Another Addition to The Opioid Crisis? Insys Theraputics Bribes Doctors to Increase Their Profit (2012-2015)

Case 
Insys Theraputics Inc. is a pharmaceutical company that focuses on giving patients cannabis and

Sybsus Drug

novel drug delivery systems. Novel drug delivery systems are systems that improve drug potency control drugs to give patients a therapeutic effect, provide greater safety and target a drug that helps a specific area. Insys’ vision is “To improve the quality of patient care by building a specialty pharmaceutical company focused on cannabinoids and novel drug delivery systems that address unmet patient needs”(Insys). John Kapoor, founder and former CEO of Insys, created a highly addictive opioid, Subsys. Subsys is a liquid form of fentanyl and is much stronger than morphine. Mr. Kapoor originally created Subsys to help those with cancer control their pain. Originally, patients had to be 18 years of age or older and had to be currently or previously using opioid therapy for their cancer pain. Patients were told to spray the liquid under their tongue. Kapoor claims he created this company after he witnessed his wife die of cancer. He said “ I wanted to believe in Subsys perhaps too much. I never wanted Subsys to be prescribed to patients who did not need it” (Thomas). 


Starting in May of 2012 and ending in December of 2015, Kapoor and other top executives bribed practitioners to prescribe the spray outside the usual course of the professional practice. Kapoor was helped by Babich, Burlakoff, Simon, Lee, Rowan, Gurry and other supporters. They used bribes and kickbacks, such as covering fees for speakers and marketing events, food and entertainment, administrative support, and paid fees to other pharmacies to make this all happen. In March 2012, the company planned and funded a marketing program called the “Speaker Program ''. The Speaker Program was created to increase the awareness of the spray and its use. They held peer-to-peer educational lunches and dinners.  Later in 2012, Insys, misled insurance companies into agreeing to pay for the drug. They falsified the identity and location of the employer of the fentanyl, misrepresented the patient's diagnosis, the pain being treated, and the patient's prior medication taken (United States District Court District of Massachusetts).  More than 8,000 people died from overdosing after using this drug. There are many stories that illustrate the tragic outcomes of all of this.  Sarah Fuller was one patient that was prescribed Sybsus when she shouldn't have been. Recently, a federal judge sentenced John Kapoor and six other Insys executives to prison for “racketeering conspiracy.” Racketeering is a criminal activity in which a person or organization engages in a ‘racket.’  John Kapoor, CEO, and founder, was sentenced to five and a half years in prison, three years of supervised release and ordered to pay restitution and forfeiture that is due at a later date.  The other six employees were also sentenced to prison for a time ranging from 26 to 33 months. Insys agreed to pay $225 million to settle fraud charges which led them to bankruptcy. The company said they would continue to operate while they come up with a plan to pay back their creditors. 

Stakeholders 

Patient Sarah Fuller who was prescribed wrong drug

Stakeholders are anyone affected by the decision or actions made by the business. In my opinion, the stakeholders affected the most are the doctors and insurance companies. The doctors and insurance companies are the ones who are receiving the bribes and being lied to by upper management. Upper management, patients, the community and the business itself are also stakeholders of this case. Upper management includes John Kappor, CEO and founder as well as the six other members that joined him in bribing and lying to doctors to increase their sales.

Individualism 

Individualism has two points of views by Milton Friedman and Tibor Machan. Both philosophers agree that the only goal of business is to make a profit within the law. Machan adds in that "“The primary obligation of the business is to maximize profit but the direct goal of profiting may need to be met by indirect goals not aimed at profiting and business people may have other goals and those goals may at times be prioritized over the goals of profit-maximizing” (Salazar). Insys' goal was to make more profit by bribing doctors to write false prescriptions and lying to insurance companies to cover the cost of the prescription. Insys’s CEO and six other employees were helping out with these bribes. After being caught bribing doctors and lying to insurance companies, Insys was in trouble with the law, which resulted in several charges against the company. Insys owes $225 million to cover all the charges against them which, in turn, led them to file for bankruptcy. Bankruptcy is not a way to maximize profit as it destroys the company. An Individualist would not agree with the way Insys tried to maximize profit. 

Utilitarianism 
A Utilitarian would deem this case as unethical. Utilitarians use the stakeholders' approach that maximizes happiness for all. Happiness is the only value of measure and can be defined as pleasure and absence of pain and is sometimes interpreted as the satisfaction of desires. This makes this case unethical because Insys Therapeutics was not maximizing happiness for anyone except for themselves. Doctors were being bribed to write false prescriptions that hurt their patients. Patients were killed from overdosing on this drug. Insurance companies were also lied to which in the end does not make them happy that they covered the cost for false prescriptions. The only happiness that came out of this case was for Insys during the period of time their sales increased. 

