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Marketing in the 21st Century
Marketing in the 21st Century

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2.1 Ethics in practice

What does this mean in practice? Let us consider this case study.

Case study: BAE Systems and the sale of radar systems to the Tanzanian Government

[In 2010 BAE Systems, a military equipment producer, was taken to court regarding] a relatively small accounting offence admitted by BAE in relation to one contract in one country – a £28m radar deal in Tanzania in 2002.

A judge has declared he was “astonished” at claims that BAE Systems, Britain’s biggest arms firm, had not acted corruptly when its executives made illicit payments to land an export contract.

Mr Justice Bean said it was “naive in the extreme” to believe that a “shady” middleman who handed out the covert payments was simply a well-paid lobbyist.

The judge concluded that BAE had concealed the payments so that the middleman had free rein to give them “to such people as he thought fit” to secure the contract for the company. BAE did not want to know the details, he added.

Corruption allegations have swirled around the overpriced radar deal since it was signed in 2001, with former Labour [government] minister Clare Short saying: “It was always obvious that this useless project was corrupt.”

(Source: Adapted from Evans and Leigh, 2010)

Further information on the ethics of bribery can be found in the Guardian article ‘Bribery and disruption: British companies fuel corruption in Africa’ [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] and the newspaper’s investigations into BAE Systems and bribery, The BAE files.

The first step identified by Marsden (2007), recognising and describing moral issues, can be applied to this example which raises a number of moral issues.

First, is BAE Systems right in paying the bribe or should it refuse to engage in purchasing negotiations on the basis that bribes are illegal and wrong? However, if not paying the bribe means that BAE Systems loses the contract, this may have wider implications for the organisation such as redundancies.

Another issue may be what its competitors are doing. If they are all willing to pay a bribe to get a contract, why should BAE Systems disadvantage itself by not paying it?