The Adeshiland Scenario

You work as the country sales manager for an Australian Iron Ore and Steel mining and production company in

Adeshiland, a poor country recently devastated by floods.

Your company had accumulated a large stockpile of semi processed iron ore waste $($slag$)$ in Australia derived

from their steel manufacture. You were asked to investigate market opportunities for this by$-$product. You

found that there was very buoyant demand in Adeshiland for by$-$products from the steel making process to be

used for railroad ballast and road fill, in cement and building blocks, helping to provide much needed

infrastructure to rebuild the country.

The quality of the product was subject to metallurgical testing and a relevant tariff applied in the importing

country based on quality. You arranged for the customs bureau of Adeshiland to analyse a sample to confirm

the specifications for an applicable tariff of $25\%$ to the import of the product.

Two months later when the first shipment was received in Adeshiland, the customs officer declared that the

product was wrongly labeled and that an applicable tariff was in fact $50\%$ not $25\%.$ On your protest, the

customs officer agreed to resolve the issue and allow the import but a payment of a fee was required which

turned out to be less than the difference between the $25\%$ and $50\%$ tariff $($although the payment is still above

what you believe is the correct rate$).$

You realised such a payment was contrary to your company$$s Code of Business Ethics and insisted that the

product be tested to confirm the sample analysis. The customs officer agreed. After one month, the analysis

has not yet been done while your company has paid more than AUD$450,000$ in storage costs.

You decided to refer the matter to your immediate superior in Australia, who suggests that you offer to

contribute to a scholarship fund to be distributed by the head of the customs Bureau in Adeshiland to enable

Adeshiland students to study at Swinburne University for three years.

How should the company go ahead?

Option $1$: You should insist on the correct determination of the customs payment and refuse to

continue importing until this is done.

Option $2$: You should pay the additional duty.

Option $3$: You should not pay the additional duty but to start the scholarship fund to be $$managed$$

by the Customs Bureau.

Option $4$: You should withdraw your company$$s business from Adeshiland.

State your most compelling reason$($s$)$ for selecting your chosen response, and the main risks involved, and

consider the possible reactions of all the stakeholders involved in the transaction. You may make reasonable

assumptions.