1 Ethical Analysis of The Commonwealth Bank Money Laund.docx

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Ethical Analysis of The Commonwealth Bank Money
Laundering Case
Case Facts
Commonwealth Bank of Australia (CBA), founded in 1911, is
one of Australia’s leading
providers of ‘integrated financial services, including retail,
premium, business and
institutional banking, funds management, superannuation,
insurance, investment and
share-broking products and services’ (Commonwealth Bank of
Australia 2018). In May 2012,
CBA introduced Intelligent Deposit Machines (IDMs) which
accept deposits by both cash and
cheque (Ockenden & Parry 2017). Once deposited, funds are
available for immediate
transfer to other accounts domestically and internationally
(Chief Executive Officer of The
Australian Transaction Reports and Analysis Centre v
Commonwealth Bank of Australia

Limited ACN [2017] FCA, para. 1). IDMs can accept up to 200
notes per deposit (up to
$20,000 per cash transaction), and there are no limits on the
number of IDM transactions a
customer can make per day (AUSTRAC v CBA [2017] FCA,
para. 2). IDMs allow for
anonymous cash deposits, as a card from any financial
institution can be used; if a non-CBA
card is used, the details of the cardholder are unknown (Norton
2017; AUSTRAC v CBA
[2017] FCA, para. 3). Since their introduction in 2012, over $1
billion has been transferred
through IDMs (Ockenden & Parry 2017).
Under the Anti-Money Laundering and Counter-Terrorism
Financing Act 2006, s. 81, “The
Act”, CBA has a joint Anti-Money Laundering and Counter-
Terrorism Financing program,
with procedures it failed to comply with from the beginning of
IDM introduction to the
market in 2012 (AUSTRAC v CBA [2017] FCA, para. 5). The
private sector has considerable
responsibility in the fight against criminal financing activities
by monitoring and providing
intelligence to regulators (Norton 2017). Both prior and during

the IDM rollout, CBA failed to
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carry out money laundering and terrorism financing risk
assessment in response to the
suspicious rise in cash deposits through IDMs, and ignored
alerts raised by internal
transaction monitoring systems (AUSTRAC v CBA [2017] FCA,
para 6). All businesses with
obligations under The Act must be enrolled on The Australian
Transaction Reports and
Analysis Centre’s (AUSTRAC) Reporting Entities Roll
(AUSTRAC 2018). CBA is therefore
required to report to AUSTRAC any transaction involving a
transfer or $10,000 or more
within 10 business days (AUSTRAC v CBA [2017] FCA, para.
9). CBA failed to report 53,506
transactions (94% of all threshold transactions (TTRs)) with a
total value of around $624.7
million, to AUSTRAC on time between 2012 and 2015
(AUSTRAC v CBA [2017] FCA, para. 10).
CBA claim this was due to a technical issue caused by a
software update (Yeates 2017).

1,640 of the late TTRS were found to be related to money
laundering syndicates under
investigation by the Australian Federal Police, with six of the
late TTRs related to customers
who had been evaluated by CBA as potential terrorism
financing risks (AUSTRAC v CBA
[2017] FCA, para. 10).
In the syndicates identified between late 2014 and April 2016,
several arrests were made
against money launderers, with two individuals sentenced to
jail-terms in May 2015 for
their involvement in the first syndicate (AUSTRAC v CBA
[2017] FCA, para. 16-34). CBA
became aware of suspicious activities associated with the first
money laundering syndicate
in April 2015 (AUSTRAC v CBA [2017] FCA, para. 16). In
transactions connected to this
syndicate, on 92 occasions CBA failed to comply with
regulatory obligations to provide a
suspicious matter report (SMR) to AUSTRAC either on time or
at all, as required by s. 41 of
The Act, nor did they monitor suspicious customers (AUSTRAC
v CBA [2017] FCA, para. 13,

19). Where alerts were raised, CBA only partially disclosed
their suspicions to AUSTRAC
(AUSTRAC v CBA [2017] FCA, para. 12).
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Ethical Issues
The ethical dilemma occurs after the money laundering
syndicate court cases which saw the
conviction of two individuals, which would result in a request
for further information from
AUSTRAC. The CBA board of directors are the party faced with
the ethical dilemma in this
case, as they have knowledge regarding suspected money
laundering transactions,
compliance failures, and can make business decisions on CBA’s
behalf. At the time of the
dilemma, the board of directors are faced with several
competing demands and pressures.
They are aware of CBA’s system failings, and their own job
security is therefore at risk. They
must comply with reporting obligations to AUSTRAC so as not
to face legal ramification from

