As chief legal officer in a well-respected company making lifesaving drugs, Alistair has been asked by his board of directors to look into rumors of price-fixing in the firm's European offices. His board has a very strong ethics policy, and is especially wary of price-fixing, bribery, kick-backs, and other unethical activities that can plague overseas operations.
After several months of detailed interviews in Europe, Alistair satisfies himself that the rumors are groundless. "There's no issue here," he heard several managers say. But, added one such manager, "if you really want something to investigate, look into the Bosnia contract."
Over the months, Alistair keeps hearing about "the Bosnia contract." So when he finishes his report on the price-fixing rumors, he decides to satisfy his curiosity on this matter. The contract, he discovers, is ordinary in almost every respect: A major relief organization has contracted with his company to supply a million inexpensive kits of medicine for delivery into the war-torn regions of Bosnia. Like most such contracts with charitable organizations, it contains hardly any profit for his firm.
What he finds strange, however, is the payment of an extraordinarily large commission to a Romanian distributor to deliver the kits deep into Bosnia. Seeking out the executive in his own firm who negotiated the contract, he has one question in mind: Is this a bribe?
Yes and no, says the executive. According to the Romanian distributor, the backs of the delivery trucks are loaded with the kits and the glove compartments are stuffed with cash. That way, when the drivers are stopped at roadblocks set up by local militia units operating all across Bosnia, they can pay whatever is demanded and continue their journey. In the past, he notes, drivers without cash have been taken from their trucks and shot. If the kits are to be delivered, this is the cost of doing business.
Alistair feels sure that none of the money has flowed back to the executive, whose only motive is to get the kits delivered. And by this time, the deliveries have already been made. Yet Alistair still faces a dilemma. Should he draft a separate report to the board on this most unorthodox contract possibly causing great harm to the executive who negotiated it or embarrassment to the relief organization, which is aware of the commission? Or should he keep silent?
What should Alistair do?