El Caso ENRON

1. Introduccin
2. Caractersticas e historia
3. Influencia poltica
4. Carcter multinacional
5. El colapso
6. Acciones penales
7. Impacto.
8. Aplicacin del capitulo 11
9. Acciones legislativas
10. Bibliografa

INTRODUCCIN

ENRON Corporation, en cuestin de quince aos, pas de ser una pequea empresa de gas en
Texas, a ser el stimo grupo empresarial de mayor valor en Estados Unidos, segn la Revista
Fortune a mediados de 2001.

Entender cmo una empresa de esta magnitud lleg a desarrollar un emporio tan grande, es una
tarea difcil, pero ms difcil an es comprender cmo fue posible ocultar deudas por sumas
mayores a los seiscientos millones de dlares.

Los resultados de la violacin de la confianza, pilar que sostiene el sistema financiero moderno,
son evidentes y nefastos: cientos de miles de trabajadores desempleados y defraudados, sin
posibilidad de recuperar sus fondos de previsin social, miles de inversionistas, que confiaron en
los estados financieros auditados por la firma de Arthur Andersen, vieron esfumarse sus ahorros al
pasar sus acciones de un precio rcord de US$84.85 a escasos cinco centavos a inicios de 2002.

Es evidente que un caso como ste amerita una seria reflexin jurdica respecto a los bienes que
se tutelan a travs de los mecanismos regulatorios del sistema financiero, que ya no pueden ser
considerados exclusivos de una nacin, por sus repercusiones internacionales en mercados
interconectados.

Cmo impedir que se defraude la confianza pblica, cmo garantizar que los patrones a partir de
los cuales se acredita la salud financiera de una empresa sean razonables y cmo hacer que los
mecanismos regulatorios no colapsen frente a la corrupcin poltica producto del financiamiento
electoral y otros mecanismos de prebendas, son los grandes retos para los mercados de captacin
del ahorro pblico.

Estas reflexiones sern ampliadas a continuacin, a partir de un anlisis de la situacin de ENRON

y de las perspectivas de reestructuracin del sistema de regulacin estadounidense.

CARACTERSTICAS E HISTORIA

SURGIMIENTO
En Julio de 1985, Houston Natural Gas se fusiona con InterNorth, una compaa de gas natural de
Omaha, Nebraska, para formar la moderna ENRON. Es una firma interestatal e intraestatal con un
gasoducto de gas natural de 37.000 millas.

En 1989, ENRON comienza a comercializar gas natural como commodity, es decir, como
mercanca, producto de la desregulacin de la que fue objeto este mercado durante la
administracin Bush. Se convierte rpidamente en el comercializador mayor de gas natural en
Estados Unidos y en el Reino Unido. La clave del explosivo crecimiento de esta empresa fue
precisamente la desregulacin que permiti vender el gas como si fuera un commodity, tal como
granos, carnes o aceite.

En Noviembre de 1999 se da el lanzamiento de "ENRON Online" un sistema de transacciones

globales en Internet que permita a los clientes de ENRON ver en tiempo real los precios del
mercado y realizar transacciones en lnea, en forma instantnea. En dos aos, esa plataforma de
comercio electrnico lleg a realizar 6000 transacciones diarias por un valor de 2.500 millones de
dlares.

En solo 15 aos, ENRON creci pasando de ser una pequea firma de gas en Texas a ser la
sptima compaa ms grande de Estados Unidos, con 21.000 empleados en ms de 40 pases,
habiendo superado los 100 billones de dlares de facturacin en el ejercicio del ao 2000. Su
compleja estructura corporativa es una enmaraada madeja de ms de 3.000 sociedades unidas a
travs de holdings, lo que hace prcticamente imposible auditarla mediante mtodos
convencionales y hace en cambio muy posible ocultar y "dibujar" resultados.

ENRON creci rpidamente sobre la base de tres actividades de comercializacin: energa,

mayoreo y servicios globales.

Se estableci en el Reino Unido a los primeros signos de la liberalizacin de la comercializacin de

la energa, llegando a ser la primera compaa que comenz a construir su propia planta luego que
se privatiz la industria elctrica.

El 14 de Agosto del 2001, la revista Fortune galardon a la firma como la ms creativa en el

perodo 1996 2001, augurndole un crecimiento continuo para toda la dcada, citndose entre
sus innovaciones, la apertura de los mercados de potencia y gas de Alemania, la creacin de un
mega almacn global virtual de gas y ser pionera del ms grande mercado mundial de
comercializacin de energa en lnea.

En el ao 2000 gan el premio del Financial Times a la "Compaa de Energa del Ao" y a la
"mejor y exitosa decisin de inversin".

La preeminencia de ENRON se origin no solamente por su papel en el mercado energtico

mundial sino tambin porque la administracin de Bush consultaba a su presidente ejecutivo,
Kenneth Lay, como asesor en energa. Su prestigio influy para que tuviera millones de inversores
captando fondos de pensiones a lo largo y ancho de Estados Unidos.

CARACTERSTICAS

ENRON es una empresa muy inusual. Por un lado es una compaa de servicios diversificada,
poseyendo plantas de energa, compaas de agua, distribuidoras de gas y de otras unidades
empresarias involucradas en la relativamente directa distribucin de servicios a consumidores y a
empresas. Por otra parte, se hizo notoria aplicando el estilo de Wall Street a estos mercados
tradicionalmente dormidos.
La genialidad de ENRON fue considerar que todos esos servicios e incluso oscuros y complejos
productos tales como anchos de banda de Telecom eran en realidad "commodities", que podan
ser comprados, vendidos y almacenados tal como se hace con las acciones y los bonos.

ENRON se convirti pues en un gigantesco "hacedor de mercados" dentro de Estados Unidos,

siendo el principal comercializador de productos de energa. Creciendo en esos asuntos
financieros en forma mucho ms rpida que en sus operaciones tradicionales.

El tamao de sus operaciones financieras convirti de hecho a ENRON en una de las compaas
de energa ms grandes del mundo, con ventas que en el ejercicio pasado superaron los 100
billones de dlares, entrando en competencia con nombres tales como Shell y Exon.

Entr tambin a competir en los mercados recientemente liberados de Europa, convirtindose en

una fuerza financiera masiva, especialmente en el Reino Unido, donde posee tambin una planta
energtica en Teesside y en Wessex Water.

Junto a esta agresiva poltica expansiva, ENRON fomentaba la participacin de sus trabajadores
en sus actividades. Alrededor del 60 por ciento de sus empleados reciba una bonificacin anual en
opciones, que equivala al 5 por ciento de su sueldo bsico. Los ejecutivos y gerentes reciban
montos mayores. A fines del 2000, todos los administradores y empleados de ENRON tenan
opciones que podan ejercerse en cerca de 47 millones de acciones. Bajo un plan tpico, el titular
recibe la opcin de comprar un nmero determinado de acciones a precio de mercado el da en
que se emite dicha opcin. Ese precio fijo se denomina "strike price". Pero la opcin generalmente
no puede ejercerse durante unos aos. Si el precio de la accin se eleva durante ese tiempo, la
opcin puede producir un buen beneficio. En los 47 millones de opciones de ENRON, el "strike
price" promedio fue de 30 dlares y a fines del 2000 el precio del mercado fue 83 dlares. El
beneficio potencial fue casi de 2.500 millones de dlares.

INFLUENCIA POLTICA

Entre 1990 y el 2002, ENRON y sus directivos donaron seis millones de dlares al mundo poltico,
de acuerdo con la investigacin realizada por el Centro de Polticas Responsables, una
organizacin no gubernamental independiente.

Las cuentas del CPR son minuciosas; de ese total informan 623.000 dlares fueron a las arcas
polticas del propio Bush, a lo largo de su trayectoria poltica. Ms de 435 miembros de la Cmara
baja del Congreso norteamericano, 188 de sus actuales miembros recibieron contribuciones de
ENRON.

Lo mismo sucede con 71 senadores, sobre un total de 100, incluyendo entre stos a 19 de los 23
miembros del Comit de Energa del Senado, una de las instancias de regulacin legislativa del
rea de actividad de ENRON.

El 78% de ese dinero que ENRON entreg a los polticos fue a arcas republicanas; el resto lo
recibieron los demcratas, como lo denota en detalle el cuadro que se presenta:

Contribuciones Polticas de ENRON

TOTAL
A los demcratas A los republicanos
Ciclo electoral
(%) (%)
(US$)
1996 1.141.016 18 81
1998 1.049.942 21 79
2000 2.441.398 28 72
2002 172.859 11 88

Fuente: CENTRO DE POLTICAS RESPONSABLES.

Las participaciones individuales de los altos ejecutivos de ENRON no se quedan atrs, siendo, por
mucho, las ms significativas las del presidente de la Junta Directiva y CEO de la empresa,
Kenneth Lay, como se muestra a continuacin:

Donantes individuales en ENRON

Contribuyente TOTAL A los demcratas A los republicanos
(US$) (US$) (US$)
Kenneth Lay & esposa 882.580 86.470 793.110
Forest Hoglud & esposa 410.002 16.180 393.822
Jeffrey Skilling & esposa 187.500 7.750 179.750
Lou Pai & esposa 89.250 2.750 86.500

Fuente: CENTRO DE POLTICAS RESPONSABLES.

Entre los sospechosos estn tambin los banqueros, los auditores supuestamente
independientes y los miembros de la burocracia estatal.

ENRON fue la principal fuente de financiacin de la carrera poltica del actual presidente George
W. Bush. El presidente de ENRON, Kenneth Lay, es amigo personal de Bush desde la poca en
que ste era gobernador de Tejas; y las propuestas de ENRON constituyeron la base del plan
energtico elaborado hace un ao por el vicepresidente Dick Cheney, bajo la supervisin directa de
Bush.

CARCTER MULTINACIONAL

De acuerdo a su informe anual de 1996, ENRON opera plantas de energa en Inglaterra, Alemania,
China, Guatemala, Turqua, Paquistn, Italia, Indonesia, la Repblica Dominicana y las Filipinas, al
igual que gasoductos en Colombia y el sur de Argentina, y es socio en la construccin del
gasoducto Bolivia-Brasil. La compaa hizo inversiones en Rusia, ha firmado acuerdos preliminares
para proyectos de energa y/o gasoductos en Polonia y Mozambique, y est explorando
oportunidades de inversin en Yemen, Omn, Vietnam y Tailandia. Su reciente adquisicin de
enormes depsitos de gas en Qatar han motivado la compaa a buscar posibles mercados para
ste en Israel, Jordania y la India. La ENRON vende propano en Puerto Rico (mediante San Juan
Gas) y en el resto de la cuenca del Caribe, y adems recientemente gan una subasta para
explotar yacimientos de gas natural bajo las aguas entre Trinidad y Venezuela.

ENRON tiene inversiones importantes en la regin, participa en la administracin del gasoducto

Bolivia-Brasil, una de las obras energticas ms importantes de Sudamrica, y es duea o
administra una serie de gasoductos, poliductos y oleoductos en Venezuela, Bolivia, Argentina,
Brasil y Colombia.
Tambin es la principal accionista o duea de varias empresas de distribucin energtica o plantas
termoelctricas en Mxico, Brasil, Venezuela, Bolivia y otros pases de la regin.

Toda esta infraestructura y red de subsidiarias ha quedado hurfana con la cada de la casa matriz.

De hecho, muchas de las empresas en las que ENRON era accionista se apresuraron a aclarar
que la cada de este coloso no iba a afectar sus inversiones.

Tal es el caso de Transredes, la empresa boliviana de transporte de energa, en la que ENRON

posea una participacin del 25%.

EL COLAPSO

HECHOS QUE CONLLEVARON AL COLAPSO

A fin de detallar en forma concisa la cronologa de hechos que llev a la cada de esta empresa, se
presenta a continuacin el presente cuadro.

Fecha Hecho

Diciembre Kenneth Lay renuncia como presidente ejecutivo pero mantiene la presidencia
2000 del directorio a favor de Jeffrey Skilling.

28 Diciembre Las acciones alcanzan la cotizacin record de $84.87 convirtiendo a ENRON

2000 en la sptima empresa ms valiosa de Estados Unidos.

14 Agosto Jeffrey Skilling renuncia despus de seis meses; Lay retoma las
2001 responsabilidades ejecutivas mximas de la compaa.

15 Agosto El empleado de ENRON, Sherron Watkins enva una carta a Kenneth Lay
2001 previnindole de irregularidades contables que podran poner en peligro a la
compaa.

20 Agosto Lay convierte en acciones opciones por valor de $519,000.

2001

21 Agosto Lay convierte en acciones ms opciones por valor de $1.48m.

2001

Octubre 2001 La firma Arthur Andersen comienza a destruir documentos relacionados a las
auditorias realizadas a ENRON. La destruccin continua hasta Noviembre
cuando la firma recibe una cdula para comparecer ante la Comisin de
Seguridades y de Comercio.

15 Octubre Lay llama al Secretario de Comercio Don Evans, pero los funcionarios de la
2001 secretara dicen que el llamado era referente a un problema que ENRON tena
con un proyecto energtico en La India.

16 Octubre ENRON reporta prdidas por $638 millones de dlares entre Julio y
2001 Septiembre y anuncia una reduccin de 1200 millones de dlares en su stock
accionario. La reduccin corresponda a asociaciones arregladas por el
Vicepresidente Financiero Andrew Fastow.

22 Octubre La Comisin de Seguridades y Comercio abre una consulta sobre un posible

2001 conflicto de intereses en relacin a las asociaciones realizadas por Fastow.
23 Octubre En una conferencia, Lay trata de dar confianza a los inversores y defiende el
2001 trabajo de Fastow.

24 Octubre ENRON echa a Fastow.

2001

28 Octubre Kenneth Lay llama al Secretario del Tesoro Paul O'Neill para informarle de los
2001 problemas financieros que enfrenta la compaa. Una Segunda conversacin
de similar tenor se realiza el 8 de Noviembre. O'Neil dice que declin ayudar a
la firma, en la medida que no pudo detectar posibles repercusiones
desfavorables en los mercados financieros debido a los problemas de ENRON.

29 Octubre Lay llama nuevamente al Secretario de Comercio Don Evans, para pedirle
2001 haga algo conducente a influenciar al Servicio para Inversores Moody para que
no lo degrade demasiado en el ranking de crditos. Evans no interviene,
diciendo que no sera apropiado influenciar la decisin de una agencia privada
de inteligencia crediticia.

31 Octubre La requisitoria de la Comisin de Seguridad y Comercio se transforma en una

2001 investigacin formal.

8 Noviembre ENRON revisa sus balances de los pasados cinco aos. En lugar de los
2001 masivos beneficios previamente proclamados, la firma dice perder actualmente
586 millones de dlares.

9 Noviembre La firma competidora Dynegy, informa que estara dispuesta a hacerse cargo
2001 del mucho mayor ENRON por 8000 millones de dlares en acciones.

19 ENRON dice que las prdidas de su tercer cuatrimestre son superiores a lo

Noviembre que se haba informado y previene que necesitar financiar una deuda de 690
2001 millones hacia fines de ese mes.

20 El precio de las acciones de ENRON llega a su punto ms bajo en 10 aos

Noviembre mientras los inversores se preocupan acerca de si la empresa podr superar
2001 sus problemas financieros.

21 ENRON asegura una extensin de su deuda de 690 millones.

Noviembre
2001

26 Las acciones de ENRON estn por el piso a $4.01.

Noviembre
2001

28 Dynegy retira su oferta cuando el rating crediticio de ENRON es degradado al

Noviembre nivel de bonos de descarte. Las acciones de ENRON descienden bajo $1 el
2001 stock de acciones experimenta el ms pesado descenso en un da en la
historia para empresas listadas en el NYSE y en Nasdaq.

2 Diciembre ENRON pide la proteccin de bancarrota prevista en el Captulo 11 y reclama

2001 legalmente a Dynergy por incumplimiento de contrato.

ENRON prohbe a sus empleados vender las acciones asignadas y ligas a sus
planes de retiro.

9 Enero 2002 El Departamento de Justicia de Estados Unidos comienza la investigacin

criminal de ENRON.
10 Enero La Casa Blanca confirma que Kenneth Lay haca lobby para apoyar a su
2002 empresa poco antes de que colapsara. Arthur Asndersen reconoce que sus
empleados destruyeron algunos documentos de ENRON.

El Procurador General John Ashcroft, quin recibi de la empresa fonos para

su campaa como Senador, se excluye de la investigacin, al igual que el
equipo de unos 100 investigadores federales de Hosuton, donde ENRON tiene
su cuartel general.

12 Enero El Departamento de Justicia nombra a Joshua Hochberg, titular de la divisin

2002 de fraudes, como fiscal actuante para dirigir la investigacin criminal dentro de
ENRON.

15 Enero Arthur Andersen echa al ejecutivo David Duncan que estuvo a cargo de auditar
2002 a ENRON y coloca en su lugar a otros tres empleados.

16 Enero Las acciones de ENRON son dadas de baja en la Bolsa de Nueva York.

23 Enero Renuncia Kenneth Lay.

24 Enero Comienza la audiencia del caso ENRON en el Congreso de Estados Unidos

25 Enero Clifford Baxter, el anterior Vice Presidente del directorio de ENRON y Jefe
Estratgico se suicida. Dej abruptamente la firma en Mayo del 2001, despus
de haber chocado con Jeff Skilling por las practicas contables de la firma.

