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Homework answers / question archive / You work for the city of Bigtown's legal department
You work for the city of Bigtown's legal department. Bigtown has been trying for years to attract more convention business, but it has been unsuccessful to date. The new mayor was voted in on the tagline, "I'll make Bigtown the place to see and be seen."
It's been six months since the mayor's inauguration, but tourism is, if anything, worse than before. The mayor is desperate and talking about offering contracts for city work in exchange for convention business. Your boss (the city's counsel) needs to convince the mayor that this strategy is unethical and possibly illegal. She asks you to research the Salt Lake City Olympics scandal and address specific issues that link to Bigtown's situation.
The Big Business of the Olympics and Bribery
LEAD STORY-DATELINE: The Washington Post, January 15, 1999.
Salt Lake City and the state of Utah are considered synonymous with the Mormon Church and the morality that flows from religious pursuits. A recent bribery scandal relating to Salt Lake City's successful bid to host the 2002 Winter Olympics casts a cloud over the city and state.
The Salt Lake Organizing Committee (SLOC) had assigned individual members to lobby members of the International Olympics Committee (IOC) to select Salt Lake City as the 2002 Winter Olympics' site. Since November 1998, there have been allegations that the members of the SLOC lobbied by making gifts to certain influential IOC members and their families. The allegations are that the SLOC members gave scholarships, free medical care, guns and other expensive gifts valued at hundreds of thousands of dollars to visiting IOC members. IOC rules limit members to gifts with a maximum value of $150. One influential IOC member is alleged to have received free medical treatment for hepatitis and financed land investment deals for one SLOC member.
The scandal has resulted in investigations by a several agencies, including the federal Department of Justice, the International Olympics Committee, the U.S. Olympic Committee, and an ethics panel for Salt Lake Organizing Committee (SLOC). The Utah legislature had created a committee to oversee the Olympics because of the approximately $1.4 billion initial costs to be incurred by Utah and the State's obligation to pay any shortfall. That committee has entered the fray and demanded financial accounting from the SLOC. The state of Utah projected receipt of three billion dollars in revenues from hosting the games.
IOC members investigating the scandal have said that punishment may range from requiring an apology to censure to expulsion depending on the results of its investigation. Several SLOC members including president Frank Joklik and vice president Dave Johnson, resigned (during the investigation process).
Assignment:
Part A - Research the Salt Lake City Olympics scandal and address specific issues that link to Bigtown's situation.
Part B - Prepare a slide presentation for your boss to give to the mayor answering the questions below. Your main points should be listed on the slides and the specific information to support each point must be explained in the notes section of the PowerPoint slide.
Lobbying is defined as "the act of trying to directly shape or influence a government official's understanding and position on a public policy issue." (Post, Business and Society 7th ed.) What is the difference between lobbying and bribery?
Whether bribery should be considered unethical or illegal has been debated extensively. Many scholars and businesspeople take the position that bribery should not be treated as unethical. Why is it that the general public considers bribery to be immoral? Use ethical theories or philosophies to explain your answer.
The Foreign Corrupt Practices Act (15 U.S.C. sec. 78) makes it illegal for US companies to pay bribes even if they are in foreign countries. Assuming that this is a case where the FCPA would apply, it helps to look at its definition of a bribe. The FCPA defines a payment that is "meant to influence an official to award or maintain business activity" as illegal. Payments that assist the payer to obtain ministerial actions are not prohibited. What argument could the SLOC members make that the payments made do not fit the definition of an illegal bribe under the FCPA?
What is the appropriate punishment for violation of ethical and legal principles? Should the remedies be limited to expulsion of the members who violated those principles or should the entire community be held responsible? Use ethical principles or theories to answer this question.
