ASSIGNMENT THINKING AND MANAGING ETHICALLY

MASTER OF BUSINESS ADMINISTRATION AWARDED BY NOTTINGHAM TRENT UNIVERSITY

ASSIGNMENT SUBMISSION FORM

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Name of Student: DONALD WONG KIN SAN Student Registration Number: KL419 Module Name: TME THINKING AND MANAGING ETHICALLY Module Number: WEC-MBA-08-0106 Assignment Title: AN ETHICAL ASSESSMENT OF UNOCAL Submission Due Date: 17 JUNE 2007 Students Electronic Signature: Donald Wong

Plagiarism is to be treated seriously. Students caught plagiarizing, can be expelled from the programme.
Assignment Form MBA Jan04

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Contents
Executive Summary 3

1.0

Introduction . 4

2.0

Unocal and the Court of Ethics .. 6

3.0

Unocals Moral Responsibility for the Karens ......... 18

4.0

The Tussle between Engagement and Isolation ............ 21

5.0

Conclusion ......... 25

6.0

References ......... 27

Appendices 1. 2. Model of Ethical Decision Making ........... 31 Content Variables Factors and Forces that Influence a Companys Decision Making .. 32

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Executive Summary
Unocal was prosecuted at the court of law, and statement upon statement made by the trial judges gave a good and reasonable indication of how the case would have been decided. It would be reasonable to deduce that Unocal would have been found guilty, and ordered to make hefty compensations, and undertake restitutions which will never be known. It chose instead to make a settlement to the plaintiffs out of court.

In this paper, we subjected Unocal to the court of ethics. We appraised Unocals actions in Myanmar using four theories of ethics. They are the ethical theories of Utilitarianism, Rights, Justice, and Care. Each theory was first clarified and its principles were used to evaluate Unocals actions. All four theories unanimously found Unocal guilty of moral irresponsibility which rendered their deeds in Myanmar unjustified. We have therefore found a positive correlation between legality and ethics in our paper.

Having clarified the discourse of the ethical theories, and using them in our analysis and thinking, we articulated a verdict that Unocal was morally responsible for the atrocities committed on the minority Karens. In the final part, we discussed the moral tussle between choosing to engage or disengage, and proposed our views on why we thought Unocal was mistaken in adopting the premise that engagement is better than isolation in dealing with rogue regimes.

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1.0

Introduction

At first it seems oxymoron that an oil and gas company should ask Profits and Principles is there a Choice?1 After all we know that the social responsibility of every business is to use its resources to increase its profits, and to maximize shareholder value (Friedman, 1970, p.125 cited in Laszlo and Nash, 2007; Gallagher, 2005). However the recent downfalls of corporate icons such as Arthur Andersen, Barings Bank, Enron, WorldCom appear to be prima facie evidence that increased attention to business ethics is warranted. Suddenly the tagline from Shells commercial does not seem nave anymore. Instead it asks us the same poignant question when we face challenging ethical dilemmas when we wrestle with our conscience to decide between right and wrong or good and evil (Velasquez, 2006).

What is ethics? The body of literature offers many varying definitions. We prefer Velasquez (2006, p. 10) who defined ethics as the discipline that examines ones moral standards or that of a society. Takala (2006, p. 1) saw ethics from Aristotles proposition of virtue, and posited an interesting definition: ethics means pursuing the good life.

Given that understanding, defining business ethics becomes easy. It is simply a type of applied ethics a study and determination of moral right and wrong as applied to business organisations (Velasquez, 2006). It can also be understood as the pursuit of a good business life (Takala, 2006).

Contrary to descriptive study which makes no attempt at reaching conclusions, an ethicist employs normative study to conclude if an action is good or bad or right and wrong2. Normative study tries to deliver moral verdicts using ethical theories on three different kinds of issues: systemic, corporate, and individual (Velasquez, 2006).

Shells advertisement in the National Geographic magazine, May 1999 issue. The differences between these two schools of taught can be better understood by clarifying the approaches they employ. While descriptive tells us how the world is, normative claims of how the world should be. Thus something which is legal may not be ethical. However what is ethical is usually and almost always legal (Doost, 2005).
2

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Ethical theories are customarily divided into two groups, usually called teleogical and deontological (Boatright, 2007). Although both groups have each spawned many theories, the most prominent of a teleogical and deontological theory are utilitarianism and the ethical theory of Immanuel Kant respectively (Boatright, 2007; Takala, 2006; Doost 2005; Sintonen and Takala, 2002; OHara, 1998). Takala (2006) also says that utilitarian the ethics of utility, and deontology the ethics of duty are the ethical grounds most commonly used to reflect on ethical issues.

