CASE 1.

2 Loose Money

[money falling from an armored truck?

That may sound pretty far-fetched, but it can and has happened. Take a recent six-month
period. In August 2014, an armored truck left the Revel Casino Hotel in Atlantic City with a bag
of money sitting on its roof. Video recordings show that it remained there unnoticed when the
truck stopped at another casino. Sometime after that, however, the bag fell off, and the $21,000
it contained was never recovered. Two months later--on Halloween, to be precise--a bag of
money worth an undisclosed sum spilled out of the rear door of an armored car after the door's
lock malfunctioned. Numerous drivers on their morning commute along I-270 in Frederick
County, Maryland, pulled over and hopped out of their cars to grab as much cash as they could.
Then on

Christmas Eve of the same year, nearly $2 million tumbled out of the back of an armored vehicle
in a crowded business district of Hong Kong, creating havoc as pedestrians and motorists alike
scrambled for the money. And, finally, back in New York a month later, the back door of an
armored vehicle popped open on the Long Island Expressway--exactly why is uncertain--and a
bag containing $178,000 fell out. When it hit the ground, it sent $20 and $100 bills flying
through the air, which caused drivers to screech to a halt to chase the fluttering cash. When it
was all over, only $40 was recovered.

After each of these accidents, local police appealed to people to return the scattered money to
its rightful owners, saying that those who kept it might be guilty of theft. Whether anyone
heeded their pleas has not been declosed.]

36

[DISCUSSION QUESTIONS

1. If you encountered a situation like those described, what would you do--turn the money into
the authorities, grab what you can and keep it, or just ignore the whole thing? What factors
would influence your decision? Is the decision a moral decision or some other kind of decision?

2. Is it dishonest to keep money that falls from an armored vehicle? Is it theft? In your opinion,
what would be the right thing to do? Explain the values or moral principles that support your
answer.

3. Some people think that if you take the money, you are hurting no one. Is that true? Would it
make a difference if the money had fallen out of someone's purse or briefcase rather than out
of an armored car? When and under what circumstances would you return property or money
that you found to its rightful owner?
4. Do these cases pit morality against self-interest? Which of the following is true of you: "I am
willing to do the right thing: (a) always, (b) only if the sacrifice is not too great, (c) only if doing
so doesn't inconvenience me or cost me anything, or (d) only if doing so benefits me in some
way"?

5. What factors explain why some people rush to take money that has fallen from a truck while
others do not? In your view, to what extent is people's behavior in such situations influenced by
what they see other people doing?

6. Does the principle "Finders Keepers" apply to cases like these?]

[EVERYONE WHO HAS EVER APPLIED FOR admission to a selective college or who has been
interviewed for a highly desired job knows the feeling of waiting impatiently to learn the result
of one's application. So it's not hard to identify with those applicants to some of the nation's
most prestigious MBA programs who thought they had a chance to get an early glimpse at
whether their ambition was to be fulfilled. While visiting a Businessweek Online message board,
they found instructions, posted by an anonymous hacker, explaining how to find out what
admission decision the business schools had made in their case. Doing so wasn't hard.]

[The universities in question--Harvard, Dartmouth, Duke, Carnegie Mellon, MIT, and Stanford--
used the same application software from Apply Yourself, Inc. Essentially, all one had to do was
change the very end of the applicant-specific URL to get to the supposedly restricted page
containing the verdict on one's application. In the nine hours it took Apply Yourself
programmers to patch the security flaw after it was posted, curiosity got the better of about 200
applicants, who couldn't resist the temptation to discover whether they had been admitted. 19

Some of them got only blank screens. But others learned that they had been tentatively
accepted or tentatively rejected. What they didn't count on, however, were two things: first,
that it wouldn't take the business schools long to learn what had happened and who had done
it and, second, that the schools in question were going to be very unhappy about it. Harvard
was perhaps the most outspoken. Kim B. Clark, dean of the business school, said, "This behavior
is unethical at best--a serious breach of trust that cannot be countered by rationalization." In a
similar vein, Steve Nelson, the executive director of Harvard's MBA program, stated, "Hacking
into a system in this manner is unethical and also contrary to the behavior we expect of leaders
we aspire to develop."