This is essentially a subject for your consideration and personal opinion regarding the ethics of bribery (as supported by ethical theories), whether in the public arena or in business. The exception to this is if a specific law or rules of conduct exist prohibiting or regulating certain activities. See, for example, section 76-6-508(1)(a) and section 76-8-103 of the Utah Code: http://le.utah.gov. Click on (1) "Utah Code/Constitution" (2) "Utah Code" (3) "Title 76" (4) "Chapter 6" [or] "Chapter 8" then find section 76-6-508(1)(a) or section 76-8-103. Hints for Excellent Work: Answer every question thoroughly. Remember to address the Bigtown proposal in your answer.
Part A - Research the Salt Lake City Olympics scandal and address specific issues that link to Bigtown's situation.
The mayor's considerations could be considered bribery, much as the same as reported in the Salt Lake City Olympics' scandal.
It's been called "the ugliest chapter in the history" of the Olympic Games. While many will argue that distinction will forever belong to the hostage killings in 1972 at Munich, one thing is for certain; the way Olympic sites are chosen will never be the same. (http://www.factmonster.com/ipka/A0114715.html) Scandal is nothing new to the Olympic Games, but the scope and intensity of the recent corruption charges were. Allegations of vote buying first surfaced Dec. 12, 1998, involving Salt Lake City's winning bid for the 2002 Winter Games. (What is vote buying - http://www.stanford.edu/~albertod/docs/Bellagio_Schaffer_Schedler.pdf)
Members of Salt Lake's bid committee are accused of spending millions of dollars to improperly influence the votes of 14 International Olympic Committee members. (Who are the International Olympic Committee - http://en.wikipedia.org/wiki/International%5FOlympic%5FCommittee) The payments reportedly include cash payoffs, medical expenses, travel expenses, gifts, entertainment and college tuition payments for IOC members' children. Six IOC members have already been booted and three more have resigned. Still three others are currently under investigation and a fourth has been given a warning. While it is unlikely that any actual criminal activity took place, the decision by several IOC members to accept lavish gifts and money was certainly unethical. It is difficult to determine whether votes were actually bought because the committee votes to award the Games by secret ballot.
The six members that have been preliminarily expelled are Jean-Claude Ganga of The Republic of Congo (http://www.factmonster.com/ipka/A0107427.html) Agustin Arroyo of Ecuador (http://www.factmonster.com/ipka/A0107479.html), Zein El Abdin Ahmed Abdel Gadir of Sudan (http://www.factmonster.com/ipka/A0107996.html), Lamine Keita of Mali (http://www.factmonster.com/ipka/A0107759.html), Charles Mukora of Kenya (http://www.factmonster.com/ipka/A0107678.html )and Sergio Santander of Chile (http://www.factmonster.com/ipka/A0107407.html). Mukora is the only one of the six thus far to resign rather than be expelled. IOC members Pirjo Haeggman of Finland (http://www.factmonster.com/ipka/A0107513.html), Bashir Mohammed Attarabulsi of Libya (http://www.factmonster.com/ipka/A0107722.html) and David Sibandze of Swaziland (http://www.factmonster.com/ipka/A0108004.html) have also resigned their posts in the wake of allegations.
IOC president Juan Antonio Samaranch (http://en.wikipedia.org/wiki/Juan_Antonio_Samaranch#Biography), though under pressure to step down due to the widening scandal, has ruled out resigning and has pledged to lead the effort in purging the corruption. He has promised the formation of an ethics commission to review how the IOC members operate. Changes are already in place for the 2006 Winter Olympics, the next games to be awarded. In a trial run for future selections, the city will be chosen by a panel made up of eight IOC members, three athletes, one winter sports representative, one national Olympic official, the IOC's longest serving member and the chairman of the 2006 evaluation commission.