In the next section, we will use utilitarianism and the three prominent schools of deontology rights, justice and caring to assess if Unocals actions in Myanmar were morally right and therefore justified.

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2.0

Unocal and the Court of Ethics

The life which is not examined is not worth living (Plato).

Global companies, operating in foreign host countries with dissimilar cultures and laws, political institutions and ideologies, commercial practices and customs, and levels of economic development, are confronted with different ethical standards with which they gauge their conduct and ascertain their moral responsibilities.

It is tempting in such circumstances to adopt the theory of ethical relativism under which something can be judged to be morally good if, in one particular society, it complies with the prevailing moral standards, but wrong if it does not and to declare that the proposed practice or activity is morally acceptable, because is conforms with the moral standards or practices of the particular society (Silbiger, 1999).

It may be equally tempting to insulate or disassociate itself from questionable conduct of its host country partner, so that repercussions are muted or avoided (Schoen et al., 2005). Highly profiled companies like ChevronTexaco, ExxonMobil, Nike, Shell, and Unocal have all treaded the same path of escape when they faced liability for the misconduct of third-world governments (Olsen, 2002; Schwartz, 2000).

Unocal knew for a fact that their foray into Myanmar would entail violations of human rights including forced labour, murder, rape and torture perpetrated by the Myanmar military in developing a gas pipeline, and yet it decided to proceed anyway to engage with the ruling junta (EarthRights International, 2005; Eviatar, 2005; Holliday, 2005; Rosencranz and Louk, 2005; Schoen et al., 2005). The US Ninth Circuit Court of Appeals in its landmark decision to allow foreign nationals to sue American companies for specific and egregious violations of human rights committed on foreign soil through the use of the Alien Tort Claims Act, had ascertained that Unocal had indeed committed the actus reus (a wrongful deed) and mens rea (a wrongful intention) of aiding and abetting human rights law violations in Myanmar (Rosencranz and Louk, 2005; Schoen et al., 2005).

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Besides jus cogens3 violations, Olsen (2002) contended that Unocal was responsible for causing the destruction of wetlands and mangrove ecosystems of the Yadana region as a result of its pipeline construction.

Unocal was found wrong by the court of law (though a sentence was never meted). We will now subject it to the court of ethics where the judges are Utilitarianism, Rights, Justice and Care.

2.1

Utilitarianism It focuses on the value of the consequences or impacts, and hence it is also referred to as the Consequential approach (Doost, 2005; Kaptein and Wempe, 2002). In the words of its founder, Jeremy Bentham, it approves or disapproves every action whatsoever on the basis of the tendency it has to augment or diminish the happiness of the parties whose interests are at stake. The choice is made in accordance with the greatest benefit for the greatest number of stakeholders at the lowest possible cost (Velasquez, 2006; Doost, 2005, Sintonen and Takala, 2002).

Utilitarian ethics claims that material utility and hedonistic pleasure are the only intrinsic values to a person. As a theory of personal morality and public choice, it expounds (just as Kantianism does) the notion that morality rests on universalisable, objective, and rational rules of decision making (OHara, 1998).

It is the most pervasive ethics theory, and its influence prevails till today. Takala (2006) asserts that utilitarianism is the ideological basis for modern economics, and serves to guide the government of many

Jus cogens means violations of norms of international law that are binding on nations even if they do not agree to them. Such atrocities include torture, forced labour, murder, rape and slavery. The judges in Unocals case found the company guilty of jus cogens violations on the Myanmar people (Schoen et al. 2005).

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countries in policy-making. The concept of the rational economic man was plausibly founded on utilitarianism. Velasquez (2006) suggests that modern management techniques such as cost-benefit analysis and cost-efficiency were based on utilitarianism. It is so ubiquitous that Nantel and Weeks (1996) argue that the definition and practice of marketing are almost entirely utilitarian4 (and ironically marketing is often deemed controversial under the light of ethics).

As OHara (1998) puts it, only economic, social, and ecological functions that promotes sustainable economic growth are taken into account in utilitarian thinking and this appeared to have been Unocals prescription of corporate ethics.

Figure 1: Framework of utilitarian ethics Source: OHara (1998), p. 49

The Utilitarian judge will now ascertain Unocal, and dispense judgement based on the decision of a panel of jury comprising the six theses of utilitarianism given in Boatright (2007).