Fuente: www.aunmas.com

ENRON era hasta hace unos meses la mayor compaa energtica del mundo. Sus acciones se
cotizaban, un ao atrs, a 85 dlares. Todo era falso: la compaa estaba en realidad al borde de
la ruina, y logr ocultarlo manipulando la informacin facilitada a sus auditores de Arthur Andersen,
con la posible complicidad de stos.

La firma auditora admiti que haba destruido numerosos documentos de ENRON, lo que la
Comisin del Mercado de Valores de Nueva York calific de 'gravsimo'. Slo en noviembre
comenz a saberse que la corporacin energtica sufra gravsimos problemas.

Los acontecimientos que ocurrieron por esa poca atraen especialmente la atencin de las
autoridades judiciales y de la opinin pblica. Los 21.000 empleados y 4.500 jubilados de la
empresa, cuyos ahorros estaban depositados en acciones de ENRON, asistieron impotentes al
desplome de la cotizacin (una accin vale ahora unos pocos centavos), sin poder vender porque
la legislacin sobre fondos de pensiones se lo impeda. A este efecto ver el cuadro de la izquierda.

No tard en saberse que los principales ejecutivos de ENRON s haban liquidado sus inversiones
en la empresa, justo antes de que reventara la crisis, y se haban embolsado en total ms de mil
millones de dlares.

ANLISIS DEL COLAPSO

En oportunidad de presentar los resultados del tercer cuatrimestre en Octubre del pasado ao,
apareci un misterioso y enorme "agujero negro" que hizo tambalear sus acciones. La Comisin de
Valores lanz entonces una investigacin dentro de la firma y de sus resultados.
De forma an preliminar, y segn los propios comunicados de ENRON, el "agujero negro" contable
es producto de la mala aplicacin de las tcnicas contables, pues se excluyeron de los balances
consolidados de la empresa a tres sociedades que debieron estar incluidas, en las cuales se
reflejan enormes pasivos que afectan la cuentas globales de ENRON, evidenciando la verdadera y
crtica situacin de la empresa.

Segn el comunicado oficial de la empresa, del 8 de noviembre de 2002, las redefiniciones de sus
balances consolidados son las siguientes:

La decisin de ENRON de que Chewco, empresa filial, debe ser consolidada desde noviembre de
1997, se basa en la informacin de que esta empresa filial no cumple con los criterios contables
para ser considerada una SPE. Como resultado de este incumplimiento, otra sociedad denominada
JEDI, en la cual Chewco tena una participacin limitada, tambin tena que ser consolidada en los
estados financieros de ENRON. En razn de estas consolidaciones, los reportes de pasivos de
ENRON se vieron afectados, al alza, con los pasivos de ambas sociedades.

La decisin de ENRON de que la subsidiaria LJM1 debe ser consolidada en 1999 y 2000 se basa
en la consideracin de que esta subsidiaria no califica como no consolidable, en virtud de
inadecuada capitalizacin, por lo que las inversiones que ENRON hizo a travs de esta subsidiaria
en Rhythms NetConnections, deben consolidarse en los balances de dichos aos.

Estas redefiniciones en los estados financieros, variaron de forma radical las ganancias de los
inversionistas y revelando enormes prdidas, por ms de 600 millone,s no incorporadas
inicialmente.

ENRON admiti haber inflado sus beneficios, lo cual precipit an ms las acciones. Un potencial
comprador se alej de las negociaciones, no dejando otra opcin que el pedido de quiebra el da 2
de Diciembre.

ACCIONES PENALES

Es probable que altos ejecutivos de esa firma estn involucrados en casos de fraude. Para afinar
sus balances, ENRON us complejas herramientas financieras orientadas a ocultar las deudas.

A sta accin se suma que muchos altos ejecutivos de la firma acumularon masivos beneficios, se
habla de 1000 millones de dlares en manos de 29 personas, vendiendo sus acciones antes del
colapso. Por el contrario, sus 20.000 empleados perdieron billones de dlares de sus planes de
pensin, luego de haber sido bloqueadas por la compaa impidiendo venderlas cuando sus
valores caan abruptamente.

Los entes que estn actualmente investigando lo ocurrido son:

La Comisin de Valores y Comercio, supuestamente el perro guardin de las finanzas y que fue el
primero en probar que la empresa estaba haciendo cosas incorrectas.

Varias Comisiones (Audiencias) del Congreso de Estados Unidos, que van a penetrar al fondo de
la cuestin para encarar las necesarias reformas legales a fin de regular y controlar a estos
gigantes empresarios.

El Departamento de Justicia Estados Unidos, que investigar los hechos criminales tales como
fraude y la comercializacin interna.

El FBI, para proteger a los empleados que tienen evidencias.

La Comisin de Valores fue la primera en iniciar la investigacin sobre el comportamiento
financiero. El 12 de enero, el Departamento de Justicia de EE.UU. design al jefe de la seccin
fraudes, Joshua Hochberg para actuar como procurador en la investigacin por causas penales
contra la compaa.

La designacin de Hochberg se produjo luego de que el procurador general, John Aschcroft se

excusara por haber recibido contribuciones a su campaa poltica por parte de ejecutivos de
ENRON.

Una docena de comisiones especiales del Congreso de EE.UU. realizan sendas investigaciones,
algunas de ellas desde comienzos del ao pasado.

En un hecho indito, la Contralora del Congreso (GAO) present ante la Justicia una demanda
contra la Casa Blanca para obligar a la administracin George W. Bush a suministrar informacin
sobre contactos entre el gobierno y ejecutivos de la firma.

El FBI tambin intervino en la inspeccin de las oficinas centrales de la compaa, luego de que
una ex ejecutiva denunciara la destruccin de documentos comprometedores.

IMPACTO.

LOCAL

Las prdidas son inmensas: queda una deuda estimada en 150 billones de dlares. Esto es su
efecto monetario directo. Sus efectos secundarios y coletazos recin comienzan. Por ejemplo, la
Banca Morgan ha admitido una exposicin de 900 millones y el Citigroup 800 millones. Algunos
bancos, tales como el Amalgamated Bank establecido en Nueva York est iniciando acciones
legales contra los ejecutivos de ENRON por valor de 15 billones de dlares.

En lo individual, muchos empleados han perdido sus trabajos y visto evaporar los ahorros de sus
retiros acumulados durante toda una vida de trabajo. Los accionistas han visto evaporarse sus
acciones que pasaron de US$85 hace un ao a cero.

El fracaso de ENRON genera preguntas incmodas referentes a los mercados libres de

crecimiento rpido. Por lo pronto, hace aparecer como peligrosa la desregulacin de los mercados
o al menos poco atractiva. Los expertos en polticas de comercializacin que aconsejaban aplicar
las tcnicas de Wall Street a los mercados energticos, confiando en que ello aportara una mayor
eficiencia y precios ms bajos, habran quedado desautorizados.

Este fracaso es una llamada de atencin a los gobiernos, para que sean ms cuidadosos a la hora
de permitir a las empresas privadas jugar papeles cruciales en el suministro y distribucin de la
energa.

El mensaje a los inversores es ser ms cautelosos en invertir en negocios que no entienden.

En pocos meses, Kenneth L. Lay, ha pasado de ser el hroe de Wall Street a ser el enemigo
pblico nmero uno. Ha sido el hombre que ha convertido una compaa no espectacular de
gasoductos en una potencia financiera, ganado un lugar en el Saln de la Fama de los negocios de
Texas. Irnicamente, ha dado cursos y conferencias sobre el futuro rol de las relaciones entre el
gobierno y las empresas.

Efectos evidentes de lo que se ha denominado "Enronitis" son la quiebra, en lo que va de este ao

de dos negocios de grandes proporciones: Global Crossing y K Mart.

En el 2001, 257 empresas inscritas en la bolsa se acogieron al Captulo 11 de la Ley de Quiebras

Estadounidense; 176 ms que en 2001.

Para poder medir la magnitud del descalabro de ENRON, se le compara a continuacin dentro de
las diez quiebras ms importantes ocurridas en Estados Unidos:

Activos
Compaa Fecha
(miles de millones)
ENRON Dic. 2001 $63.4
Texaco Abr. 1987 $35.9
Financial Corp. of Amer. Set. 1988 $33.9
Global Crossing Ene. 2002 $25.5
Pacific Gas & Electric Abr. 2001 $21.5
MCORP Mar. 1989 $20.2
Kmart Ene. 2002 $17.0
First Executive May. 1991 $15.1
Gibraltar Financial Feb. 1990 $15.0
Finova Group Mar. 2001 $14.0

Fuente: The Washington Post. Edicin digital.

POLTICO

El escndalo ENRON ha salpicado a la Casa Blanca, por sus estrechos lazos con funcionarios
clave. Al respecto, ENRON ha suministrado millones de dlares para financiar la campaa del
presidente Bush, quien es amigo personal de Kenneth Lay. El actual Vicepresidente, Dick Cheney,
tambin vinculado al mundo del petrleo y de la energa, se niega a proporcionar informacin al
Congreso relacionada con el caso y el Procurador General, John Ashcroft debe excusarse de
actuar por su vinculacin con la firma y sus directivos, como se denota en el cuadro siguiente:

Conexiones de la administracin Bush con ENRON

Funcionario Cargo Monto (en Tipo de participacin
US$)
100.000-
Karl Rove Estratega poltico Acciones
250.000
Thomas White
Secretario del Ejrcito 50.000.000 Acciones. Ex ejecutivo de ENRON
Jr.
Trabaj en ENRON antes de
Robert Representante de
- incorporarse a la administracin
Zoellick comercio.
Bush.
Lawrence Jefe del Consejo
50.000 Consultor de ENRON
Lindsay Econmico de Bush.
Fiscal general de los ENRON financi su fallida
John Ashcroft
EEUU campaa como senador
Jefe del Comit Fue representante de ENRON en
Marc Racicot
Republicano Nacional los corrillos polticos.
Fue advertido por Lay de los
Paul ONeill Secretario del Tesoro problemas de ENRON, si que
hiciera algo por prevenir la crisis

Don Evans Secretario de Comercio Idem.

Favoreci a ENRON cuando era

Director de Seguridad
Tom Ridge Gobernador de Pennsylvannia en
Interna
1997.
Ex Jefe Comisin Renunci a su puesto por las
Curtis Herbert
Federacin de presiones del Gobierno para
Jr.
Regulacin Energtica favorecer a ENRON.

Fuente: Centro de Polticas Responsables.

Es evidente que es necesario realizar cambios en la forma en que se financian los partidos
polticos, pues contribuyentes tan "poderosos" ejercen una influencia directa sobre los gobiernos,
para favorecer sus propios intereses, en perjuicio del inters pblico.

Sin embargo, la discusin al respecto es interminable, puesto que las empresas ven estas
actividades como "inversiones", necesarias para obtener una posicin ventajosa en determinados
mercados, utilizando los mecanismo estatales para favorecerse. Por otro lado, los partidos polticos
se ven necesitados de esos recursos, para poder financiar las costosas campaas multimedios que
llevan a cabo cada periodo electoral.

Los esfuerzos deben ir encaminados a no desconocer esta realidad, sino a combatirla

garantizando la pureza en la funcin pblica, tratando de eliminar la corrupcin corporativa,
fenmeno que las empresas norteamericanas han usado de forma prolfica en el resto del mundo,
con todos los gobiernos de turno, y con el beneplcito y a veces el contubernio de Washington a
travs de su servicio exterior, pero que ahora, una vez perfeccionada la tcnica en el exterior,
ataca sin decoro a la propia burocracia norteamericana, reflejando que la nacin ms poderosa del
mundo no es inmune a los problemas que ha ayudado a generar en el resto del mundo.

INTERNACIONAL

Con su presencia en cerca de 40 pases y una serie de empresas asociadas, el colapso de

ENRON, repercuti negativamente en los mercados energticos en general y en varias compaas
que le haban otorgado crditos o tenan contratos con ENRON.

La presentacin judicial llev a un organismo oficial a iniciar una investigacin sobre el estado de
cuentas de la compaa, que admiti a comienzos de ao que sus ganancias fueron menores a las
declaradas entre 1997 y 2001.

Las dudas sobre las prcticas contables de la empresa que supuestamente tendieron a cubrir la
grave situacin econmica de la compaa se incrementaron ante denuncias de una ex ejecutiva
sobre la presunta destruccin sistemtica de documentos.

El escndalo salpic a Andersen, una de las firmas ms importantes de auditora contable.

En otro campo, los cuestionamientos sobre las operaciones de ENRON en la regin no se han
hecho esperar. Al calor de un ao electoral, en Bolivia se ha empezado a cuestionar seriamente la
participacin de ENRON en el gasoducto Bolivia-Brasil.

De hecho, se ha denunciado -entre otras cosas- que la empresa obtuvo una importante
participacin accionaria en este proyecto sin haber hecho grandes contribuciones o esfuerzos, slo
se present como el socio estratgico del Estado boliviano.

En Argentina, el senador Rodolfo Terragno denunci en la prensa que sufri presin de ENRON
para un proyecto en ese pas, cuando era ministro de Obras Pblicas durante el gobierno de Ral
Alfonsn, en 1988.

Terragno afirma en un artculo de prensa que incluso recibi una llamada del hijo del entonces
vicepresidente George Bush y que hoy es presidente de Estados Unidos.

Este tipo de denuncias, an no han sido comprobadas pero, en el caso de Bolivia, han llevado a
una investigacin por parte del Congreso y posiblemente de la Contralora.

ACCIONES LEGALES

APLICACIN DEL CAPITULO 11

A continuacin, se har una breve resea de cmo funciona el sistema de intervencin judicial y
reorganizacin bajo las reglas del Captulo 11 del Cdigo de Quiebras de los Estados Unidos.
Despus de una explicacin general, se detallarn algunos puntos de inters, siendo este el mismo
proceso que se sigue contra ENRON en estos momentos en los estrados judiciales.

Cmo funciona el captulo 11

Un caso de quiebra comienza cuando se plantea la solicitud ante un Tribunal de Quiebras. Esta
peticin puede ser voluntaria, en cuyo caso la presenta el deudor, o involuntaria, estando
legitimados para presentarla aquellos acreedores que cumplan con varios requisitos estipulados en
este cdigo.
Una peticin voluntaria debe hacerse conforme a lo sealado en el formulario 1 de la Lista de
Formularios Oficiales establecidos por la Conferencia Judicial de los Estados Unidos, visible en los
anexos del presente documento.

Esta peticin debe incluir informacin bsica sobre el o los nombres del deudor, nmero de seguro
social o de contribuyente, residencia, localizacin principal de sus activos (en caso de ser una
empresa), el plan de recuperacin del deudor, o el compromiso de presentarlo, y la peticin de
proteccin al amparo del respectivo captulo del Cdigo de Quiebras.

Adems, esta peticin ha de indicar si el deudor califica como un pequeo negocio y si desea
acogerse a la regulacin especial para este tipo de negocios.

A partir de la presentacin de una peticin voluntaria de proteccin al amparo del captulo 11 o, en

caso de ser involuntaria, la notificacin de una orden de este tipo, el deudor asume
automticamente una identidad adicional como "deudor en posesin". Este trmino hace referencia
a el deudor que conserva el control y posesin sobre sus activos mientras lleva adelante la
reorganizacin segn las reglas del captulo 11, sin el nombramiento de un fideicomisario procesal.
Esta condicin se mantendr hasta que el plan de reorganizacin del deudor sea confirmado, las
gestiones sean desestimadas o transformadas a una gestin al amparo del captulo sptimo
(liquidacin), o hasta que sea nombrado un fideicomisario segn las reglas del captulo 11.

El nombramiento o eleccin de un fideicomisario ocurre slo en un reducido nmero de casos.

Generalmente, el deudor, en su condicin de "deudor en posesin", contina los negocios y realiza
muchas de las funciones encomendadas al fideicomisario.

Un balance financiero ("disclosure statement") y un plan de reorganizacin deben ser presentados

ante el Tribunal. El balance es un documento que debe contener informacin sobre los activos,
pasivos, actividades y negocios empresariales del deudor, suficientes como para permitir al
acreedor formarse un juicio informado acerca de la condicin de la empresa y poder as tomar la
decisin correcta acerca del plan de reorganizacin. La informacin entregada se rige por las
reglas de discrecin judicial, as como por las circunstancias del caso.

El plan debe incluir una clasificacin de deudas y debe especificar cmo van a ser tratada cada
una de ellas durante la ejecucin del plan. Los acreedores cuyos crditos son menoscabados (en
nuestro caso seran aquellos que no tengan un crdito con garanta real), por ejemplo, aquellos a
los que les ser modificada la prestacin establecida en el contrato, o se les pagar menos que el
valor real de su reclamo, segn lo propuesto en el plan, son los llamados a votar el plan en
votacin secreta.

Despus de que el reporte de estado es aprobado y las boletas de votacin son recogidas y
contabilizadas, el tribunal de quiebras realiza una audiencia de confirmacin, para determinar si
confirma el plan.

