In June 2019, the government of Vartan invited bids for the construction of a cellular

telephone network. ZenTel, an experienced communications company, was eager to

enter the growing field of cellular telephone networks in countries with poor

infrastructures for land lines. If ZenTel won a few of these early contracts, it would be

sought after for its field experience and expertise. After careful analysis, it prepared a

detailed bid for the Communications Ministry of Vartan, building in only half of its usual

profit margin and providing a contractual guarantee that the project would be completed

in two years or less. The multimillion-dollar bid was submitted before the deadline, and

ZenTel received notification that it had reached the Vartan government. Then, despite

repeated faxes, e-mails and phone calls to the ministry, there was no news on the bids

or the project from the Vartan government.

Steve Cheng, VP of Global Operations for ZenTel, contacted the U.S. commercial

attach in Vartan, who told him that his best chance was to go to Vartan and try to meet

the deputy minister of communications in person. Cheng prepared thoroughly for the

trip, rereading the proposal and making sure that he understands the details.

At the commercial attache's office in Vartan's capital, Cheng waited nervously for the

deputy minister and his assistant. Cheng had come to Vartan with a clear negotiating

strategy to try to win the bid. Soon the deputy minister and his staff arrived,

introductions were made, and pleasantries were exchanged. The deputy minister asked

a few questions about ZenTel and the bid and then excused himself, leaving his

assistant to talk to Cheng. After clearly indicating that many other compelling bids had

been made by firms from around the world, the assistant said, "Mr. Cheng, I guarantee

that ZenTel's bid will be accepted if you pay a $1 million commission. Of course, your

excellent proposal doesn't have to be altered in any way." It was clear to Cheng that the

"commission" was, in fact, a bribe. Tactfully, he pointed out that U.S. laws and ZenTel's

corporate policy prohibited such a payment. The assistant wished him a good day and a

pleasant flight home and left.

Required:

a. As a shareholder in ZenTel, would you prefer that ZenTel executives agree to the

payment of the "commission"?

b. When Cheng described his experience to his friend Hank Shorn, who managed

international business development for another company, Hank said that his own

"personal philosophy" was to make such payments if they were typical in the local

culture. Do you agree with Hank's point of view? Explain.

c. Why would ZenTel have a corporate policy against such payments?

d. What should Steve Cheng do next?