Kantianism 

Kantianism focused on the four basic principles of the theory as well as their right motivation. The principles say to act ethically one must act rational and make rational decisions while respecting others and being motivated by goodwill. To determine if one was motivated by goodwill, Kantians use three formulas; The Formula of humanity, autonomy and the universal law. Under the formula of humanity, it states “ Act in such a way 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). Insys Therapeutics bribed doctors and lied to insurance companies as a means to increase their sales which shows they were not motivated by goodwill.   Additionally, Kant says the only right motivation comes from the duty or moral law, meaning you will do something because that's the right thing to do. The motivation for Insys did not come from doing the right thing. Insys knew that using bribes and lying to other companies was not an ethical or legal way to increase their sales. Overall, a Kantian theorist would see Insys’s actions as unethical because of the way they tried to increase their sales. 

Virtue Theory 

Virtue Theory has a different take on a business's actions compared to other theories mentioned before. Virtue Theory is based on Aristotle's functions. Aristotle is an ANcient Greek Philosopher who developed the virtue theory. Aristotle focused more on the character traits of one. The character traits must promote wellness or flourish of the individual in society( Salazar, 22). One should act in good character and avoid any vicious or bad character traits. The first trait Insts did not obey is courage which is defined as “risk-taking and the willingness to take a stand for the right ideas and actions" (Business Ethics and Virtues). Insys did not stand up against the wrong idea and action of using bribes to increase their sales. Along with using these bribes, they were not honest with the insurance companies which violates the honesty virtue. Insys lied to insurance companies to get them to cover the cost of these prescriptions.  The next virtue is temperance. Temperance is defined as “reasonable expectations and desires” (Business Ethics and Virtues). Again, using bribes and lying is not a reasonable desire to increase profit. I also don't think Insys also should have ever expected these doctors to agree to accept these bribes. Lastly, the virtue trait justice is not followed due to the fact they were not following fair practices. They were working hard to increase their sales but not doing it in a way that is legal or ethical. Insys did not follow any of the virtues in business. 

Evaluation 

In my opinion, Insys Therapeutics acts were unprofessional and did not follow proper business ethics. Every day we hear and read about the opioid crisis that our world is facing.  The CDC states that in 2017, more than 70,000 people died from drug overdoses (CDC). These overdoses start with patients becoming overly addicted to their drug they were given. I don't understand why Insys would want to contribute to this crisis but they did and they hurt many people. John Kapoor hurt his own company, doctors, other companies, patients and many other people. More than 8,000 people overdosed from Sybsus. They knew that they were doing it and not following proper business ethics. Every person knows that you should not lie or use bribes to make more money. They put so much effort behind these bribes and programs they created to increase their profit just to get caught and file for bankruptcy. I believe they could have put that effort into following proper business ethics to increase their profit. It may have taken longer but the business would still be in good hands and have the same reputation before any of this. I think it goes to show that Insys does not care about others besides themselves and their profit after this case.

CEO and Founder John Kapoor

Action Plan

Insys Therapeutics has a long road ahead of them till their company is back to “normal” business, if it ever even gets back to that point. There are many steps that need to be taken to get back to that way of business. Their first step is to apologize to those they hurt like the doctors, insurance companies, families and the general public. Insys needs to write a personal apology to all the patients that were affected by this drug. They also need to apologize to the families that lost loved ones from overdosing on the drug. Doctors and insurance companies deserve an apology for putting them in the awkward position of using bribes and being lied to. Lastly, the public deserves an apology for contributing to the opioid crisis and assuring them that they won't do it again. Insys may also want to change their mission statement to one that is focused on the needs of their customers. A new mission statement that could work is “We are focused on caring for our patients by offering them cannabinoids and novel drug delivery systems that address their unmet needs.” This mission statement shows customers that they are focused on helping them. Along with a mission statement, they should lay out the core values that they will now follow. Some new core values might include honesty, commitment, innovation, and trust. Insys needs to be committed to their patients' needs by creating new products. They need to be honest with those who they work with and create trust with them.

Another option Insys has is to rebrand the whole company which includes changing the name of the company and their logo. Currently, when we hear Insys, this is the only thing we think of. A new name will blur out this case for the company and so will the logo. Hopefully, a new name and logo will bring a new set of business to them. They may also want to hire new or fire former employees as a new start to ensure no unethical practices will be done again by the same people. This may also bring back trust in the company. Lastly, I believe Insys should create a system that locks up the drug so patients aren't able to use the drug whenever they want. This lock could be on the spray bottle or just kept in a lockbox that only authorized people know the password to. If Insys Therapeutics carries out this action plan or some aspects of it, they may no longer have a negative reputation. Some may forgive them and give them a new start and try to do business with them again.