The authors were referring to Kotler and Turners (1981) definition of marketing: Marketing is

human activity directed at satisfying needs and wants through exchange process.

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Consequentialism

When we try to calculate the amount of

The rightness of actions is determined utility (i.e. the balance of pleasure over solely by the consequences. pain) for each individual affected by Unocals actions (including the company itself), and that for the whole society, we see the scale tilting towards pain which clearly outweighs pleasure.

Hedonism

This method of assessment is very

Only pleasure is ultimately good and pain arbitrary. There is hardly any action is absent. where pain is absent. Instead there is almost always an opportunity cost for every action taken. In Unocals case, the revenue from oil (typifying pleasure) was transacted with the blood (typifying pain) of the local people.

Maximalism

Understood arithmetically, action A is

A right action is the one that has the justified if A > (B+C+D+E+). In greatest amount of good consequences performing this assessment, it is

possible when the bad consequences are important that we be dispassionate lest also considered. we be swayed. Because it is arbitrary, this thesis could produce greater utility for Unocal if it so elects to magnify the good, and ignore the bad variables. A bad action could thus be vindicated by ignoring consequences. foreseeable negative

Universalism

While this requires people to think in

The pleasure and pain of everyone alike holistic terms, it is not useful in gauging must be considered. the level of utility in the pleasure-pain

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equilibrium.

Act-Utilitarianism (AU)

This resembles maximalism but worded

An action is right if and only if it more strongly. It is also clearer and thus a produces the greatest balance of pleasure better aid for ethical decision making. (benefit) over pain (cost) for everyone. And like consequentalism, AU would dictate an inequilibrium when there is a greater imbalance of pain over pleasure as in the context of Unocal.

Rule- Utilitarianism (RU)

In terms of specificity, clarity, and

An action is right if and only if it practical for use, RU is superior to AU. conforms to a set of rules the general The result of utility calculation using RU acceptance of which would produce the is similar to those of AU and

greatest balance of pleasure over pain for consequentalism. everyone.

The jury would deliver a 3-1 majority decision with 2 abstaining. The utilitarian judge would thus pronounce a verdict that Unocals deeds were wrong and therefore unjustified.

2.2

Rights Rights play an important role in business ethics, and indeed, in virtually all moral issues. It holds that decisions must be consistent with fundamental rights and privileges, such as the right to privacy, freedom of conscience, and property ownership (Boatright, 2007; Velasquez, 2006; Richter and Buttery, 2002). Consequently rights may be understood as entitlements (Boatright, 2007; Velasquez, 2006).

There are several different types of rights.

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2.2.1

Legal Rights These are rights recognised and enforced as part of a legal system.

2.2.2

Moral Rights Unlike legal rights, moral rights are not limited to a particular jurisdiction. They are the birthright of every person, and have universal value in that everyone irrespective of colour, gender, and nationality possesses in equal amount by simply being human (Velasquez, 2006).

2.2.3

Specific Rights These are specific to identifiable individuals. A major source of specific rights is contracts which bind parties to mutual rights and duties. In practice, special rights can cover people group. The Malays in Malaysia for example, enjoy special economic rights under a social contract created just before the Independence.

2.2.4

General Rights These are accorded to humanity in general (albeit with a Western slant). They include right of free speech, right to safety and protection, right for education, right to work, right to free pursuit of interests, etc. These rights are universal, unconditional (or inalienable), generally autonomous, and are for the large part, enshrined in the constitution of most democratic countries.

The two other distinguishable kinds of rights which we will not delve into are Negative and Positive Rights.

Rights depart from utilitarianism in several ways. Rights require morality from an individuals perspective whilst utilitarian holds the view of a society at large, and promotes its aggregate utility. John

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Locke and his contemporary Immanuel Kant are the major proponents of the ethical theory of rights.

The Kantian ethics is based on a moral principle named categorical imperative everyone should be treated as a free person equal to everyone else, and everyone has the correlative duty to treat others in this way (Velasquez, 2006; Trevino and Nelson, 2004). Kant borrows heavily from the Golden Rule in Christian thought do to others as you would want them to do to you, in expounding his two criteria for determining moral right and wrong universability and reversibility.

In stark contract to the utilitarian principle, Kantian theory focuses on motives instead of the consequences of external actions. He denounces treating people only as means. He argues that people should instead and always be treated as ends (Velasquez, 2006; Trevino and Nelson, 2004; Kaptein and Wempe, 2002).

OHara (1998) has put forward a framework for the ethics of rights (and also justice) that bears stark contrast with the utilitarian ethics.