Particularidades del "deudor en posesin"

Pese a que no le est vedado a los particulares el uso del captulo 11, es ms usual para la
reorganizacin de empresas, que en los estados Unidos se categorizar en tres grupos:

Corporaciones como es el caso de ENRON. El ente tiene personalidad distinta a la de sus

accionistas, los cuales responden y se arriesgan a ttulo personal hasta por el momento de su
participacin en la corporacin.
nico propietario (Sole propietorship). Este tipo de empresa no tiene una identidad distinta y
separada de su dueo (se demanda al dueo, no a la empresa), por lo que una accin en este
caso incluye el patrominio de la empresa y de su dueo en forma completa.

Sociedad (Partnership). Igual que en las corporaciones, la sociedad tiene existencia independiente
de sus socios. Sin embargo, en algunas circunstancias el patrimonio de los socios responde por la
deudas de la sociedad.

El cdigo coloca al deudor en posesin en la condicin de fiduciario, con los derechos y poderes
otorgados a la figura del trustee, segn las reglas del captulo 11 y requiere la realizacin de todas
sus labores de investigacin. Dentro de los poderes y obligaciones que asume, se encuentran:

Inventario de activos.

Examen y objecin de crditos.

Presentacin de reportes informativos cuando as lo solicite el tribunal, as como los reportes

mensuales de labores.

La suspensin automtica

La suspensin automtica provee de un periodo de tiempo en el cual, todos los procesos, cobros,
cierres y reivindicaciones se suspenden, no pudiendo continuarse ni iniciarse ninguno similar, salvo
algunos casos de crditos garantizados, en circunstancias en que los bienes garantizados no son
indispensables para garantizar el xito de la reorganizacin.

Esta suspensin provee un respiro al deudor, para negociar con sus acreedores y tratar de resolver
sus dificultades financieras.

Los Comits de Acreedores

Los comits de acreedores pueden jugar un papel mayor en estos procesos. El fideicomisario de
los Estados Unidos (un funcionarios pblico distinto a los fideicomisarios privados), convoca al
comit, que consiste normalmente est integrado por los siete acreedores quirografarios que
presenten los crditos ms grandes en el proceso. Este comit puede asesorar al deudor en
posesin sobre la administracin del negocio, investigar sus acciones y operacin, as como
participar en la elaboracin del plan. Su papel puede ser esencial en la salvaguardia de los
intereses de los acreedores.

Anulacin de transferencias

Los poderes de revocacin suelen usarse para anular transacciones de dinero o bienes realizadas
durante el periodo de sospecha. Mediante este trmite, se pueden cancelar dichos traspasos,
obligando al retorno de los mismos al patrimonio social, con el fin de honrar las deudas.
Generalmente, este poder se extiende a transacciones realizadas hasta 90 das antes de la
peticin de proteccin. Sin embargo, traspasos a parientes, socios o directores pueden anularse
dentro de un plazo de hasta un ao.

Crditos

Los crditos, para ser legalizados, deben estar incorporados en la lista que presenta el deudor, y
ser probados por cada uno de los acreedores. Es deber del deudor notificara los acreedores sobre
la incorporacin de su nombre y de su crdito. En dicha notificacin debe sealarse adems el
derecho del acreedor a aportar pruebas de su crdito y que su no presentacin le inhibir de votar
el plan de reorganizacin.

Conversin a liquidacin

El deudor tiene derecho, por una nica vez, de transformar su peticin de acogerse al captulo 11,
para acogerse al captulo 7 (Liquidacin),salvo que se d alguna de las siguientes circunstancias:
a. El deudor no ostenta la categora de "deudor en posesin", b. El caso fue promovido por un
acreedor o, c. L proceso fue convertido a un a peticin al amparo del captulo 11. Esta peticin,
despus de or a los interesados, la resuelve el tribunal. Para hacerlo, el tribunal debe acreditar
alguna de las siguientes situaciones: una prdida continuada del capital, imposibilidad de construir
el plan, retrasos irrazonables en perjuicio de los acreedores, denegatoria o revocacin del plan o
imposibilidad de cumplir con un plan aprobado.

La exoneracin

El Cdigo de Quiebras seala que la confirmacin del plan por parte del juez exonera al deudor de
toda deuda que haya surgido previo a la aprobacin del plan. Despus de esta confirmacin, el
deudor debe realizar un plan de pagos y queda limitado por las previsiones del plan de
reorganizacin. As, este plan crea nuevos derechos contractuales, reemplazando los vigentes al
momento de la intervencin.

Revocacin de la orden de confirmacin

Esta solicitud debe ser solicitada dentro de los 180 das posteriores a la confirmacin, por cualquier
interesado. El Tribunal, despus de notificar y escuchar a los otros interesados, puede revocar la
confirmacin si y slo si esta confirmacin se dio producto del fraude.

ACCIONES LEGISLATIVAS

Para el Contador en Jefe de la SEC (Securities and Exchange Commission), los Estados Unidos
poseen los ms profundos y lquidos mercados en el mundo, en su mayora debido a la alta calidad
del sistema de control financiero. Si bien es cierto es ineludible trabajar en asuntos como
transparencia y simplificacin de los estndares contables, no es viable abandonar el sistema que
le ha permitido a esa nacin alcanzar su actual nivel. Es ms razonable que permitan a la
Administracin hacer los cambios fundamentales a los estndares y a la forma en que la SEC vigila
en mercado.

Para el jefe de la Comisin de Valores e Intercambio de los Estados Unidos, la debacle de ENRON
es trgica, y muchos ciudadanos han sufrido sus consecuencias. Inversionistas inocentes fueron
engaados abusando del sistema de confianza y contabilidad. Ms trgico es el caso de
inversionistas que confiaron parte de sus fondos de pensin a una compaa que aparentaba ser
exitosa, confiando en la empresa, sus auditores, analistas, agencias de calificacin y en el sistema
de control federal de informacin al inversionista.

Igualmente fueron traicionados aquellos que adquirieron opciones de ENRON dentro de sus
programas de retiro, e hicieron planes a largo plazo, basados en la apreciacin futura de sus
acciones, slo para encontrarse a s mismos atrapados en el acelerado hundimiento de una
inversin que les tom gran parte de su vida laboral. Estos son los estadounidenses que con su fe
impulsan el mercado, quienes no tienen una asociacin de comercio, cuyos intereses son y deben
ser superiores.

Dentro de las iniciativas que promueve actualmente la SEC a partir del escndalo ENRON, estn:
Un sistema de informacin actual. Los inversionistas necesitan informacin actualizada, no slo
informes peridicos, junto con requerimientos claros a las empresas en bolsa para que informen de
oficio y provean actualizaciones de informacin de peso, incuestionable y en tiempo real.

Revelacin por parte de las empresa en bolsa de informacin actual y significativa que permita
evaluar y dirigir. Proveyendo este tipo de informacin, as como antecedentes histricos, permitir
a los inversionistas valorar la posicin financiera de la empresa, su evolucin y cambios.

Un sistema actualizado de informacin peridica. Junto al nuevo sistema de entrega de datos, la

SEC cree que los inversionistas merecen mejoras al sistema de actualizacin informativa. Los
informes trimestrales y anuales deben ser producidos en forma ms eficiente y ms accesibles y
comprensibles de lo que son actualmente, reflejando apropiadamente los riesgos y beneficios.

Balances financieros claros e informativos. Los inversionistas y empleados encargados de

preservar y acrecentar los ahorros y fondos de retiro, merecen reportes financieros comprensibles
y rpidos de interpretar.

Identificacin a conciencia y valorizacin de las empresas en bolsa y sus auditores de los principios
fundamentales de contabilidad. Las empresas en bolsa, y sus asesores deben ser requeridos a
identificar los tres, cuatro o cinco principios contables crticos de los cuales depende el estado
financiero de una empresa, y que implican las ms complejas, subjetivas y ambiguas decisiones o
valoraciones. Los inversionistas deben ser informados, concisa y claramente, cmo se aplican esos
principios, as como la informacin acerca del rango de posibles efectos en la diferenciacin de
esos principios.

Parmetros contables estandarizados, que respondan de forma expedita, concisa y clara a las
necesidades actuales e inmediatas y que refleje la realidad de los negocios.

Un efectivo y transparente sistema de regulacin privada de la profesin contable, sujeta a la

supervisin estatal. La SEC inici recientemente la discusin de cul sera la mejor forma de
reestructurar la regulacin referida a los auditores contables. Se sugiri la creacin de una Oficina
de Contadura Pblica que asuma el control de calidad y el poder disciplinario sobre contadores y
auditores. Al menos un grupo mayoritario de los posibles miembros no deben ostentar dicha
profesin. Adems, sus miembros deben provenir del sector privado, de manera tal que ningn
grupo est en capacidad de imponer, influenciar o controlar sus decisiones y esfuerzos.

Un sistema que asegure que aquellas personas a las que se les ha encomendado la funcin
pblica de realizar auditoras a las empresas en bolsa, lo hacen teniendo como nico objetivo en
inters pblico de su actividad, sin ser objeto de conflictos de inters que les confundan en el
ejercicio de sus deberes. Los auditores han de ser realmente independientes y, en particular, debe
eliminarse la posibilidad de un conflicto entre aumentar sus propias remuneraciones a cuenta de la
proteccin del pblico inversionista. Su fidelidad a la causa de informacin clara, completa y
entendible debe ser inclaudicable.

Acciones de proteccin al inversionista ms agresivas y reales, por parte de los comits de

auditoraje. Estos comits han de ser proactivos, no reactivos, al asegurar la calidad e integridad de
los reportes financieros corporativos. Especialmente importante es la necesidad de mejorar la
interaccin entre los miembros del comit de auditora y auditores externos y altos jerarcas de la
empresa. Estos comits deben entender cules principios contables fueron escogidos y porqu,
cmo fueron aplicados, as tengan una base para confiar en que el resultado presentado es fiable.

Conclusiones

Necesidad de proteger al inversionita: principio de confianza

Independizar auditores

Mejorar parmetros de control contable

Concienciar sobre roles de auditoraje

Mejorar la conciencia de lso inversionistas

Bibliografa

BBC. ENRON: Radiografa de un escndalo. www.BBCMundo.com. Mircoles 06 de febrero de

2002.

Cardoso, Oscar Raul. ENRON: Cuando el Estado se retira. www.clarn.com. 19 de enero de 2002.

Chamero, Juan. El Escndalo ENRON. El Ocaso de la Clase poltica. El avasallamiento del Estado
por las grandes Corporaciones. www.aunmas.com. 30 de enero de 2002.

C-SPAN. ENRON political contributions. www.c-span.org. 13 de octubre de 2002.

Divisin de Juzgados de Quiebras. Serie de Documentos Pblicos. "Chapter 11 Reorganization

under the Bankruptcy Code". Administrative Office of The United States Courts. Junio 2000.
Adems, puede verse la referencia al Cdigo de Quiebras Estadounidense, en
www4.law.cornell.edu/uscode/11.

ENRON Corp. ENRON PROVIDES ADDITIONAL INFORMATION ABOUT RELATED PARTY AND
OFF-BALANCE SHEET TRANSACTIONS; COMPANY TO RESTATE EARNINGS FOR 1997-2001.
Houston, 8 de noviembre de 2001. www.enron.com/corp/sec.

Herdman, Robert. Are Current Financial Accounting Standards Protecting Investors? Testimonio
ante el Subcomit de Comercio, Negocios y Proteccin de Consumidor del Comit de Comercio y
Energa de la Cmara de Representantes de los Estados Unidos, 14 de febrero de 2002.

Nueva Opinin. La quiebra de le empresa energtica ENRON salpica al presidente Bush. El

escndalo amenaza al presidente de EU, a Cheney y a tres ministros. www.nuevaopinin.com.
Semana del 14 al 20 de enero de 2002.

Pitt, Harvey. Legislative solutions to problems raised by events relating ENRON Corporation.
Testimonio ante el Subcomit de Mercados de Capital, Seguros y Empresas con Respaldo Estatal,
de la Cmara de Representantes de los Estados Unidos. 4 de febrero de 2002.

Samuelson, Robert J. Las lecciones del caso ENRON. www.quepasa.copesa.cl. 10 de febrero de

2002.

The Washington Post. www.washigntonpost.com

Gonzlez, Martn Conejo & Mauricio Daz.

mconejo@hotmail.com
1. What led to the eventual collapse of Enron under Lay and Skilling?

Answer:

There are a host of reasons that led to Enrons collapse. Taken together, answers to all the questions
stated here address this particular question more completely. To summarize, Enrons collapse was
caused by: (1) A corrupt leadership at the top, (2) Violation of laws that were not enforced by the
companys CEO, Chair and members of its Board of Directors, and auditors (Arthur Andersen), (3)
Lack of regulation Enron had one of the best ethics code in the industry. The collapse of the
company clearly illustrates that written ethics and compliance codes alone do not work. Corrupt
leaders at the top (and middle) of organizations is a recipe for disaster. Probably no code or law can
prevent the willful intent with the available means for criminally minded and greedy CEOs (Lay
and Skilling), CFOs (Fastow) and other top level officers (individually and as coalitions) from
defrauding and stealing from their organizations. Secondly, as the Sarbanes Oxley Act and the
Revised Federal Sentencing Guidelines show, effective communication, monitoring, and auditing of
the organizations legal and ethical compliance standards and procedures must be enforced.
Kenneth Lay paid lip service to ethics. He said he fully understood the legal, moral, and ethical
implications of leading organizations and people. In an introductory statement to the revised Enron
Code of Ethics issued in July 2000, Lay emphasized that Enrons officers and employees should
conduct the companys business affairs in accordance with all applicable laws and in a moral and
honest manner. Enrons ethics code was based on the values of respect, integrity, communication,
and excellence. The code specified that An employee shall not conduct himself or herself in a
manner which directly or indirectly would be detrimental to the best interests of the Company or in
a manner which would bring to the employee financial gain separately derived as a direct
consequence of his or her employment with the Company. So much for ethics codes with leaders
who do not walk the talk. Answers to the following questions add to the response given here.

Lay and skilling also created a corrupt elite coalition among themselves, Fastow, and several of the
traders in the company. The now classic film , Enron: The Smartest Guys in the Room reveals
the inside workings of this courruptcorrupt subculture that became the dominant engine that drove
the company into bankruptcywithout the lower level employees ever knowing. Do values count?
Yes, in Enrons case, the dominant coalitions values were greed, flamboyance, waste, and win-at-
any-cost.

2. How did the top leadership at Enron undermine the foundational values of the Enron Code of
Ethics?

Answer:

Key players among the top leadership were Andrew Fastow, Jeff Skilling, and Ken Lay. Each of
these individuals contributed to undermining Enrons foundational values; their activities raise
crucial questions about how closely they adhered to the values of respect, integrity, communication,
and excellence.

Skilling, for example, did not take the obligation to communicate very seriously when he accused
an investigative reporter of unethical behavior because she asked him to clarify Enrons nearly
incomprehensible financial statements and he refused to do so. A subsequent effort to have three
key executives meet with the reporter to answer her questions completely and accurately turned
out to be more deception than clarification.
The decentralized nature of Enron also created communications barriers and prevented all but a few
people in the organization from seeing the big picture. The communication value was also
undermined when Fastow tried to conceal how extensively Enron was involved in trading in order
to maintain the high market valuation that was essential to keeping Enron from collapsing. Lays
assertion that he lacked any knowledge of what was happening is another action that brings into
question the commitment of Enrons leadership to the communication value.

Enrons commitment to excellence was perverted through the rank and yank performance
appraisal system and the compensation system that enriched executives, encouraged people to
inflate the value of contracts, and promoted use of non-standard accounting practices. Both the
performance appraisal system and the compensation system were creations of Enrons top
leadership.

Collectively, all of the preceding decisions and actions did little to support the values of integrity
and respect. In addition, Fastows exemption by the board and top management from the companys
ethics code undermined the values of respect and integrity.

3. In retrospect: given Kenneth Lays and Jeff Skillings operating beliefs and the Enron Code of
Ethics, what expectations regarding ethical decision and actions should Enrons employees
reasonably have had?

Answer:

The employees were kept in the dark on the misguided and corrupt strategic and operational
dealings of Lay, Skilling, and Fastow. Sherron Watkins (the whistle blower who helped reveal
Enrons illegal activities) warned Lay several times but to no avail. In an August 2001 interview it
was noted that, Sherron Watkins, an Enron vice president, had sent an anonymous memo to Lay
that read, I am incredibly nervous that we will implode in a wave of accounting scandals. Of
course, that's exactly what happened. After the company's demise, the investigating U.S. Congress
discovered Watkins' memos to Lay and other top executives. (After sending the memos, she had
met with Lay with no results) (Carozza, 2007).

With regard to lower level employees, what could they have reasonably expected regarding Enrons
code about ethical decisions and actions? In hindsight, Enron was continually winning Fortune
Magazines best-in-class awards, Arthur Andersen (Enrons auditors) saw no problems year after
year with Enrons accounting procedures, the SEC (Security Exchange Council)Enrons
regulatorhad no problem with Enrons business practice, so why would lower level employees
question the company that was adding to their wealth before the crash? Watkins stated in 2001,
Enron was primarily a financial trading house. A financial trading house lives on its investment
grade rating and its reputation. Any hint of trouble and business disappears like water through a
sieve. When I met with Ken Lay, I was both optimistic and naive. I not only expected that a
thorough investigation would occur but I also expected Enron to establish a crisis management team
to address the financial peril Enron would face when the accounting was exposed, which in my
opinion was sure to happen. In the long run, companies rarely get away with cooking the books.
But no other top executives came forward to back me up and Ken Lay gravitated toward good news
and didn't quite accept what I was saying. (Carozza, 2007).

