MGT233: Organizational Behavior Chapter 2 Week 5 Tutorial (7-11 March 2021) PLEASE READ THE SNC-LAVALIN CASE STUDY THEN ANSWER THE QUESTION ON THE NEXT PAGE CASE STUDY: SNC LAVAUN GROUP INC SNC tavalin (SNC) is one of Canada's largest engineering and construction firms. The World Bank, the African Development Bank, Swiss palice, and other entities have uncovered evidence that SNC hribed or attempted to bribe government staff and leaders to win contracts in Africa and Asia. SNL is also being investigated for unethical activities in contract bidding on a major Canadian project involving a Montreal superhospital Almost a dozen former SNCL executives, most of whom held senior positions, either face charges of criminal activity are under investigation. The company and its 100 subsidiaries have been banned for a decade from bidding on World Bank-funded contracts. The World Bank and other investigators report that in several contracts SNC processed bribes through an expense line called "project consultancy cost" or PCC For example, SNC recently settled a corruption case filed by the African Development Bank, which had discovered project consultancy cost items representing 7.5 percent of the total contract value of two SNC road projects in Uganda and Mozambique. The engineering firm recently acknowledged that none of these expenses were legitimate. "Everybody used this term, and all know what that means," admits SNCL's former director of international projects. "Sometimes it was 'project consultancy cost. sometimes 'project commercial cost! but the real fact is the intention is a bribe. SNCL paid the PCC bribes indirectly through employees. One SNCL engineer in Nigeria said he was told to use his personal funds to pay a Nigerian official for a "soils investigation. The official had selected the engineering firm for a contract. When asked why he participated in the kickback (hiribes) scheme, the engineer (employee): "When the bonus asks, in that part of the world... what would you do if you were put in my shoes if you were in a remote area of Nigeria?" Another way that SNCL executives apparently bribed officials was through "rent fees." The most prominent "agent transfers involving more than CAD $110 million occurred over 10 years to a Swiss bank account controlled by an SNEL executive vice-president working in North Africa and later at headquarters in Montreal, One of the key questions is whether the wrongdoing was known at the highest levels in the company??? The senior executive convicted in Switzerland daims that the top brass (below the board level) knew how the funds were used The CEO resigned when an internal review revealed these actions to the board. Several months after he quit, the CEO was charged with fraud relating to contract activities with a major Canadian contract. Another SNC vice-president now facing several charges also admits to engaging in bribery and related crimes. He explained that SNC-Lavalin had a corporate culture where it was common practice to do all that was necessary, including the payment of commissions and other benefits to obtain contracts, including in Libya. The second executive also argued that he was under pressure to engage in these illegal activities because the executive above him said: "that he had to follow their orders to satisfy their expectations. In fact, a few former SNC executives have since tried to sue the company for wrongful dismissal on the grounds that their illegal activities were required by the company to keep their jobs Even SNCL's board seems to have downplayed personal responsibility. Very early in the RCMP Investigation, SNCL'S board received an anonymous internal letter describing the bribery activities, yet the board later acknowledged that it has no credibility." And when the extent of wrongdoing at SNC eventually became public, the board chair said: "Clearly, our board of directors can't govern something that they don't know about or prevent something they are not aware ATER READING THE CASE STUDY, MEASE ANSWER THE FOLLOWING QUESTIONS on before the actio. But the prepare by Chefe potere penation and the book, in which you find more Concept to see anew the question Tips to anav/ Your newers 1 how more! 1. Moral Intensity: The degree that an houe demands 1 Merlinity De bebes have high more intensity? Bensitivity and more! the splication of ethical principles - Yes Intensity apply to the High moral intensity decisions the stron ethical b) No wetha behavior implications mong several INO maintensity situation exhats when Livelin wecutives The consequences of the decision could be very and other stuff good/bad There is high greement by others that the decision outcomes are good/bad. There is high probability that the coord/bad outcomes will occur Many people will experience the consequences of the decision 2. Moral sensitivity A person's ability to detect a 2. Moral sensitivity: Do executives and other stat have high moral dilemma and estimate its relative moral sensitivity to recognize the unethical nature of the importance actions bribel? Factors associated with a person's moral sensitivity - Yes Expertise/knowledge of prescriptive norms & b) No rules Alt varied between employees and executives Previous experience with specific moral dilemmas Choone option and explain why Ability to empathize with those affected by the decision A strong self view of being a morally sensitive person A high degree of situational mindfulness awareness of the present situation as well as to one's own thoughts and emotions in the moment) Tips to answer / Your awer 3. Focus on the last three paragraphs of the case, then suggest some of the steps that SNC-Lavalin should take to minimize these types of corporate wrongdoing? in Question Concepts to use to answer the question 2. What we should Supporting Ethical Behavior SNC-Lavalin and other 1 Code of ethical conduct statement about the companies this desired practices, activities, rules of conduct & situation take to philosophy in relations with stakeholders & minimize these types environment of corporate 2. Train and regularly evaluate employees on their wrongdoing? knowledge of proper ethical conduct. 