S. Bartlett

References

“Better Patient Care Through Innovation.” INSYS Therapeutics, www.insysrx.com/.

Thomas, Katie. “Insys Founder Gets 5½ Years in Prison in Opioid Kickback Scheme.” The New  York Times, The New York Times, 23 Jan. 2020,
www.nytimes.com/2020/01/23/health/opioids-insys-kapoor-prison.html.

Carlson, Rosemary. “What Is Racketeering?” The Balance, The Balance, 25 Sept. 2019, www.thebalance.com/what-is-racketeering-4584753.

Salazar, Heather. The Case Manual

Salazar, Heather. Business Ethics and Virtues

Salazar, Heather. Kantian Business Ethics

“Understanding the Epidemic.” Centers for Disease Control and Prevention, Centers for Disease Control and Prevention, 19 Mar. 2020, www.cdc.gov/drugoverdose/epidemic/index.html.

Insys Theraputics: Exotic Dancers and Money Bribery Leads Opioid Manufacturer Insys Therapeutics to File for Bankruptcy (2012-2015)

Ethics Case Controversy

Insys Therapeutics, an American pharmaceutical company, recently filed for bankruptcy as a result of having to pay $225 million in settlement. This settlement is a result of Insys Therapeutics bribing doctors to prescribe their highly addictive pain killer Subsys along with insurance companies to cover the charges of this drug. Insys Therapeutics used bribery tactics such as hiring an exotic dancer as a sales representative to persuade doctors in prescribing their patients Subsys as much as possible, even if they didn’t have cancer related pain, which was the drugs intended use. Not only that, but Insys Therapeutics also paid these doctors large cash payments as a form of bribery at their “speaker programs,” which were intended to be used as a way to teach these doctors about Subsys through lunches and dinners. The actual reasoning for these lunches and dinners, however, were to be used as a coverup in order to pay these doctors bribes to get them to increase the amount of Subsys prescribed as well as to increase the dosage of Subsys prescribed.

John Kapoor

On top of having to pay $225 million in settlement, Insys Therapeutics' top executives were  all individually charged. CEO and founder John Kapoor was sentenced to five and a half years in prison on racketeering chargers and was ordered to pay $250,000 for his role in this fraudulent bribery scheme that contributed to the opioid epidemic. Not only that, but former vice president of sales Alec Burlakoff was sentenced to twenty-six months in prison after pleading guilty in federal court to racketeering conspiracy and his role in this case as well. Former CEO Michael Babich was also sentenced to thirty months in jail after pleading guilty in federal court to conspiracy and mail fraud charges.Too add, Michael Gurry, who was Insys Therapeutics' former vice president, and former national sales director Richard Simon, were both sentenced to thirty-three months in prison. Besides these executives, former regional sales manager Joseph Rowan received twenty-seven months in jail along with Sunrise Lee, who was the exotic dancer hired as a sales representative, and was sentenced one year and one day for her part in the scandal. Besides Insys Therapeutics employees and higher up management, doctor Gordon Freedman was charged with accepting more than $300,000 from Insys . Gordon is just one of the many doctors who were charged with accepting money from Insys Therapeutics.

U.S. Attorney Andrew Lelling gives this quote in a statement that really stuck with me: “Just as we would street-level drug dealers, we will hold pharmaceutical executives responsible for fueling the opioid epidemic by recklessly and illegally distributing these drugs, especially while conspiring to commit racketeering along the way." This statement is extremely important to think about because if there is a drug dealer on the streets, selling and distributing drugs, getting people addicted to opioids and other types of drugs, pharmaceutical companies involved in fueling the opioid epidemic by getting individuals addicted to their drugs for monetary gain should also be held accountable. This case sets the tone for other pharmaceutical companies and shows them that these types of actions will not be tolerated.

Stakeholders

When it comes to who the stakeholders are for this case, or who was directly affected by

Jeffrey Buchalter

these business decisions, first we have the individuals prescribed Subsys. As a result of this business decision, many individuals became addicted to opioids and lives were lost for the use of this potent drug. Specifically, we have Sarah Fuller, a thirty-two-year-old woman who was found dead in her bedroom as a result of a lethal amount of fentanyl in her blood from Subsys and Jeffrey Buchalter who was an IRAQ war veteran who survived multiple bomb blasts and as a result of his pain, was put on Subsys and became severely addicted. Next, we have the doctors were bribed during this case. As a result of this business decision, doctors were becoming richer and richer as they prescribed Subsys to their patients by lying to insurance companies about the actual health status of their patients, but also lost their trust with patients which outweighs the money in the long run.Workers of Insys Therapeutics and higherup management were also affected by this business decision and as a result are a stakeholder. As a result of this business decision, some workers of Insys Therapeutics were affected because they were getting commission from pushing insurance companies