Figure 2: Framework of rights and justice (Kantian) ethics Source: OHara (1998), p. 53

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The Rights judge will now deliver its judgement based on a jury that consists of the two criteria, and one maxim given in Velasquez (2006).

Universability

Kantian tradition would have Unocal act

Ones reasons for acting must be reasons the way the vast majority would to that everyone could act on at least in abstain from indulging in activities that principle. would violate human rights.

Reversibility

The companys action was ethically

Ones reasons for acting must be reasons irreversible it would have neither that he or she would be willing to have subjected itself (or the American people) others use, even as a basis of how they to any foreign colonisation nor any of the treat him or her. atrocities that were inflicted on the Karens.

Maxim

Unocal used the second part of this

Never use people merely as means but maxim to argue that their project had always respect and develop their ability benefited the locals by improving their to choose for themselves. standard of living. They have however craftily sidestepped the first part of the maxim never use others as a means to advance ones purpose. Their defence was therefore hollow.

The criteria and maxim of rights would therefore judge Unocal guilty of moral misgivings, and their deeds unjustified.

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2.3

Justice Aristotle, the most prominent advocate of the classical ethics theory of justice proposed three forms of justice (Boatright, 2007). 2.3.1 Distributive justice, which deals with the distribution of benefits and burdens; 2.3.2 Compensatory justice, which is a matter of compensating persons for wrongs done to them; and 2.3.3 Retributive justice, which involves the punishment of wrongdoers.

Among the three kinds of justice, distributive is comparative while compensatory and retributive are both non-comparative. Distributive justice is comparative it considers not the absolute amount of benefit and burdens of each person but each persons amount relative to that of others. Conversely the non-comparative determines the amount of compensation owed to the victim or the punishment due to a crime based on the features of each case, rather than a comparison with other cases (Boatright, 2007; Velasquez, 2006).

Decisions and behaviours are judged by their consistency with an equitable and impartial distribution of benefits and costs among individuals and groups. John Rawls, famed for his egalitarian theory of justice as equality and fairness, postulated that social and economic inequalities are permissible and are compatible with justice provided that opportunities are fair and open for all to gain access to them, and that the least advantaged must have a fair slice of the benefits (Boatright, 2007; Velasquez, 2006; Kaptein and Wempe, 2002; Richter and Buttery, 2002). His proposition spawned modern concepts such as the difference principle (in every distribution there is a worst-off person), and the modern mantra of equal opportunity.

Justice will now pronounce its judgement based on a jury comprising the four criteria discussed above.

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Distributive justice The distribution of benefits and burdens.

Unocal and Totals investment in the Yadana field had only benefited people in that area, and the ruling military junta (Htay, 2005; Schoen et al., 2005). The rest of Myanmar continue to suffer the consequences of a degraded environment, and expanded political oppression

(Carter, 2004). Clearly the principle of distributive violated. justice was flagrantly

Compensatory justice

The plaintiffs (villagers i.e. Doe) in Doe

Compensating persons for wrongs done v. Unocal were compensated by the to them. defendant (Unocal) in an out-of-court settlement (Eviatar, 2005; Rosencranz and Louk, 2005). Hence compensatory justice was served albeit not by a court of law.

Retributive justice Punishment of wrongdoers.

As the Doe v. Unocal case was ordered to be reheard en banc, a sentence was not pronounced, and thus, the perpetrators were not punished (Rosencranz and Louk, 2005).

Egalitarian justice

Forced labour, arbitrary arrests, murder,

The basic liberty of every person must be rape, etc. were among the atrocities protected from invasion by others, and committed by the Unocal-Total-junta must be equal to those of others. collusion. Egalitarian justice would

denounce the deplorable action of Unocal to its eternal shame.

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The court of Justice would therefore find it straightforward to arrive at a decision to pronounce Unocal guilty of breaching all four theories of justice.

2.4

Care Our literature review shows that Velasquez (2006) and OHara (1998) are the only proponents of the ethical theory of care. Care places emphasis on caring for the concrete well-being of people close to us (Velasquez, 2006). It was founded on Carol Gilligans research on Kohlbergs stages of moral development.

According to OHara (1998), care brings the devalued life world of women, ethnic minorities and marginalised groups in society to attention, and reevaluates it. She also argues that reciprocity, mutuality, and relationality are at the centre of a care-based ethics. Consequently the invisible connections of human dependence on the sustaining function of families, the subsistence sector, and ecosystems become visible.

The ethics of care therefore advocates the sustainable interdependence between human beings and the environment, and promotes the need to conserve its symbiotic relationship the yin and yang for present and future generations.

