Ethical Dilemmas

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Wilson Chemicals Ltd
Background
Wilson Chemicals (Ghana) Ltd., a subsidiary of the British company Wilson Chemicals, was a Ghanian
manufacturer of chemicals, particularly chemical fertilizers. Since its establishment in 1962 the subsidiary
had grown at a steady rate despite the economy difficulties and political upheavals since independence.
There were several reasons for its success. First, its primary product was fertilizers, which were in great
demand in this agriculturally based economy. Second, it had since 1968 been responsive to the host country
by employing more and more native Ghanians in top positions. Third, in 1972 it had named Mr. Joseph
Okono, an Oxford-educated Ghanian, as subsidiary president, thus removing the last vestige of "colonial"
control.
Mr. Okono proved to be an extremely able manager: he had increased sales an average of ten percent a
year, tripled real profits, seemed to have a flair for working cooperatively with whatever government was in
power, and was well liked by employees and clients alike.
In the winter of 1984, however, a careful examination by a British-based auditing firm revealed disquieting
discrepancies in accounting practices. In short, it appeared that Mr. Okono, during the last year, had used
about £50,000 as "incentives" to bureaucrats in government agencies (the chief purchasers of fertilizers) to
gain key contracts, minimize bureaucratic red tape, and generally streamline procedures. In London the
directors of the corporation were naturally worried about the news but were unsure of what course of
action to pursue.
Dialogue
Participants: George Teele, Vice President, International Division, WilsonChemicals
Gerald Howard, President, Wilson Chemicals
Ian Thomas, Director, West African Division, Wilson Chemicals
The directors are meeting at the London head office to discuss the news received from the
independent auditors in Accra, Ghana.
Thomas: Gentlemen, I’ll come right to the point. Mr. Okono must be fired. We cannot allow this
situation to endure any longer than it has.
Howard: How long has it been going on?
Thomas: Who knows? Certainly for some time, I should think.
Teele: All we know is that about £50,000 were used for "incentives" in 1983.
Thomas: Incentives, bribes, call them what you like, but what we have here is a clear case of dishonesty.
Howard: I'm not so sure there is any "clear case" at all. We all know that business is done differently
from place to place, and I really have no reason to assume that Mr. Okono is not simply
conducting business the way it must be conducted to ensure growth.
Teele: That's right. And what we also have to look at here is not what Mr. Okono has done wrong,
but what he's done right. Profits are way up, and problems are down. Given the continuing
economic and social/political disorders, I'd say that Mr. Okono has done a fine job. It's not that I'm
justifying bribery, but let's be honest—we all know it exists, and until the audit none of us could
really care less how Mr. Okono managed to triple profits.
Howard: Well, I don't know if I'd go so far to say "we couldn't care less," but it is true we were more
interested in the end than in the means.

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Thomas: Let us assume that as far as we are concerned Mr. Okono has a free hand to distribute gratuities
to whomever he desires. But there is another problem.
Howard: What's that?
Thomas: Mr. Flight Lieutenant Rawlings and his PNDC.
(On December 31, 1981, Flight Lieutenant Jerry Rawlings, along with a small group of soldiers, launched
a successful coup against the Ghanian government. Rawlings became Chairman of the Provisional
National Defense Council (PNDC), the Ghanian ruling council.)
Howard: Mr. Okonohas managed to work well with all the regimes.
Thomas: But Rawlings is different. He's dedicated himself to ferreting out corruption and black
marketeers. If Okono were caught, why the whole future of Wilson would be in danger in
West Africa. Can't you just see how tidy it would be for the new government to discover that
a foreign company was bribing his government administrators?
Teele: That's a point. But when Rawlings was in power before, there were no major crackdowns.
Besides, every regime claims to be in favor of "cleaning up" the country, but it rarely seems to
happen.
Howard: Still, Ian has a point. Though I'm no expert, Mr. Rawlings does seem quite intent on this
policy.
Teele: I feel all this talk of external matters has not gotten us very far. What do we do about Mr.
Okono? I really can't see firing him without at least getting an explanation from him.
Exhibits
Exhibit 1: Cover Letter from Sylvia Appleby, Accountant for Firmin andGoodheart,
Accompanying Her Financial Report on Wilson Chemicals (Ghana) Ltd.
Firmin and Goodheart
Certified Public Accountants
67 Grange St.London, ECS, EnglandTelephone 01 424-0670
12 February 1984
Mr. Ian Thomas
Director, West African Division
Wilson Cemicals
74, The Oaks
Landon, WC2
DearMr.Thomas:
Enclosed is the financial report of your subsidiary, Wilson Chemicals Ghana, Ltd.During theaudit madebyourAccra
office at yourrequest several discrepancies were reported. Some of the errors were procedural; others, I'm afraid, were
more serious.
Specifically, I refer to approximately £50,000 which was unaccounted for by the financial officer, Mr. G. Johnson.
When queried by our auditors, Mr. Johnson replied that the money had been spent by Mr. Okono and his
executives as “incentives” to increase or maintain business. There did not seem to be any attempt to cover this
expense; however, Mr. Johnson noted that in the past these “incentives” had been written off as sales promotion
costs.
In light of these findings, we find it impossible to certify your subsidiary as financially in conformance with
accepted accounting practices. Please contact me if you have any further questions regarding this matter.
Very truly yours,
Sylvia Appleby
SA:bf
Enclosures