3. Confidential Ethies telephone hotline and website: employees can report suspicious behavior 4. Ethics ombudspersonas receive information from employees and investigate the wrongdoing 5 Ethics audits commonly evaluating corporate social responsibility practices Corporate ethical culture and leaders acting with highest thoxad standards Good luck! MGT233: Organizational Behavior Chapter 2 Week 5 Tutorial (7-11 March 2021) PLEASE READ THE SNC-LAVALIN CASE STUDY THEN ANSWER THE QUESTION ON THE NEXT PAGE CASE STUDY: SNC LAVAUN GROUP INC SNC tavalin (SNC) is one of Canada's largest engineering and construction firms. The World Bank, the African Development Bank, Swiss palice, and other entities have uncovered evidence that SNC hribed or attempted to bribe government staff and leaders to win contracts in Africa and Asia. SNL is also being investigated for unethical activities in contract bidding on a major Canadian project involving a Montreal superhospital Almost a dozen former SNCL executives, most of whom held senior positions, either face charges of criminal activity are under investigation. The company and its 100 subsidiaries have been banned for a decade from bidding on World Bank-funded contracts. The World Bank and other investigators report that in several contracts SNC processed bribes through an expense line called "project consultancy cost" or PCC For example, SNC recently settled a corruption case filed by the African Development Bank, which had discovered project consultancy cost items representing 7.5 percent of the total contract value of two SNC road projects in Uganda and Mozambique. The engineering firm recently acknowledged that none of these expenses were legitimate. "Everybody used this term, and all know what that means," admits SNCL's former director of international projects. "Sometimes it was 'project consultancy cost. sometimes 'project commercial cost! but the real fact is the intention is a bribe. SNCL paid the PCC bribes indirectly through employees. One SNCL engineer in Nigeria said he was told to use his personal funds to pay a Nigerian official for a "soils investigation. The official had selected the engineering firm for a contract. When asked why he participated in the kickback (hiribes) scheme, the engineer (employee): "When the bonus asks, in that part of the world... what would you do if you were put in my shoes if you were in a remote area of Nigeria?" Another way that SNCL executives apparently bribed officials was through "rent fees." The most prominent "agent transfers involving more than CAD $110 million occurred over 10 years to a Swiss bank account controlled by an SNEL executive vice-president working in North Africa and later at headquarters in Montreal, One of the key questions is whether the wrongdoing was known at the highest levels in the company??? The senior executive convicted in Switzerland daims that the top brass (below the board level) knew how the funds were used The CEO resigned when an internal review revealed these actions to the board. Several months after he quit, the CEO was charged with fraud relating to contract activities with a major Canadian contract. Another SNC vice-president now facing several charges also admits to engaging in bribery and related crimes. He explained that SNC-Lavalin had a corporate culture where it was common practice to do all that was necessary, including the payment of commissions and other benefits to obtain contracts, including in Libya. The second executive also argued that he was under pressure to engage in these illegal activities because the executive above him said: "that he had to follow their orders to satisfy their expectations. In fact, a few former SNC executives have since tried to sue the company for wrongful dismissal on the grounds that their illegal activities were required by the company to keep their jobs Even SNCL's board seems to have downplayed personal responsibility. Very early in the RCMP Investigation, SNCL'S board received an anonymous internal letter describing the bribery activities, yet the board later acknowledged that it has no credibility." And when the extent of wrongdoing at SNC eventually became public, the board chair said: "Clearly, our board of directors can't govern something that they don't know about or prevent something they are not aware ATER READING THE CASE STUDY, MEASE ANSWER THE FOLLOWING QUESTIONS on before the actio. But the prepare by Chefe potere penation and the book, in which you find more Concept to see anew the question Tips to anav/ Your newers 1 how more! 1. Moral Intensity: The degree that an houe demands 1 Merlinity De bebes have high more intensity? Bensitivity and more! the splication of ethical principles - Yes Intensity apply to the High moral intensity decisions the stron ethical b) No wetha behavior implications mong several INO maintensity situation exhats when Livelin wecutives The consequences of the decision could be very and other stuff good/bad There is high greement by others that the decision outcomes are good/bad. There is high probability that the coord/bad outcomes will occur Many people will experience the consequences of the decision 2. Moral sensitivity A person's ability to detect a 2. Moral sensitivity: Do executives and other stat have high moral dilemma and estimate its relative moral sensitivity to recognize the unethical nature of the importance actions bribel? Factors associated with a person's moral sensitivity - Yes Expertise/knowledge of prescriptive norms & b) No rules Alt varied between employees and executives Previous experience with specific moral dilemmas Choone option and explain why Ability to empathize with those affected by the decision A strong self view of being a morally sensitive person A high degree of situational mindfulness awareness of the present situation as well as to one's own thoughts and emotions in the moment) Tips to answer / Your awer 3. Focus on the last three paragraphs of the case, then suggest some of the steps that SNC-Lavalin should take to minimize these types of corporate wrongdoing? in Question Concepts to use to answer the question 2. What we should Supporting Ethical Behavior SNC-Lavalin and other 1 Code of ethical conduct statement about the companies this desired practices, activities, rules of conduct & situation take to philosophy in relations with stakeholders & minimize these types environment of corporate 2. Train and regularly evaluate employees on their wrongdoing? knowledge of proper ethical conduct. 3. Confidential Ethies telephone hotline and website: employees can report suspicious behavior 4. Ethics ombudspersonas receive information from employees and investigate the wrongdoing 5 Ethics audits commonly evaluating corporate social responsibility practices Corporate ethical culture and leaders acting with highest thoxad standards Good luck