4. How did Enrons corporate culture promote unethical decisions and actions?

Answer:
The succinct and unequivocal answer to this question is that Enrons corporate culture did little to
promote the values of respect and integrity that were articulated in the Enron Code of Ethics. These
values were undermined through the companys emphasis on decentralization, its employee
performance appraisals, and its compensation program. By keeping each Enron division and
business unit separate from the others, very few people had a holistic perspective of the companys
operations. This decentralization, in conjunction with insufficient operational and financial controls
as well as a distracted, hands-off chairman, a compliant board of directors and an impotent staff of
accountants, auditors and lawyers, contributed to a corporate culture that enabled the occurrence of
unethical decisions and actions. The extremely rigorous and threatening performance evaluation
process utilized peer evaluations wherein employees frequently ranked their peers lower in order to
enhance their own positions in the company. Enrons compensation plan seemed oriented toward
enriching executives rather than generating profits for shareholders, and encouraged people to
inflate the value of contracts and to use non-standard accounting practices. The performance
appraisal system and the compensation systems helped define and reinforce a culture that was rife
with the potential for unethical decisions and actions. In short, Enrons culture encouraged and
reinforced unethical decisions and actions. As revealed by whistleblower Sherron Watkins,
Enrons unspoken message was, Make the numbers, make the numbers, make the numbers if
you steal, if you cheat, just dont get caught. If you do, beg for a second chance, and youll get one.

5. How did the investment banking community contribute to the ethical collapse of Enron?

Answer:

Investment banks were not found legally liable in actively contributing to the Enron scandal. In
what may have been the final blow to plaintiffs attempt to hold several investment banks liable for
their involvement in the Enron scandal, the United States District Court for the Southern District of
Texas granted summary judgment in favor of the investment banks after several years of litigation.
In re Enron Corp. Sec., Derivative & ERISA Litig., No. H-01-3624, 2009 WL 565512 (S.D. Tex.
Mar. 5, 2009), (David O'Neal (2009). No Liability under Stoneridge for Investment Banks That
Did Business with Enron. Securities Litigation Blog,
http://securities.litigation.alston.com/blog.aspx?entry=2004 May 5, 2009, accessed March, 2011).
However, the debate continues with regard to whether or not J.P. Morgan and Citibank, in
particular, violated their ethical responsibilities to shareholders and the public in continuing to loan
Enron funds while the company lied and defrauded all who were involved during the scandal. An
Economist article described the role of these banks this way, Might J.P. Morgan and Citi have let
their lending standards slip in order to win investment-banking business from Enron, allowing the
company to become over-leveraged? Did being both a creditor of Enron and an adviser create acute
conflicts of interest as the company approached bankruptcy? As creditors, the banks may have had
an interest in preserving whatever value Enron had left to maximise their chance of being repaid. As
advisers, they may have had reason to promote riskier strategies in a bid to keep Enron alive and
stop its shareholders being wiped out. An article in the Economist stated the issue this way, Both
banks vehemently deny lowering lending standards to win investment-banking business. J.P.
Morgan had lent to Enron for many years. The banks also deny that they took advantage of their
advisory role by getting Enron to pay off unsecured loans to the company with money raised during
a secured refinancing late last year. (Commercial banks after Enron,Conflicts, conflicts
everywhere (2002). The Economist. http://www.economist.com/node/954024 Accessed March,
2011.)

It could also be argued that the investment banks were one of several watchdogs who failed to
regulate Enron during its scandalous period. Where were Enrons public auditors, board of
directors, federal government watchdogse.g. the SEC (Security & Exchange Commission)?
Unfortunately, the lessons from Enron have been repeated as witnessed by the latest subprime
lending crises that also involved investment banks in even more risky practices than Enron.

6. If the Sarbanes-Oxley law had been in effect, do you believe the Enron debacle would have
occurred? Explain. 7. Could another Enron occur now? Why or why not? Explain.

Unfortunately, it seems that the answer to these two questions is Yes. As stated in the response to
the previous question, the subprime lending crisis that continues to negatively affect the national
and global economies recently occurred and involved many more financial institutions and
companies, including banks. The problem appears to be multifaceted: (1) the deregulation of the
financial industry, including banks and a lack of federal laws, some of which have been repealed, to
regulate this industry; (2) a lack of enforcement of laws like Sarbanes-Oxley; (3) a lack of ethical
leadership of CEOs and boards of directors to safeguard their corporations from scandals such as
Enron and the subprime lending crisis; and (4) Congress members receiving large campaign
contributions from companies and industry lobbies to water down and even repeal regulations and
laws that would prevent such scandals as Enron and the subprime lending crisis. For example,
corporations and their lobbies help passed The Reform Act of 1995, which was called the
Securities Rip-off Act. This Act offered substantial loopholes and decreased the power of the
Securities & Exchange Commission to act as a watchdog over brokerage and financial firms
(Moore, Hank, 2011. The Big Picture of Business Business Lessons to be Learned from the
Enron Scandal. http://www.strategydriven.com/2011/03/11/the-big-picture-of-business-business-
lessons-to-be-learned-from-the-enron-scandal/ Accessed March, 2011).
 1

FOOD FOR THOUGHT: THE 2008 CHINA MILK SCANDAL (1)

Vivien K.G. Lim, Rashimah Rajah and Smrithi Prasad wrote this case solely to provide material for
class discussion. The authors do not intend to illustrate either effective or ineffective handling of a
managerial situation. The authors may have disguised certain names and other identifying information
to protect confidentiality.

Copyright 2012, National University of Singapore and Richard Ivey School of Business Foundation
Version: 2012-11-14

In 2007, Sanlu, a Chinese milk manufacturing company based in Shijiazhuang, was recognized as a
formidable force by its competitors as it had topped the list of local dairy producers for more than a
decade. It was also the second biggest dairy producer in the world. Sanlu was the number one
bestselling milk brand in China, responsible for 18.3 per cent of total national dairy sales in 2007. (2)
A year later, however, a scandal unfolded that brought not only Sanlu but other dairy manufacturers in
China unwanted international attention. More than 290,000 infants were affected by this scandal,
which involved deliberate tainting of milk powder. What motivated one of the most well trusted
brands in China to engage in business practices that led to the deaths of innocent infants?

BACKGROUND INFORMATION

In 2008, an incident in China involving milk products brought regional and global attention to the
country. At a time when international trade was important for the countrys economic progress, the
milk incident raised concerns about the safety of food products made in China and the ethics of
business practices in Chinese companies.

Chinas dairy market had expanded to keep pace with the countrys rapid economic development.
Besides importing close to 300,000 tonnes of dairy products from Japan, New Zealand and other
countries to satisfy the demand of high- and middle-income consumers, many local dairy producers
had been established and expanded to meet the demand of the lower income group, which constituted
the bulk of Chinese consumers. Sanlu was one example. Priced at RMB85 (about US$13) per tin (900
grams) almost half that of imported milk powders Sanlus products were very popular among
consumers in Chinas rural areas.

----------------------------
1 This case has been written on the basis of published sources only. Consequently, the interpretation and
perspectives presented in this case are not necessarily those of Sanlu Group or any of its employees.
2 Chris Buckley, Second Infant Death in China Milk Scandal, Asia One, September 16, 2008,
www.asiaone.com/Health/News/Story/A1Story20080916-88026.html, accessed December 22, 2010.
 2

The low cost strategy allowed the company to be highly successful, and it was the market leader for
more than 10 years. However, under the pressure of increasing price competition, coupled with the
absence of quality control by both the government and the company, Sanlu engaged in cost-cutting by
adding melamine a chemical used in producing plastic into diluted raw milk to inflate the
protein content. This became a common practice in the dairy industry. (3)

Adding unapproved or banned chemicals to spice up the quality of food products in China was not
new. For example, washing powder was added to flour to make you tiao (Chinese fried bread stick)
fluffier and last longer, acetic acid and mineral acid were added to vinegar to increase its fixed acid
content and talc powder was added to wheat powder to give a smoother texture. Just five years before
the 2008 milk incident, a company sold baby formula with little or no nutritional value, leading to the
deaths of at least 12 infants and causing malnutrition in hundreds more. (4)

INTERNATIONAL ATTENTION

The 2008 Chinese milk scandal was one of the most prominent cases involving food safety that the
World Health Organization (WHO) had to deal with in recent years. In December 2008, China
reported the number of victims to be more than 290,000. (5) Among them, 51,900 were hospitalized,
and four cases were fatal. In addition, 8,311.7 tonnes of unqualified milk products were withdrawn
from the market as of October 31 that year. (6) Although the incident drew international attention, the
effect was predominantly confined to China with limited cases in Taiwan, Hong Kong and Macau.

On July 16, 2008, the Gansu local government officially reported to the Ministry of Health that 16
infants in the province were diagnosed with kidney stones after consuming milk powder produced by
the Sanlu Group. (7) After the initial focus on Sanlu, investigation by the Chinese government
revealed that the problem existed to a lesser degree in products from 21 other Chinese companies,
including well-known companies such as Monmilk, Yili and Yashili. Some of these had exported their
products overseas. This issue raised concerns about food safety and political corruption in China.
There was speculation that the Chinese government maintained silence about the incident during the
Beijing Olympics to maintain a positive image. This silence led to delay in follow-up actions, which
could have averted serious health consequences.

According to WHO, the crisis led to a significant decline in consumers confidence in Chinas food
products. WHO spokesperson and food safety scientist, Peter Ben Embarek, attributed the cause of the
event to inadequate measures and lack of control among agencies responsible for monitoring food
safety in the private sector. These agencies were often not well-staffed and lacked resources and
equipment. As a result, they could not keep up with the rapid pace of food, agricultural and industrial
production in China over the past few decades. He concluded by referring to the large scale of the
incident as being

----------------------------
3 Dunce Lawrence, China Says Sanlu Milk Likely Contaminated by Melamine, (Update 1), Bloomberg,
September 12, 2008, www.bloomberg.com/apps/news?pid=newsarchive&sid=at6LcKJB6YA8&refer=asia,
accessed December 22, 2010.
4 47 Detained for Selling Baby-Killer Milk, China Daily, May 10, 2004,
www.chinadaily.com.cn/english/doc/2004-05/10/content_329449.htm, accessed December 22, 2010.
5 Timeline: Sanlu Milk Powder Scandal, Television New Zealand Limited, December 24, 2008,
www.tvnz.co.nz/business-news/timeline-sanlu-milk-powder-scandal-2429256, accessed December 22, 2010
6 8,300 Tons of Tainted Milk Products Withdrawn, Xinhua News Agency, October 31, 2008,
www.china.org.cn/china/national/2008-10/31/content_16693286.htm, accessed December 29, 2010.
7 China Seizes 22 Companies with Contaminated Baby Milk Powder, Xinhua News Agency, September 16,
2008, www.news.xinhuanet.com/english/2008-09/17/content_10046949.htm, accessed December 22, 2010.
 3

clearly not an isolated accident. It was a large-scale intentional activity to deceive consumers for
simple, basic, short-term profits. (8)

PARTIES INVOLVED

The magnitude of this scandal implicated several organizations the Chinese government, Chinese
manufacturers and the Chinese media. In the following sections, the role of the private company,
Sanlu, and the other parties involved in shaping the course of events will be discussed.

The Role of the Company: Sanlu Group

Lack of corporate governance, transparency and social corporate responsibility were the main issues
underlying the milk scandal. Instead of working towards producing good quality and safe products,
Sanlu ignored early warnings and did not take steps to highlight the situation to consumers. Since late
2007, the company had been receiving complaints from consumers regarding changes in the colour of
urine as well as crystals in the urine of babies who had consumed Sanlus milk powder. (9) However,
the company took little action to improve its product. Instead, it engaged in the practice of private
settlement to appease consumers who publicly questioned the quality of its products. (10)

After receiving confirmation that its product was tainted with melamine and that the chemical was
deliberately added by man in August 2008, the Sanlu Group engaged in a series of actions to
conceal the incident from the public. One face-saving initiative involved collaborating with Chinas
biggest search engine, Baidu.com, by signing an advertising agreement of RMB3 million
(US$474,000) on the condition that negative news related to the company was removed. (11)

The Role of the Government

The Chinese government played a critical role in the development and proliferation of the incident. By
providing Sanlu with the national inspection exemption label, not taking immediate action to address a
potential national epidemic and silencing the media, the Chinese government was directly as well as
indirectly implicated in the milk incident. The inspection exemption label was a form of special
reward designed by the General Administration of Quality Supervision, Inspection and Quarantine
(AQSIQ).

This label was awarded to Chinese companies with a reputation for quality products, big market shares
and strict safety controls so that they did not have to undergo certain quality inspections. As a result of
the absence of state inspection, quality control was left to the manufacturers discretion, which
provided opportunities for companies to engage in questionable cost-cutting measures. There were
early warnings related to the milk scandal posted by the public, (12) professionals (13) and the media,
(14) even before the case was formally exposed in March 2008. However, the government did not take
these warnings seriously.

----------------------------
8 Lisa Schlein, Chinas Melamine Milk Crisis Creates Crisis of Confidence, Voice of America, September 26, 2008,
www.voanews.com/english/news/a-13-2008-09-26-voa45.html, accessed December 29, 2010.
9 Zhu Zhe and Cui Xiaohuo, Sanlu Ex-boss Was Aware of Tainted Milk, China Daily, January 1, 2009,
www.chinadaily.com.cn/china/2009-01/01/content_7358822.htm, accessed December 22, 2010.
10 Sanlu to Recall Milk Powder as Baby Dies, China Daily, September 12, 2008,
www.chinadaily.com.cn/china/200809/12/content_7020499.htm, accessed December 22, 2010.
11 The Chinese Milk Crisis: Lessons for CSR, CSR Asia Weekly, 4.41, October 8, 2008, www.csr-
asia.com/upload/cover/037971505303.pdf, accessed December 22, 2010.
12 On June 30, an inquiry from the public about the product was found on the official website of the AQSIQ.
13 In July, a urologist in a paediatric hospital specifically asked the AQSIQ to refer his observations to
epidemiologists but was asked to refer his query to the Health Department.
14 The China News Service reported that for months many parents of sick infants had complained to their local
inspection administrations and sent samples for testing. However, they were told that the powder met national
safety standards. In July, a cable TV channel in Hunan Province reported that an unusually high number of
kidney stone cases among infants were found in a childrens hospital.
 4

Besides the lack of response, the Sanlu incident also provided evidence of the prevalence of
institutionalized corruption in China, where companies engaged in unethical practices in pursuit of
profits. In numerous articles, the incident was compared to the SARS crisis, when reports about SARS
incidents in China were delayed. In both situations, the Chinese government placed restrictions on
media coverage to protect its political image, which subsequently led to a worsening of the incident.
(15) In the case of the tainted milk incident, the Propaganda Department put out a 21-point directive to
the nations media during the Olympics period. The eighth point said: All food safety issues, such as
cancer-causing mineral water, are off-limits, which prevented early exposure of the incident. (16)

Also, there was speculation regarding corruption and inefficiency in the local government. Although
the municipal government in Shijiazhuang was informed of the melamine contamination by the Sanlu
Group, it neither took immediate action to contain the situation nor informed the central government,
which was informed of the crisis by foreign diplomats. According to the New Zealand government,
Sanlus New Zealand partner, Fonterra, was aware of the contamination in August 2008 and
immediately requested its Chinese partner as well as government officials to recall all milk powder
produced by the Sanlu Group.

However, as local officials did not cooperate, action was taken only a month after the alert. Left with
few alternatives, Fonterra eventually reported the case to the New Zealand government. It was then
that the New Zealand government bypassed local officials and reported directly to the Chinese central
government and the case was brought to light. (17)

The Role of the Media

The extent of Chinese government control over the media becomes evident when examining the
timeline of the publication of the media reports on the Sanlu incident. Sanlu Group informed the local
authority on August 2, 2008, six days before the opening of the Beijing Olympics. It was only from
September 10 onwards (when the games were officially over) that the news was released to the public.
Given the heightened vigilance following 2007s spate of food safety scares, it came as a surprise that
the news related to the Sanlu incidents was contained for one month. Newspapers, television, radio
and even the Internet were able to actively conceal and downplay the severity of the incident.

This did not prevent social media from discussing the food scare, as individuals (e.g., affected parents)
blogged openly about their experiences with Sanlu milk powder and their dealings with the company.

Such information, however, remained restricted as those websites did not appear in search results on
the Internet. This was primarily due to the agreement between Sanlu and Baidu.com, which removed
negative information and stories about Sanlu from Chinas most powerful search engine.

