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As you may have discovered in your research, Lockheed Martin faced a corruption scandal back in the 1970’s that led to the passage of the Foreign Corrupt Practices Act in the U.S. In response to the charges, executives at Lockheed argued that the payments to foreign officials was the only way it could secure overseas contracts, and therefore provide jobs to its domestic and international workforce. Lockheed’s president went so far as to say the bribes paid to foreign governments to secure contracts supported not just its 60,000 workers, but each worker’s family, and indeed, each worker’s community at large. Moreover, Chiquita Banana, in response to its payments to terrorist organizations became public, said the payments were being made, at least partly, to secure jobs for Columbian workers. How would you respond to these arguments?
Here is Lockheed’s then-President, A. Carl Kotchian’s strong defense of the payments:
“Such disbursements did not violate American laws…My decision to make such payments stemmed from my judgment that the [contracts]…would provide Lockheed workers with jobs and thus rebound to the benefit of their dependents, their communities and stockholders of the corporation. I should like to emphasize that the payments…were all requested…and were not brought up from my side.” A. Carl Kotchian, The Payoff: Lockheed’s 70-Day Mission to Tokyo, Saturday Review (July 9, 1977), p. 12.
How would you respond to Kotchian’s claims? Does it matter whether it made the payments with its workers, their dependents, and their communities in mind? Should it matter (note, we’re getting back to the question of motives again – that keeps popping up)? Does it matter to you that Lockheed never “brought up” the payments and that they were all requested? Why or why not?
On a related note, and from a broad perspective, what role do you see U.S. companies play in helping workers in foreign countries earn a living? By that I mean, should U.S. companies be concerned about economic development in foreign nations? For instance, in response to public outrage about its payments to a terrorist organization, Chiquita at one point argued that it’s opening up areas of Latin America to economic development, jobs, living wages, and environmental change. Do you buy that argument? Is any development “good development”? Or can development be harmful?
One last line of questioning. Should the U.S. government consider military intervention? As I indicated in a prior post, there is precedent for U.S. military involvement in a foreign nation to protect a U.S. company. Occidental Petroleum Corp, a Los Angeles based oil and gas producer, faced the terrorist groups in Columbia in a similar way to our scenario. In response, in 2002 60 to 100 U.S. Special Forces troops and advisors arrived in Columbia to train Columbian troops to protect the pipeline. See, Gary Marx, Imperiled Pipeline Gets U.S. Troops in Columbia, AmazonWatch (2002), available at http://amazonwatch.org/news/2002/1112-imperiled-pipeline-gets-us-troops-in-colombia. My question is this: should the U.S. military be called on to assist in the protection of a privately-owned, U.S.-based banana producer (or oil and gas producer)? Is that a role the U.S. military should take on? Why or why not?
Does the type of business matter to your answer? Meaning, is the Occidental example more palatable because it was an oil and gas producer and our company just farms bananas? Why or why not? Meaning, are some businesses so important to vital U.S. interests that the U.S. military should protect them in these situations? Is it possible to justify protecting a company like Occidental from terrorists while at the same time leaving Chiquita Banana or our generic banana company high and dry? If you do make that distinction, how do you justify it?
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