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Ethical Questions

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Consider the following scenarios:

Scenario 1: to assist the sales of your products in a particular foreign market, it is suggested that you pay a 10% commission to a "go-between" who has access to high-ranking government officials in that market. You suspect, but do not know for certain, that the go-between will split the commission with the government officials who decide which goods to buy. Should you do it? Does it make a difference if your competitors routinely pay such commissions?

Scenario 2: You have a long-standing client in a country that imposes foreign exchange controls. The client asks you to pad your invoices by 25%. For example, you would ship the client $100,000 worth of goods but would invoice the client for $125,000. On the basis of your invoice, the client would obtain the $125,000 from the country's central bank. The client would then pay you $100,000 and have you put the remaining $25,000 in a Swiss bank account in the client's name. Should you do it? Would it make a difference if your client is a member of a politically unpopular minority and might have to flee the country at a moment's notice?

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Solution Preview

Scenario 1:

Based on the information given, the "10% commission" which is described, appears most likely to be just a bribe that is split between the middle-man and the government official. Since we aren't 100% sure of that, but merely suspect it to be true, one could argue that legally, it is plausible deniability since we didn't "know" for sure it was going to be a bribe, we only suspected it. So legally, if something were to happen later where this was exposed to ...

Solution Summary

Consider the following scenarios:

Scenario 1: to assist the sales of your products in a particular foreign market, it is suggested that you pay a 10% commission to a "go-between" who has access to high-ranking government officials in that market. You suspect, but do not know for certain, that the go-between will split the commission with the government officials who decide which goods to buy. Should you do it? Does it make a difference if your competitors routinely pay such commissions?

Scenario 2: You have a long-standing client in a country that imposes foreign exchange controls. The client asks you to pad your invoices by 25%. For example, you would ship the client $100,000 worth of goods but would invoice the client for $125,000. On the basis of your invoice, the client would obtain the $125,000 from the country's central bank. The client would then pay you $100,000 and have you put the remaining $25,000 in a Swiss bank account in the client's name. Should you do it? Would it make a difference if your client is a member of a politically unpopular minority and might have to flee the country at a moment's notice?

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