It didn't take Harvard long to make up its mind what to do about it. It rejected all 119 applicants
who had attempted to access the information. In an official statement, Dean Clark wrote that
the mission of the Harvard Business School "is to educate principled leaders who make a
difference in the world. To achieve that, a person must have many skills and qualities, including
the highest standards of integrity, sound judgment and a strong moral compass--an intuitive
sense of what is right and wrong. Those who have hacked into this web site have failed to pass
that test." Carnegie Mellon and MIT quickly followed suit. By rejecting the ethically challenged,
said Richard L. Schmalensee, dean of MIT's Sloan School of Management, the schools are trying
to "send a message to society as a whole that we are attempting to produce people that when
they go out into the world, they will behave ethically."

Duke and Dartmouth, where only a handful of students gained access to their files, said they
would take a case-by-case approach and didn't publicly announce their individualized
determinations. But, given the competition for places in their MBA programs, it's a safe bet that
few, if any, offending applicants were sitting in classrooms the following semester.

Forty-two applicants attempted to learn their results early at Stanford, which took a different
tack. It invited the accused hackers to explain themselves in writing. "In the best case, what has
been demonstrated here is a lack of judgment; in the worst case, a lack of integrity," said
Derrick Bolton, Stanford's director of MBA admissions. "One of the things we try to teach at
business schools is making good decisions and taking responsibility for your actions." Six weeks
later, however, the dean of Stanford Business School, Robert Joss, reported, "None of those who
gained unauthorized access was able to explain his or her actions to our satisfaction." He added
that he hoped the applicants "might learn from their experience."

Given the public's concern over the wave of corporate scandals in recent years and its growing
interest in corporate social responsibility, business writers and other media commentators
warmly welcomed Harvard's decisive response. But soon there was some sniping at the decision
by those claiming that Harvard and the other business schools had overreacted. Although 70
percent of Harvard's MBA students approved the decision, the undergraduate student
newspaper, The Crimson, was skeptical. "HBS [Harvard Business School] has scored a media
victory with its hard-line stance," it said in an editorial. "Americans have been looking for a sign
from the business community, particularly its leading educational institutions, that business
ethics are a priority. HBS's false bravado has given them one, leaving 119 victims in angry
hands."

As some critics pointed out, Harvard's stance overlooked the possibility that the hacker might
have been a spouse or a parent who had access to the applicant's password and personal
identification number. In fact, one applicant said that this had happened to him. His wife found
the instructions at Businessweek Online and tried to check on the success of his application. "I'm
really distraught over this," he said. "My wife is tearing her hair out." To this, Harvard's Dean
Clark responds, "We expect applicants to be personally responsible for the access to the
website, and for the identification and passwords they receive."

Critics also reject the idea that the offending applicants were "hackers." After all, they used their
own personal identification and passwords to log on legitimately; all they did was to modify the
URL to go to a different page. They couldn't change anything in their files or view anyone else's
information.]

[In fact, some critics blamed the business schools and Apply Yourself more than they did the
applicants. If those pages were supposed to be restricted, then it shouldn't have been so easy to
find one's way to them.
In an interview, one of the Harvard applicants said that although he now sees that what he did
was wrong, he wasn't thinking about that at the time--he just followed the hacker's posted
instructions out of curiosity. He didn't consider what he did to be "hacking," because any novice
could have done the same thing. "I'm not an IT person by any stretch of the imagination," he
said. "I'm not even a great typist." He wrote the university a letter of apology. "I admitted that I
got curious and had a lapse in judgment," he said. "I pointed out that I wasn't trying to harm
anyone and wasn't trying to get an advantage over anyone." Another applicant said that he
knew he had made a poor judgment but he was offended by having his ethics called into
question. "I had no idea that they would have considered this a big deal." And some of those
posting messages at Businessweek Online and other MBA-related sites believe the offending
applicants should be applauded. "Exploiting weaknesses is what good business is all about. Why
would they ding you?" wrote one anonymous poster.

Dean Schmalensee of MIT, however, defends Harvard and MIT's automatically rejecting
everyone who peeked "because it wasn't an impulsive mistake." "The instructions are
reasonably elaborate," he said. "You didn't need a degree in computer science, but this clearly
involved effort. You couldn't do this casually without knowing that you were doing something
wrong. We've always taken ethics seriously, and this is a serious matter." To those applicants
who say that they didn't do any harm, Schmalensee replies, "Is there nothing wrong with going
through files just because you can?"

To him and others, seeking unauthorized access to restricted pages is as wrong as snooping
through your boss's desk to see whether you've been recommended for a raise. Some
commentators, however, suggest there may be a generation gap here. Students who grew up
with the Internet, they say, tend to see it as a wide-open territory and don't view this level of
web snooping as indicating a character flaw.

discussion questions

1. Suppose that you had been one of the MBA applicants who stumbled across an opportunity
to learn your results early. What would you have done, and why? Would you have considered it
a moral decision? If so, on what basis would you have made it?