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Figure 3: Framework of the ethics of care Source: OHara (1998), p. 57

When we appraise Unocal from the perspective of care, we can clearly see that the company had negated its duty to society and the environment. By turning a blind eye to the sufferings of the locals (pain) to achieve profit goals (utility/pleasure), it also jeopardised the harmony between the land and its inhabitants. The judge of care would then declare Unocal wrong, and its actions unjustified.

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3.0

Unocals Moral Responsibility for the Karens

Myanmar, then Burma has been ruled by a fraternity of military elitists for 45 years since a March 1962 coup. It has since brutally suppressed every pro-democracy movement. In May 1990, the junta ignored a nationwide general election that gave a landslide victory to Aung San Suu Kyis National League for Democracy, and has since 1991 to this very day, consigned the Nobel peace laureate to house arrest.

According to the 1983 census, the Karens constitute only 6.2 percent of the whole Myanmar population. Together with the Karenni and the Shan, the Karens are the most severely marginalised, discriminated, and ostracised ethnic groups by the ruling junta, and consequently they received the worst forms of treatments (Htay, 2005). The SLORC, whom Unocal partnered, adopted the policy of draining the ocean so that the fish cannot swim in quelling any form of armed resistance. It simply means undermining the opposition by attacking the civilian population until it can no longer bear to support the opposition (Htay, 2005, p.45). Egregious atrocities, murders, forced labour, and human rights violations of all kinds and magnitude have been committed by the trigger-and-torture-happy SLORC.

Against this backdrop, is Unocal morally responsible for the sufferings and the losses of the Karens in the Yadana project? Well the US courts thought so, and we are unequivocally in agreement with them.

The Universal Declaration of Human Rights recognises the inherent dignity and the equal and inalienable rights of all members of the human family as the foundation of freedom, justice, and peace in the world (United Nations, 1948 cited in Schoen et al., 2005). This is a very egalitarian, rights, and caring definition from the perspective of ethical theories. Abetting with the SLORC, and condoning the outrageous violations of life, liberty, and property are universally wrong. One ought to know that these activities are wrong: one ought not to murder, rape, torture, and enslave, and hence, one ought not to cooperate with those who do these activities.

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The claim Unocal made to separate itself from the actions of the military will not hold up to ethical scrutiny. Unocal is an immediate implicit material cooperator in the action of the Myanmar military. Unocal and the Myanmar military both had the same object as goal, Unocal was aware of the activity of the military in support of that shared goal, and Unocal supplied the military with the material means to secure the shared objective. In its failure to explicitly disclaim the activities of the military, Unocals cooperation is implicit. Immediate material cooperation in egregious human rights violations, even if not explicit cooperation, is always ethically wrong (Boatright, 2007; Schoen et al., 2005; Kaptein and Wempe, 2002).

Years of economic sanctions have caused the ruling military regime to eagerly welcome foreign investors. Holliday (2005) therefore argues that foreign companies would be able to exert their influence on the junta to adopt some the values they embrace in their home countries. In our opinion, Unocal could have played a role in evangelising the Myanmar government, and in turn conducted its business in ways it would in the US, but it chose not to. Their failure inevitably raises suspicions about the companys moral standards, value systems, and corporate governance. We are not surprised if Unocal was another one of the many companies that do not walk the talk of their corporate code of ethics.

Instead of closing its eyes to the use of forced labor by the Myanmar military, Unocal should have investigated an appropriate wage rate to guarantee the workers earned a just wage which would not have only permitted the workers to provide their families with the bare necessities of life, but would have also permitted the workers and their families to enjoy leisure, rights, and benefits appropriate to the possibility of the good life.

Instead of ignoring the inclination of the Myanmar military to committing atrocities, Unocal should have implemented processes, for instance, external international inspections of workplace conditions to prevent such conduct.

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In place of cooperating and coordinating with the junta in effecting the pipeline construction, Unocal could have refused to participate in the project until safeguards against human rights violations were instituted by the Myanmar military.

Finally, Unocal, in deciding to settle the villagers claims out of court in lieu of a potentially enormous legal liability is in itself an admission of guilt. While it may be argued that the settlement was motivated by a need to salvage its reputation from further attacks in the public court, we prefer to see it as an acceptance of moral liability.

Our verdict is clear Unocal ought to be held morally and materially responsible for the Karens. Consequently it would be morally justified to compensate the defendants, and the plaintiffs should receive due sentencing commensurate with the wrongs they committed.