Investigations of the Salt Lake situation by five different organizations (The FBI, the Justice Department, the USOC, the Utah attorney general and the Salt Lake ethics committee) are ongoing. Allegations of misconduct surrounding the 2000 Summer Games in Sydney (http://www.canoe.ca/SlamOlympicScandalArchive/jan22_sca.html) have surfaced as well recently and the IOC has announced it plans to investigate all the Olympic sites from 1996 on. Many other unsuccessful bid sites have come forward and substantiated the claims that excessively lavish treatment was expected and most often received by IOC members. Things like free helicopter rides, plastic surgery and shopping sprees for voting members were commonplace. All of these corruption charges come following the public admission that East German female swimmers were pumped up on vast amounts of anabolic steroids in the 1970's and 80's (http://portal.unesco.org/en/ev.php-URL_ID=33956&URL_DO=DO_PRINTPAGE&URL_SECTION=201.html). The United States Olympic Committee has asked the IOC to somehow compensate all the swimmers, including several Americans, who lost out on Olympic glory because of the chemically enhanced performances of the East Germans. Unfortunately for swimmers like Shirley Babashoff (http://www.usatoday.com/sports/columnist/brennan/2004-07-15-brennan_x.htm), who might easily have had a record five gold medals in 1972, there's not much that can be done to recapture the moment.
The recent scandal surrounding the Olympics is likely to get worse before it gets better. Samaranch has called a special IOC assembly for March 17-18 to formalize the pending expulsions and ratify the new site-selection procedures. Also, the first report from the committees is expected to be released within the next week (http://www.factmonster.com/spot/olympicscandal1.html).
Other resources to utilize
Bribery scandal dulls Olympics' century-old shine - http://www.cnn.com/SPECIALS/1999/olympic.probe/overview/
Salt Lake City bribery scandal: the buying of the Olympic games http://www.wsws.org/articles/1999/jan1999/olym-j13.shtml
World Timeline: Olympics corruption scandal - http://news.bbc.co.uk/1/hi/world/297030.stm
PART B - Lobbying is defined as "the act of trying to directly shape or influence a government official's understanding and position on a public policy issue." (Post, Business and Society 7th ed.) What is the difference between lobbying and bribery?
One major difference is that lobbying is considered legal, whereas bribery is often considered with illegal or at least on some levels unethical behavior. However, in some international countries, bribery is an accepted practice. For most, it seems to be a matter of intent (the intent of lobbying is considered to be in the best interest of society and thus, considered ethical and legal), whereas bribery involves intent to gain an illicit advantage against another person or person(s).
Definitions of bribery include: The practice of offering something (usually money) in order to gain an illicit advantage. Also see - http://legal-dictionary.thefreedictionary.com/bribery
Bribery is the practice of offering professional money or other favors in order to circumvent ethics in a variety of professions. It is a form of corruption and is generally illegal, or at least cause for penalties from professional organizations.
http://en.wikipedia.org/wiki/Bribery
Offering or promising anything of value with intent to unlawfully influence a public official, bank employee, officer or employee of the Government, witness, or any common carrier as well as soliciting or accepting such an offer. Soliciting or receiving anything of value in consideration of aiding a person to obtain employment in the US Government. Receiving or soliciting any remuneration, directly or indirectly, in cash or in kind in return for purchasing, ordering, leasing, or recommending to purchase any good, service, or facility. http://www.albany.edu/sourcebook/app11.html
The Special Bid Oversight Commission - http://commerce.senate.gov/hearings/0414ioc.pdf has one definition of bribery and has a complete historical overview very relevant to the question.
2. Whether bribery should be considered unethical or illegal has been debated extensively. Many scholars and businesspeople take the position that bribery should not be treated as unethical. Why is it that the general public considers bribery to be immoral? Use ethical theories or philosophies to explain your answer.