----------------------------
15 Chua Chin Hon, Milk Scandal A Tale of Greed and Cover-up, Straits Times, September 28, 2008,
www.asiaone.com/News/the%2BStraits%2BTimes/Story/A1Story20080928-90424.html, accessed December
22, 2010.
16 Frank Ching, Tainted Food: Chinas History of Using Melamine, National Business Review, September 16,
2008, www.nbr.co.nz/comment/frank-ching/tainted-food-china-s-history-using-melamine, accessed December
22, 2010.
17 Toxic Milk Toll Rockets in China, BBC News, September 15, 2008,
www.news.bbc.co.uk/2/hi/7616346.stm, accessed December 22, 2010.
 5

REMEDYING THE SITUATION

Government Reaction and Recall

Immediately after the incident was made public, Chinas Health Ministry announced that it would
launch a nationwide investigation into the infant kidney stone cases. Seventy-eight individuals
suspected of being involved in the baby milk powder contamination were questioned by Chinese
police. These individuals included dairy farmers and milk dealers. It was found that water had been
added to dilute the milk, which was then sold to Sanlu for greater profit. Melamine was subsequently
added to the diluted milk to maintain the products standard protein content. (18) With the
commencement of the investigation, Sanlu also sealed off 2,176 tonnes of contaminated milk powder
and recalled more than 8,300 tonnes from the market. Finally, on September 13, 2008, an order was
decreed by the authorities to halt all production at Sanlu plants. (19)

The Health Ministry also took action to keep the cases under control. It initiated warnings and
informed the public to immediately refrain from consuming Sanlu milk powder formula. The public
was advised to consult doctors if babies who had consumed the milk powder were found to have
difficulty urinating. In addition, the ministry issued a treatment scheme on its official website to help
local hospitals treat such sick babies. (20) Besides controlling the situation in China, the government
also actively managed international opinion. The Health Ministry promised to notify WHO and
affected countries of any development in the case.

New Policies and Regulations

To prevent similar incidents from happening again, the Chinese government also implemented new
policies and regulations. Measures were introduced to regulate the dairy market, including providing a
sum of RMB316 million (US$50 million) to dairy farmers (RMB200 (US$31) per cow) to defray
feeding and other operating costs. (21)

New food safety draft laws, which set stricter food quality standards and demanded greater
government responsibility, were reviewed on October 23, 2008. Under the draft laws, health
authorities were responsible for assessing and approving food additives, and food manufacturers were
expected to adhere to regulations and guidelines by authorities or run the risk of having their
production licenses revoked. (22)

The draft stipulated that even non-harmful substances, as long as they were not approved food
additives, were not allowed to be added in food. The law required health authorities to issue scientific,
safe and reliable food safety standards, which were compulsory for all food producers. The revised
law also stated that all enterprises, hospitals and quality supervision agencies were required to
immediately report all food safety incidents to health authorities.

----------------------------
18 Daniel Barboza, Chinas Dairy Farmers Say They are Victims, New York Times. October 3, 2008,
www.nytimes.com/2008/10/04/world/asia/04milk.html?pagewanted=all, accessed December 22, 2010.
19 China Reports 432 Infants with Kidney Stones Due to Fake Milk, Economic Times, September 13, 2008,
http://articles.economictimes.indiatimes.com/2008-09-13/news/27704989_1_milk-powder-kidney-stones-sanlu-
group, accessed December 23, 2010.
20 Nationwide Investigation Launched on Sanlu Scare, Xinhua News Agency, September 12, 2008,
www.china.org.cn/government/central_government/2008-09/12/content_16440855.htm, accessed December 22,
2010
21 China Takes Measures to Regulate Dairy Market, Aid Dairy Farmers, Xinhua News Agency, September
24, 2008, www.china.org.cn/china/national/2008-09/25/content_16529887.htm, accessed December 22, 2010.
22 China Reviews Food Safety Draft Law, Xinhua News Agency, October 23, 2008,
www.china.org.cn/business/2008-10/23/content_16656987.htm, accessed December 22, 2010.
 6

Arrest and Apology

In total, 22 companies were involved in the milk scandal, and several top executives were arrested.
The board chairwoman and general manager of Sanlu Group, Tian Wenhua, was fired along with other
local officials. Twenty-one people were arrested, with two men facing the death penalty and Tian
sentenced to life imprisonment. (23)

Tian, 66, was convicted for not halting the milk production and sales even after she was informed that
they were contaminated. She was fined about RMB25 million (US$3.95 million) as well. (24) On
December 19, 2008, Sanlu secured a loan of RMB902 million (US$142.6 million) to pay the medical
expenses of and compensation to children affected by the tainted milk powder it produced. Sanlu went
bankrupt in December 2008 with a net debt of RMB1.1 billion (US$174 million). Sanlu was fined
RMB50 million (US$7.9 million) despite its bankruptcy. (25)

While Tian was on trial at the beginning of 2009, other Chinese dairy companies (e.g., Inner Mongolia
Yili Industrial Group, Mengniu Dairy and Bright Dairy Group) involved in the tainted milk incident
surprised many by offering an apology in the form of a New Year text message sent to millions of
mobile phone subscribers: We are deeply sorry for the harm caused to the children and the society. . .
We sincerely apologize for that and we beg for your forgiveness. (26)

Skeptics stated that saying sorry was not good enough as real change would require more than
training and education of officials. (27) According to China scholar Russell Leigh Moses, The
problem is not so much political or structural as psychological. The top leadership is more and more
out of step with the public and even though there is still room for them to maneuver on this, these
events accumulate and the wiggle room gets narrower and narrower. (28)

The milk incident affected the publics confidence in the safety of Chinese-made products, which was
already tainted by a series of other scares involving food, drugs and toys in recent years. (29) This has
further prompted authorities to put in place tighter rules governing milk production.

REPEAT CASES

Despite the string of food scares, as well as other contaminated non-food products (e.g., lead
contamination in Mattels childrens toy products), unethical practices continued to surface in Chinese
companies. In December 2010, five wineries were suspected of manufacturing adulterated wines that
only

----------------------------
23 Daniel Palmer, Culprits in Chinas Contaminated Milk Scandal Get Death Penalty, Australian Food News,
January 23, 2009, www.ausfoodnews.com.au/2009/01/23/culprits-in-chinas-contaminated-milk-scandal-get-
death-penalty.html, accessed December 22, 2010.
24 Zhu Zhe and Cui Xiaohuo, Two Get Death in Tainted Milk Case, China Daily, January 23, 2009,
www.chinadaily.com.cn/china/2009-01/23/content_7422983.htm, accessed February 1, 2012.
25 Chinese Milk Scam Duo Face Death, BBC News, January 22, 2009,
http://news.bbc.co.uk/2/hi/7843972.stm, accessed February 1, 2012.
26 China Dairies Offer Text Apology, BBC News, January 2, 2009, http://news.bbc.co.uk/2/hi/7807637.stm,
accessed December 22, 2010.
27 Simon Elegant, Chinas Milk-poisoned Scandal: Is Sorry Enough?, Time News, September 23, 2008,
www.time.com/time/world/article/0,8599,1843536,00.html, accessed December 22, 2010.
28 Simon Elegant, Chinas Milk-poisoned Scandal: Is Sorry Enough?, Time News, September 23, 2008,
www.time.com/time/world/article/0,8599,1843536,00.html, accessed December 22, 2010.
29 Debasish Roy Chowdhury, Nothing is Scarier Than the China Scare, Asia Times, August 4, 2007,
www.atimes.com/atimes/China_Business/IH04Cb01.html, accessed February 1, 2012; Louise Story, Lead Paint
Prompts Mattel to Recall 967,000 Toys, New York Times, August 2, 2007,
www.nytimes.com/2007/08/02/business/02toy.html, accessed February 1, 2012.
 7

contained 20 per cent fermented grape juice, with the bulk of ingredients consisting of sugar water
mixed with chemicals. They were also suspected of misrepresenting their products as famous brands,
including the Great Wall Wine manufactured by the China National Cereals, Oils, and Foodstuffs
Import and Export Corporation (COFCOA). (30)

The government seized 5,114 boxes of wine that were falsely labeled, 19 templates for forging brand
labels and 280 unlabeled bottles. While this move by the government was welcomed by the parties
affected (i.e., the original brands such as COFCOA), the fact that such incidents continued to bring
China into the spotlight revealed that the problem lay deeper it was rooted in an organizational
culture that fostered institutionalized corrupt behaviour.

A news article in June 2011 reported that insiders warned that little has changed since the Chinese
Milk Scandal of 2008 since Chinas standards for fresh milk remained among the lowest in the world:
it allowed two million bacteria per milliliter of raw milk, while the maximum in the United States and
Europe was 100,000 bacteria. (31) In February 2011, yet another milk contamination incident was
discovered. Instead of melamine, leather-hydrolyzed protein was used to boost the protein content of
milk. Although China announced that it was closing about half of its dairies to resolve this issue, other
food safety scandals have been reported. These include toxic bean sprouts, pesticide-drenched beans,
aluminum dumplings and glow-in-the-dark pork. (32) More recently, in April 2012, China was
plagued with a pharmaceutical capsule crisis, when it was found that medicines were packed into
capsules that were tainted with chromium. (33)

FINAL THOUGHTS

As the world becomes more globalized and countries engage in international trade relations, agencies,
government institutions and private corporations need to understand the culture, economic
environment and intricacies surrounding economic transactions that prevail in emerging economies
such as China.

While acknowledging that a culture that allows corruption to exist helps us to understand the countries
better, it is also important to analyze why such a culture prevails.

What factors motivate individuals and businesses to resort to questionable means for economic gain?
Why do governments allow unethical behaviours through their cover-up attempts? How did the parties
involved justify their decisions? Were their attempts to rationalize their actions justifiable? How does
a more global and wired world affect businesses decisions to engage in questionable actions? What
role does social media play in curbing corruption? These questions are worthy of discussion as
international businesses increasingly expand into emerging economies.

----------------------------
30 Liu Linlin, Fake Wine Stuns Nation, Global Times, December 27, 2010,
www.globaltimes.cn/china/society/2010-12/604367.html, accessed February 1, 2012.
31 Gus Lubin, Insiders Warn of Another Chinese Milk Scandal Waiting to Happen, Business Insider, June 21,
2011, www.articles.businessinsider.com/2011-06-21/news/29973916_1_raw-milk-watered-down-milk-global-
times, accessed February 1, 2012.
32 Peter Foster, Top 10 Chinese Food Scandals, Telegraph, April 27, 2011,
www.telegraph.co.uk/news/worldnews/asia/china/8476080/Top-10-Chinese-Food-Scandals.html, accessed
February 1, 2012.
33 Capsule Crisis Stirs Stock Market, China Daily, May 14, 2012, www.china.org.cn/business/2012-
05/14/content_25379520.htm, accessed August 14, 2012.
30/07/13 Cmo la crisis europea hundi a Pescanova, un gigante espaol de la pesca - WSJ.com

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SPANISH Updated July 19, 2013, 12:03 a.m. ET

Cmo la crisis europea hundi a Pescanova, un gigante

espaol de la pesca
Por MA TT MOFFE TT

REDONDELA, EspaaLa cada de Manuel Fernndez de Sousa, quien hizo que Pescanova SA pasara de ser una
empresa pesquera provincial espaola a un gigante multinacional, es una historia aleccionadora sobre la crisis
bancaria que todava se siente en Europa.

Sus problemas comenzaron en una reunin de la junta directiva el 27 de febrero, cuando los dos nuevos directores
lo interrogaron sobre los propuestos resultados financieros de la empresa.

Dos das antes, Fernndez los haba convocado junto a otros grandes
accionistas para alertarlos que la empresa afrontaba una escasez de
efectivo de 50 millones de euros (US$65,6 millones). Entonces por
qu, preguntaron los nuevos directores, se dispona Pescanova a
divulgar resultados de 2012 que mostraban una gran ganancia y
abundancia de efectivo? "Las cifras no tenan ningn sentido", dijo uno
de los dos, Franois Tesch, cuya firma tena una participacin de casi 6%
en la empresa. Los dos directores se negaron a aprobar las cifras y
Fernndez no las public.

Esa confrontacin provoc una sucesin de eventos que llevaron a

Pescanova a solicitar la proteccin por bancarrota. Las autoridades ms
tarde le quitaron a Fernndez que est siendo investigado por
presunta falsificacin de cuentas y por vender acciones antes de que
surgieran las malas noticias el control operativo de Pescanova. El
mircoles, Fernndez, que se haba comprometido a quedarse, dimiti.

Fernndez dijo que no quera "suponer un obstculo para la

administracin concursal, de cara a las negociaciones que se han de
llevar a cabo con los acreedores del concurso".
AFP/Getty Images
El escndalo de una de las mayores empresas de pescado congelado del
mundo ofrece una instantnea de la afliccin corporativa que aqueja al
sur de Europa, desde que el grifo de crdito del continente se sec. Los
ngulos de esta imagen ilustran a compaas que asumieron mucha
deuda y crecieron con rapidez antes de que estallara la burbuja
crediticia. Ahora, algunas de estas empresas estn siendo investigadas
por prcticas presuntamente ilegales.

En Pescanova, una reciente auditora de KPMG hall que la empresa

acumul en secreto una deuda de 3.280 millones de euros, cerca del
AFP/Getty Images doble de la cantidad que haba divulgado en informes financieros. Un
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Manuel Fernndez juez lo calific como un complot para presentar "una imagen irreal de la
situacin econmica y patrimonial" de la empresa.

En una entrevista en junio, Fernndez, que se desempe como presidente ejecutivo de la empresa, reconoci que
la deuda era mayor de lo reportado y que haba errores en la forma en que Pescanova y su auditor, BDO Espaa,
llevaron la contabilidad.

"La direccin cometi errores. BDO cometi errores", afirm Fernndez. El empresario admite haber vendido
algunas de sus acciones, pero indica que despus prest ms de 9 millones de euros de los fondos recaudados para
ayudar a la empresa a salir de la restriccin de efectivo. En una declaracin legal posterior, Fernndez dijo que
ninguna de sus acciones form parte de una "estrategia fraudulenta deliberada", y que fueron realizadas de buena
fe para mantener a flote a su empresa. BDO declin hacer comentarios.

Con la renuncia de Fernndez, no est claro quin dirigir ahora la empresa. La junta directiva no nombr a un
nuevo presidente. Las operaciones diarias siguen en manos del administrador de la bancarrota, Deloitte. Al mismo
tiempo, algunas de las filiales de la empresa en Amrica Latina han iniciado los procesos de bancarrota en
jurisdicciones locales. Esto supone un grave riesgo porque podra significar que varios de sus activos clave acaben
siendo vendidos para pagar a los acreedores.

Tesch, uno de los directores, dice que la reunin de la junta dur siete horas sin receso para almorzar. Seal que
la auditora no le dej otra opcin a Fernndez que marcharse. "Simplemente fue un informe devastador",
recuerda Tesch.

El colapso de Pescanova, la tercera mayor bancarrota en la historia espaola, se produce en un momento en que el
pas sufre los efectos de una ola de presuntos delitos financieros que han cargado de costos a accionistas y
contribuyentes. Como en otras partes de Europa, las acusaciones de fraude corporativo estn obstaculizando los
esfuerzos del pas para recuperar la confianza de los mercados financieros y salir de la recesin.

Adems del caso Pescanova, la fiscala espaola est investigando presuntas irregularidades en siete bancos que
hicieron prstamos de manera agresiva durante el boom inmobiliario de principios de los 2000 y despus
necesitaron ms de 30.000 millones de euros en rescates del gobierno cuando la economa se contrajo. Todos los
bancos han negado haber cometido prcticas ilegales.

El declive de Pescanova es particularmente impactante ya que se trata de una potencia global con ms de 10.000
empleados en 26 pases, incluida Amrica Latina. En 2011, su facturacin fue de 1.670 millones de euros. Rodolfo
Langostino, su mascota, un langostino con acento argentino que baila tango, es muy conocido entre los espaoles.

Fernando Ruiz Lamas, un profesor de finanzas de la Universidad de La Corua, en Galicia, la regin donde se
fund Pescanova, apunt que la compaa "nunca hizo la transicin de una empresa familiar a una empresa que
cotiza en bolsa".

Fernndez, hijo del fundador, coloc a su hijo y hermano en la junta. Ambos estn bajo investigacin, afirman las
autoridades.

En abril, Pescanova contrat a la firma de contabilidad KPMG para que llevara a cabo una auditora forense. Dijo
que hall que la empresa pesquera ocult deuda en filiales remotas cuyas cuentas nunca fueron consolidadas con
las de la matriz. La consultora tambin descubri que Pescanova utiliz facturas falsas de empresas fantasma para
obtener financiacin a corto plazo de bancos y empresas de factoraje, que compran facturas y despus recaudan
pagos.

Fundada en 1960, Pescanova fue una pionera en el uso de buques fbrica, que congelan la pesca a bordo. En los
ltimos 15 aos, Fernndez lanz una costosa diversificacin a la acuicultura, abriendo granjas de mariscos en
Portugal, Ecuador y Chile. Los bancos "ofrecan ms dinero de lo que uno poda desarrollar", anota Fernndez.
Pero el crdito se sec cuando Europa entr en crisis en 2008, aade, y desde entonces ha sido difcil financiar la
empresa.

A mediados de 2011, un banco de ahorros de Galicia, que estaba tratando de reducir su tamao debido a la

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recesin en el pas, vendi una participacin en Pescanova y renunci a dos puestos en la junta. Para ocupar sus
lugares, llegaron Tesch, representando a la firma de inversin Luxempart, con sede en Luxemburgo, y Jos
Carceller, representando a la cervecera Grupo Damm, con sede en Barcelona.

