JP Morgan Owned Shipping Vessel Seized with $1.3b in Cocaine (2019)

Ethics Case Controversy
On June 17, 2019, the United States Customs and Border Protection seized 20 tons of cocaine which were enclosed within the shipping containers aboard the MSC Gayane in Philadelphia, OA as it travelled from Chile to Europe. This makes it one of the largest seizures of cocaine in the history of the United States. The Gayane is a shipping vessel that is owned by JP Morgan and leased out to the Mediterranean Shipping Company. The 20 tons of cocaine were hidden inside of shipping containers whose seals were taken off and replaced with near identical ones.
The situation and JP Morgan's subsequent silence on the incident has brought up questions on whether the organization was involved with any of the drug trafficking. Because JP Morgan is just the owner, we might want to look at whether the Mediterranean Shipping Company could be at fault here. The case is currently being investigated by the United States Government.

Stakeholders
The stakeholders in this case would be: JP Morgan, the Mediterranean Shipping Company, drug dealers, and cocaine users. Since the Gayane is a vessel owned by JP Morgan, any wrong doings will be connected back to them. JP Morgan needs to make sure it has control over the types of operations occurring on board to prevent scandals that can cost a fortune.

Individualism
An Individualist would view JP Morgan's conduct as ethical as the organization was not knowingly engaging in drug trafficking. Individualism is the idea that businesses should be focused on making as much profit but doing so legally (Salazar 17). Because JP Morgan is leasing the vessel to another organization, they are receiving payments for principal plus interest. They aren't receiving money from the transportation of drugs. According to a July 2019 Wall Street Journal article, the people profiting from this were the ones getting cocaine on board (Paris).

Utilitarianism
A Utilitarian could view this as unethical when taking the lack of reaction by JP Morgan into account. Utilitarianism is the theory that a business decision should be made to make sure the happiness of everyone affected is maximized (Salazar 19). Because JP Morgan only owns the ship, they are not the ones responsible for loading cargo and transporting it. When a situation like a giant drug bust occurs and your name is attached to the scandal, you would want to respond and clear your name. However, JP Morgan hasn't done so. This can lead to the general public or shareholders to be disgruntled because they want to know what the company has to say about it.

Kantianism
A Kantian would view JP Morgan as ethical in this situation. In Kantianism, a decision is made rationally and with respect for everyone involved (Salazar 20). JP Morgan made a decision to go with one of the top shipping companies in the world because the chances they would allow something like this to occur is very slim. Even though drug trafficking through shipping vessels is on the rise, it would be unreasonable to call out an organization for using a ship. Within Kantianism is the formula of humanity. It states that it is "wrong to use people as mere means to get what you want" (Salazar 22). JP Morgan does not violate the formula of humanity in this case as they were just conducting a normal business deal, not trying to pull a fast one on the shipping company. Also included in Kantianism is the motivation of an organization. The motivation of JP Morgan would be neutral as they were thinking that their ship was being used for normal business use.

Virtue Theory
Virtue Theorists would likely not view this as ethical mainly because of the reaction by JP Morgan. Virtue Theory is an ethical theory based on someone's character. The four main virtues are: courage, honesty, temperance, and justice. Being courageous means that you can stand up for what is right. In this case, JP Morgan failed to showcase this by not taking action after the incident. They have stayed silent on the issue, where they very well could have sent out a press release or talk to the shipping company about a possible solution. JP Morgan has not talked about this situation which puts them in an unfavorable position in the honest category. Once again, had they released a statement saying they're looking in to the situation, they would have shown honesty. JP Morgan has shown the characteristic of temperance, which is to have realistic expectations. When JP Morgan leased out their vessel, their expectations were to receive payments.. Thats all they wanted from the deal; they had no idea that the transportation of drugs was occurring. JP Morgan has overall been just in their intentions with the vessel, just not on providing updates about the situation.

Justified Ethics Evaluation
I do not think JP Morgan has committed any wrong doing during this incident. They are just the owners of the ship and decided to lease it out for a shipping company to use. JP Morgan did not hire the crew that brought the cocaine aboard. I think that JP Morgan could have talked about it a little bit to show they aren't just ignoring it. JP Morgan could also talk to the shipping company about possible changes to how they handle the ship. The company acted ethically throughout the entire incident.

P. Perzanowski

References

Brito, Christopher, and Jason Silverstein. “Ship Seized in $1.3 Billion Cocaine Bust Is Owned by

JP Morgan Chase.” CBS News, CBS Interactive, 11 July 2019,

www.cbsnews.com/news/ship-seized-in-1-3-billion-cocaine-bust-is-owned-by-jp-morgan

-chase/.