It depends where you live; multinational corporations operate in countries where bribery, sexual harassment, racial discrimination, and lack of concern for the environment are neither illegal nor unethical or unusual. (Bribery is illegal in Canada but corporate entertainment is allowed and is tax deductible.) The company must decide whether to adhere to constant ethical principles or to adjust to the local rules to maximize profits. (Bribery is widespread but it appears to be worse in some countries (see rankings). A World Bank survey of 3,600 business showed that 40% were paying bribes in 69 countries. It estimates that bribery accounts for 10-20% of contracts worldwide.) As the costs of corporate and white-collar crime can be high, both for society and individual businesses, many business and trade associations have established ethical codes for companies, managers, and employees. Government efforts to encourage companies to adhere to ethical standards include President Clinton's (http://www.answers.com/topic/bill-clinton) Model Business Principles (1995), in a program overseen by the Dept. of Commerce. (http://www.answers.com/topic/united-states-department-of-commerce) Business Ethics - http://www.answers.com/topic/business-ethics
It is considered immoral by the general public because bribery involves coercive tactics, taking one of the parties' rights to make their own decisions (autonomy). To help you analyze this in terms of moral and ethical theories click on
http://www.transparency.ca/Readings/TI-G02.pdf for the article "The Development of International Bribery Law," which discusses the historical moral and ethical theories about bribery.
Another excellent source to help you address the questions below is the primary US government website on corruption found at http://people.colgate.edu/mjohnston/websources.htm
The Foreign Corrupt Practices Act (15 U.S.C. sec. 78) makes it illegal for US companies to pay bribes even if they are in foreign countries. Assuming that this is a case where the FCPA would apply, it helps to look at its definition of a bribe. The FCPA defines a payment that is "meant to influence an official to award or maintain business activity" as illegal. Payments that assist the payer to obtain ministerial actions are not prohibited. What argument could the SLOC members make that the payments made do not fit the definition of an illegal bribe under the FCPA?
The author makes the claim that it was wrong for Salt Lake to give money to win votes, but goes on to say that it is not unique to Salt Lake City. Page 3 (http://commerce.senate.gov/hearings/0414ioc.pdf) where it says that USOC shares in the responsibility for the improper conduct of bids and organizing committees in Salt Lake City mainly for two reason (1) "... failure to assure that United States candidate cities not seek to influence IOC members in the selection process by improperly providing them with things of value" and (2) "...by the admitted recognition by certain USOC personnel that the bid and organizing committees were using the USOC's International Funds to influence or pay back IOC members for their site selection votes." Therefore, this is one argument that SLOC could use. Page 20 of the same article pointing out that there is not report of these "gift." This article has 116 pages and many other examples from which you can draw on for question three. Also SLOC may argue that ministry is not separate from state affairs and defer to the clause "Payments that assist the payer to obtain ministerial actions are not prohibited."
What is the appropriate punishment for violation of ethical and legal principles? Should the remedies be limited to expulsion of the members who violated those principles or should the entire community be held responsible? Use ethical principles or theories to answer this question.
This question calls for your personal and moral ideals. After reading the suggested material, use one of the theories that best matches your values and ethical background and argue your stance. Given the extensive and lavishness the gift giving, an inquiry into the reasonableness and propriety of these practices was warranted (see p. 28, http://commerce.senate.gov/hearings/0414ioc.pdf). Refer to the conclusions this author drew. Do you feel the same or different?
You may also get some good ideas from the author of The Development of International Bribery Law - http://www.transparency.ca/Readings/TI-G02.pdf. From the research above, that reads, LAUSANNE, Switzerland (AP) -- Six IOC members were ousted Sunday in an unprecedented purge stemming from the biggest corruption scandal in the history of the Olympics. Do you agree? Disagree? Was IOC of Salt Lake or USOC to blame for not overseeing the whole process as suggested in the write-up from http://commerce.senate.gov/hearings/0414ioc.pdf.
My thoughts would follow something along these lines - Why are bribes wrong? First consider the winners and losers. Utilitarianism: An act is moral if it maximizes aggregate welfare. Does bribery increase or decrease aggregate welfare? How does bribery conflict with rights? Suppose bribery were accepted in society. What rights would they violate? The OECD has managed to reach agreement in important areas: In December 1997, the 29 OECD countries and 5 others agreed to criminalize the bribing of foreign officials - In 1996, members agreed to disallow the deductibility of bribes. Addressing the Challenges of International Bribery and Fair Competition 2001 - http://www.mac.doc.gov/tcc/anti_b/oecd2001/BriberyReport2001.pdf