Sarah Fuller

to approve Subsys, but, many employees lost their job as a result of this business decision. As for higher up management of Insys Therapeutics, they were making large amounts of money from their untruthful acts. Lastly, we have society as a whole who is a major stakeholder. Because of this business decision, the opioid epidemic became even worse, resulting in society suffering from many losses and overdoses. If there is a silver lining in all of this, however, as a result of this business decision, the government is cracking down on these big pharmaceutical companies’ tactics on selling their drugs as a way to prevent the opioid epidemic from growing.

Ethical Theories

Individualism

An individualistic thinker would not be in favor of the Insys Therapeutics case above. According to Milton Friedman, an individualistic thinker, the only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders within the law of the land. Although Insys Therapeutics was trying to maximize profits and make as much money as possible for their owners and stockholders, they did so in an illegal way, making their actions not “within the law of the land.” Specifically, these employees were charged with mail fraud, bribery, kickbacks and racketeering, which Milton Freidman would have been against. Not only would Freidman be against this case, but Tibor Machan, another individualistic thinker, would also be against this case. Like reasoning for Friedman’s theory, because Insys Therapeutics did not act within the law of the land, this also goes against Machan’s theory. Not only that, but Insys Therapeutics indirect goals, which were to bribe doctors and insurance companies, was solely aimed at profiting which goes completely against what Machan believed. Lastly, Insys Therapeutics lost its owners and stockholders a lot of money as a result of the company filing for bankruptcy for their illegal actions. This goes against an individual thinker because Insys Therapeutics is not maximizing profit here for its owners and stockholders. In fact, they are doing more harm than good. Because Insys Therapeutics was so worried about making a lot of money in a short amount of time in unlawful ways, profit was not maximized and an individualistic thinker would not be in favor of this case.

Utilitarianism

If you were to look at this case in short-term, then a utilitarian thinker would be in favor of this case. Patients are happy since they feel less pain and Insys Therapeutics workers and stockholders would be happy since they are maximizing profits. Because Utilitarianism focuses on happiness in the long-run, however, a utilitarian thinker would be against this case. The fundamental rule of Utilitarianism focuses on maximizing pleasure and minimizing pain with a complete stakeholder approach, however, Insys Therapeutics paid more attention on making a lot of money quickly versus the safety and happiness of its stakeholders and patients, thus violating this rule. John Stuart Mill, a utilitarian thinker, believed that “we out to bring about happiness and pleasure in all beings capable of feeling it and if happiness is valuable, there is no difference morally speaking between my happiness and yours” (Salazar). With that being said, the Insys Therapeutics case would go against this idea because the owners and higher up business professionals were only worried about their own happiness, not the happiness of its patients. The actions of Insys Therapeutics brought happiness to these professionals because they were making a lot of money off of the briberies and kickbacks, however, the patients were very much unhappy since they because addicted to the highly potent drug and even died as a result of these actions. Because of this, a Utilitarian thinker would be against this case. Because Insys Therapeutics was only concerned about short-term happiness, they did not understand the negative long-term effects from their actions, which goes against this ethical theory.

Kantianism

A Kantian thinking would definitely be concerned with what is going on with this case here. First of all, under the Kantian theory, “you must never deceive or harm people, or otherwise use them for your own personal gain” (Salazar). In the case above, customers were not only being deceived and lied to by Insys Therapeutics, but they were being harmed by the inaccurate prescription of the drug, all for the company’s own personal gain. Because Insys Therapeutics were knowingly deceiving their customers and people in general all for their own personal gain, a Kantian thinker would not like this case. To add to this, Insys Therapeutics was treating patients as mere means. What this means is that these patients were only being use to help the company make more money and not to truthfully administer the drug to patients and make money in the process. Sarah Fuller’s case is a perfect example of a patient being used as mere means. Sarah was prescribed Subsys for neck and back pain, which is pain not related to cancer. Insys therapeutics wanted to make money off of their patients in a non-truthful matter since they did not care that Sarah did not have cancer pain and prescribed the drug anyways. These patients were also being lied to and deceived through wrongfully being prescribed Subsys as well as Insys Therapeutics not disclosing just how potent and dangerous their drug was.

