Case Overview
In December 2011 the board of directors of Montreal-based SNC-Lavalin, the largest engineering and construction company in Canada, received a whistleblower letter that alleging Riadh Ben Aissa, an executive vice-president, had secretly funneled money to members of Libya’s Gaddafi family.
In March SNC issued details of its own independent review, which found that president Pierre Duhaime breached the company’s code of ethics in approving more than $56 million of improper payments after the chief financial officer had declined to approve them.
In April the RCMP searched SNC-Lavalin’s head office in Montreal. Later that month Ben Aissa was arrested in Switzerland in connection with allegations of corruption of a public
However, in these calculations, SNC ignored one important factor: the negative impact this decision might have had on its reputation. Following the investigation, the company was banned from doing business with Quebec public agencies, as well as it was suspended from bidding on any construction projects that are backed by the World Bank for the next 10 years , .
Those consequences have dramatically affected the company’s sales and negatively impacted its share price. Contrary to SNC’s intentions, its actions greatly reduced the utility of SNC’s shareholders. In my opinion, this reduction cannot be compensated by the sales made in North African countries as reputation has a long-term value. It is easy to sully reputation, but it will take years for reputation to be regained.
From a deontological reasoning perspective the right action to choose matters the most. It should be a choice that everyone could follow in the future. There are several cases where companies decided to make tough decisions. Ikea, the world's biggest home furnishings retailer, says it won't build more stores outside the Moscow region until Russian officials stop withholding permission for two outlets in the central cities of Samara and Ufa. The reason the stores aren't opening is that Ikea is refusing to pay bribes to safety inspectors. ''We have zero tolerance on corruption and we have a very clear policy,'' Ikea