a breach of The Act and receive a civil penalty. As a firm, CBA
also have responsibility to act
in the interests of shareholders, both keeping them informed and
maintaining profitability,
which partially relies upon maintaining a good reputation. There
is pressure to consider
public welfare in relation to financial crime.
Ethical Dilemma
The ethical dilemma in this case is:
“To fully disclose money laundering information to AUSTRAC”
or
“Not to fully disclose money laundering information to
AUSTRAC”
If the board of directors fully discloses money laundering
information, it is reasonably
foreseeable that they will receive fines for monitoring and
reporting failures as well as
failing to establish sufficient risk assessment procedures, as
required by The Act. This will
create reputation damage and a loss of market share. Key
executives will lose their jobs. If

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the board does not fully disclose money laundering information,
they will receive a
significantly larger fine through a civil lawsuit from AUSTRAC
when exposed for non-
compliance under The Act. CBA’s reputation will be severely
damaged reducing market
share. Key executives involved in the decision-making process
with lose their jobs.
Utilitarianism Analysis
The stakeholders likely to be affected directly and indirectly by
the ethical dilemma in this
case are: The Commonwealth Bank’s board of directors,
shareholders, employees, money
launderers, law enforcement agencies, the Australian public,
AUSTRAC, competitors and
customers. Both long-term and short-term consequences of the
ethical dilemma will be
considered in the analysis.
Reasonably foreseeable consequences of fully disclosing details
of money laundering
information to AUSTRAC:

• In the short-term, the board of director’s must arrange
payment of fines for failing to
establish sufficient risk assessment and monitoring procedures
as required by The
Act. As the board’s reputation will be damaged due to
incompetency, key executives
will lose their jobs. Some customers will switch banks, reducing
profits in the short-
term.
• Customers will view CBA as less competent, creating
dissatisfaction.
• Competitors will gain some customers from CBA’s loss; their
market share will grow.
• Shareholders will be dissatisfied with CBA’s incompetency.
Share prices will fall in
the short-term and their profits will reduce.
• Individual employees involved in human-errors will be
disciplined.
• Known money launderers will be prosecuted by law
enforcement agencies.
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Reasonably foreseeable consequences of not fully disclosing
details of money laundering
information to AUSTRAC:
• For the board of directors, the consequences of not offering
full disclosure is that in
the short-term they will feel they have not upheld their
regulatory duty and are
aiding money launderers. They will feel relief that their system
failures are not
exposed. In the long-term, once exposed by investigation for not
offering full
disclosure, key executives will suffer jobs loss due to deceitful
behaviour and non-
compliance. CBA will receive a large fine due to breaching The
Act, which the board
must manage. CBA’s reputation will be severely damaged.
Many customers will
switch banks, reducing profits.
• Customers will view CBA as untrustworthy and incompetent,
creating significant
dissatisfaction.
• Competitors will be disadvantaged as CBA is not operating
with the same regulations

as them. In the long-term, once CBA is exposed, a royal
commission will result in
investigation of the entire financial sector. Competitor’s will
gain a significant
number of customers from CBA’s loss.
• Shareholders would not have access to all information they
would want when
making investment decisions, creating dissatisfaction once CBA
is exposed. CBA’s
share price will reduce when exposed, and therefore shareholder
profits will reduce.
• Employees will be dissatisfied as they are working for an
employer who is not
following regulatory obligations as required by law. Once
exposed, some employees
will be laid off as CBA must make cuts due to substantial fines.
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• Not having full information will mean that AUSTRAC will be
unable to regulate the
industry effectively as it’s autonomy is being ignored. In the
long-term this will also

damage their reputation as regulators.
• Law enforcement agencies will have diminished capacity to
investigate illegal
activity.
• The Australian public will be exposed to serious and perpetual
financial crime. This
will create lost proceeds to crime within the economy.
The utilitarianism analysis concludes that the decision which
creates the greatest good for
the greatest number in this case would be to fully disclose
money laundering information to
AUSTRAC. While there is financial and reputational damage for
either decision, it is
significantly worse for the board if they do not offer full
disclosure. Further, the Australian
Public is indirectly disadvantaged when AUSTRAC and law
enforcement agencies have
diminished capacity to perform their duties, this outweighs the
minimal short-term benefits
to stakeholders. Many of the short-term benefits of not fully
disclosing information are
negligible once the inevitable exposure of CBA’s non-
compliance occurs.

