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St Charles Drilling workers are expected to wear steel toed boots, along with adequate gloves, safety glasses, a construction helmet, a mask when welding, and a breathing mask if working with toxic chemicals with inhalation potential. St Charles Drilling pays over $50,000 annually to provide Workmans Compensation insurance which required by law, to protect employees from on-the-job injuries. Emmitt, one of the senior drillers suffered a back injury at work which led to two operations and ultimately a workmans compensation claim where he received a lump sum settlement and left work and retired.

The Operations Manager purchased drill rig repair parts from a supplier who was going out of business, the Operations Manager paid $15,000 for a stock of valuable drill rig repair parts and after discussion with the General Manager and Accountant it was decided to capitalize these drill rigs parts and list them as inventory capital at a value of $35,000.

St Charles Drilling was audited by the State of Missouri who found that invoices had been issued but labor and materials sales were not separated on the invoice. In Missouri Labor is not taxable but materials are subject to sales tax. The State Auditor charged St Charles Drilling with $25,000 in unpaid sales taxes, not including any fines, due to invoices not separately stating labor and materials and issuing customers in many cases a single bill inclusive of sales tax.

An internal audit revealed approximately $40,000 was missing from the company bank account. The missing funds were traced back to actions taken by the new accountant Dee, although it was not exactly clear what the accountant had done to hide her activities, as some of the accounting records appeared to be falsified.

St Charles Drilling has been at times a slow pay with its creditors but has always made payroll. There have been cases where creditors threatened to withhold deliveries if payment was not made first. There was a situation during the economic recession, when St Charles Drilling could only make interest-only payments on its loans and had to temporarily forego making principal payments on its outstanding loan with Charlie Chitwoods surviving family members. Charlie Chitwood is the former owner of St. Charles Drilling and he died of a heart attack while bear hunting in Alaska. St Charles drilling makes loan payments to Charlies surviving wife and two daughters.

St Charles Drilling sells an inexpensive water well pump of suspected low quality called the SCD Pump. It is sold to customers as part of a promotion, the free pump special, where every completely new water well and water pump system, comes with a one-year parts and labor warranty and includes a free pump. One problem is the free pump, is held together using a thin and subject to corrosion mild steel rods with nuts, a low-grade cast iron housing, and plastic stages which are exposed, rather than sleeved in stainless steel as in other water well pumps. The SCD pump has become notorious for failure under warranty, and it typically splits and separates between the black plastic stages or cracks vertically.

There were so many warranty failures with the SCD pumps that the company began replacing the failed SCD pump with top-of-the-line Sta-Rite Industries, premium water well pumps of high quality. The Sta-Rite pumps are not only higher quality but also more costly. St. Charles Drilling eventually dropped the SCD pump entirely from its product line, because they were losing money on them through too many failures under warranty. It was especially disconcerting when it was discovered that competitors like Jody Schmidt Well Service used the defective SCD Pump aggressively in their sales advertising when competing for jobs with St. Charles Drilling.

Once they fully dripped the SCD brand of pump due to quality issues, St Charles drilling began branching into Grundfos brand pumps as a second premium line, in addition to offering pumps from Sta-Rite Industries. Sta-Rite was an aggressive vendor and required a very large purchase at the outset of the year.

The Chief Pump Service Mechanic at St. Charles Drilling, Don, had come down with Cancer. While being treated for Cancer, the company had Don receiving full pay for six months, and then they cut back to half pay for the

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next three months. Don did return to work after about 9 months, but he was never quite the same, physically or mentally, and a few months later the Cancer returned, and Don succumbed to his illness.

The physical site of St Charles Drilling was leased property in Weldon Spring owned by the founder and family of Kurt Stoy. The original location in downtown St Charles which dated to 1951, had proved untenable for providing good access to highways and the market, compared to the new location Weldon Spring, where the firm moved to during the 1960s. At the time of the move, Weldon Spring was an undeveloped outlying area. Succeeding owners of St Charles Drilling after Kurt Stoy, first Charlie Chitwood and later Al Miller did not own the property but instead held a lease.