A mediados de 2012, Fernndez sorprendi a los nuevos directores con un plan para recaudar capital emitiendo
ms acciones. Tesch y Carceller accedieron bajo la condicin de que Fernndez los nombrara al comit de auditora
de la junta.

Tras completarse la emisin de 125 millones de euros en agosto, Fernndez les dijo a los directores que tendran
que esperar a que los accionistas votaran en una propuesta para expandir el comit en la reunin anual de abril.
Fernndez explic recientemente que no quera obligar a un miembro del comit de auditora de entonces a
renunciar. Pero Tesch empez a tener sus dudas. "Haba una fuerte resistencia y me pareci un poco extrao".

Pero las cosas no tardaron en enrarecerse an ms. El 15 de febrero, Fernndez proyect una ganancia para 2012
que rondaba los 40 millones de euros, superando las estimaciones anteriores, indica Tesch.

Sin embargo, el 25 de febrero, Fernndez convoc a Tesch y Carceller, adems de otros grandes accionistas, a un
reunin de emergencia para discutir la restriccin de liquidez de 50 millones de euros. En una entrevista,
Fernndez atribuy los cambios en el pronstico a negociaciones voltiles con prestamistas y firmas a las que haba
intentado vender algunos de los activos chilenos de Pescanova.

Finalmente, lleg la reunin de la junta del 27 de febrero que, segn Carceller, produjo el "bombazo" que sacara a
relucir los problemas de Pescanova.

Tesch y Carceller pasaron la maana debatiendo el informe financiero de 2012 con Fernndez. El documento
mostraba ganancias slidas y casi 150 millones de euros en efectivo, sin indicios de la crisis de liquidez que
Fernndez haba mencionado dos das antes, informaron los participantes de la reunin.

Tesch y Carceller dicen que se encontraron ante un dilema. Si accedan a firmar el informe, podran acabar siendo
acusados por la fiscala de respaldar informacin falsa. Pero negarse supondra poner en evidencia los problemas
de la compaa y perjudicar el valor de sus inversiones.

Al final, se negaron a firmar. "Si hubiramos firmado esos papeles, esto hubiera continuado con ms deuda y ms
problemas", dijo Tesch.

En retrospectiva, Fernndez dice que el informe financiero nunca debera de haber sido presentado a la junta.
Parte de la culpa la tena BDO, seal, pero "la direccin debe producir las cifras correctas y evitar que una
persona cometa errores". BDO no est siendo investigada, aseguran las autoridades.

El 28 de febrero, Pescanova inform a la comisin de valores que aplazara la publicacin de sus resultados
financieros de 2012, hasta que vendiera su negocio chileno o buscara la proteccin por bancarrota.

A mediados de marzo, Fernndez anunci que haba discrepancias que "podran ser significativas" en la magnitud
de la deuda antes reportada y varias semanas despus Pescanova se declar en bancarrota. Adems de
Fernndez, cinco miembros actuales y previos de la junta estn siendo investigados por un juez por acusaciones de
falsificacin de cuentas. Algunos altos ejecutivos tambin estn bajo investigacin. A excepcin de Fernndez, los
ejecutivos y directores no pudieron ser localizados para hacer comentarios.

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30/07/13 Pescanova : se confirma la teora de la bola de nieve? | tica Empresarial y Social
Catal | English | Espaol

Prcticas cuestionables en
Pescanova: se confirma la teora de
la bola de nieve?
Publicado el mayo 1, 2013 por Domnec Mel

El 28 de febrero
de 2013, cuando
casi t odo el
mundo pensaba
que Pescanova
SA era una slida
empres a , se
anunciaba que
ent ra r a en
concurso de acreedores. Su presidente, Manuel Fernndez de Sousa-
Faro, tras unos das de confusin, explic que exista un desfase entre
las cuentas presentadas y las reales. Tambin desvel que unos das
antes del preconcurso haba vendido la mitad de su participacin en
Pescanova, ocultndoselo al consejo y al regulador burstil.

El 25 de abril, el Juzgado Mercantil n.1 de Pontevedra declaraba el

concurso voluntario de Pescanova SA y decida suspender las facultades
de administracin de la compaa, despojando a Sousa de sus funciones.
Requera un administrador concursal, que sera un representante de la
Comisin Nacional del Mercado de Valores (CNMV). En su auto, el juez,
llegaba a esta conclusin tras analizar diversas irregularidades como el
incumplimiento de presentar las cuentas de 2012 y discrepancias en la
deuda. Afirmaba: mantener las plenas facultades del deudor puede
conducir a una situacin de difcil gobernabilidad en absoluto compatible
con el orden que debe presidir el proceso concursal. Inmediatamente la
CNMV design como representante a Deloitte, una prestigiosa firma de
servicios profesionales, que contaba con equipo suficiente para controlar
no solo la matriz sino tambin las filiales.

De este modo, Manuel Fernndez de Sousa-Faro dejaba la

presidencia de Pescanova que haba asumido en 1980. Pescanova es
una empresa de productos de pescado congelado, fundada por su padre
en 1960, que ha llegado a ser una empresa multinacional con 10.500
trabajadores. Es lder mundial en alimentacin marina y opera en 21
pases, con una facturacin anual de 1.671 millones de euros, de los
cuales el 57% fuera de Espaa. Desde 1985 cotiza en la bolsa de

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Madrid.

La facturacin de la compaa actualmente ronda los 2.000 millones de

euros y el editda (beneficio bruto de explotacin calculado antes de la
deducir gastos financieros) est entorno a los 335 millones de euros.
Pese al crecimiento de las ventas de la compaa (un 29,2%, entre 2007
y 2011) y un aumento del Ebitda del 51%, la deuda de Pescanova haba
alcanzado 1.522 millones de euros segn las ltimas cuentas
presentadas correspondientes al primer semestre de 2012, de los cuales
756 eran a corto plazo. Sin embargo, la deuda real puede ser de 2.500 o
incluso 3.000 millones de euros, mientras que los fondos propios slo
rondaran los 500 millones. Estamos, pues, ante un endeudamiento que,
como mnimo, quintuplica el patrimonio. Tcnicamente, esta deuda fue el
motivo del concurso voluntario de acreedores, junto a la falta de
refinanciacin por parte de la banca que la condicionaba al cambio de los
gestores de la empresa. El anuncio pill por sorpresa a muchos
inversores y la cotizacin en bolsa de Pescanova cay en picado. El 25
de abril cada accin se haba desvalorizado casi un 70% respecto al 28
de febrero.

Pescanova parti de una innovadora idea (congelar pescado en buques-

factora en alta mar) y durante aos tuvo un espectacular desarrollo. Hoy,
Pescanova es la matriz de un holding compuesto por ms de 80
compaas, la mayora en el exterior. El propio Fernandez Sousa es el
administrador nico de varias de ellas. Con la expansin vinieron
necesidades de financiacin a la que accedieron cajas de ahorro gallegas
hoy agrupadas en Novagalicia Banco y tambin bancos como el
Sabadell, el Popular y Bankia y, en menor medida el Santander BBVA,
Caixabank y otros.

Las primeras tensiones de tesorera se produjeron despus de que

algunos proyectos, particularmente en la acuicultura con grandes
inversiones y subvenciones, no rindiesen como estaba previsto, adems
de dos siniestros en una factora de Portugal. Pero, al parecer, la actual
situacin financiera tiene tambin otras causas.

Antes de que se encargara a Deloitte la gestin, se pidi a la auditora

KPMG que hiciera el forensic (un auditora con lupa), la cual se
contrastara con los informes de DBO Auditores, que hasta entonces
haba auditado en Pescanova. Se debern saber muchas cosas que hoy
por hoy, en gran medida, slo son sospechas.

Qu ocurri en realidad? Qu causas han conducido a la situacin

actual? Por qu la banca exiga la destitucin de los gestores? Fueron
simplement e errores estratgicos o un crecimiento imprudente?
Hubo ligereza en la financiacin de nuevas inversiones al utilizar
crdito fcil procedente de las cajas de ahorro gallegas, como todas,
muy politizadas? La crisis de estas cajas arrastr a Pescanova? Hubo

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apaos con la auditora DBO para dulcificar la situacin de la empresa y

as obtener crditos y atraer inversores? Falt diligencia en los
bancos en verificar la situacin real de la empresa antes de otorgar
crditos? Por qu no se presentaron las cuentas de la compaa a su
debido plazo? Por qu ocurri el desfase entre la deuda presentada
y la deuda real? Convendr aclararlo.

Segn parece hubo, adems, contabilidad oculta, pasando deudas a

filiales apenas auditadas y falseando la situacin real de la empresa
hasta que la bomba estall Qu hacan los consejos de
administracin? Se preocuparon de verdad los consejeros por el bien
de la empresa o eran complacientes comparsas dciles a la voz de su
amo? Se ha reconocido trfico de informacin privilegiada y masiva
venta de acciones antes de que se desplomaran.

Lo s daos ocasionados y previsibles abarcan a proveedores de

materias primas y bancos, a los inversores que ignorando lo que ocurra
han perdido mucho dinero, a empleados que podrn perder su empleo,
comunidades dnde operaba Pescanova, que podrn sentir los efectos
indirectos de la situacin

En este caso, como en tantos otros, existen responsabilidades

morales y legales. Pueden afectar a consejos de administracin,
incluyendo a sus presidentes, al auditor BDO, a entidades financieras y
aun al regulador burstil (CNMV). En ltimo trmino habr
responsabilidad de personas que seguramente no cumplieron su
cometido ni actuaron con integridad.

Me pregunto: Hubo una bola de nieve formada por acumulacin de

malas prcticas cuyo encubrimiento llev a otras, y as sucesivamente?
Quiz, pero hay que esperar para saberlo con certeza. En definitiva,
estamos ante un caso a seguir. Sabremos aprender de l, al menos,
qu es lo que no se debe hacer?

Esta entrada se public en tica empresarial y est etiquetada con

'bola de nieve', Caso de estudio, consejos de administracin,
contabilidad oculta, emprendedores, fraude, integridad, Pescanova,
trfico de informacin privilegiada en mayo 1, 2013
[http://blog.iese.edu/eticaempresarial/2013/05/01/practicas-
cuestionables-en-pescanova-se-confirma-la-teoria-de-la-bola-de-nieve/]
por Domnec Mel.

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Comentarios

Agust Ignasi Garrido

mayo 2, 2013 en 9:36 am

Interessant, el que est clar s que hi ha hagut poca transparncia i molt

probablement han estat ensenyant els comptes no consolidats del grup.
Mho haig de mirar.

Federic Bofarull
mayo 3, 2013 en 10:24 am

Excelente post. Me temo que Muchas empresas caen en este tipo de

prcticas o similares. En el fondo, se trata de huir hacia delante hasta
que se pincha el globo.

Creo que los empresarios, familiares o no, pequeos, medianos o

grandes, multinacionales o no, deberan contar con criterios adecuados
para decidir y la valenta de no huir cuando los problemas aparecen.
Siempre es la mejor manera (y la ms tica) de solucionarlos.

Lourdes Agea
mayo 8, 2013 en 7:39 am

Independientemenete de lo que suceda con esta empresa espero que

como bien pauntas sepamos aprender de l a fin de prevenir que este
tipo de cuestiones sucedan a futuro o al menos para tener mecanismos
de deteccin y prevencin.

Los comentarios estn cerrados.

WordPress Multilinge por ICanLocalize

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Note: the following case is copyrighted and may be copied and used only by current users
and owners of the textbook, BUSINESS ETHICS: CONCEPTS AND CASES by Manuel
Velasquez.

Dominos Delivers

In May 1993 Dominos paid $2.8 million to settle a lawsuit brought by the family of 41-year-old
Susan Wauchop who was killed when her van was struck by a Dominos delivery truck being driven on a
highway in rainy weather.1 The family alleged that the 19-year-old driver was speeding to meet Dominos
guarantee to deliver a pizza within 30 minutes. Dominos argued that weather and road conditions were
the real cause of the accident and refused to change its 30-minute guarantee. Not only was the guarantee
popular with its customers, it also set Dominos apart from its numerous rivals in a highly competitive
and crowded business.2
Dominos Pizza was founded in 1960 when two brothers, Tom and Jim Monaghan purchased a pizza
store in Ypsilanti, Michigan. A year later Jim traded his half of the business to his brother for a
Volkswagen Beetle and Tom Monaghan became sole owner.
By 1983, the company had expanded to 1000 restaurants. Ten years later the company was well on its
way to owning over 4000 outlets within the United States, and over 500 outside the United States. In
addition, over 1000 Dominos Pizza restaurants were owned by others as franchise operations. Dominos
had become the fastest growing pizza company in the world. Analysts felt that the key to Dominos rapid
expansion was a promotion that it launched in 1984: guaranteed 30-minute delivery. Initially, the
company advertised that if pizza was not delivered within 30 minutes it was free. This was later changed
to a guarantee of delivery within 30 minutes or a $3
refund.
The company required all franchisees in the United States to sign a contract agreeing to use the 30-
minute guarantee. Driver training manuals made the importance of speed clear: Speed is vital. For
Dominos the deadline is 30 minutes. After 30 minutes, the hungry customer begins to get restless. After
40 minutes, he gets worried. After 50 minutes, he gets irritated. After an hour he explodes. The manuals
also emphasized safety, however: Know one thing for sure: FAST DELIVERY DOES NOT COME
FROM SPEEDING AND RECKLESS DRIVING ... without a doubt, reckless, illegal driving does not
profit the shop. To allow drivers sufficient time to make their deliveries, the company adopted a policy
of Go fast in the shop, go slow on the road. A pizza made from fresh ingredients should be in the oven
within two minutes of a phoned-in order, and in its box within eight minutes, allowing the driver 22
minutes to meet the 30-minute deadline. In addition, outlets were not to guarantee delivery to an area
more than two or three miles away.
Shortly after the 30-minute guarantee was put into place in 1984, the company began to get
complaints that it was encouraging unsafe driving and some accidents involving Dominos drivers resulted
in small lawsuits that the company settled out of court. The company began to fire managers who failed
to pay attention to safety. Supervisors had to be certified as defensive driving instructors. The company
began using safety training tapes, and safe driving training was required of all drivers, who also had to pass
safe driving tests. No applicant was hired if he had a moving violation within the previous two years. A l l
drivers were required to take defensive driving classes. The company publicized all of these new safety
programs.
 The importance of the 30-minute guarantee to Dominos was evident in a 1989 study of pizza chains
in South Carolina which suggested that Dominos had little competitive advantage over other pizza
restaurants besides fast delivery.3 Pizza Hut provided eat-in facilities with high levels of service, home
delivery, a pizza rated as medium/high in quality, prices that were above Dominos for plain pizzas but
below Dominos for pizzas with several toppings, several sizes and types of pizzas, beer, and numerous
other Italian dishes on its menu. Little Caesars provided take-out only with no sit-down or delivery
services, a medium quality pizza priced a few cents above Dominos, sandwiches, and soft drinks but no
beer. Schianos had eat-in facilities with extremely high service levels but no delivery, a very high quality
New York style pizza priced at about Dominos level, beer, wine, soft drinks, and a wide variety of
Italian dishes and sandwiches. Pizza Factory provided take-out and eat-in facilities but no delivery, no
waiters and such low service levels that a pizza rated as medium in quality and priced a few cents above
Dominos for plain cheese but below Dominos for pizzas with several toppings, beer, soft drinks, and
sandwiches. Pizza Delights offered home delivery, take-out and eat-in facilities with high levels of
service, pizzas rated as medium/high in quality and priced above Dominos for plain cheese but below
Dominos for pizzas with many toppings, beer, soft drinks, sandwiches, and a small number of Italian
dishes. Pizza Inn offered eat-in dining with high levels of service, take out, and home delivery, a pizza
rated as low/medium in quality, prices below Dominos, sandwiches, several Italian dishes, beer, wine,
and soft drinks. Dominos had no eat-in facilities but offered very fast home delivery as well as take-out, a
single kind of pizza that came in two sizes and was rated as low/medium in quality, soft drinks but no
beer, and no other menu items. While its prices for plain cheese pizzas were below average, its prices for
pizzas with numerous toppings were above.
Criticism of the 30-minute guarantee continued to mount. In 1989, the director of the National Safe
Workplace Institute, a nonprofit organization based in Chicago, claimed that in 1988 Dominos drivers
were involved in 100 accidents resulting in 10 deaths.4 The following year the Institute announced that
there were 20 deaths involving Dominos delivery cars in 1989 and that some 140 accidentsat least 20 of
them involving fatalitieshad resulted in lawsuits against Dominos since the 30-minute guarantee was
first initiated in 1984. The director of the institute alleged that the companys 30-minute guarantee was
responsible for many of the deaths.5 (In 1989 and 1990 Dominos had a total of about 80,000 drivers
working for the company.)
In early 1990, Dominos developed a new 14-part safe-driving program for its drivers. In July of that
year, the company began attaching letters to pizza boxes explaining that the company was devoted t o
speed in the kitchen, not on the road.6 The company also said that it had conducted studies to see whether
its guarantee was a significant cause of delivery accidents and had found that accidents had been caused
primarily by road and weather conditions and by drivers falling asleep at the wheel, not by speeding
attributable to the guarantee. Nevertheless, an employee testified during a trial in Pennsylvania that at the
outlet for which he worked a driver who met the 30-minute deadline with four pizzas in an hour got a
bonus of 1 percent of those sales, while drivers who missed deadlines were given only one or two pizzas t o
deliver thus preventing them from making what the faster drivers made in tips. Another driver claimed
that The 30-minute policy would push me to do things I normally wouldnt do, like going 50 mph in a 40
mph zone.7 Critics also alleged that the compensation system provided an incentive for drivers t o
deliver as many pizzas as possible during a work shift. Although drivers received the minimum wage of
$3.35 an hour and a mileage reimbursement, the bulk of their pay came from tips which increased as the
number of pizzas they delivered increased.
 In late 1990 Dominos installed a toll-free number that people could call if they saw a Dominos
employee driving recklessly. The company also hired behavioral scientists to revamp its driver-safety
program. And the company had all employees watch a video tape in which Suzanne Boutrose explained
how unsafe driving had led to her sons death. The companys mission statement, which indicated that the
fundamental goal of the company was to be the leader in delivering off-premise pizza convenience t o
consumers around the world, stated that as part of meeting this goal the company was committed t o
placing team member [employee] and customer safety and security above all other concerns.