Kantian Analysis
The primary duty in this case could be owed to either
AUSTRAC as a regulator, or CBA’s
shareholders. As CBA operates with reporting regulations under
The Act, they have
mandatory enrolment with AUSTRAC. In all decisions relating
to disclosure of money
laundering information, the primary duty must be to AUSTRAC
so that they are able to
regulate the industry. Under the assumption that there is no
prima facie case, the maxims
for review are:
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“To always ignore autonomy”
or
“To never ignore autonomy”
Next, the Categorial Imperative must be applied to each maxim
to determine if it passes as
an ethical law.

“To always ignore autonomy”.
1. Universalisable = No
The outcome would be that everyone would always ignore the
autonomy of others. The
logical end point of which would be that all decisions are made
based on deception,
coercion or manipulation. This is a self-defeating outcome.
2. Respect for rational beings = No
The sole intent of the decision-maker is to deny AUSTRAC’s
right to autonomy to avoid
punishments. This is a selfish intent.
3. Respect for Autonomy = No
By always ignoring autonomy, the intent of the decision-maker
is to deny AUSTRAC’s ability
to make free and informed choices. This is disrespectful of their
autonomy.
The maxim fails all three Categorical Imperative tests;
therefore, it is unethical.

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“To never ignore autonomy”.
1. Universalisable = Yes
The outcome would be everyone would always respect the
autonomy of others. The logical
end point being that all decisions made are free of deception,
coercion or manipulation. This
is a self-fulfilling outcome.
2. Respect for rational beings = Yes
By never ignoring autonomy, the decision-makers intent is to
enable AUSTRAC to make free
and informed choices, despite punishments. This is a selfless
intent.
3. Respect for autonomy = Yes
By never ignoring autonomy, the intent of the decision-maker is
to respect AUSTRAC’s
ability to make free and informed decisions. This is inherently
respectful of their autonomy.
This maxim passes all three Categorical Imperative tests;
therefore, it is ethical.
The maxim “to never ignore autonomy” can be considered an

acceptable ethical law. If
everyone must never ignore autonomy, the board of directors
therefore must, regardless of
any consequences, respect the autonomy of AUSTRAC so that it
can perform its regulatory
duties. Therefore, Kantian analysis recommends the ethical
decision to fully disclose money
laundering information to AUSTRAC.
Ethical Rights Analysis
The first stage of an ethical rights analysis is determining which
rights are at play at the
point of the ethical dilemma. The following rights are relevant:
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• CBA board of director’s negative right to make business
decisions, which obligates all
other rational beings not to prevent the board from making
business decisions.
• AUSTRAC’s negative right to autonomy, which obligates all
other rational beings to
refrain from acting deceitful, manipulative or coercive towards
them.

• Shareholder’s negative right to autonomy.
• Law enforcement’s agencies negative right to autonomy.
There is a clash of rights between the board of director’s
negative right to make business
decisions and AUSTRAC’s negative right to autonomy. This is
the case as the board of
director’s is seriously considering not fully disclosing money
laundering information to
AUSTRAC. According to the Hierarchy of Rights, autonomy is
the more basic right, and
therefore must prevail. Without universal respect for the right to
autonomy, the right to
make business decisions cannot be fulfilled. By not fully
disclosing all known information
regarding money laundering transactions, the board are acting
deceitful and ignoring
AUSTRAC’s right to autonomy and impeding its ability to
regulate the financial industry.
Therefore, rights analysis concludes the ethical decision is to
fully disclose money laundering
information to AUSTRAC.
Distributive Justice Analysis

Distributive Justice analysis begins with going behind the ‘Veil
of Ignorance’ and identifying
the potential worst off parties affected by the ethical dilemma.
The potential worst off
parties at the time of the ethical dilemma could be:
• The board of directors, as they are faced with a forced choice
with undesirable
consequences.
• AUSTRAC, as their negative right to autonomy is being
violated.
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• The shareholders, as their negative right to autonomy is being
violated.
• Australian Federal Police, as their negative right to autonomy
is being violated.
• The Australian public, as they are being exposed to perpetual
financial crime.
At the point of the ethical dilemma, AUSTRAC is the worst off
as their negative right to
autonomy is being violated. While other party’s autonomy is
also being violated, the board’s