Mohamed, Theron. “4 Surprising Facts about the $1 Billion Worth of Cocaine Found on a Ship

Owned by JPMorgan | Markets Insider.” Business Insider, Business Insider,

markets.businessinsider.com/news/stocks/cocaine-ship-jpmorgan-boat-liberian-flag-1-bill

ion-drugs-surprising-2019-7-1028346364#the-sheer-quantity-of-cocaine1.

Paris, Costas. “Inside Shipping's Record Cocaine Bust.” The Wall Street Journal, Dow Jones &

Company, 24 July 2019,

www.wsj.com/articles/inside-shippings-record-cocaine-bust-11563960604.

Salazar, Heather. The Business Ethics Case Manual.

Sandler, Rachel. “U.S. Authorities Seize 20 Tons Of Cocaine From Ship Owned By JP Morgan.”

Forbes, Forbes Magazine, 12 July 2019,

www.forbes.com/sites/rachelsandler/2019/07/11/us-authorities-seize-20-tons-of-cocaine-f

rom-ship-owned-by-jp-morgan/#5e1441e2ea33.

Apple: Mac Production Moved to China (June 3, 2019-)

Ethics Case Controversy

Apple Technology decided to move Apple Mac Pro production to China. Mac Pro production was announced June 3, 2019 at the 2019 Apple World Developers Conference at the San Jose Convention Center in San Jose, California (Schwartz & Gurman 1). Apple had previously released in 2013 that the Mac productions would take place in the United States as part of their patriotic campaign. The announcement has come while China and the United States are currently in the middle of a trade war. Trump had raised the tariff on Chinese imported goods to 25% on May 10, 2019 (“China to Increase Tariffs on $60bn Worth of US Goods” 1). There is currently no resolution to the trade war.


The Chinese factory employees working at Apple’s Catcher factory are exposed to unsafe working environments and not given enough safety equipment. They work extra hours for little pay. The dormitories provided by the company have no running water and few showers, resulting in many workers not bathing (Maggio 1). Workers lose around $76.57 United States dollars every month due to working overtime. Additionally, when employees resign they receive their final paycheck the fifth of the month, regardless of when they resign. Also, workers are not given any hands-on safety training. They are expected to read about safety procedures without getting any practice. The factory does not provide goggles or face shields to workers, making it dangerous for them when operating machinery. Chinese employees are not receiving their rights to a safe and healthy working environment nor their rights to fair wages (“Apple’s Failed CSR Audit” 5).

Stakeholders

Apple’s stakeholders include the upper-management, the supervisors, the customers who buy their products, business entities, the community,  the Employees who work for Apple, and the environment ("Intro" 5). Also included as stakeholders would be the peer companies and the stockholders.  Some peer companies include Quanta Computer Inc and Catcher technology Co., where the Mac Pros are being made. ( “Apple's Failed CSR Audit 1) (Gurman 1). The stockholders include Arthur Levingston, Tim Cook, who is also CEO, Craig Federighi, and The Vanguard Group and Blackrock. Arthur Levingston is the largest stockholder with 1.16 million shares, Tim Cook is the second largest stockholder with 901, 474 shares, Craig Federighi is the third largest stockholder with 460, 367 shares, and the Vanguard Group and Blackrock have 15.93 percent of the outstanding shares of the company (Lindsay 1).

Individualism

An Individualist would deem this controversy unethical because the decision to move Mac production to China does not maximize profits for the stockholders. This theory was created by Milton Friedman who stated that, "In such an economy, there is one and only one social responsibility to business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud”(Desjardins 54). The ethical rule used in Individualism is, "Business actions should maximize profits for the owners of the business but do so within the law (The Case Manual 17). Due to the ongoing trade war between the United States and China, Apple stands to lose profits on tariffs imposed on goods. An Individual theorist to deem this controversy to be unethical because the stockholders lose profits as a result of the imposed tariffs on goods.

Utilitarianism

A utilitarian theorist would deem this controversy to be unethical because not everyone affected by Apple's decision to move Mac production to China is happy.  The ethical rule applied in utilitarianism is, "Business actions should aim to maximize happiness in the long run for all conscious beings that are affected by the business action"(The Case Manuel 19). Basically this means that a utilitarian theorist would weigh the pros and cons of a business action and how it would affect everyone involved. This controversy would be deemed unethical by a utilitarian theorist because the customers, stockholders, and employees are upset. Customers have to pay more to buy the Mac because of the raised tariffs, stockholders lose profits because of the raised tariffs, and Chinese employees are not receiving their rights to fair wages and a safe and healthy working environment. This results in unhappy customers, stockholders, and employees.