QUESTIONS

1. Compare the various pizza restaurant chains. Do you agree that fast delivery is the only competitive advantage
Dominos has? If so, explain the implications.
2. Imagine you were a Dominos manager and had to answer the question: Should Dominos continue to maintain
its 30-minute guarantee? If not, then what do you suggest the company should put in its place to survive? If i t
should continue, then what should the company do that it has not yet done to deal with the reckless driving
accusations? Explain your recommendations fully, including all the moral factors involved.
3. In your judgment, is Dominos morally responsible for the deaths cited in the case? Explain your answer.

NOTES

1. Dominos Pizza to Pay $2.8 million in Crash, Chicago Tribune , 12 May 1993.
2. Michael Clements, Dominos Detours 30-minute Guarantee, USA Today , 22
December 1993, p. 1A.
3. Jay Horne, Christine Perkins, Kim Goates, Peter Asp, Ken Sarris, John Leslie, and James J. Chrisman,
Pizza Delights, Inc., in Michael J. Stahl and David W. Grigsby, Strategic Management for Decision
Making (Boston: PWS-Kent Publishing Company, 1992).
4. Roderick Oram, Live Fast and Die Young in Americas Speedy Pizza Business, Financial Times , 16
September 1989, p. 2.
5. Judge Lifts Wraps in Dominos Case, Chicago Tribune , 27 August 1991, p. C3.
6. Jenise Griffin Hill, Dominos Is Sued by Family, Orlando Sentinel Tribune,
2 November 1990, p. 1.
7. Jeff Testerman, Fast Pizza Runs Into Trouble, St. Petersburg Times, 17 January 1994, p. 1B.
NOTE: THE FOLLOWING CASE IS COPYRIGHTED AND MAY BE COPIED AND USED ONLY BY CURRENT USERS
AND OWNERS OF THE TEXTBOOK, BUSINESS ETHICS: CONCEPTS AND CASES BY MANUEL
VELASQUEZ.

CASES FOR DISCUSSION

H. B. Fuller and the Street Children of Central America

The article was one of many published on street children in Latin American cities during the early
1990s. The issue on which it focused was one that childrens advocates had brought to the attention of H.
B. Fuller Company repeatedly over many years. The article read:

On a sidewalk in San Pedro Sula, Honduras ... a lanky, dark-haired boy [is] sitting w i t h
arms curled around his folded legs, staring at the passing traffic. The boy, a nineteen-
year-old named Marvin, has been sniffing glue for ten years. Once the leader of a gang of
street kids, he now has slurred speech and vacant eyes. A year ago, Marvin began to lose
feeling in his legs. Now he can no longer walk. He slides on his butt, spiderlike, through
gutters, across streets, and along the sidewalks. Still loyal to their chief, the younger kids
in his gang bring Marvin food, carry him to a news stand to spend the night, and make
sure he has enough glue to stay high. ... Doctors offer no hope that Marvin will ever w a l k
again. Toluene, the solvent in the glue he sniffs, is a neurotoxin known to cause
irreparable nerve damage. ... In Honduras, the drug of choice for children is H. B.
Fullers Resistol, a common shoe-glue made with toluene. Toluene creates the high the
children come to crave ... Sniffing the glue is so common ... that the common name f o r
street kids is Resistoleros . 1

Marvin was not the only casualty of the toluene-based glue. Toluene, a sweet-smelling chemical
used as a solvent for the ingredients in adhesives, destroys the thin layers of fat that surround nerves,
causing them to die. Occasional inhalation will produce nosebleeds and rashes while habitual use produces
numerous disorders including: severe neurological dysfunction, brain atrophy, loss of liver and kidney
functions, loss of sight and hearing, leukemia, and muscle atrophy. Prolonged use can result in eventual
death. For over a decade, thousands of homeless children throughout Latin America, but most visibly in
Guatemala and Honduras, had become addicted to inhaling the glue. Many of them were thought to have
died while many more were now severely disabled by blindness, diminished brain functioning and
crippling muscle atrophy.
H. B. Fuller had total revenues of $1.243 billion in 1995, up from $1.097 billion in 1994. Profits had
totaled $392 million in 1995 and $354 million in 1994. Founded in 1887, the company was now a global
manufacturer of adhesives, sealants, and other specialty chemicals, and had operations in over 40 countries
in North America, Europe, Asia, and Latin America. While 15 percent of its sales revenues came from its
Latin American operations, those operations accounted for 27 percent of its profits, indicative of the fact
that its Latin American operations were much more lucrative than its operations elsewhere around the
world. According to the company, it has profits of about $450,000 a year from glue sales in Central
America.2
 The companys adhesive products are made and distributed in Central America by H. B. Fuller S.A., a
subsidiary of Kativo Chemical Industries, which itself is a wholly owned subsidiary of H. B. Fuller
Company of St. Paul, Minnesota. Resistol is a brand name that H. B. Fuller puts on over a dozen of the
adhesives it manufactures in Latin America including its toluene-based glues. These toluene-based
adhesives have qualities that water-based adhesives cannot duplicate: they set very rapidly, they adhere
strongly, and they are resistant to water. The glues are widely used throughout Latin America by shoe
manufacturers, leather workers, carpenters, furniture makers, and small shoe repair shops.3
Both Honduras and Guatemala, two countries where Fuller markets its glue products and the t w o
countries where Resistol abuse is most pronounced, are mired in poverty. In 1993 Honduras had a per
capita gross domestic product (GDP) of only $1950, and unemployment of approximately 20 percent.
Guatemala was doing slightly better with a per capita GDP of $3000 and an unemployment rate of about
15 percent. More than a third of the population of each country is below poverty. For several years both
countries have had large deficit budgets, forcing them to take on an ever larger debt burden and to sharply
curtail all social services. Migration from the countryside into the major cities had exacerbated urban
crowding and had created large impoverished populations in every large city. In these impoverished,
insecure, and stressful conditions, family life often became unstable: husbands abandoned their wives, and
both abandoned the children they were too poor or too sickly to care for. The countless children that
roamed city streets begging for handouts, for the most part, had been abandoned by their families,
although a good number were runaways from what they felt was an intolerable home life.
For years H. B. Fuller had been pressured by child advocate groups in Central America and the
United States who were concerned about the rising use of the companys glues by homeless children in
Latin America. A number of child advocates and social workers argued that Fuller should follow the lead
of Testors, a company which makes and markets glues in the United States. Criticized in the late 1960s for
marketing glues that American teenagers had started sniffing, the company ran a number of tests and
decided that a safe way of keeping kids from sniffing its glues was by adding minute amounts of mustard-
seed oil (allyl isothiocyanate,) a common food additive. Inhaling glue containing the mustard-seed
additive produced tearing and gagging that discouraged inhalation. Testors reported that the use of
mustard-seed oil had virtually eliminated abuse of its glues and that it had never had reports of any kind of
injury deriving from the addition of the oil from users nor from employees in its plants.4
In response to the urging of Honduran social workers, the legislature of Honduras in March 1989
passed Decree 36-89 which banned importing or manufacturing solvent-based adhesives that did not
contain mustard-seed oil. However, the general manager and other executives from the local H. B. Fuller
subsidiary lobbied the government to have the law revoked. Possibly, observers noted, because i t
might reduce the glues effectiveness, possibly because the smell would be irritating to legitimate
users.5 Company officials in Fullers Honduras subsidiary argued that they had data showing that
mustard seed oil had a short shelf life and that studies on rats in the United States had shown that the
substance was potentially carcinogenic. They urged that instead of requiring additives, the government
should attempt to control distribution of the glue by prohibiting its sale to children, and should educate
street kids on the dangers of inhaling it. In November 1989, a Hoduran government commission
recommended that the new law be scrapped and that the government should concentrate on controlling
distribution of the glue and providing education on the dangers of inhaling glue. Two years later, a
journalist investigating the incident reported, however, that there is no official study showing a decline
in the effectiveness of mustard-seed oil in adhesives as they sat on store shelves and that, far from being
carcinogenic, the Food and Drug Administration lists the additive on its Generally Regarded as Safe
list and it is consumed daily in products such as horseradish and pickles.6
Honduran law already prohibited sale of toluene-based products to children, although the law was
rarely enforced. To reduce the availability of the glue to children, the company now discontinued selling
the glue in small jars. Fuller also began paying for the support of several social workers to work with
street children. And the company began providing information to distributors warning of the dangers of
Resistol addiction.
Childrens advocates, however, who had worked with street children for several years did not feel
the programs were working. The terrible economic conditions afflicting the country that led parents t o
abandon their children, also made life on the streets a painful unceasing nightmare for a child from which
the only available escape was the cheap intoxication offered by inhaling glue. Casa Alianza, the Latin
American wing of Covenant House, an international Catholic charity based in New York would later
release a report on Central American street children stating that Living on the edge of survival they are
often swept in an undertow of beatings, illegal detention, torture, sexual abuse, rape, and murder.7 The
report detailed numerous cases of children detained and beaten by police for sniffing glue. In one case the
mutilated bodies of four street boys were found in 1990, their eyes burned out, ears and tongues severed,
some had had boiling liquid poured over their bodies, and all were shot in the head, some with bullets that
were later traced to a government-issued gun. In such conditions, the lure of the hallucinogenic glue was
irresistible. Said one social worker about an abandoned child who habitually sniffed glue, When he
inhales Resistol, he hallucinates about his mother caressing him.8
Although criticisms of the company continued, the company argued that the problem did not lie
with its glue, but with the social conditions that led children to misuse it, particularly the terrible
economic conditions afflicting the countries. The company insisted that it was not responsible for the way
its glues were being misused and that if it were to remove Resistol from the market, the street children
would merely begin to use one of the toluene-based products of the other companies selling glues in the
region. The company insisted, in fact, that by continuing to sell its glue in Central America, it was helping
to improve the economic conditions that were at the root of the problem. Commenting on its reasons for
staying, a company spokesperson stated that We believe those little [shoe] businesses need to survive.
They provide employment, help relieve the issue of poverty, and were willing to do whatever we can.9
On July 16, 1992, however, the companys board of directors met and voted unanimously to stop
selling ... Resistol adhesives in Central America. According to the companys 1992 annual report: Faced
with the realization that a suitable replacement product would not be available in the near future and that
the illegitimate distribution was continuing, the Board of Directors decided that our Central American
operations should stop selling those solvent-based Resistol adhesives that were commonly being abused
by children.10
The company sent press releases announcing its decision to newspapers around the country and the
decision of the board was widely publicized and highly praised. However, in September 1993 the company
revealed that although it had stopped selling its glue to retailers it had continued to sell the glue t o
industrial customers who were willing to buy it in large tubs and barrels.11
 The new controls restricting distribution of the product into retail markets, however, did not take i t
off the streets. Large quantities of the glue still continued to flow into the hands of street children,
presumably from the supplies of Fullers industrial customers.12
In 1994 the company decided to change the chemical formula of its glue to make it less attractive t o
children. The toluene in the glue was replaced with the chemical cyclohexane which smells less sweet and
is less volatile than toluene, although like toluene it too produces an intoxicating high and has similar
toxic effects on the body. However, because it does not evaporate as quickly as toluene, it takes much
longer for cyclohexane to produce similar concentrations of fumes. The company also announced that i t
would increase the price of its glue by 30 percent to price it further out of the reach of children. Both of
these moves, the company said, would discourage use of its glues among street children. However, Dr. Tim
Rohrig, a toxicologist, said that he doubted the formula change had led children to stop sniffing Resistol:
I doubt the kids are that sophisticated that they can differentiate by odor. If it can get them high, then
they will use it. ... They may have to take more sniffs with cyclohexane than they would with toluene but
they still can get the desired intoxication.
In 1995 the company issued a statement claiming that in reality it neither manufactured nor sold
Resistol. Instead, the company asserted, it was a subsidiary of a subsidiary of the company in Central
America that had actually made and sold Resistol, and claims that the company was responsible for the
deaths of children are nothing more than an attempt to hold Fuller liable for acts and omissions of its
second-tier Guatemalan subsidiary.13

QUESTIONS

1. In your judgment, is H. B. Fuller responsible for the addiction of street children to its Resistol products? Do
you agree or disagree with the statement that the social conditions in Honduras and Guatemala are ultimately
responsible for misuse of H. B. Fullers products and that neither the product nor the company is to blame? Do
your agree or disagree that a parent company is not responsible for the activities of its subsidiaries? Explain your
answers fully.
2. In your judgment did H. B. Fuller conduct itself in a morally appropriate manner? Explain your answer.
3. What, if anything, should the company have done that it did not do?

NOTES

1. Ed. Griffin-Nolan, Dealing Glue to Third World Children, The Progressive ,

December 1991, p. 26.
2. Diana B. Henriques, Black Mark for a Good Citizen, New York Times , 26
November 1995, section 3, p. 1.
3. Norman Bowie and Stefanie Ann Lenway, H. B. Fuller in Honduras: Street Children and Substance Abuse,
in Thomas Donaldson and Al Gini, eds., Case Studies in Business Ethics , 3rd ed. (Englewood Cliffs, NJ:
Prentice Hall, 1993), p. 287.
4. Griffin-Nolan, Dealing Glue, p. 26.
5. Henriques, Black Mark for a Good Citizen
6. Griffin-Nolan, Dealing Glue, p. 27.
7. Paul McEnroe, Glue Abuse in Latin America Haunts Fuller Co., Star Tribune , 21 April 1996.
8. Griffin-Nolan, Dealing Glue, p. 28.
9. McEnroe, Glue Abuse.
10. H. B. Fuller, Annual Report , 1992.
11. Diana B. Henriques, Black Mark for a Good Citizen, New York Times , 26
November 1995, section 3, p. 1.
12. McEnroe, Glue Abuse.
13. McEnroe, Glue Abuse.
PANORAMA DE LA ADMINISTRACIN FINANCIERA
CORPORATIVA

1
 Panorama de la administracin financiera corporativa

Weston, J. Fred. y Brigham, Eugene F. (1998) fundamentos de Administracin financiera. Mc Graw

Hill, dcima edicin.

Panorama de la administracin financiera corporativa.

Oportunidades profesionales en las finanzas

Las finanzas constan de tres reas interrelacionadas: 1) mercados de dinero y de capitales, que
trata de muchos de los tpicos que se cubren en la macroeconoma; 2) inversiones, la cual se
centra en las decisiones de individuos y de instituciones financieras y de otra naturaleza cuando
eligen valores para sus carteras de inversiones, y 3) administracin financiera o "las finanzas en los
negocios", cuya rea de desempeo se relaciona con la administracin real de la empresa. Las
oportunidades profesionales dentro de cada campo son muchas y muy variadas; sin embargo, los
administradores financieros deben tener un buen conocimiento de las tres reas, si es que desean
hacer un buen trabajo. .

Mercados de dinero y de capitales

Un gran nmero de especialistas en finanzas decide trabaja r en las Instituciones financieras, tales
como bancos, compaas de seguros, ns: itucir de ahorros J ~L. ij;-,~~;t,ln;.\_):-;? :'-;~: ncs de
crdito. P:.t:.J. tLilt.! xi~c' <.-, ~-';:-.; ~;.~ .. . ~ ;~:C~~::::-;:~~ conocer los factores que causan que
las tasas de inters suban y bajen, las regulaciones a las cuales deben sujetarse las instituciones
financieras y los diversos tipos de instrumentos financieros (hipotecas, prstamos para
automviles, certificados de depsito y similares). Tambin se necesita un conocimiento general de
todos los aspectos de la administracin de negocios, toda vez que la administracin de una
institucin financiera incluya las reas de contabilidad, mercadotecnia, personal y sistemas de
cmputo, as como al rea de administracin financiera, La habilidad para comunicarse, tanto en
forma oral como escrita, es muy importante; el "talento personar', o la habilidad para conseguir que
otras personas hagan su trabajo, es de importancia fundamental.