primary duty is to AUSTRAC, so it’s autonomy is priority in
this decision. The board of
directors must therefore choose the outcome which best serves
AUSTRAC. The alternative
outcomes are:
• To fully disclose money laundering information to AUSTRAC
would have the outcome
that all autonomy would be respected.
• To not fully disclose money laundering information to
AUSTRAC would have the
outcome that all autonomy would be ignored.
The only outcome that improves the worst off’s position is to
fully disclose money
laundering information to AUSTRAC.
Final Recommendation
The case surrounds the primary duty owed to AUSTRAC and
it’s right to autonomy,
necessary to regulate the financial industry. Based upon the
above analysis, all four ethical
models arrive at the same conclusion. Therefore, it is
recommended that the only ethically
justifiable decision is for the board of director’s to fully
disclose money laundering

information to AUSTRAC. To minimise the punishments
associated with this decision, the
board should consult with their lawyers to prepare for the
inevitable lawsuit due to
improper risk assessment procedures and reporting failures, a
breach of The Act. They
should collect all information detailing how and why systematic
failures occurred in the risk
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assessment, monitoring and reporting processes to minimise
fines. The board should
immediately release a PR statement explaining details of the
failures and plans to establish
better risk assessment and reporting procedures adhering to
anti-money laundering laws.
This would minimise reputation damage and loss of market
share that would arise from
coverage in the media. The head of the board should resign to
minimise overall job loss
within the board.

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Reference List
Anti-Money Laundering and Counter-Terrorism Financing Act
2006 (Cth)
AUSTRAC 2013, Enrolment and registration, viewed 1 May
2018,
<http://www.austrac.gov.au/enrolment-and-registration>.
Chief Executive Officer of The Australian Transaction Reports
and Analysis Centre v
Commonwealth Bank of Australia Limited (2017) FDA.

Norton, S 2017, ‘Lessons from the CBA money-laundering
scandal’, The Strategist, 15
September, viewed 2 May 2018,
<https://www.aspistrategist.org.au/lessons-cba-money-
laundering-scandal/>.
Parry, Y & Ockenden, W 2017, ‘Commonwealth Bank: How
smart ATMs and a coding error
caused a massive mistake’, ABC News, 8 August, viewed 26
April 2018,
<www.abc.net.au/news/2017-08-07/commonwealth-bank-how-
smart-atms-and-coding-
error-caused-mistake/8781066>.
Yeates, C 2017, ‘’Mistakes can be made’: CBA blames software
for scandal’, The Sydney
Morning Herald, 6 August, viewed 1 May 2018,
<https://www.smh.com.au/business/banking-and-
finance/mistakes-can-be-made--cba-
blames-software-for-scandal-20170806-gxqiao.html>.

Live Case Analysis 2 Guideline (30marks)
Task: Write the Analysis with1750(Minimum)- 2000 words
(Maximum), NO 10% Leeway.
Please question the questions Q1-5 below. There is the
guideline what I want to write in your
questions. Please copy the questions before you answer the
questions. There are words limit in
different questions. There are rubrics below each question or
each part. Please the follow the
rubrics and avoid the common issues.
THE CASE is in other file. (Aids and Needles Case)
NOTE: NOTE: You are not required to define any of the ethical
theories in your report. You
are required, however, to fully reference the case facts you use
in your report.
NOTE: STUDENTS ARE NOT EXPECTED TO PROVIDE
REFERENCING IN THIS ASSIGNMENT.
Case Facts: (Please make sure you can answer “TRUE” to all of
the following statements)
Question 1: Describe the facts that underpinned the ethical
dilemma in the case.
480 words approximately – be sure to include only that
information that is directly relevant to the ethical
dilemma. The inclusion of information that is not relevant to the
ethical dilemma, no matter how interesting,
will not attract marks. No introduction, contents page or
executive summary is required.
That what I want you to be included.
1. The case facts describe the organisation/industry that the
ethical dilemma relates to.

2. The case facts inform the reader of the period of time that the
case happened.
3. The case facts are presented in chronological order that are
easy for the reader to follow.
4. The case facts include all of the information needed to
convince the reader that there is an ethical dilemma (i.e.
there is a forced choice between two exact alternative actions,
both of which will result in punishment for the
decision-maker specifically).
5. The Case Facts section includes NO information that occurs
after the ethical dilemma point in time.
Case Issues:
Question 2: Who was the decision- maker in the case, and what
conflicting demands did they have to
accommodate?
120 words approximately – be sure to identify the decision-
maker that has the initial ethical dilemma in the
case, and to detail the competing pressures you believe they
faced at the time of their decision.
Question Answer
Who is the decision maker?
What competing demands do they face at
the point of the Ethical Dilemma?
Rubric for QUESTION 1& 2 (3 marks for total):