Kantianism

A Kantian theorist would deem this controversy to be unethical because the factory employees are being treated as a 'mere' means instead of as an ends. In Kantianism, to determine if an action is ethical, it is evaluated to see if it is of the good will and done with the right motivation. To determine if an action is of the good will, it is weighed against the three Categorical Imperative tests. The Formula of Humanity, one of the three Categorical Imperative tests, says that a person should, “ act in such a way that you 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”( Kantian Business Ethics 9). When assessing this controversy against the Formula of Humanity, it comes up lacking because the factory employees are treated as a 'mere' means instead of as an end. The workers are taken advantage of and not receiving their proper rights to fair wages and a safe and healthy environment. As for the motivation, Kantianism deems that only motivation permissible is the one done in accordance with the moral law or duty, otherwise stated as being the right thing to do.(Kantian Business Ethics 12) The motivation behind Apple’s decision to treat its workers poorly is not because it is the right thing to do, but because it is convenient for the company. Therefore, a Kantian theorist would deem Apple’s decision to move Mac production to China to be unethical because its factory workers are treated poorly.

Virtue Theory

A virtue theorist would deem this controversy to be unethical because the four virtues are not completely expressed.  The four virtues are: courage, honesty, temperance, and justice. Apple does not exhibit the virtue of courage because it is not taking a stand for the right ideas or actions. The factory workers in China are not being treated properly and the company stands to lose profits because of moving production of the Mac to China. The treatment of factory workers in China is not right. Therefore, the virtue trait of courage is not being expressed. Apple does not exhibit the virtue of honesty because it originally said that Mac production would be in the United States. Apple does not exhibit the virtue of temperance because it did not establish fair expectations with their workers and their desires for increase in production and profits is not achieved because of the trade war. The virtue trait of justice is not being shown because fair practices are not given to factory workers in China.  They are being deprived of the right to a safe working environment, the right to fair wages, and other rights (“Apple’s Failed CSR Audit” 1). In conclusion, a virtue theorist would deem this controversy to be unethical because the four virtues are not represented by Apple.

Justification Ethics Evaluation

In my opinion, Apple’s decision to move Mac Pro production to China was unethical for various reasons. The most important reason would be the treatment of Chinese factory employees. This could have been avoided if those in management had carried out the terms listed in Apple’s Code of Conduct and made necessary changes to make it happen. Nevertheless, this is how the factory employees are treated. Also, Apple’s decision to move production to China is unethical because it does not maximize profits for the stockholders. Tariffs have been raised by both countries all year, making the move a financial risk. There is currently no resolution to the trade war. The working conditions and the lack of maximized profits result in Apple’s decision to move Mac production to China unethical.

S Sherman

References (MLA 8 Format)

“Apple's Failed CSR Audit.” Chinalaborwatch.org, 2018,

       www.chinalaborwatch.org/upfile/2018_01_12/201801161.pdf. Accessed 30 July

       2019

“China to Increase Tariffs on $60bn Worth of US Goods.” USA News | Al Jazeera,

       Al Jazeera, 13 May 2019, www.aljazeera.com/news/2019/05/china-impose-

       tariffs-60bn-worth-goods-190513132012941.html.

DesJardins, Joseph R. An Introduction to Business Ethics. McGraw-Hill/Irwin, 2014.

Gurman, Mark. “Apple Is Moving Mac Pro Production to China.” Apple Is Moving

       Mac Pro Production to China, Los Angeles Times, 28 June 2019,

       www.latimes.com/business/la-fi-tn-apple-pro-china-20190628-story.html.

       Accessed 22 July 2019.

Maggio, Edoardo. “Workers at an Apple Manufacturing Plant in China Complained

       about Poor Working Conditions and Exposure to Noxious Chemicals.” Business

       Insider, Business Insider, 17 Jan. 2018, www.businessinsider.com/china-labour-

       watch-apple-catcher-working-Conditions-2018-1. Accessed 30 July 2019.

Salazar, Heather. The Case Manual. n.d.

Salazar, Heather. “Kantian Business Ethics”, in Business in Ethical Focus, ed. Fritz

       Allhoff and Anand J. Vaidya. Broadview Press, 2008.

Schuetz, Molly, Mark Gurman. “Apple Mac Pro Production Moving to China.” Time,

       Time, 28 June 2019, time.com/5617267/apple-mac-pro-china/. Accessed 31 July

       2019.