affect the customers. The last stakeholder is the environment and people in society because the documents that Daimler viewed where about CO2 regulations. The fact they persuaded the government not to change the regulations on CO2 emissions means that the environment and the people in society are being affected in a negative way because the amount of CO2 emissions where not reduced.

Individualism is an ethics theory that was created by Milton Freidman. This ethical view is about how everyone has the right to pursue what they want and that no one can tell them how to run their lives, while staying within the law. Freidman also says that the only purpose of a business is to profit. Daimler did what they wanted to do for themselves by trying to increase the profits that they were making. But by looking at the leaked government documents and hiring someone to get the documents for them is outside the law and would not be supported by Individualism. Individualism would support their intentions though because they tried to benefit themselves and the business by trying to cut back on costs that would have been implemented if the new CO2 regulations where to be implemented.

Dieter Zetsche, CEO of Daimler Car Manufacturing Co.

The Utilitarianism point of view states that says a person’s action needs to benefit the masses or help the greatest amount of people for it to be ethical. In Daimler’s case, the only people that would have benefited from this was Daimler because they cut costs by stopping the CO2 regulations from being implemented.. Von Klaeden, and the CEO Dieter Zetsche were both negatively and positively affected. They were put under fire for this scandal but avoiding major cost expenditures can make a top management leader look very good. This could lead to bonuses and higher pay. The stockholders did benefit form this scandal because when costs are cut, you end with a larger gross profit, which in the end could raise the company’s stock value. The customer’s both benefited and were hurt from the scandal because even though the cars they buy do not need to be modified to follow the regulations. But the society and the environment are the biggest stakeholder in this case because not changing the CO2 regulations harms the health of the people in society and it hurts the environment. There are already many problems with how much CO2 we emit as a society and not changing that just for one company’s benefit hurts a lot of people and it hurts the environment. This means that Daimler was being unethical under the Utilitarian point of view.

Kantianism is an ethic theory that is about how a person should act rationally, how a person should allow and help people to act rationally, how to respect people, and how it is important to be motivated by goodwill. Daimler did not follow these principles because they obtained secret government documents and used them in their favor. They did not make a rational decision because it just ended up hurting them in the end and it shows that they cannot be trusted. They also did not help others at rationally because they let Klaeden get the documents for them. They also did not motivated by goodwill because they obviously did not care about the negative implications that not reducing CO2 emission has. Daimler also did not follow the formula of humanity, which is to act in a way to treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means. Daimler did not follow this because they did not benefit humanity in any way. They just tried to benefit themselves, and their business so that they can avoid certain costs and keep a steady profit. Based off of the Kantian point of view, Daimler was being unethical.

Virtue Theory
Mercedes Benz, the most popular car manufactured by Daimler

There are also many business virtues that a Daimler needs to follow to be classified as ethical under the virtues theory. These virtues include, Courage, Honesty, Temperance and self-control, and justice. Daimler did show courage during this scandal because it was very courageous of them to take a risk like this to benefit their company. But they were not courageous enough to admit they were wrong in this case and they denied ever viewing the documents. Daimler did not follow the honesty virtue because they were not honest with its customers and the government because they were not honest and did not admit to what they were doing. For them to be ethical they would have needed to admit their wrong doings and tell the truth about hat they did. They also did not follow the self-control virtue because they were not ale to control themselves from breaking the law and viewing secret documents without permission for the EU. Daimler also did not follow the last virtue of justice because they had to cheat the system to fix their problems instead of working hard and fixing the problems in a justified way. Based off of the virtues theory, Daimler was acting unethical in this scandal.


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1 comment:

  1. I really enjoyed reading this blog post. I thought the case overview had enough detail so I knew and could understand exactly what was going on. I thought you did a great job explaining who the stakeholders are and why they are involved and affected in this case. I see your point under individualism that they were trying to cut their costs and therefore increase profits, which is what individualism pushes for companies. I like how you say who benefits and is hurt by this scandal in the utilitarian analysis. Also, I like how you point out the environment is one of the biggest stakeholders and since that is the majority the decision is unethical. I also thought you hit all the points of the last two theories. I think the blog could benefit from more statistics, but, overall, good blog post.