The Case Facts & Case Issues:
3 marks- The Case Facts section will present an accurate
representation of the case with no irrelevant
information included. The decision- maker will be identified
accurately.
Which common issues you cannot get the full marks? Please
avoid it.
Case Facts:
□ The Case Facts section was incomplete and did not support
the Ethical Dilemma sufficiently well
□ The Case Facts section was poorly written and confusing to
read
□ The Case Facts section was insufficiently referenced (and
therefore unconvincing to read)
Case Issues:
□ The Case Issues section did not identify the decision-maker in
the case (*if there is no specific name available, then
the position that they held needs to be identified – e.g. CEO,
CFO, employee etc.)
□ The Case Issues section did not describe the competing
demands faced by the decision-maker
Ethical Dilemma:
Question 3: What was the initial ethical dilemma faced by the
decision- maker in this case?
80 words approximately – be sure to accurately define and
justify the ethical dilemma. Make sure it is
expressed as two exactly opposite alternatives, and explain how
each alternative is undesirable for the

decision-maker specifically (i.e. how do you expect they will
face punishment for their decisions?)
What is the punishment for the
Two exactly opposite statements! decision-maker
specifically?
****(Don’t miss that) The Ethical Dilemma identified in my
analysis is the first forced choice between two
undesirable alternatives.
Rubric for QUESTION 3 (3 marks for total):
Ethical Dilemma & Punishments
3 marks- An accurate ethical dilemma will be expressed in the
correct format, and relevant punishments
linked directly to the decision- maker.
avoid it.
□ The Ethical Dilemma was illogical
□ The Ethical Dilemma was NOT expressed as two exactly
opposite statements
□ The punishments associated with the Ethical Dilemma were
not linked to the decision-maker specifically
Four Concepts Usages

Question 4: Using the Utilitarian, Kantian, Rights, and
Distributive Justice approaches to ethical decision-
making, provide an analysis of the ethical dilemma. (16 marks
for total)
1120 words approximately – to answer this question well, you
need to introduce each of the four theories in
turn (i.e. each theory should have its own section). Ideally, you
will apply the steps of each theory to the case
as you identify and define them. As a guide, you should
allocate approximately 395 words to Utilitarianism,
325 words to Kantianism, 200 words to Rights, and 200 words
to Justice.
A. Utilitarianism: (Please make sure you can answer “TRUE” to
all of the following statements)
You should allocate approximately 395 words to Utilitarianism
1. The ethical dilemma headings used in the Utilitarian analysis
are expressed in exactly the same manner as they
were previously in the assignment.
2. The consequences listed are expressed as specifically as
possible – vague expression and non-sequences are
avoided at all times.
3. The list of consequences are comprehensive, and would
convince any reader that represent enough information to
determine “the greatest good for the greatest number”.
4. The explanation of “the greatest good for the greatest
number” is clearly written so that the reader fully
understands your logic.
5. I have linked the “the greatest good for the greatest number”

explanation back to the Ethical Dilemma specifically.
6. The conclusion to this section states which Ethical Dilemma
alternative must be chosen according to
Utilitarianism. There is no discussion about the penalties
attached to this choice.
Rubric for QUESTION 4A (5 marks):
Application of Utilitarianism
5 marks- The student will demonstrate a detailed understanding
of the ethical theory under review through a
logical and defensible resolution of the ethical Dilemma.
avoid it.
□ The list of consequences was illogical and/or poorly
expressed
□ The list of consequences was incomplete/far too brief to be
useful to the reader (*more problematic if the
assignment is under the word count)
□ The list included non-sequences
□ The justification of the Greatest Good was poorly explained
□ The link back to the Ethical Dilemma was not present
B. Kantianism:
325 words to Kantianism
What is the nature of the ethical dilemma? That is,
what does it concern specifically?
E.g. the engineers in the Ford Case had the Ethical
Dilemma: “to inform the public about their safety
concerns”, or “Not to….” – this decision relates
specifically to public autonomy (and not safety –
as there were no Pintos for sale at the point of the

ED).
To whom, therefore, does the decision-maker owe
their primary duty in this case?
What are the maxims underpinning the Ethical
Dilemma/Primary Duty?
A)
B)
****(Don’t miss that) The conclusion to this section states
which Ethical Dilemma alternative must be chosen
according to Kantianism. There is no discussion about the
penalties attached to this choice.
Rubric for QUESTION 4B (5 marks):

