If you were a chairman of Premier Oil Ltd., what would be your decision? What dilemmas do you face in this decision? How could the dilemmas be resolved?

The following Imaginary situation Is typical type of ethical dilemma which can face a multinational company when it tries to do business In certain parts of the world. A donation to the President's campaign fund You are chairman ofa multinational oil company called Premier ail Ltd with Ha In London. For many years Premier Oil has been trying to gain access to the large oil and gas elds in a country called Energyiand. Last year you appointed Joe Smith to be MD otyour 100% subsidiary in Energyland called Premier Oil (Energyland) 00- known as POEC for short. POEC formed a 50/50 Joint Venture called JV Co with an Energyland oil company called Energyland Oil Int: known as EOI lor short. JV Co has been negotiating with the Energytand Govemrrtent on a concession agreement to exploit the oil and gas reserves of Energytand. Negotiations have been going well and preliminary agreement has been reached between N Go and the Energyland Got/eminent. The main terms 01 this preliminary agreement have been captured in a no 'nding Memorandum oI Understanding (MOU) which Joe Smith Signed on behalf of POEC a week ago. Your negotiators are working hard to nalise the legally binding contract. You have lust arrived in Energylaml on yourlirst visit in orderto meet with the Energyland President to express your thanks tor the positive attitude shown by his negotiators and explore with the President some ideas for further cooperation. You are in high spirits since this deal could be worth up to $10 billion over the next 10 years and the stock market has reacted favourably to the news. You will meet with the President tomorrow and you are having a quiet dinner with Joe Smith to go over the delails oi the progress made to date. During dinner you are shocked to learn that as part of the deal and before the legally binding contract is signed. JV Co will have to contribute $5 million towards the President's campaign fund for the iorlheoming Presidential elections. Joe explains that during the earlier negotiations a competitor had already agreed to make this payment. Without a similar undertaking the government would not have agreed the MOU with JV On. At this point you remind yourself of the relevant parts of Premier Oil's Business Principles. Premier Oil companies insist on honesty, Integrity and fairness in all aspects 0! our business and expect the same in our relationships with all those with whom we do business. The direct or indirect after, payment, soliciting or acceptance or bribes in any form Is unacceptable. Facilitation payments are also bribes and should not be made. Employees must avoid conicts olinterlear between their private amines and their pan in the conduct of company business. Premier Oil companies do not make payments to pollcal patties. organizations or their representatives. Premier Oil companies do not take part in party politics. However, when dealing with governmens, Premier Oil companies have the right and the responsibility to make our position known on any matters which affect us, our employees, our customers, our shareholders or local communities in a manner which is in accordance with our values and the Business Principles. Joe further explains that the payment will be made through a oompany owned by the brother of the President which will invoice JV Co for $5 million lor services provided to JV CD. However, in reality, no such services will be provided. Joe believes that this will effectively hide the donation. Alter dinner you are joined at the bar by Mr Kim, the Chairman oi EOI who is from a well known iamily in Energyland and whose father is a personal friend of the President. You explain your concerns to him. He explains that in Energyland such a payment is not regarded as a bribe but more as a business necessity. However, he understands you conoems and makes two suggestions. 1) JV Co currently obtains genuine senrices from another local company Personnel Seivices(Energy1and) (:0. Mr Kim is also Chairman of this company. He can instruct this company to make the $5 million donation and then recovermistrom JV Co by inating genuine invoices. This would effectively hide the linkage of the donation to Premier Oil. 2) Mr Kim offers to make the payment personally (he is from a wealthy family). This will be very sale since he and his family make regular payments to the President and there is no way the $5 million payment will be traced back to Premier Oil. All he asks in retum is that EOI will be the JV partner ior any future contracts won by Premier Oil in Energyland. The UK has been trying to improve political relations with Energyland and the Prime Minister will visit Energyland in 2 weeks time. The PM phoned you before you left to wish you luck on your visit and to say that he was relying on you to use your business contacts with the President to help smooth UK/Energyland relaonships prior to his visit next month. It is now 7.30am and room service hasjust delivered some black Oofiee. Following the meetings the previous evening with Joe Smith and Mr Kim you did not slept very well. You will have breakfast with Joe Smith at 8am and will be joined by Mr Kim at 93m. Your meeting is scheduled with the President at 10am. Vou are facing a serious dilemma. Premier Oil has negotiated a very lucrative deal but as things stand at the moment a donation will have to be made to the President's campaign fllndt 1his is strictly against Premier Oil's Business Principles. As the chairman of Premier Oil the final decision is yours. What have mu decided to do? And why? Premier Oil Limited HQ London Chairman You Premier Oil (Energylanil) Co Known as pocc Registered in Energyund 100% owned by Premier Oil MD Joe Smith NO) 50150 Joint Venture between roles and Energy on Inc (01). a 100% owned local company. President of E01, Mr Kim, is chairman of Board ofDitcclors orJv Co and Joe Smith is Deputy Chairman