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Exhibit 2: Letter from Okono to Howard
Wilson Chemicals (Ghana) Ltd.
P.O. Box 272Accra, Ghana
20 February 1984
Mr. George Howard
President
Wilson Chemicals
74, The Oaks London, WC2, England
Dear Mr. Howard,
Your letter of 13 February arrived here today. Your concerns are justified, but things are not (exactly)
as they seem.
You accuse me of bribery. I do not deny it. Indeed, some £47, 000 were expended last year, a year of
some chaos may I remind you, in an effort to maintain sales. I assure you that this money was spent
solely for this purpose; neither Inor any other Wilson executives profited personally from this outlay.
The economy situation here in Ghana is not good. Last year was a year of drought. Food production
dropped. Cocoa, the main crop of Ghana, declined to 110,000 tons, the lowest yield since the 1920s.
And yet, Mr. Howard, Wilson's sales of Chemical fertilizers did not decline. Fuel shortages are acute.
We have, however, had enough fuel to continue operations at a normal level. Other companies have
failed. The Ministry of Industries has halted or made difficult the importation of machinery. Some
companies wait months for needed goods to clear customs. Our goods are cleared in days.
Why have we been successful when others have not? The answer lies in an outlay of £47,000 as
incentives to individuals to give Wilson “extra consideration.” Of course, this practice is undesirable,
yet, it has been necessary to preserve business—your business, my business.
In your letter you state concern about the Rawlings government. I too am concerned, yet not because I
fear interference in the practice of rewarding incentives to key administrators. I,probably more than
anyone else, would be delighted if “corruption” were ended, if business could proceed without the
need for inducements. What concerns meabout Mr. Rawlings is his anti-business stand. This is far
more worrisome than his “crackdown” on corruption, as this stance could really imperil Wilson.
Since Rawlings and the PNDC took power again at the end of 1981, there has, however, been little
change in the way business has been conducted. In fact, we have made great efforts to work with the
government, and I see no reason why this should change. The truth is Ghana needs Wilson. Wilson
also needs Ghana. It is a give-and-take relationship. Our goal, as is yours, is not to damage this
relationship.
Mr. Howard, trust me. For the last thirteen years I have made Wilson work, and work well. I see no
reason to believe I cannot continue to do so, but Imust be able to have a free hand (as I have had).
Wilson will not fail in Ghana as long as I am allowed to direct the subsidiary's policies as I see fit.
I remain.
Loyally yours,
Joseph Okono

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Exhibit 3: Gross Sales, Wilson Chemicals (Ghana) Ltd., 1973-1983
Exhibit 4: Brief Summary of the Rawlings Government Crackdown on Public Corruption*
In 1982, Mr. K. Edusei, a former leading member of the now banned People's National Party, was
imprisoned for accepting £5,000 from an Italian businessman.
*Source: The Economist Intelligence Unit, Quarterly Economic Review of Ghana, Sierra Leone.
Gambia, and Liberia, No. 4, 1983, p. 9.
In 1983 the crackdown continued:
1. A number of civil servants were dismissed on charges of corruption or embezzling.
2. Nine senior police officials and fifteen others were retired early for alleged profiteering.
3. The Director of Prisons and other senior prison officials were dismissed for a variety of reasons.
4. Some officials of the Ghana Water and Sewage Corporation, the Ghana National Trading
Corporation, and the Cocoa Marketing Board have been ordered to stand trial for tax evasion.
5. Sixty-nine officials, including sixteen principal and assistant principal secretaries, have been
forced to quit the Foreign Affairs Ministry for financial irregularities.
Some Points to Keep in Mind
Bribery for profit is an old and widespread practice. From the Persian Gulf to the Far East, from Latin
America to Africa, an extraordinary amount of money is paid by corporations for the purposes of securing a
contract, increasing or maintaining business, or avoiding bureaucratic red tape. Although generally frowned
upon, payoffs for profit show no signs of disappearing.
Some efforts have been made to curb bribery. Following the Lockheed scandal of the mid-1970s in which the
Lockheed Corporation was found guilty of bribing Japanese industrial and government officials, the United
States passed the U.S. Foreign Corrupt Practices Act. This 1977 law made it a criminal offense for U.S.
companies to pay bribes abroad. Many countries, however, have done little, if anything, to curb the practice.
Most Western European countries, for instance, either openly approve bribery or ignore it. Italy, for example,
passed a law in 1980 making it legal for Italian companies to use bribery for obtaining foreign business.
Gross Sales
Wilson Chemicals (Ghana) Ltd
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1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983
MillionsofPoundsSterling