Ethical Dilemma: Who Tinkered With My Cousin's Company Products?

A few years ago, your cousin founded a company that manufactures beauty products. You, along with a few others were angel investors in her start-up. Today, her products are doing so well, they are being sold all over the G.C.C. But your cousin (who is also the CEO) has recently received terrible news; 3 people in Manama, Bahrain died after using the products. Your cousin believes that Jumana, a rival businesswoman, and fierce competitor, injected poison into the products. Unfortunately, your cousin cannot prove this, or pinpoint which laboratory was compromised. Your cousin also has to deal with the negative press and social media backlash. Her products and the company's reputation are being destroyed, and as a result, sales begin to plummet. Your cousin has her team look into solutions, and they advise her with the following:

Option (1): Do nothing at all.

Option (2): Recall products nation-wide (all over Bahrain, not only Manama); then destroy them.

Option (3): Recall and destroy the products all over the G.C.C.

The company lawyer says that a recall is not required by law since the company was not fully responsible, she recommends option (1) - doing nothing - because recalling the products is like publicly admitting fault and responsibility. The CFO concurs, he states that the company will suffer minor losses, and the issue will eventually blow over. And until things get back to normal, he recommends terminating 30% of the office staff. The main issue is more customers could die.

Option (2) is expensive in the short term and will require greater employee layoffs and additional financial losses to investors. But this option is safer to customers in Bahrain; and could create enough trust, that sales will eventually bounce back.

Option (3) is by far, the most expensive in the short term and will require significant employee layoffs and investor losses. And even though there is no evidence this is a regional (G.C.C.) issue or threat, it provides the highest customer protection.

Given the conflict between the interests of her [employees and investors] vs. those of her [customers] your cousin is struggling, she asks you for advice. Which strategy would you choose? why?

Hints: [legal vs. ethical - strategic planning and leadership - theories of ethics - social responsibility of business - public perception and social drawbacks]