Virtue Theory

A virtue theorist believes that character traits promote wellness or flourishing of individuals within a society (Salazar). Not only that, but they believe that “individuals must act so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits” (Salazar). With that in mind, the Insys Therapeutics case goes against what a virtue theorist believes in. Compared to the previous three theories, they all look at individuals’ actions where virtue theorists look at the character traits of the individuals. For the Insys Therapeutics case, John Kapoor, founder of Insys Therapeutics and master mind behind this scandal, lacked many virtues such as caring and compassion. Kapoor did not care about the patients his drug could help nor did he have compassion for his employees with the potential outcome from his actions, he only cared about making money and doing so in a dishonest way, such as bribing doctors and insurance companies. Not only did he lack these virtues, but he held vices such as selfishness and greed for only caring about himself and flourishing in terms of making the most money for himself. As a result, what John Kapoor and Insys Therapeutics executives did violated what a virtue theorist believed in. These individuals’ character was detrimental to the case and overall lead to the company filing for bankruptcy and executives going to jail.

Justified Evaluation

Overall, Insys Therapeutics actions were unethical and the outcome is what needed to be done. Bribing doctors and insurance companies for your own personal gain is heartless. When a patient goes to their doctor for care, they trust that the correct action plan is being put forth for them, however, in this situation and case, patients were steered down the incorrect path by people who they were supposed to be able to trust. Unfortunately, Insys Therapeutics and the doctors accepting their bribes were so focused on making a large amount of money in the short-run that they did not even consider what could happen as a result in the long run. These doctors should have denied the bribes and reported Insys Therapeutics immediately. Not only that, but the employees and higher up management shouldn’t have been bribing these doctors and insurance companies in the first place. They should have trusted the process and made money while treating these patients accurately and truthfully. The Insys Therapeutics case violated all of the ethical theories in my opinion, as stated above. These greedy and dishonest individuals only cared about themselves and making large amounts of money through illegal actions and deceiving people, causing for a lot of unhappiness.

Company Action Plan

As for the company's next form of action, some major changes that need to be put in place are a new mission statement, new core values to follow, heavy monitoring of the company in the future, as well as heavy marketing strategies. As of right now, Insys Therapeutics’ mission statement is “to improve the quality of patient care by building a specialty pharmaceutical company focused on cannabinoids and novel drug delivery systems that address unmet patient needs” (Insys Therapeutics). I recommend that a new mission statement should be “to improve the lives of patients through honesty, technology, and innovation.” This new mission statement shows customers that Insys Therapeutics is committed in helping their customers honestly through their new innovative technologies.When it comes to core values for Insys Therapeutics, they must exemplify consistency, honesty, innovation, and respect when rebooting their company. Consistency is important because Patients want to know that they are being treated the same and for the right reason every time they are prescribed a drug. By being consistent, people are more likely to trust the company and use their drugs. Honesty is important because. Nobody likes to be lied to, especially when it comes to being prescribed medication. When a customer feels deceived, they are less likely to come back and do business with a company. Because of this, Insys Therapeutics must be extremely honest to their patients about the potency of their drug and not try and do anything that would cause patients to lose their trust. With innovation, new diseases are coming into the picture, so innovation is essential for Insys Therapeutics. Customers need to know that Insys Therapeutics will continue to provide the best and most effective medications to accurately and effectively treat patients. Lastly, By showing respect to customers along with patients, they will feel as if they are not just a money sign. This will cause for individuals to do more business with Insys Therapeutics, ultimately, making them successful in the future.

Besides a new mission statement and improved core values, the company also should improve the Subsys applicator by limiting the amount of sprays a patient can

administer to ensure that less overdoses will occur with this drug. They also should monitor who is being administered Subsys and for what reasons to make sure that not too many people are being prscribed this drug and to ensure its for the right reasons. It is also important for Insys Therapeutics to hire all new higher up management and ceos so that customers know that the individuals who were a part of this crime will not be working for this company again. Also, Insys Therapeutics should change their company name to "Honest Insys" and in a press release done by the new CEO, should explain all the new core values, mission statement, employees, and any major changes to the company, such as its new name. Lastly, marketing needs to be highly used right now with this new emerging company so that customers know that they can be trusted and their products are worth using. Commercial and billboards along with the press release are just a few ways to market. Overall, a lot needs to be done in order to get this new and improved Insys Therapeutics back on its feet. It will not be cheap, but it will be worth it.

-Emily Sarkisian

Works Cited

Insys Therapeutics, Insys Therapeutics, www.insysrx.com/products/approved.

Pacenti, John. Veteran, would-be lawyer, mom left dead or addicted after Subsys, The   Palm Beach Post, 11 Apr. 2018, www.palmbeachpost.com/news/20180404/veteran-would-be-lawyer-mom-left- dead- or-addicted-after-subsys.

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

Turner, Ashley. Insys Therapeutics founder, former executives found guilty in criminal     fentanyl   bribery case, CNBC, 2 May 2019, www.cnbc.com/2019/05/02/insys-     therapeutics-former-executives-found-guilty-in-criminal-opioid-case.html.