Application of Kantianism
avoid it.
□The party to whom the decision-maker owes their primary duty
was not identified accurately
□ The maxims included consequential considerations
□ The Universalization test was not applied accurately
□ The Respect for Persons test was not applied accurately
□ The Respect for Autonomy test was not applied accurately
C. Rights: (Please make sure you can answer “TRUE” to all of
the following statements)
200 words to Rights
1. All of the relevant “Rights at Play” and their attached
obligations are included in my list.
2. I have included more than just the two Rights I believe clash
in my analysis.
3. I have justified that there is a violation of a Right from
evidence in my Case Facts section.
4. I have clearly explained how the clash of Rights is resolved
using the Hierarchy of Rights concept.
5. I have linked the resolution of the clash of Rights back to the
Ethical Dilemma specifically.
6. The conclusion to this section states which Ethical Dilemma
alternative must be chosen according to Rights. There
is no discussion about the penalties attached to this choice.

Rubric for QUESTION 4C (5 marks):
Application of Rights
avoid it.
□ The list of relevant “Rights at Play” was incomplete (*i.e.
relevant stakeholders were not included in the analysis)
□ The list of relevant “Rights at Play” did not include the
attached obligations
□ The “Clash of Rights” was not correctly identified
□ The resolution of the Clash of Rights was poorly explained
D. Distributive Justice:
200 words to Justice
List all of the potential worst-off parties at the point of the
Ethical Dilemma. Describe their worst position at the point
of the Ethical Dilemma but not past it.
You should borrow from your list of parties in your
Utilitarian section here – consistency in your representation
of relevant parties will make your work look comprehensive.
Who is the very worst-off party on your list?
I recommend that you justify your claim using Rights theory.

****(Don’t miss that) 1. The analysis of the outcomes for the
very worst-off party focuses ONLY on their
worst-of position – all other considerations are not mentioned at
all.
****(Don’t miss that) 2. The conclusion to this section states
which Ethical Dilemma alternative must be
chosen according to Distributive Justice. There is no discussion
about the penalties attached to this choice.
Rubric for QUESTION 4D (5 marks):
Application of Justice
avoid it.
□ The list of potential “worst-off parties” was incomplete
(*includes relying on consequences)
□ The selected “worst-off party” was not logically justified
□ The outcomes for the “worst-off party” included reference to
consequences
Final Recommendation:
(Please make sure you can answer “TRUE” to all of the
following statements)
Question 5: Present and justify the final recommendation you
would have made to the decision- maker in this
case had they asked you for advice on how to resolve their
initial ethical dilemma.

200 words approximately – identify and justify the final
recommendation would you have made given the
opportunity to consult with the decision-maker before they
made their decision. You must explain how the
decision-maker could avoid the punishment(s) that you
identified in Question 3.
1. The Final Recommendation specifically states which Ethical
Dilemma alternative you would recommend
OVERALL to the decision-maker (had you had the opportunity
to do so at the time of the decision).
2. The Final Recommendation provides at least one strategy that
could assist the decision-maker in avoiding the
punishment(s) you identified earlier in your work.
3. The Final Recommendation does not provide ANY additional
information other than that required in (1) and (2)
above.
Rubric for QUESTION 5 (3 marks):
Final Recommendation
3 marks- The final recommendation will resolve the ethical
dilemma logically and defensibly and provide
strategies for dealing with dissenting groups to the decision-
maker.
avoid it.
□ The Ethical Dilemma was not resolved specifically
□ The punishment associated with the Ethical Dilemma
alternative is not dealt with specifically
Format: It is recommended that you use headings to guide your

answer, as it will keep both you and the marker ‘on-
track’.
References: Your reference list is not included in your word-
count. however, you should provide references for the
case facts you include in your analysis (i.e. newspapers,
Internet sites, periodicals etc).
Rubric for format (1 mark)
Expression, spelling & Grammar, Page number, Double line
spacing. Within the words limit.
1 mark- The analysis will confirm to the presentation and
Harvard referencing standards sets in the School’s
referencing and essay presentation guidelines.
avoid it.
□The text is not double, or 1.5 line spaced
□ Incorrect or inaccurate referencing standards applied in the
text AND/OR the final reference list
□ Exceeded the word limit
AIDS and Needles
Becton Dickinson, one of the largest manufacturers of medical
supplies, dominates
the US market in disposable syringes and needles. In 2005, a
nurse, Maryann Rockwood
(a fictional name), used a Becton Dickinson 5cc syringe and

