Japanese Bribe Case Study

THE CASE OF THE JAPANESE subvert I. BACKGROUND OF THE CASE 1976 Former Nipponese Prime curate Kakuei Tanaka was arrested on charges of winning bribes amounting to $1. 8 Million Dollars from Lockheed Aircraft confederation. Tanakas repository and some(prenominal) other politics awayicials were arrested unitedly with source Prime Minister Tanaka. Takeo Miki was ousted from commission on suspicion of concealing Tanakas dealings with Lockheed Aircraft political party. In Holland, Prince Bernhard resigned from 300 political science dumbfounds held for allegedly having stock $1. Million in bribes from Lockheed Aircraft Company in corporation with the leverage of 138 F-104 Starfighter Jets. In Italy, Giovanni Leone, the Italian President in 1970 to dragher with Prime Ministers Aldo Moro and Mariano Rumor were to a fault accused of accepting bribes from Lockheed in connection with the purchase of $100 Million outlay of aircraft during the late 1960s. S dropdinavia, South Af rica, Turkey, Greece and Nigeria were also among the 15 countries in which Lockheed admitted to having handed out payments and that at least $202 Million in commissions were make by the political infracty since 1970.Lockheed started using bribes since 1958 in sight to outsell Grumman Aircraft, a competitor, for the Nipponese Air Force become. As per his testimony, William Findley of Arthur preadolescent & Co. the auditors for Lockheed, engaged the services of Yoshio Kodama to act as middleman between Lockheed and the lacquerese regime in order to secure the government contract for the purchase of military aircrafts. several(prenominal) bribes were make by the union to date the contract in its favour.In 1972, Lockheed rehired Kodama as adviser to sell its aircraft to Japan. Lockheed was in dire hire to sell its aircraft owing to a serial of pecuniary disasters, cost overruns, pushing the confederacy to the brink of bankruptcy in 1970. A controversial loan fasten award ed the club amounting to $250 Million helped the aircraft social club in distaste the bankruptcy. Lockheed President, Mr. Carl Kotchian anxiously anticipated making the sales since the company has non been making its project sales of aircraft worldwide.Mr. Kotchian believed that Japan is a largely-untapped food market and if Lockheed penetrates the Japanese market, the company can interpret $400 Million and thus, improve the companys financial status and master the jobs of thousands of the firms employees. Kodama eventually succeeded in engineering a contract for Lockheed with the either(prenominal) Nippon Airways, beating McDonnell Douglas, its active competitor. For the sale, Kodama askes and received $9 Million as pay-off silver from 1972 to 1975.Allegedly, a good deal of the silver went to then Prime Minister Tanaka and other government officials for interceding with All Nippon Airways on behalf of Lockheed Aircraft Company. Mr. Kotchian admitted full knowledge abou t where the money was going and that he was persuaded by the agency that in making the payoff, Lockheed was sure to get the contract with All Nippon Airways. Subsequently, Lockheed netted $1. 3 Billion from the contract. Mr.Kotchian defended the payoff as in keeping with Japanese telephone line practices, significance that I order to do lineage in Japan, one has to make payoffs, further, Kotchian reiterated that the exercise did non violate any American Laws and that Lockheed requisiteed to adjust to the existing carrying into action musical arrangements in order to be matched and guarantee the jobs of thousands of its employees, as well as learn move profitability. Otherwise, the company would be bankrupt and thousands will lose their jobs. In August 1975, after investigations conducted by the U. S.Government, Lockheed admitted to making $22 Million in hole-and-corner(a) payoffs and in consequent Senate investigations in 1976, the deals were made public, causing Japan to cancel the jillion dollar contract with Lockheed. In 1979, Lockheed pleaded red-handed to concealing the bribes by writing them off as merchandising costs. Lockheed was not charged with bribery since the law took rig only in 1978. Mr. Kotchian was not indicted only was forced to resign from his office patch in Japan, Kodama was arrested together with Tanaka. II. STATEMENT OF THE problem 1. What were the moral and heavy implications of the actions of the Lockheed management? . What is the belief of the transaction with respect to fair tilt in business? III. AREAS OF CONSIDERATION 1. The need to ensure the profitability of the company. 2. The need to ensure the welfare and well-being of thousands of employees of the company. 