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4.0

The Tussle between Engagement and Isolation

Unocal knew the conduct and track record of their local partner in Myanmar, and they knew too that their partner had had an appalling reputation of human rights violation particularly with regards to the Karen minority ethnic group. Notwithstanding these facts, they argued that engagement instead of isolation is the proper course to achieve social and political change in developing countries with repressive governments to justify their venture into Myanmar, and their partnership with the ruling military regime.

Shwartz (2000) argued that Unocals decision to choose engagement over isolation was founded on three reasons. First, they reasoned that their activities were not causing any harm. They had complied with government legislations, abided by environmental standards, and did not use slave labour. Second, they saw themselves as catalysts for change, and therefore contended that their involvement would more likely support democratic forces, stimulate change, increase connection with the outside world, and ensure that the military government will not survive for long. Third, they claimed that their participation had been legitimised by global institutions like the World Bank, the IMF, ASEAN, and other international organisations that have been funding and supporting economic and social projects in Myanmar. They had earlier refused to participate in a lucrative project in Afghanistan because the World Bank, IMF, and others would not participate but Myanmar was different. Hence, they could not see a reason for abstinence.

While the arguments appear to have a certain degree of plausibility, they were flawed. It is our contention that absolving their responsibility is akin to acquitting a drunkard who pleads innocence on grounds of drunkenness after going on a shooting spree injuring and killing others. Like the drunken person, Unocals actions may not have been driven by mala fide5 per se, but we argue that they had been negligent for failing to calculate the costs of injuries, and human rights violations. Their cost and benefit analysis was myopic, and probably skewed to simply evaluating the potential profits it
5

A legal term that means done in bad faith.

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might earn in the pipeline project instead of evaluating the social benefits against the detriments to the Myanmar citizens resulting from the project an evaluation that might very well have been undertaken by the jury in consideration of the case at trial.

Unocal had also ignored a 1997 Presidential order to ban U.S. investments in Myanmar until democratisation, and respect for human rights were evident. To the eternal ignominy of Unocals leaders, they had invested in a country which was the worlds leading producer of opium and heroin, and tolerates drug trafficking and traffickers in defiance of the views of the international community (Hadar, 1998).

Consequently, we are in the opinion that Unocal was mistaken for choosing engagement over isolation. Schwartz (2000) argued that a rule of thumb for engagement to succeed is the presence of transparency, where for example, Amnesty International and other organisations are permitted to enter the country, and observe the conditions people are experiencing. Myanmar had none.

Contrary to Unocals stance, we support isolating developing countries with repressive and recalcitrant governments for five reasons. First, substantial foreign investments have not achieved positive outcomes. There have been instances where corporate investments have contributed to conflict and human rights abuses (Anon, 2006; Htay, 2005; Schoen et al., 2005; Olsen, 2002; Schwartz, 2000). Despite the existing trade and investment barriers, foreign investment in energy and mining enterprises in Myanmar has become a significant source of revenue for the current regime. Such projects rarely produce tangible financial benefits to the general population and arguably further entrench the regime (Htay, 2005; Carter, 2004). Against popular belief, the much touted prescription of engagement ironically strengthens the ruling regimes the very shackles and chains it was supposed to loosen.

Second, engagement does not foster the much touted economic development that necessarily leads to improvement of human rights, and a democratic government. Myanmars inclusion into the ASEAN fraternity has proven that. The relationship

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between economic prosperity and growth and political liberalisation is complex, and there is therefore no causal link between democracy, respect for human rights, and economic development. (Forcese, 2002 cited in Carter, 2004).

Third, any hope for engagement to succeed is an illusion. Proponents once believed ASEAN could strategically influence the junta to change. The truth now evident is this group, known for its long tradition of consensus, is divided on how to handle Myanmar. While Malaysia and Philippines continue to be vocal in calling for change, Singapore and Thailand have been reluctant to act because of their heavy investments in Myanmar (Zulkafar, 2007). Hence the junta no longer takes ASEAN seriously because they know ASEAN cannot come to a cohesive agreement.

Four, it is simply impossible to do business in such countries without directly supporting their rogue governments, and their pervasive human rights violations. For business to take place, foreign companies are required to form joint-ventures with state-controlled companies, which are in turn steered by the appointed proxies (Holliday, 2005). It is therefore difficult to imagine how such JV companies can conduct their business in neutrality when it is covenanted with a local partner that serves the interest of the abhorrent government it represents.