Esteemed University Professor Caught Laundering Money for corrupt Columbian Businessman (2017-current)

Business Ethics

Caught with his hands in the cookie jar: Money laundering expert cleans cash for unknown

Colombian nationals (2017-2019)

Ethical Case

In November of 2019, Bruce Bagley, professor of international relations at University of Miami

 and world renowned expert on Drug Trafficking, Money Laundering, and general corruption in Latin America, was caught laundering money for a corrupt businessman from Latin America. He set up a business account under the name “Bagley Consultants”, and used it to wash cash for an individual who has been identified as Alex Saab, a Columbian businessman. [Herald] At the beginning of 2019, Saab employed Bagley as a business consultant, to assist in winning a “no-bid contract” to import food to Venezuela, a deal made with the Maduro administration,

well known for its corruption and general mistreatment of the Venezuelen people. Winning this contract led to the FBI sanctioning Saab, as they had suspicion of corrupt profits being made off the deal. This led to them monitoring accounts that he had relations with, in an attempt to catch any suspicious bank activity, which led to them discovering that Bagley was passing large sums from Saab’s food company through his business accounts (opened under “Bagley Consultants), siphoning a percentage of the money before distributing the remainder to Saab. It has been reported that this money was originally meant for the food project and was being misappropriated, though whether this was due to corruption between Saab and the Venezuelen government or solely on Saab’s behalf is still unclear. The implication here is that Bagley could claim the money left in his account as his consulting fee, therefore disguising any illegal activity under the ambiguity of what consulting an international businessman about winning a government contract might entail. As the details of the case continue to come to light, Bagley has altered his legal strategy; Originally pleading not guilty, as of March 20th 2020 he’s accepted a guilty plea deal, admitting to 1 count of corruption. 

Stakeholders

• Venezualan public at large
• Venezualan government
• Colombian nationals, their unknown constituents
• Bruce Bagley
• US Federal Government
• University of Miami students and staff
  
  
  
• Alex Saab

Utilitarianism

According to the Stanford Encyclopedia of Philosophy, Utilitarianism is the Moral Theory wherein we should seek to have the consequences of our actions result in the greatest good for the greatest number of individuals (Driver). It is also from the consequentialist school, a type of moral theory that measures worth of action on the consequences of that action, rather than any inherent principle in the action, or moral measure of the action in itself. In the case of Bruce Bagley, it seems that he was not acting in accordance with the tenets of utilitarianism; his laundering of 3 million dollars takes away any potential benefit that may have been generated by those funds had he not deemed it permissible. It seems that Bagley was acting in his own self interest. We can only compare the opportunity cost of him stealing and facilitating the transfer of the money to how that money would have been used otherwise. To clarify, it is a guarantee that if that money had not been stolen it would have gone to food supplies for the Venezuelan people, resulting in widespread benefit for the population. 3 million goes much further there than it does here. We can see clearly a utilitarian would not have condoned Bagley’s actions, on the basis of them resulting in less happiness than if he had refrained from acting. The consequences of his actions were not, by any measure, maximizing the potential benefit of the situation.

Kantianism

According to the Business Ethics Case Manual, Kantianism is the most popular derivative of the branch of moral philosophy known as deontology. Deontology focuses on the morality of an action itself, rather than the consequences of that action [Salazar]. This morality is determined by a set of rules or laws governing the sorts of actions that are impermissible, permissible, and supererogatory. In Kantianism, these rules come from Kant’s three formulations of what he calls the categorical imperative. This set of rules is justified by the pursuit of what Kant refers to as “the good will”, which can best be understood as the need to treat reason (and the ability to reason) with respect; to allow each rational free agent (read:healthy adult human) to act as if they have complete control over their own destiny; such that they have autonomy. The formulations are as follows: 1. Act only according to that maxim whereby you can at the same time will that it should become a universal law. The second formulation of the categorical imperative is more intuitive: “never treat a rational free agent as a mere means, only ever as an end unto itself”. In layman's terms, this means that we should seek to treat every other thinking person as someone capable of leading themselves; we should never take advantage of a person in pursuit of some other end. The third formulation follows from the previous two; we should make laws that follow these guidelines, then choose to abide by those laws for the benefit of society.

A Kantian would agree with the utilitarian that Bagley’s actions were impermissible, but they would do so on the basis of an entirely different perspective on the situation. Rather than focusing on whether Bagley’s actions led to some positive or negative impact on himself and others, they would focus on the principles of the actions themselves. This means evaluating the motivation behind Bagley’s actions, and determining whether he was in pursuit of the good will, and if his actions abide by the categorical imperative. Stealing for self interest at the expense of a whole country, lying about it, and seeking to cover up the actions, does not pass the first formulation of the categorical imperative, and clearly demonstrates that Bagley sought to use free agents as a mere means in selfish pursuits. Having violated the first and second formulations, the Kantian would conclude that Bagley was not acting ethically when he chose to launder money for Alex Saab.

