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International Aspects of Engineering Ethics Examples of ethical issues in some other cultures and countries…

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1 International Aspects of Engineering Ethics Examples of ethical issues in some other cultures and countries…

2 The fuzzy line between gifts and bribes “Grease” payments and US law

3 Bribery (and Extortion)  Bribery: A gift or payment offered or solicited in exchange for some other action, when the action in question is not one to which the recipient is entitled.  Extortion: A payment demanded in exchange for prevention of some unwarranted harm that otherwise would not occur.

4 Bribery and the law  Federal (1977 Foreign Corrupt Practices Act) and state laws make offering or soliciting a bribe a criminal offense.

5 “Grease” payments  A gift or payment solicited from an applicant by an official to expedite the handling of a request for a service or action to which the applicant is generally entitled.  Grease payments are a form of petty extortion, and common practice in some countries.

6 “Grease” payments and US law  US law (FCPA) does not prohibit US engineers working in foreign countries from making such payments for “routine governmental action” for permits, etc.  However, any payment to other private entities or any payment with the intention of gaining new business is illegal under the FCPA.

7 Gifts and Japanese business customs  Gift giving has long been a tradition in Japanese business.  Shinto, Japan’s main religion, is built on ritual and ceremony, not a moral basis.  There is a fuzzy line between gift giving, commissions, “introduction fees”, which are all part of traditional Japanese business practices, and bribery.

8 A case of bribery in Japan  In 1972 All Nippon Airline (ANA) decided to purchase 21 Lockheed Tristar L-1011 airliners for about $105 million.  This surprised most industry observers who had expected ANA to select the DC-10 to replace their aging Boeing 747 fleet, because of close business ties between ANA and McDonnell Douglas.  In 1976, former Prime Minister Kakuei Tanaka was arrested for alleged involvement in the multi- million dollar Lockheed Aircraft bribery scandal.

9 Bribery in Japan…  It was discovered that Lockheed had paid 2.4 billion yen to win the ANA contract.  500 million yen went to Prime Minister Tanaka, 160 million yen to ANA officials, and the balance to various other political leaders.  Tanaka was found guilty of accepting a bribe, but he delayed by appealing the verdict and stayed out of prison until his death in 1993.  (In 1977 the US passed the FCPA)  (Case from Joseph M. Katz Graduate School of Business webpage, Univ. of Chicago)

10 Product Liability issues in Japan  Before Japan’s 1995 Product Liability Law, compensation for damages caused by defective products was usually settled through direct negotiation between the victim and the maker, resulting in a discrete settlement without making the facts about the problem public.  Before this law, injured parties had to prove fault by the manufacturer. For various reasons, it was very difficult for consumers to prevail in court. Thus, only about 160 product liability lawsuits were filed in the 50 years prior to the adoption of the 1995 law.

11 Product Liability issues in Japan  Japan’s new law is based on European laws rather than the more liberal US model.  The law defines defects only generally as "a lack of safety normally expected for a product".  Like US law, it is a defense if the manufacturer can show that, at the time of product delivery, the hazard could not be predicted with then-current technology.  The Japanese law requires the cause of the failure to be established by a government research institution.

12 A comparison of Japanese and American tort law  Conflicts: Americans seek resolution in courts, whereas Japanese prefer negotiation.  Sanctions: Americans strive to recover material loss, whereas Japanese seek to recover emotional loss.  Justice: Americans are concerned with universal justice whereas Japanese try to attain harmony inside the group.  Bridging the Communication Gap : How IBM Succeeded in Japan, Jack Seward, Howard Van Zandt : Japan : The Hungry Guest, Japan : Lotus Press, 1985, p 239

13 Mexico and piracy of intellectual property  The U.S. music, film, and software industries estimate that they lose $485 million annually to piracy in Mexico, the third largest producer of pirated intellectual property.  In one year, Mexico City pirates sold 66 million music cassettes compared with only 30 million legal sales.  Piracy is viewed as a means of employment for a large portion of a population which is already suffering from unemployment.  Preston, Julia, "As Piracy Grows in Mexico, U.S. Companies Shout Foul," New York Times, April 20, 1996, pp A1.

14 Cheap labor and exploitation  Maquiladoras are Mexican plants, owned or directly employed by a U.S. company, which assemble goods for sale in the U.S. GM, Ford, AT&T, General Electric, and Johnson & Johnson are just some of the well-known US companies that employ thousands of workers in the Mexican maquiladora industry at only $35 to $55 per week.  The Mexican government does not enforce labor laws on foreign companies, and foreign companies are much harder for Mexican citizens to take legal action against.  U.S. companies in Mexico are bound only by their own ethical codes, and not necessarily by legal codes.  Is this ethical or is it exploitation?  Peters, Susanna, "Labor Law for the Maquiladoras: Choosing between Workers' Rights and Foreign Investment," Comparative Labor Law Journal, Vol. II, Number 12, Winter 1990.

15 Environmental issues in Mexico--freon  There are many examples where Mexico and the US are in conflict over environmental issues.  Industrialized countries have agreed to end production of freon refrigerants. The US acted in 1996 to restrict manufacture of freon. Developing countries, including Mexico, are not restricted from manufacturing or using this product, and this situation has created problems in the US.  A black market exists in the US for imported freon refrigerants, which sell for over $30/lb here, now. The retail price of this product was about $1/lb before the 1990 ban. Profits can be higher than for cocaine smuggling.  “You name it, they’ve tried it,” says Marc Gwaltney, a U.S. Customs official in Los Angeles. He cites a taco stand in Tijuana, Mexico. “In addition to a taco, you could buy a one-pound can of Freon, put it in your pocket, and walk back across the border.”  A scheme to divert a 72,000 lb shipment of freon from Russia to Mexico was thwarted in 1995.