Five, as the foreign investments do not translate into infrastructure or sustainable employment for the population, it is our contention that a disengagement strategy, withdrawal, and banning investments would not negatively affect the innocent population. It will instead achieve the goal of cutting off the lifeline of the ruling government as it heavily relies on capital from the investments. Taking a utilitarian view to achieve the greatest good for the greatest number, we postulate that some arm-twisting is necessary (and justified) when the road of diplomacy has ended.

In light of Myanmar, we do however realise that any isolation effort will be undermined by the willingness of ASEAN nations to trade with and support the regime. And even more detrimental is China and Russias economic interests in

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Myanmar. Both countries are heavy investors in Myanmars natural resource sectors like oil, gas and timber (Zulkafar, 2007; Carter, 2004). Further they are veto-wielding members of the powerful UN Security Council, and may therefore block any hard-line action against Myanmar.

In the final analysis, we argue that it is not the duty of any companies to stimulate political change in any country, what more in hardcore military regimes like Myanmar. This issue is beyond one company, and it is even larger than a regional caucus of nations like ASEAN. It is also inconceivable to expect multinational companies to collaborate in unison to boycott Myanmar. Nonetheless companies do have a moral and societal obligation to fulfil, and when faced with tough dilemmas, it is our contention that they should choose principles over profits.

We suggest companies to consider using McDevitt et al.s (2007) model in its ethical decision making process, and this is provided in Appendix 1. This model may be useful in helping companies embroiled in the tussle between engagement and isolation. We have also included as Appendix 2, a framework of factors and forces that shape and reshape a companys decision making process.

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5.

Conclusion

Ethics is a fertile ground for animated debates as it often has are no definitive answers. It is a playground for academic research where theorists can indulge in eternal disputes with each other over differing interpretation and dispensation of theories and principles in confronting ethical dilemmas.

Ethics is hot property. It is no empty philosophical abstraction. The fall from grace of various corporate icons of our generation has fuelled the interests of colleges, universities, businesses, governments, and societies to engage in the appreciation, critique, and application of ethical principles and conduct in everyday life. Increasingly companies awakening to the motives behind embracing codes of ethics, and good values at its core. And today, more and more books are written about corporate governance and corporate social responsibility than anytime before in history.

In this era of globalisation and heightened ethical sensitivity, companies, in their business activities must benefit both shareholders and stakeholders. Losing sight of either or favouring one more than the other is a good prescription for costly troubles later on. There is ample evidence in the body of literature and the practitioner to support ethical business conduct. Further there is a suite of ethical theories that can serve to guide ethical direction, diagnose and clarify ethical dilemmas, and provide the framework to evaluate business strategy ethically prior to implementation.

Ethical behaviour is a good long-term business strategy. We tend to agree with Velasquezs (2006) observation that over the long run, and for the most part, ethical behaviour can give the company significant competitive advantages over companies that are not ethical. This is not a nave presumption because we acknowledge ethical behoaviour can impose losses on the company, and unethical behaviours sometimes pays off. Obviously not all unethical business practices get punished, and certainly not all ethical endeavours engender rewards.

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Had Unocal thought and managed ethically, it would have decided against venturing into Myanmar, and thus averted the sufferings and loss of untold human lives. It would have also saved itself from the damning reputation from the trial, and perhaps still be in business today.

For Unocal, dabbling in a foreign country with a repressive military government was not worth it. In fact, it was wrong. Their strategy of engagement was misguided and it backfired.

Unocal is history. It is in the power and duty of business leaders and managers today and the future to choose to run their business ethically. When they are confronted with the question Profits or Principles Is there a Choice? We urge them to answer with a resounding Yes!

Word count: 3,885 words

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References
1. Books

Boatright, J.R. (2007), Ethics and the Conduct of Business, 5th ed., Pearsons/Prentice Hall, New Jersey.

Kaptein, M. and Wempe, J. (2002), The Balanced Company: A Theory of Corporate Integrity, Oxford University Press, New York.

Trevino, L.K. and Nelson, K.A. (2004), Managing Business Ethics: Straight Talk About How To Do It Right, 3rd ed., Wiley, New Jersey.

Silbiger, S. (1999), The 10-Day MBA, Piatkus Publishers, London. Velasquez, M.G. (2006), Business Ethics: Concepts and Cases, 6th ed., Pearson/Prentice Hall, New Jersey.

2.

Journal Articles and Research Publications

Anon. (2006), Strange bedfellows: the uneasy relationship between big business and ethical principles, Strategic Direction, Vol. 22, No. 10, pp. 9-12.