3. The ethical and legal standpoint that binds entities in the conduct of their business. IV. abridgment OF THE CASE The case revolves around several issues that confront todays ripe business practice/s basically, every company aspires to achieve m ove ingathering and profitability as its major policy.Secondly, the company as an organization is augmented and represent by people who are playacting each of their respective tasks in order to achieve the goals and objectives of the firm. In the case of Lockheed Aircraft Company, in that respect is a dire need to tantalise from near bankruptcy and the means by which it can be achieved is to get hope of the contracts for the company to build and supply aircrafts to their mean buyers. The Japanese market offers a strength target for the aircraft company, much as the other companies are likewise aware of.The airline and aircraft industry is a highly combative industry. Each company needs to update its existing technology, requiring continuous investments in retooling and research. such an activity requires continuous flow of currency considering the immense requirement for funding the expenditures. Should the company let up on continually improving its product and technolo gy, the result would be disastrous for the company since competitors could easily beguile the company and its market. All of these predicaments compounded the financial woes of Lockheed Aircraft Company during the 70s.It is under this bonds that management was forced to find a means by which the company can stay afloat, make profit and keep going its large workforce. The decision to make maestro means to ensure sales was at the moment, imperative for management. Using the argument that during those days, a business sub- kitchen-gardening existed in Japan, that is, that the company inevitable to abide by the functioning form to get the All Nippon Air Contract. In simple terms, payoffs are needed to relieve the sale of the companys aircraft to the Japanese airline company.Ethically, a payoff to further a contract at the get down of other competitors deviates from existing moral set that should govern the conduct of business. However, assuming that a system of patronage exis ted in Japan during the time such a system constrained the management of Lockheed to use incomparable means to go through bring as conduits to their intended client in order to seal the contract. Prior to investigations conducted and the subsequent admission of the company regarding the payoffs, landing the contract with All NipponAirways, did not only guarantee profits for Lockheed but also, a continuing support for its thousands of employees. V. CONCLUSION Based on the foregoing, it is established that Lockheed acted within the sphere of embodied culture prevalent of the times. From a business mans point of view, the payoffs could and then be classified as marketing costs since from the point of view of the company, the money that was used was partly in procession of its product, by todays standards. However, the crux of the problem was that those who received the payoffs were government officials who had simplicity of the affairs of their country.As such, these officials we re in a position to exert overweening find on the airline company to purchase the aircraft from Lockheed. It is this undue influence that made the act unethical and from a legal standpoint, criminal in nature since, the resulting transaction is now a case of bribery on the part of Lockheed and extortion on the part of the government officials who received the payoff. As for Mr. Kotchian, I believe that as CEO of Lockheed Aircraft Company, he acted in the beaver following of the company and for everyone who are instantly involved with the company (employees, technicians, management, etc. As CEO, he is tasked with ensuring a profitable accusation for the company and provide a continuing means of livelihood for all those active by the company. Likewise, it is his duty to ensure the competitiveness of the company. VI. RECOMMENDATION Despite the arguments of utilitarianism in this case, wherein the interest of the majority is deemed primordial over the interests of the few, I/We believe that Mr. Kotchian, in behalf of the management of Lockheed Aircraft Company acted within the bounds of bodied culture prevalent of the time.Arguably, using ethics and pietism as a gauge, I/We encompass that Lockheed and Mr. Kotchian were guilty of below the belt competition as they undermined their competitors through the use undue influence instead of marketing a superior product. Although the immediate results could have benefitted all those come to within the sphere of the company, the means by which it was achieved were tainted with fraud and the wilful spin of facts (reporting payoffs as marketing costs), hence, providing the other stakeholders such as its investors and stockholders a false representation of the financial affairs of the company.Although, bribery was not yet classified as corporate crime prior to 1978, the act of Lockheed Aircraft Company and Mr. Kotchian should be regarded as unethical, immoral and under-the-counter as well as promoting unfair co mpetition with respect to other aircraft manufacturers in the industry. The decision of the Board of Directors to force the resignation of Mr. Kotchian as CEO of Lockheed Aircraft Company is deemed victorian herein and the subsequent arrest of Mr. Kodama and former Prime Minister Tanaka is likewise usurp under the circumstances.