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Confronting Fraud in a New Job

I need help with this scenario:

Becky Knauer recently resigned from her position as controller for Shamalay Automotive, a small, struggling foreign car dealer in Upper Saddle River, New Jersey. Becky has just started a new job as controller for Mueller Imports, a much larger dealer for the same car manufacturer. Demand for this particular make of car is exploding, and the manufacturer cannot produce enough to satisfy demand. The manufacturer's regional sales managers are each given a certain number of cars. Each sales manager then decides how to divide the cars among the independently owned dealerships in the region. Because of high demand for these cars, dealerships all want to receive as many cars as they can from the regional sales manager.

Becky's former employer, Shamalay Automotive, receives only about 25 cars a month. Consequently, Shamalay was not very profitable.

Becky is surprised to learn that her new employer, Mueller Imports, receives over 200 cars a month. Becky soon gets another surprise. Every couple of months, a local jeweler bills the dealer $5,000 for "miscellaneous services." Franz Mueller, the owner of the dealership, personally approves payment of these invoices, noting that each invoice is a "selling expense." From casual conversations with a salesperson, Becky learns that Mueller frequently gives Rolex watches to the manufacturer's regional sales manager and other sales executives. Before talking to anyone about this, Becky decides to work through her ethical dilemma.

1. Put yourself in Becky's place.

a. What is the ethical issue?
b. What are your options?
c. What are the possible consequences?
d. What should you do?

Solution Preview

Here are the main points you need to consider for each question presented in the dilemma:

a. What is the ethical issue?

The main ethical issue that you need to consider in this case is if her actions are ethically sound by not taking action due to the fact that she now knows what's taking place at the dealership. Basically the dealership is bribing the regional managers so that they are able to get the highest number of cars which helps the dealership to remain profitable. Although the gifts could be seen as incentives or business gifts, when it comes down to it, they're still bribes. The main ethical issue surrounds the fact that the ...

Solution Summary

This solution addresses the case of Becky Knauer. All case questions are answered, including:

1. Put yourself in Becky's place.

a. What is the ethical issue?
b. What are your options?
c. What are the possible consequences?
d. What should you do?

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