Anon. (2005), Ethics is just about doing the right thing: Shell shocked and IBM goes fact-finding, Strategic Direction, Vol. 21, No. 7, pp. 14-17.

Carter, J. (2004), Economic pressure: the political currency of the Burmese junta; reform through disengagement, Legal Issues on Burma Journal, No. 19, pp. 10-34.

Doost, R.K. (2005), The curse of oil! Search for a formula for global ethics, Managerial Auditing Journal, Vol. 20, No. 8, pp. 789-803.

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Gallagher, S. (2005), A strategic response to Friedmans critique of business ethics, Journal of Business Strategy, Vol. 26, No. 6, pp. 55-60.

Hadar, L.T. (1998), U.S. sanctions against Burma: a failure on all fronts, Trade Policy Analysis, March 26, Centre for Trade Policy Studies, available at http://www.cato.org/pubs/trade/tpa-001.html, accessed 28 May 2007.

Htay, S. (2005), Economic Report on Burma 2004/05, Federation of Trade Unions Burma, pp. 1-79.

Holliday, I. (2005), Doing business with rights violating regimes: corporate social responsibility and Myanmars military junta, Journal of Business Ethics, Vol. 10, No.61, pp. 329-342.

Laszlo, C. and Nash, J. (2007), Six facets of ethical leadership: an executives guide to the new ethics in business, Electronic Journal of Business Ethics and Organisation Studies, Vol. 12, No. 1, pp. 1-6.

Lloyd, B. and Kidder, R.M. (1997), Ethics for the new millennium, Leadership and Organisation Development Journal, Vol. 18, No. 3, pp. 145-148.

McDevitt, R., Giapponi, C and Tromley, C. (2007), A model of ethical decision making: the integration of process and content, Journal of Business Ethics, Vol. 73, No. 2, pp. 219-229.

Nantel, J. and Weeks, W.A. (1996), Marketing ethics: is there more to it than the utilitarian approach, European Journal of Marketing, Vol. 30, No. 5, pp. 9-19.

OHara, S.U. (1998), Economics, ethics and sustainability: redefining connections, International Journal of Social Economics, Vol. 25, No. 1, pp. 43-62.

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Olsen, J.E. (2002), Global ethics and the Alien Tort Claims Act: a summary of three cases within the oil and gas industry, Management Decision, Vol. 40, No. 7, pp. 720724.

Richter, E.M. and Buttery, E.A. (2002), Convergence of ethics? Management Decision, Vol. 40, No. 2, pp. 142-151.

Sargent, T. (2007), Toward integration in applied business ethics: the contribution of humanistic psychology, Electronic Journal of Business Ethics and Organisation Studies, Vol. 12, No. 1, pp. 1-22.

Schoen, E.J., Falchek, J.S. and Hogan, M.M. (2005), The Alien Tort Claims Act of 1789: globalisation of business requires globalisation of law and ethics, Journal of Business Ethics, Vol. 10, No.62, pp. 41-56.

Schwartz, M. (2007), The business ethics of management theory, Journal of Management History, Vol. 13, No. 1, pp. 43-54.

Schwartz, P. (2000), When good companies do bad things, Strategy and Leadership, Vol. 28, No. 3, pp. 4-11.

Sintonen, T.M. and Takala, T. (2002), Racism and ethics in the globalised business world, International Journal of Social Economics, Vol. 29, No. 11, pp. 849-860.

Takala, T. (2006), An ethical enterprise: what is it? Electronic Journal of Business Ethics and Organisation Studies, Vol. 11, No. 1, pp. 4-12.

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3.

Electronic and Print Media

EarthRights International (2005), Doe v. Unocal case history, EarthRights International, January 30, available at: http://www.earthrights.org/site_blurbs/doe_v._unocal_case_history.html, accessed 13 May 2007.

Eviatar, D. (2005), A big win for human rights, The Nation, April 21, available at: http://www.thenation.com/doc/20050509/eviatar, accessed 14 May 2007.

Rosencranz, A. and Louk, D. (2005), *135 Doe v. Unocal: holding corporations liable for human rights abuses on their watch, Chapman Law Review, Spring 2005, available at: http://www.laborrights.org/press/Unocal/chapmanlawreview_spring05.htm, accessed 13 May 2007.

Zulkafar, M. (2007), Not so good a friend after all, The Star, May 30.

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Appendix 1 Model of Ethical Decision Making: Process and Content

Source: McDevitt et al., (2007, p. 223)

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Appendix 2

Content Variables factors and forces that influence a companys decision making

Source: McDevitt et al., (2007, p. 221)

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