Titan Corporation, based in San Diego, California, has about 12,000 employees dispersed across 60 countries. In 2005, it was found guilty of bribing the president of Benin. The combined penalties of $28.5 million are the largest imposed on a company in the history of the Foreign Corrupt Practices Act. Titan, with $2 billion in annual sales, mainly from military, intelligence, and homeland security contracts with the U.S. government, pleaded guilty to three felonies before a federal judge in San Diego. According to the Securities and Exchange Commission (SEC), Titan's misconduct was global. Though Titan does business in more than 60 countries, the company has no policy on overseas bribery and failed to monitor its 120 international agents. The SEC said Titan underreported commission payments in its business dealings in France, Japan, Nepal, Bangladesh, and Sri Lanka.
Paul R. Berger, an associate director at the SEC's enforcement division, said that the evidence in the case showed "the virtually complete lack of internal controls" at Titan, along with the company's inability to operate with policies and procedures that would help them detect and deter such problems.
Critical Thinking Questions
1. Do you think that Titan is an isolated example or that many companies engage in similar behaviors overseas but are never caught? Do you think it is acceptable for a firm to take the risk and pay a bribe if the firm believes that the chances of getting caught are small and that in the worst-case scenario the fine imposed will be an insignificant fraction of total operating costs? Explain.
2. Shortly after Titan pleaded guilty to the bribery charges, it hired Daniel W. Danjczek under a new position title of "vice president for compliance and ethics." Danjczek's job is to "instill ethical behavior at the company." Do you think this is a wise and sincere attempt to redress the company's ethical problems or a public relations gimmick? What would you do to ensure that such an appointments not perceived by employees as a superficial "quick fix" to improve the firm's ethical reputation? Explain.
3. When a company operates in many different countries with widely diverse legal systems and ethical standards how can it develop and enforce a global set of criteria as to what is right and wrong? Explain