16 Environmental issues in Mexico--water  Most residents in the U.S. have abundant access to water. An exception is along both sides of the US-Mexico border. Even there, some corporations are privileged with priority access to water.  A maquiladora in Piedras Negras produces over 21,000 pairs of pants daily, using a huge quantity of water 10 enormous washing machines in the process used to make the fabric wrinkle-free.  At the same time, nearby colonia residents struggle to have sufficient potable water for their basic cooking and consumption.  I. Coronado and G. Kourous, “Water Conflict in the Borderlands”Borderlines 57, vol. 7 no. 6 1999.

17 Environmental issues in Mexico--wildlife  “MEXICO CITY, Mexico, March 3, 2000 (ENS) - After a five year battle by environmentalists, the Mexican government and Mitsubishi Corp. announced Thursday they have canceled plans to build the world’s largest salt plant in a gray whale breeding lagoon. The project, situated in the heart of the last pristine breeding grounds for the California gray whale, had drawn opposition from scientists, Hollywood stars and government officials around the world…”  Mitsubishi planned a 116 sq.-mile salt plant that threatened calving waters for the recovering Pacific gray whale population.  A fight led by environmentalists (International Fund for Animal Welfare) was successful in mobilizing public opposition, and convincing the Mexican government and Mitsubishi to terminate the project.

18 German Business Culture  Germans tend to take themselves very seriously. They do not tend to joke during meetings or presentations.  Presentations should be well thought out, carefully researched, thorough and orderly. German businessmen like facts, more facts, examples, and a summary of all main points at the end. They do accept new information, but are very persevering and persistent when assessing new situations and ideas.

19 German business culture, cont’d…  Many Germans tend to be more frank than Americans. They have a forceful manner of speaking, but tend to use restrained gestures. They can sometimes be seen by others as insensitive and pushy.  Although they dislike personal confrontation, they do not hesitate to point out if a foreigner does not meet acceptable behavior.  Since German society has not been very mobile in the past, many are not used to dealing with strangers. This is slowly changing, however, as they too become more global and interact more with foreigners.  To a greater extent than Americans, they are typically well informed as to what is happening across Europe and in the rest of the world.  They have a strong sense of privacy and seldom invite people to their homes.

20 German business culture, cont’d…  They do not like questions about family or their personal life, and they tend to avoid personal relationships in business. They are often uncomfortable with "small talk" and like to get right down to business.  Their personal space tends to be a bit larger than Americans and they tend to dislike touching, but do use direct eye contact.  Germans dislike boasting and believe in cooperation, not competition.  Reliability, loyalty and the integrity of the company are very important.  Germans are meticulous about appointments. They are made very far in advance and everything must be planned out. Punctuality is very important. Do not be late! Meetings will start on time and end on time even if its aims are not accomplished. Time consciousness is important, as is adhering to an agreed-upon schedule.

21 German etiquette--- some do’s and don’ts…  Use formal greetings and a firm handshake.  Never use first names unless invited to do so.  Managers tend to keep office doors closed.  Top managers dress more conservatively than middle- management and nonprofessionals.  Waving the hand back and forth means "no".  To signal the number "one," hold thumb upright.  Gum-chewing is considered impolite for professionals.  Putting your hands in your pocket while talking is impolite.  The OK gesture is considered rude among the more cultured.

22 Germany—bribes and kickbacks  Problems with bribery are not uncommon in the German construction industry, where competitive bidding from both the public and private sector takes place for building contracts. An anti-corruption squad in the state of Hesse uncovered 1,500 cases of public officials on the take between 1987 and 1995. The anti-corruption squad estimated the average bribe added 3% to 5% to every building contract. Kickbacks, bribes, and other schemes contributed to an estimated additional cost of 20% to 30% to projects, costing taxpayers billions per year. Auditors complain that they have no mandate to look for improper expenditures, and the German tax code actually allows deductions for bribes.

23 France—bribes and kickbacks  The problem of bribes and kickbacks in France is not uncommon. For a construction firm to secure a contract often requires donations to local political parties, from which a generous fraction is skimmed by the local political officials.

24 France—bribes and kickbacks  Not just companies are involved. According to a French secret service report, the official export credit agency of France paid around $2 billion in bribes to foreign purchasers of “defence equipment” in 1994.

25 The Engineering “profession” in France?  Because of a lack of organization of the French engineering profession, until 1987“…there was no code of ethics for engineers in France. For cultural and historical reasons, the question of being or not being a profession is not an issue in France. Therefore, professional ethics have not been developed as in English-speaking countries.”  Except for a 1934 law protecting the term “Graduate Engineer”, the practice of engineering is not protected or regulated.  Ironically, “…France is the one country in the world where the social status conferred to the engineer is the highest.”  Christelle Didier, Centre d’Ethique Contemporaine. Université Catholique de Lille

26 Canadian Business Ethics  Canadians are averse to any appearance of impropriety.  Cronyism and Nepotism are not favorably looked upon in Canada.  Bribery is not tolerated in Canada.  Generally speaking, Canadians are somewhat suspicious and disapproving of the wealthy.

27 United Kingdom  Some building regulations include a "deemed to satisfy" provision; work performed in conformity with the engineers’ codes of practice automatically satisfies statutory building regulations.  In the US, this is not the case, and simply satisfying all regulations will not protect a designer against a claim, when the design is not consistent with engineering standards of practice.  Vivian Weil, “Prospects for International Standards”, the Online Ethics Center for Engineering and Science

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