3. In your view, was it wrong for the MBA applicants to take an unauthorized peek at their
application files? Explain why you consider what they did morally permissible or impermissible.
What obligations, ideals, and effects should the applicants have considered? Do you think, as
some have suggested, that there is a generation gap on this issue?

4. Did Harvard and MIT overreact, or was it necessary for them to respond as they did in order
to send a strong message about the importance of ethics? If you were a business-school
admissions official, how would you have handled this situation?
5. Assess the argument that the applicants who snooped were just engaging in the type of bold
and aggressive behavior that makes for business success. In your view, are these applicants
likely to make good business leaders? What about the argument that it's really the fault of the
universities for not having more secure procedures and not the fault of the applicants who took
advantage of that fact?

6. One of the applicants admits that he used poor judgment but believes that his ethics should
not be questioned. What do you think he means? If he exercised poor judgment on a question
of right and wrong, isn't that a matter of his ethics? Stanford's Derrick Bolton distinguishes
between a lapse of judgment and a lack of integrity. What do you see as the difference? Based
on this episode, what, if anything, can we say about the ethics and the character of the curious
applicants?]
CASE 3.2 Battling over Bottled Water

[WATER IS THE LIFEBLOOD OF THE EARTH, but by 2025, according to the United Nations, two-
thirds of the world's population could face chronic shortages of water. In fact, some countries
are already importing huge supertankers of freshwater from other countries. But one place
that's definitely not short of water is the state of Michigan, which has 11,000 lakes and is
surrounded by Lakes Michigan, Huron, Superior, and Erie.]

113

[So it came as a surprise to some that the Nestle company's new Ice Mountain bottled-water
plant in Mecosta County, Michigan, dredged up so much controversy when it began pumping
water from a local spring.81 Nestle's willingness to invest $100 million to build a new 410,000-
square-foot bottling plant in Mecosta reflects the fact that bottled water is big business, with
annual sales of $6 billion (up 35 percent since 1997). Many county residents, in fact, are thrilled
about Nestle's being there. The Ice Mountain plant employs about a hundred people at $12 to
$23 per hour, significantly more than many local jobs pay. And the company shells out hundreds
of thousands of dollars in local taxes. Township supervisor Maxine McClellan says, "This is
probably the best project we've ever brought into Mecosta County." She adds that she wants "a
diversified economy where our kids don't have to move away to find jobs."

The problem, as some local residents see it, is that Nestle has also built a 12-mile stainless steel
pipeline from the plant to Sanctuary Spring, which sits on an 850-acre private deer-hunting
ranch and is part of the headwaters of the Little Muskegon River, which flows into the
Muskegon and then into Lake Michigan. The company started pumping 130 gallons of water
every minute from the spring, with plans to increase that to 400 gallons per minute, or about
262 million gallons a year. But whose water is Nestle pumping? That's the question being asked
by Michigan Citizens for Water Conservation (MCWC), a local Mecosta group that has filed suit
contesting Nestle's right to the spring's waters. Although the company has a ninety-nine-year
lease on the land, MCWC contends that the water itself is a public resource. As Jim Olson,
MCWC's lawyer, explains it, under the doctrine of "reasonable use" the owners of a stream can
use its water for drinking, boating, swimming, or anything else "as long as it's in connection with
their land." But, he argues, "this does not include the right to transport water to some distant
land for [some other] use. We're arguing that the same is true with groundwater--you can't
sever it from the estate."

Michigan State Senator Ken Sikkema, who chaired a task force on Michigan water issues, rejects
that argument: "A farmer pumps water out of the ground, waters potatoes, and sends the
potatoes to Illinois--there's no real difference. The water in those potatoes is gone." This
reasoning hasn't assuaged the fears of three American Indian tribes who have joined the fray.
Citing an 1836 treaty that protects their fishing and hunting rights in the Great Lakes region,
they have brought a federal lawsuit against Nestle and the state of Michigan to stop what they
see as a massive water grab. "Our fear," says a spokesperson for the Little Traverse Bay Bands of
Odawa Indians, "is that the export could significantly and permanently damage the fishery."