needle to draw blood from a
patient known to be infected with HIV (Human
immunodeficiency virus). Ms. Rockwood
worked in a clinic that served AIDS patients, and she drew
blood from these patients
several times a day. After drawing the blood on this particular
day, she transferred the
HIV-contaminated blood to a sterile test tube by sticking the
needle through the rubber
stopper of the test tube, which she was holding with her other
hand. She accidentally
pricked her finger with the contaminated needle. She is now
HIV positive.
A few years earlier, in 2000, Becton Dickinson had acquired
exclusive rights to a patent
for a new syringe that had a moveable protective sleeve around
it. The plastic tube around
the syringe could slide down to safely cover the needle. The
Becton Dickinson 5cc
syringe used by Maryann Rockwood in 2005, however, did not
yet have such a protective
guard built into it. The AIDS epidemic has posed peculiarly
acute dilemmas for health
workers, including doctors and nurses. Doctors performing
surgery on AIDS patients can
easily prick their fingers with a scalpel, needle, sharp
instrument, or even bone fragment
and can become infected with the virus. The greatest risk is to
nurses, who, after routinely
removing an intravenous system, drawing blood, or delivering
an injection to an AIDS
patient, can easily stick themselves with the needle they were
using. Needlestick injuries
occur frequently in large hospitals and account for about 80
percent of reported

occupational exposures to HIV among health care workers. It
was conservatively
estimated in 2005 that about 64 health care workers were then
being infected with HIV
each year as a result of needlestick injuries.
Although the fear of HIV had heightened concerns over
needlestick injuries, HIV was not
the only risk posed by needlestick injuries. Hepatitis B can also
be contracted through an
accidental needlestick. In 2000, the Centre for Disease Control
(CDC) estimated, on the
basis of hospital reports, that each year at least 12,000 health
care workers are exposed to
blood contaminated with the Hepatitis B virus, and of these 250
die as a consequence.
Due to underreporting, however, the actual numbers may be
higher. In addition to
Hepatitis B, needlestick injuries can also transmit numerous
other viral, bacterial, fungal,
and parasitic infections, as well as toxic drugs or other agents
that are delivered through a
syringe and needle. The total statistics on needlestick injuries in
2005 are disturbing,
although the exact incidence of contamination is unclear. It was
estimated that each year,
in the United States alone, between 800,000 and 1 million
needlestick injuries occurred in
hospitals - of these, between 60,000 and 300,000 resulted in
Hepatitis B infection. By one
estimate, the risk of contracting HIV from a known
contaminated needle could be as high
as 1 in 1000, and the risk of contracting Hepatitis B, a serious
and often life-threatening
condition, could be as high as 1 in 6. These estimates would
imply that as many as 600 to

1000 health care workers were at risk of contracting HIV and as
many as 100,000 were at
risk of contracting Hepatitis B.
Several agencies stepped in to set guidelines for nurses,
including the American Nursing
Association, the CDC, the Environmental Protection Agency
(EPA), and the Food and
Drug Administration (FAD), who all developed such guidelines.
The most comprehensive
guidelines were issued by the Occupational Safety and Health
Administration (OSHA),
who on December 6, 2001, required hospitals and other
employers of health workers to
(a) make sharps containers (safe needle containers) accessible
to workers, (b) prohibit the
practice of recapping needles by holding the cap in one hand
and inserting the needle with
the other, and (c) provide information and training on
needlestick prevention to
employees.
The usefulness of these guidelines was controversial. Nurses
work in high-stress
emergency situations requiring quick action, and they are often
pressed for time both
because of the large number of patients they must care for and
the highly variable needs
and demands of these patients. In such workplace environments,
it is difficult to adhere to
the guidelines recommended by the agencies. For example, a
high-risk source of needle
sticks is the technique of replacing the cap on a needle (after it

has been used) by holding
the cap in one hand and inserting the needle into the cap with
the other hand. OSHA
guidelines specifically warned against this two-handed
technique of recapping and instead
required that the cap be placed on a stable surface and the nurse
use a one-handed
spearing technique to replace the cap. (Note that recapping the
needles in this more time
consuming way presented no risk of needlestick injury to the
user). As noted above
however, nurses are often pressed for time (and are keenly
aware of the added danger of
walking around with an uncapped needles) and tend to take the
‘two-handed recapping
shortcut’ when no suitable surface is readily available for the
safer one-handed capping
technique. This fact is known to Hospital administrators, who
regularly warn against such
practices, and offer ongoing training and retraining
opportunities to their nursing staff.
Several analysts suggested that the peculiar features of the
nurse's work environment
made it unlikely that needlesticks would be prevented through
mere guidelines alone: The
problem was not the worker, but the design of the needle and
syringe. Experts on
needlestick injuries argued that, rather than trying to teach
health care workers to use a
hazardous device safely, the focus should be on the hazardous
product design and that a
whole new array of devices in which safety is an integral part of
the design was required.
Regulators also urged manufacturers to provide the health care
worker with devices in

