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Case 7: islington Chemical and the Civil War in Malbodia falington Chemical Corp (ICC) is a Toronto-based manufocturing compuny that produces, among other products, compounds ased in the mabing of carpeting and isnthethe flooring. While toC has cooducted eateratre research tete prodec. Ing non carbon based material from which to mabe carperiog (ouch as hemp and variesus strong grasses), its primary peodact is a synthetic material called "nylese." which is made from petrochemicalk. ICC prides itsrif on limiting, to the extent. that it can, its environmental Gootprint. It has iried to alopt same of the environmeatal techniques adopted by mariet innovator Interfece Carpets to leep borh pollution and carbon emistions to a minimum at ICC plants. ICC selis its products, including nylene, throughout the woeld fieto markets where carpet maloen are located, primarily Mexico, the Unitted Seanes, and South. east Ania). It operates sis manafacturitie plante three in Canada, two in the United States, and one in Mexico. All of the manufacturing plants are operated by ICC in acoordance with consistent. if not identical, envinonmentat, operational, and employment policiescreated by the head office in Toronto. In 25 years ofogerration, ICC has had no major environmental issues at any of its plants. Its etopleyment record is emviable, and ICC is considered one of the bert employers in Canada in. the chemical manufacturing sector. Three years ago, ICC recogntred that it was selling asofe and noore of fits aylene to carpet makers in Southeast Asia-especially to buyers in Vietnam and Thanland. At about the same time, Robert Smythe, 10C; prosident, received a viait from reptesentatives of the trade commission of a smull Soctheast Aslan country called Malbodia. The Malbodian othicials were keen on attracting werli-tatabliabed Western companies - especially manufacturing companies - to set ap operaticas in their island coantry: Malbodia is located in the Soath China Sea at the mouth of the Guy of ThatIand. It is an lsland country approximately the size of New. Brunswidk, with a population of 1,800,000 people. Historically, its cconony mas based on agriculture. and fishing, until 30 years ago, when tin was discovered in minable quantities. For 20 years while the tin mines were developed, the cocntry's abysmal stundurd of living increased substantially; however, with increased prosperity came political unrest to the country. In 2002 , General Mahat, with the support of the millitary established himself as leader of the country (by force, without any democratic mentel lins: election). Clamping down on any opposition, Mahat used bratal means to retain his powef. Mahat also argued that foreign corporatioas were "raping" the Malbodiat land and "stealing" its resources, sach as tin. Malbodia "porchised" tin mines from forelgn mining companies fallegedly for fait raloe, but the mining campanies suggested otherwise) and the mines were nationalised Between 2002 and 2009 , Mahat ruled as a dictator, and the two elections that wrre held wrat a tham. Given the existence of the tin reserves, the country's exosing dil noe fuf. fef, bot ins GDP was still about 25 percent the site of neighbouring cosntries? When IOC received the visit from the Malbodias Trade Comminios (Mahat) people), Mahat and his advisers had decided that the country's toobocer needed diversification-including the establishment of a manufacturing sectoe. They had alrcady been suecessful in attracting some large Weitern manufactusers to set ap in Malbodia, and they were andious to have 10C set op a plant there as well. The Malbodians impressed Smythe with their knowledge of the carpet- nutuficturitig. indastry in Southeast Asia. They offered tenspting inceatives for ICC to set up aperations in Malbodia, but indicated that any plant opened in Malbodia would have to be operated ast a 5050 joint ventare between the Malbodiun gevirnment and ICC. (The country's officials told Senythe that Malut did not wast a rrpeat of the coastry's experience with what he thought were the unethical practices of the foreign tin-mining companies. In truth, Mahat felt eatitied to a "cat" of any product that would be sold outside of Malbodia. Smythe discussed this propasal at length with the JCC bound of directors he was hesitant to enter into a relationship with the Mtalbodian epremrant and worried that ICC might not be able to operate a plast in the "OC mus" The beard. however, believed this to be a tremendous financlal opgortunity for JCC in light of the company's growing presence in the rcglos, and the board falt that the Malbodians really wouldn't want to interfere with the ICC model. In Aagust 2008. ICC signed a joint venture agreement with the MGilbodiat government, with the bylene plant to open in Mallodis in Apeil zoos. In March 2009, Mahat's officials contacted the ICC people it Malbodia asd adrieed that "security personnel" must be hired to protect the phint. The IOC mployees in Malbodia were surprised because they had not seen any evidense of vandaliam of antagonism from the local people. Bat the Malbodian othedala a prind pcesure. and the "security perionnel" were hired. (In fact, it was disooveral a year liater that the security personnel were a paratnilitary groop controiled by Genrral Mahat. and the fees for the security went directly to Mahat 3. To pet Mabodial GDP in coterat an soof thalunfi of To an extent, the JCC boand was correct. ICC was pernitsed to set op the tylent plast in the image of its ocher plants, implementing both rigorous enuebontelental standards and a generous (by Malbydian standards) empioyment eatinantrent: Noting that many in the worlufocce had had only minimul levels of ichcoling. ICC oflered (and paid for) the requivalent of high achooldasses for iss ehployeet. The. plant was a financial succesk, shipping, its product to eristirg and evest nerr fu4 tomers in Thailand. The Malbodian grvernment left the plant alores eritet for the "security perrontel" and, of courke, the 90 percent cut of the frvenue it fook as joint venture partact. The 1CC eraployees had erpected government healith and safety and eavironemental examiners to wisit the phant (fas was caltemury in North Americal, but the plant was never vistted by a fegultoe. In February 2011 , the political cllate in Malbodia changed dramalicaly. The Malbodian people, historically peaceful and passive, began democitratieg agiin it their despotic government and the dictator General Mahat Initially peacefial demonstrations were reptessed berstally by Mahat-in one demenitrabion, a dosea Protesting students were shot to death by the army. This incident yerred the reptessed Malbodian people into action against an intelerable and undemocratic government. There were more proteits, wideryfead otrikes, and armul conflict Smythe heard about this on radio one morning asd raised it at the moethly board meeting beld a day later. The board weas concerned about ROCH Mabodian operation. They asked the general manager of the JCC plast in Balboda (a Canadian named Stewart Keith) to speak, no the board to erplain the situmion so ghat the board could consider the situation and decide what, if awy, acticen should be taken. At the meeting. Keith eyplained that be feafed for the safery of 1 is werkern and the plant, noting that both the Malbodinn goven ment (the army) atod the rebets have attacked and destroyed buildings in the ririaing. This worried him because of the nature of the product being manufactured at the ICC plant-it kighly flamstrale and potentially environmentally powonoca ther cal Keith pointed out that the ICC plant was percetved as being all znou with the government, altisough it was ditar to him that the cmployce were nopyetic to the rebels. He mentioned the baclggroand of the security porwoersel and thar allegiance to Mahat, After Keith left the meeting, the bodrd menthen beseridiscuaing the Malbodian operation. Quetisen What should Smythe recormanend to the bourd that XoC do abeut its Malbodian plant