Telecommunications, Inc., is a U.S. company, a global leader in information technology, and it specializes in building data network systems. The company is a major player in the industry, although it is no match for companies like Cisco Systems.
Recently, however, it has been more successful in securing contracts to build and support data network systems outside the United States. In one recent competitive bidding situation with companies from two other countries, the Latin American country of Bolumbia awarded Telecommunications a multimillion-
dollar contract to develop a network for the corporate community. The job went so well that Telecommunications believes it will have a leg up on other companies in bidding for future contracts.
Telecommunications was the prime contractor on that job.
It was responsible for the selection of subcontractors to perform the work that Telecommunications did not want to do, or when the company believed it was advantageous to use a local contractor. According to the company’s contract with Bolumbia, only Latin American companies could be selected for subcontract work. In a recent competitive bidding selection process, Bolumbia National Communications (BNC), S.A.' was chosen to assist in infrastructure connectivity.
BNC wasn’t as well established as other companies such as Telefonica, the Spanish multinational company that operates throughout the Spanish- and Portuguese-speaking world, but it had submitted a bid that met all the specifications of the job including some that were unusual requests. Telefonica did not include these items in its subcontractor bid.
Ed Keller is employed as an engineer for Telecommunications, Inc. Keller recently graduated with a master’s degree in engineering and joined the company six months ago. Keller had a 3.92 grade point average and could have worked for a variety of engineering firms. He chose Telecommunications because of the opportunity it afforded to travel around the world and as a result of its reputation for quality service and high moral standards.
During lunch at the office one day, Keller was talking to several of the more senior members of the engineering staff of Telecommunications, who told him about their recent trip to Bolumbia. They visited four cities and a resort in one week, and all their expenses were paid for by BNC. Keller knew that BNC had just completed its work on the contract for infrastructure connectivity. Out of curiosity Keller questioned the engineering staff about the propriety of accepting an all-expenses-paid trip from a major subcontractor. Keller was told that it was common practice for Latin American companies to make gestures of gratitude, such as free travel and entertainment. One of the senior engineers, Mike Stone, 'S.A., Sociedad Anonima, is the designation for a Spanish company.
stated: “There’s nothing wrong with accepting such an offer.
After all, the offer of free travel was made after the decision to accept the bid of BNC and the completion of the job. We were not responsible for making the selection decision. All we did was to establish the engineering specifications for the job.”
Keller viewed this as an opportunity to learn more about the bidding process so he approached Sam Jennings, the head of the internal audit department of Telecommunications.
Keller grew up with Jennings’s son and Sam Jennings has been a close friend of the Keller family for many years.
Keller asked Jennings to have lunch with him one day.
Jennings was curious about the request since they hadn’t had lunch during the six months that Keller worked for Telecommunications.
Keller said he had some questions about reporting expenses on trips that he might be assigned to in the future. Since it was a work-related request and their families go back a long time, Jennings cleared his calendar and agreed to have lunch with Keller.
During the lunch, Keller raised the issue of whether there was a conflict of interest when members of the senior engineering staff, such as those who worked on developing specifications for the BNC job, accept free travel and entertainment from a subcontractor. At first, Jennings was furious because Keller had misled him about the purpose of the lunch, but he gave Keller the benefit of the doubt and proceeded to answer the question.
Jennings informed Keller that the relationship between the engineers in question and BNC, and whether there was any inappropriate influence one way or the other, had been examined because of the company’s concern about a possible violation of the Foreign Corrupt Practices Act (FCPA). Jennings went on to explain that the act prohibits U.S. multinationals or their agents from making payments that improperly influence government officials in another country, or their representatives, in the normal course of carrying out their responsibilities. Jennings told Keller that no evidence existed that the awarding of the contract was a prepayment for the promise of later free travel and entertainment, as Keller had expected. Moreover, explained Jennings, the decision to accept the BNC bid was made by Richard Kimble, the engineering division manager, and Bob Gerard, the vice president for engineering, and neither of them received any free travel or lodging. The fact was, according to Jennings, the rejected bids, while lower than BNC’s, were inadequate and did not meet the specifications of the contract. Only BNC’s proposal could do that.
Keller felt better about the situation after discussing it with Jennings. Still, he wondered about the values of a company that condones accepting free travel and entertainment from a subcontractor and those of the engineers who should be beyond reproach in carrying out their responsibilities.
Questions 

1. Should U.S. multinationals that operate overseas conduct business using U.S. ethical standards or the standards of the host country?
2. Assume that the engineers of Telecommunications did influence the decision-making process by establishing engineering specifications that only BNC could meet.
The engineers received free travel and lodging from BNC but only after the job was completed. Is there anything wrong with this picture?
3. Do you think that Ed Keller is right to be concerned about the values of Telecommunications and the senior engineers who accepted the offers of free travel and lodging? Why or why not? If you believe that Keller’s concerns are warranted, which values should be of concern to him?