which safety was built into the design.
The risks of contracting life-threatening diseases by the use of
needles and syringes in
health care settings had been well documented since the early
1980s. Well over half of all
the needles and syringes used by U.S. health care workers since
1980 were being
manufactured by Becton Dickinson. Despite the emerging crisis,
however, Becton
Dickinson decided not to modify its syringes, although it did
include in each box of
needled syringes an insert warning of the danger of needlesticks
and of the dangers of
two-handed recapping. On December 23, 2000, the U.S. Patent
office issued patent
number 4,631,057 to Charles B. Mitchell for a syringe with a
tube surrounding the body
of the syringe that could be pulled down to cover and protect
the needle on the syringe. At
the time, at least four other patents for needle-shielding devices
existed. As Mitchell
noted in his patent application, those devices all suffered from
serious drawbacks. One of
them would not lock the protective cover over the exposed
needle, one was extremely
complex, another was much longer than a standard syringe and
difficult to use, and a
fourth was designed primarily for use on animals.
It was Mitchell's assessment that his invention was the only
effective, easily usable, and
easily manufactured device capable of protecting users from
needlesticks, particularly in
emergency periods or other times of high stress. Unlike other
syringe designs, Mitchell's

was shaped and sized like a standard syringe so nurses already
familiar with standard
syringe design would have no difficulty adapting to it. Shortly
after Mitchell patented his
syringe, Becton Dickinson purchased from him an exclusive
license to manufacture it. A
few months later, Becton Dickinson began field tests of early
models of the syringe using
a 3cc model. Nurses and hospital personnel were enthusiastic
when shown the product.
However, they warned that if the company priced the product
too high, hospitals, with
pressures on their budgets rising, could not buy the safety
syringes. With concerns about
HIV rising fast, the company decided to market the product.
In 2001, with the field tests completed, Becton Dickinson had to
decide which syringes
would be marketed with the protective sleeves. Sleeves could be
put on all of the major
syringe sizes, including 1cc, 3cc, 5cc, and 10cc syringes.
However, the company decided
to market only a 3cc version of the protective sleeve. The 3cc
syringes account for about
half of all syringes used, although the larger sizes-5cc and 10cc
syringes-are preferred by
nurses when drawing blood. This 3cc syringe was marketed in
2002 under the
trademarked name Safety-Lok Syringe. It was promoted as a
device that "virtually
eliminates needlesticks." The 3cc safety syringe with the
protective sleeve was sold in
2001 to hospitals and doctors' offices for between 50 and 75

cents. By 2003, the company
had dropped the price to 26 cents per unit. At the time, a regular
syringe without any
protective device was priced at 8 cents per unit and cost 4 cents
to make. Information
about the cost of manufacturing the new safety syringe is
unavailable but is estimated at
between 13 and 20 cents each. The difference between the price
of a standard syringe and
the price of the safety syringe was an obstacle for customers. To
switch to the new safety
syringe would increase the hospital's costs for 3cc syringes by a
factor of three. An
equally important impediment to adoption was the fact that the
syringe was available in
only one 3cc size, and it was perceived to be of limited
application. Hospitals are
reluctant to adopt and adapt to a product that is not available for
the whole range of
applications the hospital must confront. In particular, hospitals
often needed the larger 5cc
and 10cc sizes to draw blood, and Becton Dickinson had not
made these available with a
sleeve.
For 5 years, Becton Dickinson manufactured only 3cc safety
syringes. During that period,
Becton Dickinson did not license its new safety syringe
technology to another
manufacturer that might have produced a full range of syringe
sizes. Most hospitals and
clinics, including the medical facility where Maryann
Rockwood worked at drawing
blood from many patients with Hepatitis B or HIV, did not stock
the Becton Dickinson
safety syringe. Most nurses in the United States continued to

use unprotected syringes.
Maryann Rockwood sued Becton Dickinson, alleging that,
because it alone had an
exclusive right to Mitchell's patented design, the company had a
duty to provide the
safety syringe in all its sizes, and that by withholding other
sizes from the market it had
contributed to her injury. The case was settled out of court.
Velasquez, M.G. 2006. Business Ethics: Concepts and cases
(6th ed.). Sydney:
Pearson. pp. 292-296.

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