However, David K. Ladd, head of the Office of Great Lakes, argues that bottled water is a special
case, Legally, he contends, it's a "food," regulated by the Food and Drug Administration.
"There's no difference between Perrier bottling water, Gerber making baby food, or Miller
brewing beer. When you incorporate water from the basin into a product, it's no longer water
per se." And Brendan O'Rourke, an Ice Mountain plant manager, adds that the 262 million
gallons it wants to pump are less than 1 percent of the annual recharge rate of the local
watershed, equivalent to just 14 minutes of evaporation from the surface of Lake Michigan.

For their part, scientists opposed to the project argue that Nestle's pumping has already
lowered the local water table and that northern pike are having trouble spawning in a stream
fed by Sanctuary Spring. Jim Olson argues that the Ice Mountain plant should reduce its water
consumption to 100 gallons per minute or less, not increase it to 400 gallons. "Every gallon
removed is needed for the stream to sustain itself," he states. "The right to withdraw
groundwater does not include the right to diminish... existing or future uses."

To the surprise of many, Michigan state court judge Lawrence Root bought that argument and
upheld the MCWC's lawsuit. Ruling that the environment is at risk no matter how much water
Nestle draws out, he ordered the pumps turned off. Two years later, an appellate court reversed
Judge Root's decision, and MCWC and Nestle subsequently entered an agreement limiting
Nestle's withdrawals from Sanctuary Spring to 250 gallons per minute--although there has been
some legal skirmishing between the two antagonists since then. In the meantime, however, the
political tide has turned against Nestle. Small towns in Maine and California have opposed its
building new bottled water plants in their jurisdictions; Congress has held hearings into the
diversion of groundwater by bottled water companies and other businesses; and Michigan has
passed legislation that, among other things, makes it virtually impossible for operations such as
the Ice Mountain plant to remove more than 100,000 gallons of groundwater per day.]

114

[DISCUSSION QUESTIONS

1. Should people in Michigan be concerned about how, and by whom, the state's ground water
is used? In your view, what issues of justice does this case raise?

2. Would Nestle's pumping 262 million gallons of water per year from Sanctuary Spring
constitute "reasonable use"? Is the company treating either local residents or the Native
American tribes unfairly, or would it be unfair to restrict Nestle's use of water from the spring?
3. Is groundwater a public resource, the use of which is appropriate for society to regulate? Or is
it the property of those who own the land to use as they see fit? Who has the strongest claim
on groundwater--the owners of the land from which it is pumped, the original inhabitants of the
area (that is, the local Indian tribes), local residents, citizens of the whole Great Lakes region, or
all Americans?
CASE 7.5 Palm Oil and Its Problems

[PALM OIL IS ONE OF THOSE UBIQUITOUS but overlooked products that have a hundred
different uses. It comes from the oil palm tree (Elaeis guineensis), which originated in West
Africa, but which by the mid-1800s was discovered to grow well in Malaysia and other countries
in Southeast Asia. Back then the oil was used for soap and to lubricate engines. By the mid-
twentieth century, plantations dotted not only Malaysia but also Indonesia, which together now
account for nine-tenths of the world's supply of palm oil. Today, the oil finds its way into many
processed foods and into consumer products like lipstick, shampoo, and shaving cream. Many
Asian households cook with it, and recently it has come to be used as a biofuel, helping to make
palm oil a $44 billion industry.112

Demand has pushed prices high and increased the number of palm-oil plantations. That in turn
has contributed to needed economic growth in the countries that produce it, which is good
news for them. But environmental groups are alarmed by the spread of palm-oil production,
viewing it as damaging to wildlife and hazardous to the planet. In past decades, the area under
cultivation for palm oil has mushroomed fifteenfold, eliminating peat land and forests in wide
swathes of Malaysia and Indonesia. In fact, deforestation in Indonesia is so rapid that a recent
U.N. report says that all of the country's forests could be gone by 2022. Destroying forests and
peat land to slake the world's thirst for palm oil releases enormous quantities of carbon dioxide,
thus contributing to climate change. In Sumatra and Borneo, palm-oil expansion also threatens
the habitat of elephants, tigers, rhinos, and orangutans.

Awareness of the problem led to the establishment of the Roundtable on Sustainable Palm Oil
(RSPO), a consortium of growers, processors, food companies, and nongovernmental
organizations that was set up in 2004 to prod the industry into producing "sustainable" palm oil,
that is, oil that could be certified as having been produced "without undue harm to the
environment or society," in particular, without having involved the destruction of areas with
"high conservation values." These areas include not just primary-growth forests, but also
secondary and degraded forests that are "important for environmental conservation and
community well-being."