Individualism

According to the Business Ethics Case Manual, Individualism is the moral perspective that, when in a business setting, any given company is obligated to maximize profit, and gains for the owners, within the rules of the law. It is obligated to do so because fair and equal competition leads to innovation and general benefit across socioeconomic class. When analyzed from the individualist’s perspective, Bagley’s actions were clearly impermissible. While he did seek profit for his company, and therefore profit for the owners (him and his wife) he did so by violating the law, and covering his actions up as best as possible. He acted dishonestly, and therefore is in violation of the principles of individualism, and his actions would be deemed impermissible.

Virtue Ethics

Virtue ethics in the branch of moral philosophy that focuses on the character of an agent, and whether the actions of an agent are indicative of someone embodying virtue. Specifically, the theory focuses on achieving eudaimonia or flourishing, so called because it is the state achieved by an agent who has properly weighed each virtue and chosen to ask in the way that best suits the situation and the individuals involved. For the purposes of analysis in business ethics, there are 4 main virtues keep in mind while evaluating a scenario, and they are: Courage, Temperance, Honesty, and Justice/fairness [Presentations].

Subjecting Bagley’s circumstances and actions to the tenets of virtue theory, we can see that he was clearly acting unethically. Stealing money from a worthwhile cause is as far away from just as an action could be, and is clearly indicative of a lack of temperance and self control. Stealing for the sake of personal benefit, and being dishonest about it, violates the virtue of honest, and displays cowardice in the face of confrontation. Given the facts of the case, it seems obvious that a virtue theorist would condemn Bagley for his lack of ethical fortitude.

Justificated Ethics Evaluation

When evaluating Bagley’s case from a personal perspective, I feel obligated to subject the

circumstances to my own general morally relevant ethical guidelines. Namely, 1. Act rationally,

seeking to treat other people as if their experience is just as important, relevant, and beautiful as our own and 2. Establish a doctrine of intense personal accountability, and seek to act in order to avoid negative consequences for ourselves and others. I chose these as guidelines because I feel they embody the collective sentiment of both sides of the “moral theory” coin; Both the principles of our actions, and the consequences of those actions, are relevant and valuable to the judgement of the entire picture of an ethical dilemma. At the core of all of the moral theories is the idea that any action can have a moral weight, and lean towards a good or evil outcome. This goodness or evilness varies in both basis and method of measure, but the core idea remains the same; that we should act in a way that leads towards goodness.

Analyzing Bagley’s case under my personal justificated system, we can see that his actions are not at all morally permissible. He failed to treat the value of the money he stole as if it were just as vital to the Venezuelen people as it was for him personally. Rather than weigh the potential consequences of his actions against the benefits of them, he chose to act in a self-interested manner, and it resulted in his imprisonment, as well as suffering for untold numbers of hungry citizens in South America. He sought out consequences that would lead to personal gain and negative consequences for others, and showed no remorse for his actions, showing that he lacks strong integrity or personal accountability, again violating the tenets of my personal ethical theory. In all aspects, and subjected to analysis from varying moral perspectives, Bagley acted in a morally impermissible fashion, and should see consequences for it.

Action Plan

Bagley’s first moral misstep came when he lied about his guilt after first getting caught. Attempting to ride on reputation in the face of hard evidence made his trustworthiness in the public forum fall through the floor. Bagley should have come clean during his original indictment, and parlayed this confession into a deal where he could help to catch his co-conspirators. Ideally, admitting to laundering the money would have gotten him a lighter sentence and would have allowed him to be an aid to law enforcement in catching the people whose money he was actually laundering. From an external perspective, Bagley lied to protect a corrupt businessman and to attempt to keep a sum of 300,000 dollars, at the expense of a food supply project for the people of Venezuela. Faced with this reality, the professor should have sought to create the greatest good for the greatest number, take responsibility for his role, and reverse the circumstances he helped to facilitate. As it stands, Bagley should continue with his guilty plea, and seek to be held accountable for the crime he commited. Being in the unique position of essentially being the only employee of the guilty company, Bagley will most likely go to prison, and Bagley Consultants will go out of business, but if by some stroke of luck he happened to avoid prison, here is how the professor should reorient his business to atone for the crime and adapt to the new circumstances:

“Bagley Consultants, where we seek fair, honest, and fruitful solutions for all of our clients international needs™” (they didn’t have a mission statement, or even a website, so I’m hoping international needs covers the sort of work the company claimed to do) 

This mission statement covers the basics of what Bagley Consultants should seek to represent itself as following Bruce’s transgressions. The company should seek to remain fair to all parties involved in a negotiation, they should be truthful in the manner in which they conduct business, and they should seek profitable, beneficial solutions for the parties involved. In addition, Bagley consultants should seek to maintain meticulous personal accountability and integrity. Having been caught with his hand in the proverbial cookie jar, the Professor should take as many extra measures as possible to catalog his financial and business related dealings, and allow public access to them for any party that may have a vested interest in them. This includes potential clients, government officials, potential employers, any party that might have reason to be distrusting of the tactics Bagley has demonstrated over the course of the money laundering case. Employing this strategy will force Bagley to be completely honest and transparent about any of his methodology, as well as the services he provides, and will lead to increased levels of trust over time if he continues to operate within the law. This can be done through maintaining records of accounts and transactions, notes on meetings, any sort of information catalog that could be referenced if necessary. This sort of accountability would allow for some latitude in Bagley’s decision making and general actions, while keeping him aware of the circumstances he created.

In addition to assisting law enforcement in catching co-conspirators and reorganizing his business’s operational structure, Bagley should make a sincere and public apology to the people of Venezuela for his role in their ongoing battle with corruption. Doing this, as well as making a statement about the other actions he’s taking as a result of his conviction, would demonstrate how he’s seen the error of his ways and is seeking to both right his wrongs and perform better in the future. This attitude of honesty and humility should extend into whatever hiring, firing, or promotional methodology Bagley uses going forward; he should let employees know clearly and upfront how business is conducted, and why its being tracked and cataloged the way it is. He needs to make it clear through any sort of marketing or media material that he is aware of his mistakes and is working to reverse their effects. 

Having a history as one of the world’s foremost experts in Central and South American business and politics should afford Bagley plenty of future opportunities to perform his services under similar circumstances to the ones he must have found himself in when he first met with Alex Saab. What matters most going forward is how he alters his posture towards these sorts of situations, and that is best served by shifting his perspective and methods to be more focused on accountability and honesty, rather than personal profit. If he seeks the most benefit for his clients  within this new moral structure, this attitude towards his work will in turn lead to increased opportunities.

Joshuah Service

Works Cited

Driver, Julia. “The History of Utilitarianism.” Stanford Encyclopedia of Philosophy, Stanford University, 22 Sept. 2014, plato.stanford.edu/entries/utilitarianism-history/.

Farzan, Antonia. “He Was the Go-to Expert on Money Laundering. Now He's Been Charged with Laundering Money.” The Washington Post, WP Company, 19 Nov. 2019, www.washingtonpost.com/nation/2019/11/19/bruce-bagley-money-laundering-university-miami-expert/.

Gold, Michael. “Professor Who Is Corruption Expert Accused of Laundering $2.5 Million.” The New York Times, The New York Times, 18 Nov. 2019, www.nytimes.com/2019/11/18/nyregion/bruce-bagley-money-laundering-venezuela.html.

Romo, Vanessa. “U.S. Arrests Money-Laundering Expert For Laundering Money.” NPR, NPR, 19 Nov. 2019, www.npr.org/2019/11/19/780877837/u-s-arrests-money-laundering-expert-for-laundering-money.

Russell, Ty. “'I'm Feeling Fine. Not Guilty': UM Professor Bruce Bagley, Who Wrote Book On Drug Crime, Accused Of Money Laundering.” CBS Miami, CBS Miami, 18 Nov. 2019, miami.cbslocal.com/2019/11/18/um-professor-accused-of-laundering-over-2-million-faces-potential-tenure-in-federal-prison/.

Salazar, The Business Ethics Case Manual

Salazar, In class Presentations

Sky. “International Money Laundering Expert Arrested for Money Laundering.” Sky News, Sky, 19 Nov. 2019, news.sky.com/story/international-money-laundering-expert-arrested-for-money-laundering-11864982.

“University of Miami.” Bruce Bagley, 22 Feb. 2020, people.miami.edu/profile/bbagley@miami.edu.

Weaver, Jay. “UM Professor Plans to Plead Guilty to Money Laundering, New York Court Records Show.” Miamiherald, Miami Herald, 12 Mar. 2020, www.miamiherald.com/news/local/article241129956.html.

York, Associated Press in New. “Professor Who Is Expert on Corruption Charged with Laundering Money.” The Guardian, Guardian News and Media, 19 Nov. 2019, www.theguardian.com/us-news/2019/nov/19/professor-bruce-bagley-expert--corruption-charged-laundering-money-florida.