The property had two abandoned above ground fuel tanks and two buried fuel tanks. The buried fuel tanks, which remained in use until they began leaking in the 1990s, had their own pumps similar to a service station. There was also a POL point - Petroleum, Oil and Lubricants were the firm stored onsite, rock drilling oil, waste oil, anti-freeze, PVC cement, pipe dope, and solvents such as acetone. Drilling operations also required the use of drilling mud, Revert, undercoat, and Chlorine tablets among other substances and chemicals. There was some leakage problems with the chemicals described into the Earth and subsequently there is a long term threat to the Groundwater. St Charles Drilling was sold in 1996 to Flynn drilling. After over 30 years of use by a drilling company it is believed the site is contaminated and requires an environmental cleanup. To this day in 2023, the property remains vacant while there has been considerable development around the old site. Perhaps someday there will be enough money and willingness to repair the environmental damage and make the property location useful again.

In order that the State of Missouri gain some oversite over well drilling operations, laws were passed that required the Department of Natural Resources to license drillers and pump installers in Missouri. This was similar to the State of Illinois which had for a long time previously required licensing. In Illinois, drillers needed to meet an experience requirement and pass a written test. The state collects a fee to issue a drilling contractor or pump installers license as well as a license to drill or construct a well.

In practice, whenever operating in Illinois, St Charles Drilling was required to notify the State of Illinois who dispatched a Department of Natural Resources management employee to the job site, so they could observe installation and the setting and sealing of well casing into bedrock, and the installation of the pitless adapter which is a below grade (underground) water line connection at the well head itself. Illinois also required a special lockable sealed lid to prevent access to the well without hand tools. Both Missouri and Illinois required a drill log (a written record) of the different layers of rock they would drill through when constructing a well and this report would be filed with the state along with a licensing fee.

St Charles Drilling was constructing a drilled well in Illinois when they struck a pocket of natural gas. The driller was smoking a cigar at the time and the natural gas spewing from the borehole did ignite and catch on fire. The management of St Charles Drilling did contact the Illinois Department of Natural Resources, as required by law to notify them of the incident. St Charles Drilling employees used a combination grout and cement to plug the well permanently, once they put out the fire with a liquified combination of drillers mud.

Another job led to lawsuit against a city in Missouri, New Florence along with a counter lawsuit by the city which the court found had mis-represented the weight of the city well submersible components, (parts which were down inside the well) which had to be retrieved from downhole in order to repair well. The system was so heavy the pump service truck could not pull the system for repair and a drill rig (larger more powerful machine) was required to pull the pump. The system weighed so much, the pipe which was in poor condition, broke and the remaining pipe, the electrical cable and the pump and motor fell to the bottom of the well, rendering the system inoperative. A new well had to be drilled. This was at the customers expense since the court found the City of New Florence liable, since they not honestly provide the correct specifications of the system in question.

)What are three situations from the case where it appears St. Charles Drilling is in violation of GAAP, Generally Accepted

2) 2a. What are four situations from the case where St. Charles Drilling appears to have generally taken an ethical approach with respect to the human rights of workers at St. Charles Drilling. Give a brief explanation why each of the four human rights situations you mention seem to be ethical. (4 marks)

2b. Assess St Charles Drilling from a transparency policy standpoint highlighting either the company being either proactive or reactive and giving valid reasoning (1 mark)

3) Considering the key components of an ethics policy, analyze St. Charles Drilling from a market characteristic approach. Give evidence of 5 market characteristics present in the case. (5 marks

Interpret St Charles Drilling's situation from the position of ethics in marketing. identify the following. 4a. A marketing failure. (1 mark)

4b. A potential marketing success. (1 mark)

(1 mark)

ethical challenges in general. (1 mark)

4c. Considering the company Value Chain where did the ethical breakdown occur?

4d. What is the ethical dilemma the company faced with the SCD Pump? (1 mark)

4d. Recommend a solution for overcoming ethical challenges in marketing or even

Technology

5) Give four recommendations for St Charles Drilling on how it could have made a more sustainable environment. Give any evidence of political action that forced or required St. Charles Drilling to be more environmentally conscious.