But the Roundtable has proceeded slowly. Only 35 percent of RSPO growers have been certified,
and none has been decertified for poor performance. Furthermore, an investigative report in
Bloomberg Businessweek has revealed extensive abuse of workers on Indonesian palm oil
plantations. "Every time an NGO shines light into the activities of an RSPO producer, it finds
dirt," contends Tomasz Johnson of the London-based Environmental Investigation Agency. "Yet
the RSPO hasn't displayed the ability or intent to exclude anyone."

Small wonder, then, that environmentalists are frustrated at the slow progress. Some of them
have resorted to direct action. Greenpeace targeted Unilever, although the company uses only 4
percent of the world's palm oil, because some of its well-known brands (like Dove soap) include
palm oil. In 2008, protestors stormed the company's London headquarters and demonstrated
outside several of its facilities around the world with banners displaying slogans like "Unilever:
Don't Destroy the Forests."]

283

[Greenpeace also went after Nestle, posting a video on YouTube that featured the bloody finger
of an orangutan inside one of the company's Kit Kat candy bars.

Unilever quickly committed itself to using only palm oil certified as sustainable, and twenty
other big companies, Procter & Gamble among them, rapidly followed suit. But Greenpeace
wanted the company to go further and make sure that its suppliers weren't breaking the law.
Unilever agreed, but doing so turned out to be problematic. "We found that, in one way or
another, all of our suppliers have technically infringed either RSPO standards or Indonesian law,"
says Gavin Neath, a senior vice-president. "It isn't as easy as saying just pick the best. We are
not in a position to do that. The industry almost certainly has to go through fundamental
change."

Because it doesn't buy all that much palm oil, Nestle hadn't anticipated being caught up in the
controversy. A member of RSPO, it had been purchasing some sustainable oil but hadn't
planned to utilize only sustainable oil until 2015. After first trying to stop the Greenpeace video,
the company buckled because of the public response. It suspended all purchases from Sinar
Mas, an Indonesian conglomerate known to be involved in the illegal clearing of forests and
peat land. And it went further, hiring an independent auditor to review its supply chain and
enable it to avoid "high-risk plantations or farms linked to deforestation."

Besides bad publicity and badgering from environmentalists, one factor in the change of policy
at Unilever and Nestle may have been the attitudes of their employees, many of whom are
concerned about environmental issues. As the Economist magazine explains, "For years
companies have been saying that a commitment to corporate social responsibility can improve
the quality of staff that they can recruit. It follows that these recruits then care about the
behavior of the company that employs them."

Despite these victories for environmentalists, much of the palm-oil industry has paid little
attention, in part, because environmentalists have focused on a few well-known Western
companies while ignoring Asian companies altogether. Verifying sustainability is not as easy as it
sounds either, because oil from different small plantations gets mixed together (and sustainable
oil and unsustainable oil are indistinguishable). An executive at one small cosmetics company,
which has switched to coconut oil, says that there is "no such thing as sustainable palm oil: it
doesn't exist." But for the world as a whole to get by with less palm oil is going to be expensive,
and rival products also have some environmental drawbacks. On the other hand, deforestation
is high on the agenda of the World Bank and United Nations, and various governments and
nongovernmental organizations are getting involved. For example, a billion-dollar grant from
Norway has induced Indonesia to declare a moratorium on clearing forests and to set up its own
certification body. Some optimists argue that increased productivity can enable the palm-oil
industry in Indonesia to continue to expand without destroying more forests, but that remains
to be seen. In the meantime, the world's thirst for palm oil remains unslaked.

DISCUSSION QUESTIONS

1. The word "sustainable" is tossed around a lot. What does it mean to you?

2. Is it fair for environmentalists to single out companies like Unilever and Nestle that are more
socially responsible than most and which are relatively small consumers of palm oil, or is this
justified simply as a matter of strategy?

3. How far must corporations go to ensure that the various ingredients used in their products
are produced in an environmentally satisfactory way? What if there aren't any truly sustainable
options?

4. Can monitoring and self-regulation by industry groups like the Roundtable effectively address
environmental issues, or will outside pressure always be needed? Was Greenpeace right to act
as it did, or should it have tried to work with the companies in question?

5. Preventing deforestation is important, but once previously forested land has been cleared,
whether six months ago or sixty years ago, is there anything wrong about using it to produce
palm oil now?

6. Used as a biofuel, palm oil reduces our dependence on petroleum. How do we balance that
against deforestation?

7. Developing countries like Indonesia are responding to increased demand for palm oil by
Western consumers. Is it fair to the producer nations to insist that they restrict the expansion of
this industry?]