2
El puesto inicial ms comn que se da en esta rea es el de funcionario bancario sujeto a
entrenamiento, donde el aspirante ingresa a las operaciones bancarias y aprende acerca del
negocio, dsele el trabajo de los cajeros automticos hasta la administracin del efectivo y la
concesin de prstamos Es posible pasar un ao o un periodo similar rotando entre tales reas,
despus de lo cual el principiante quedara colocarlo dentro de un departamento, frecuentemente
como subgerente de alguna sucursal. De manera alternativa, alguna persona podra convertirse en
especialista ele algn rea, tal como bienes races, y obtendra autorizacin para hacer prstamos
que podran llegar hasta varios millones de dlares, o podra intervenir en la administracin de
fideicomisos, bienes races y fondos de pensin. Las compaas ele seguros ofrecen trayectorias
profesionales similares, del mismo modo que las uniones ele crdito y las compaas ele
prstamos para el consumidor.

Inversiones

Los graduaelos en finanzas que se dedican al rea de inversiones generalmente trabajan para una
casa ele corretaje como Merrill Lynch y colaboran ya sea en la divisin ele ventas o como analistas
de valores. Otros deciden trabajar para bancos, como los mutualistas o compaas de seguros y se
dedican a la administracin ele sus carteras de inversiones; algunos ms optan por trabajar para
empresas de consultora financiera y se dedican a asesorar a los inversionistas individuales o a los
fondos ele pensin acerca de la mejor manera de invertir sus fondos. Las tres funciones principales
del rea ele inversiones son las siguientes: 1) ventas, 2) anlisis de valores individuales y 3)
determinacin de la mezcla ptima de valores para un inversionista dado.

Administracin financiera

La administracin financiera es la ms amplia de las tres das y es la que ofrece el mayor nmero
de financiera es incluye bancos y otras io"titncinof'<: fin:''1cieras, ::5i '::0:11(; :':-:::-;::- ,.';.:;;::: -'H
y al menudeo. La administracin financiera (;un!;(': del tos de carreteras. Los tipos de empleo que
se encuentran en la administracin financiera oscilan desde aquellos en que se toman decisiones
con relacin a la expansin de plantas industriales hasta aquellos en que se eligen los tipos de
valores que se deben emitir para financiar una expansin. Los administradores financieros tambin
tienen la responsabilidad de decidir los trminos de crdito sobre los cuales los clientes podrn
hacer sus compras, la cantidad de inventarios que debe mantener una empresa, la cantidad de
efectivo que se debe tener a la mano, si se deben adquirir o no otras empresas (anlisis de
fusiones) y el monto de las utilidades de la empresa que se deber reinvertir dentro de! negocio en
lugar de pagarse como dividendos.

3
Independientemente del rea que elija una persona, necesitar un conocimiento general de las tres
reas. Por ejemplo, aquel banquero que se dedique ;;1 hacer -:>~~<_~:o;'; a negocios no podr
hacer bien su trabajo sino tiene una buena comprensin de la administracin financiera, pues elche
ser capaz de juzgar que t-in ccazrnente esta operando una empresa. El mismo concepto resulta
ser cierto para cualquiera de los analistas de valores ele Merrill Lynch. Aun los corredores de
acciones deben tener una comprensin de los principios general, de!:is finanzas, si
verdaderamente desean proporcionar una asesora inteligente sus dientes. Al mismo tiempo, los
administradores financieros corporativos necesitan saber cules son los planes de sus banqueros,
la forma en que Ios inversionistas probablemente juzgarn el desempeo de sus corporaciones y
determinarn consecuentemente los precios de sus acciones. Por lo tanto, aquel que decida hacer
una carrera en finanzas necesitar saber algo acuerdo a estas tres reas,

Preguntas de autoevaluacin

Cules son las tres reas principales de las finanzas?

Si se tienen planes definidos de dedicarse a un rea, Por qu se es necesario que se este cerca
de las dems?

La administracin financiera en la dcada de los noventa

Cuando la administracin financiera emergi como un CID ) separado de C'i udi( principios de
este siglo, se daba un nfasis cspe;,) (los aspectos a la formacin de nueva CflltCsa:; y 1,
.i.TSOS tipos i::s empresas podan emitir ):: .ra ; ;UIH'r Lqrantc la n .n: f~~-" ';'11~ ~,'
Ll~ ,~,,-," :~: liquidc:1, '-'" ~) ;" "';-. ;;;<: ,n',': l):"ante los aos cuarenta y
cincuenta, las finanzas an se enseaban como una materia descriptiva y de tipo institucional, la
cual era visualizada ms bien desde el punto de vista del analista externo que desde el punto de
vista de la administracin. Sin embargo, un cierto movimiento encaminado hacia el anlisis terico
empez a manifestarse durante los sesenta y el foco de atencin de la administracin financiera
cambio y se centr en aquellas decisiones administrativas que se relacionaban con la eleccin de
activos y pasivos que maximizaran el valor de la empresa. El nfasis sobre la valuacin continu
hasta la dcada de los ochenta, pero el anlisis se ampli a efecto de incluir: 1) la inflacin y sus
efectos sobre las decisiones de negocios; 2) la desregulacin de las instituciones financieras y la
tendencia resultante hacia la creacin de compaas de servicios financieros de gran tamao y
ampliamente diversificadas; 3) el notable incremento que se observ tanto en el uso de
computadoras para anlisis como en las transferencias electrnicas de informacin, y 4) la
creciente importancia de los mercados globales y de las operaciones de negocios. Las dos

4
tendencias ms importantes que se observarn durante los aos noventa probablemente estarn
dadas por la continua globalizacin de los negocios y por un mayor incremento en el uso de la
tecnologa de las computadoras.

La globalizacin de los negocios

Cuatro factores han hecho que la tendencia hacia la globalizacin sea obligatoria para muchos
negocios: 1) los progresos observados en el transporte y en las comunicaciones han disminuido los
costos de embarque y han hecho ms factible el comercio internacional; 2) el conglomerado
poltico de consumidores que desean adquirir productos de bajo costo y de alta calidad ha ayudado
a mitigar las barreras comerciales creadas para proteger a los productores nacionales ineficientes y
que operan a un alto costo; 3) a medida que la tecnologa avanza, el costo de desarrollo de nuevos
productos tambin ha aumentado y, a medida que los costos de desarrollo aumenten, tambin
aumentarn las unidades de venta, principalmente para que las empresas sigan siendo
competitivas; 4) en un mundo poblado por empresas internacionales que tiene II la capacidad de
instalar sus medios de produccin en aquellos lugares en que los costos sean ms bajos, una
empresa cuyas operaciones de manufactura estn restringidas a un solo pas no podr competir a
menos que los costo- de su pas de origen sean bajos, una condicin que no necesariamente
existe .ara muchas corporaciones de los Estados Unidos. Como el resultado de este: hay cuatro
factores, la supervivencia requiere que la mayora de los productos es manufacturen y vendan en
forma global.

Las compaas de servicios, que incluyen a los bancos, a las agencias de a las firmas de
contadores, tambin estn siendo obligadas, porque tales empresas pueden atender mejor a sus
cliente' a nivel mundial. Desde 00 :':;," ~~_::t(L-1Li~ivaHfcL~ ~ ila. }I~ajt:., pero {:r;-
cirni(~nto n1~is dinmico las oportunidades permanecen siempre con las compaas que operan a
nivel internacional.

Tecnologa de las computadoras

La dcada de los noventa ver varios progresos continuos en la tecnologa de las computadoras y
de las comunicaciones, y esta tecnologa revolucionar la forma en que se toman las decisiones.

5
Las compaas tendrn redes de computadoras personales interconectadas entre si y vinculadas a
las computadoras centrales de su propia empresa y a las de sus clientes y proveedores. De tal
modo, los administradores financieros estarn en condiciones de compartir datos y programas y de
tener reuniones "cara a cara" con sus colegas distantes, principalmente. A travs de
videoteleconferencias La capacidad para alimentar y analizar datos sobre una base de tiempo real
tambin significa que el anlisis cuantitativo se usar rutinariamente para "probar" la eficacia de
distintos cursos de accin. En conclusin, la prxima generacin de administradores financieros
necesitar de mejores talentos tanto computacionales como cuantitativos que los requeridos en el
pasado.

Preguntas de autoevaluacin

Cmo ha cambiado la administracin financiera desde principios de 1900 hasta la dcada de los
noventa?
Cmo podra una persona prepararse mejor para hacer una carrera en administracin financiera?

Importancia creciente de la administracin financiera

Las tendencias histricas que se expusieron en la seccin anterior han aumentado en forma
notoria la importancia de la administracin financiera. En pocas anteriores, e! gerente de
mercadotecnia proyectaba las ventas, e! personal de ingeniera y de produccin determinaba los
activos que se necesitaban para satisfacer esas demandas, y e! trabajo de! administrador
financiero consista simplemente en obtener el dinero necesario para ampliar la planta y para
comprar el equipo y los inventarios requeridos. Esta situacin ya ha dejado de existir. Hoy en da
las decisiones se toman de una manera mucho ms coordinada y el administrador financiero
generalmente tiene una responsabilidad directa en el proceso de control.

Preguntas de autoevaluacin

Explquese la razn por la cual la planeacin financiera es importante para los directores ejecutivos
de la actualidad.
Por qu el personal del rea de mercadotecnia necesita tener conocimientos acerca de la
administracin financiera?

6
La responsabilidad del administrador financiero

La tarea del administrador financiero consiste en adquirir y usar fondos con miras a maximizar el
valor de la empresa. A continuacin se describen algunas actividades especficas que intervienen
en dicha tarea:

Preparacin de pronsticos y planeacin. El administrador financiero debe interactuar con otros

ejecutivos al mirar hacia el futuro y al determinar los planes que darn forma a la posicin futura de
la empresa.

Decisiones financieras e inversiones de importancia mayor. Una empresa exitosa generalmente

observa un crecimiento rpido en las ventas, lo cual requiere de inversiones en planta, equipo e
inventarios. El administrador financiero debe ayudar a determinar la tasa ptima de crecimiento en
ventas y tambin debe ayudar a decidir sobre los activos especficos que se debern adquirir y la
mejor forma de financiar esos activos. Por ejemplo, deber la empresa financiarse con
instrumentos de endeudamiento o de capital contable? Y, si se usan deudas, deberan ser a corto
o a largo plazo?

Coordinacin y control. El administrador financiero debe interactuar con otros ejecutivos para
asegurarse que la empresa sea operada de la manera ms eficiente posible odas las decisiones de
negocios tienen implicaciones financieras y todos los administradores -tanto financieros como de
otra naturaleza- necesitan tener esto en cuenta. Por ejemplo, las decisiones de comercializacin
afectan el crecimiento en venus, lo cual a su vez influye sobre los requerimientos de inversin. De
este modo, quienes tornan decisiones de comercializacin deben tener en cuenta la forma en que
afectan (y se ven afectadas por) factores tales como ra H.i de fondos, las poHti~~,("~ .J. la
:~~~U'/:l:':-~(;:- d.c can:~ci(t~ 1:1 planta.

Forma de tratar con los mercados financieros. El administrador financiero debe tratar con los
mercados de dinero y de capitales. Tal como se ver en el captulo 3, toda empresa afecta y se ve
afectada por los mercados financieros generales, de los cuales se obtienen los fondos, se
negocian los valores de una empresa y se recompensa o se castiga a los inversionistas.

En sntesis, los administradores financieros toman decisiones con relacin a aquellos activos que
deben adquirir sus empresas, la forma en que esos activos deben ser financiados y la manera en
que la empresa debe administrar sus recursos existentes. Si estas responsabilidades se
desempean en una forma ptima, los administradores financieros contribuirn a maximizar los

7
valores de sus empresas y esto tambin aumentar el bienestar a largo plazo de aquellos que
hacen compras a la empresa o que trabajan para ella.

Preguntas de autoevaluacin

Ctense las cuatro actividades especficas en las cuales participan los administradores financieros.

Formas alternativas de organizaciones de los negocios

Existen tres formas principales de organizacin de negocios: 1) personas fsicas, 2) asociaciones y

3) corporaciones. En trminos numricos, aproximadamente el fiU% de los negocios son operados
como personas fsicas, mientras que el resto se divide igualmente entre asociaciones y
corporaciones. Sin embargo, tornando como base el valor de las ventas en dlares,
aproximadamente el 80'/, de todos los negocios es administrado como corporaciones, un 1 como
personas fsicas y alrededor del 7% CQ.1J10 asociaciones. Debido al hecho de que la mayor parte
de los negocios son administrados como corporaciones, en este libro concentraremos nuestra
atencin sobre ellas. Sin embargo, es importante entender las diferencias entre cada una de estas
tres formas.

Persona fsica

Persona fsica (o persona natural) es un concepto jurdico, cuya elaboracin fundamental

correspondi a los juristas romanos. Cada ordenamiento jurdico tiene su propia definicin de
persona, aunque en todos los casos es muy similar. En trminos generales, es todo miembro de la
especie humana susceptible de adquirir derechos y contraer obligaciones. En algunos casos se
puede hacer referencia a stas como personas de existencia visible, de existencia real, fsica o
natural.

La persona fsica tiene tres ventajas de gran importancia: 1) se constituye de una manera sencilla y
poco costosa, 2) esta sujeta a un nmero reducido de disposiciones gubernamentales y 3) el
negocio no queda sujeto al pago de impuestos sobre ingresos de naturaleza corporativa.

La persona fsica tambin presenta tres limitaciones importantes: 1) a la persona fsica le es difcil
obtener fuertes sumas de capital; 2) el propietario tiene una responsabilidad personal ilimitada por
las deudas del negocio, lo cual puede dar como resultado prdidas que excedan la cantidad de
dinero que se haya invertido, y 3) la vida de un negocio organizado como persona fsica queda

8
limitada a la vida del individuo que la haya creado. Por estas tres razones, las personas fsicas
individuales suelen restringirse principalmente a las operaciones de negocios pequeos. Sin
embargo, los negocios empiezan frecuentemente como personas fsicas y posteriormente se
convierten en corporaciones, principalmente cuando su crecimiento causa que las desventajas
derivadas de ser una persona fsica sobrepasen sus ventajas.

Asociacin

Se dice que existe una asociacin siempre que dos o ms personas se asocian para administrar un
negocio de naturaleza no corporativa. Las asociaciones pueden operar bajo diferentes grados de
formalidad, que pueden ir desde acuerdos informales de tipo oral hasta convenios formales
presentados ante la secretara de estado del rea en la cual la asociacin realiza sus operaciones
de negocios. La principal ventaja de una asociacin es su bajo costo y su facilidad de formacin.
Las desventajas son similares a las asociadas con las personas fsicas: 1) responsabilidad
ilimitada, 2) vida limitada de la organizacin, 3) dificultad para transferir su propiedad y 4) dificultad
para obtener grandes sumas de capital. El tratamiento fiscal de una asociacin es similar al de las
personas fsicas, lo cual representa en general una ventaja, tal como lo demostramos en el captulo
3.

En relacin con la responsabilidad, los socios pueden perder potencialmente todos sus activos
personales, aun aquellos activos que no se hayan invertido en el negocio debido a que, bajo la
legislacin de las asociaciones, cada socio es responsable de las deudas del negocio. Por
consiguiente, si un socio es incapaz de satisfacer su deuda prorrateada en caso de que la
asociacin caiga en quiebra, los socios restantes debern hacerse cargo de las deudas no
satisfechas, procediendo a disponer de sus activos personales si ello fuera necesario. Los socios
de la firma norteamericana de contadores pblicos denominada Laventhol and Horwath, una
enorme asociacin que quebr recientemente debido a diversas demandas entabladas por
inversionistas que basaron sus decisiones en estados financieros auditados con errores, estn
aprendiendo todo lo concerniente a los peligros que implica el crear una empresa bajo la forma de
una asociacin. De este modo, un socio que se encuentre en Texas y que fracase al llevar a cabo
la auditora de una institucin de ahorros y prstamos, puede llevar a la ruina a un socio millonario
que se encuentre en Nueva York y que nunca se haya acercado o escuchado los consejos de S&L.
2

Las tres primeras desventajas -responsabilidad ilimitada, falta de permanencia de la organizacin y

dificultad para transferir la propiedad de la empresa- conducen a la cuarta desventaja, la dificultad

9
a la que se enfrentan las asociaciones para atraer cantidades sustanciales de capital. Esto no
constituye un problema especfico para un negocio de crecimiento lento; sin embargo, cuando los
productos de una empresa realmente tienen xito en el mercado y cuando necesita obtener
grandes sumas de capital a efecto de capitalizar sus oportunidades, la dificultad para atraer capital
se convierte en un inconveniente real. De tal forma, las compaas en crecimiento como la Hewlett-
Packard y Apple Computer generalmente empiezan su vida como personas fsicas o como
asociaciones, pero en algn momento de su desarrollo se ven obligadas a convertirse en
corporaciones.

Corporacin

Una corporacin es una entidad legal creada por un estado. Es autnoma y distinta de sus
propietarios y administradores. Esta autonoma le confiere a la corporacin tres ventajas
principales: 1) Vida ilimitada. Una corporacin puede continuar su vida aun despus de que sus
propietarios originales y sus administradores hayan fallecido. 2) Facilidad en la transferencia de los
ttulos de propiedad. Los ttulos de propiedad pueden dividirse en acciones de capital, las cuales
pueden transferirse con mucho ms facilidad que los instrumentos de propiedad de las
asociaciones o de las personas fsicas. 3) Responsabilidad limitada. Para ilustrar el concepto de
una responsabilidad limitada, supngase que usted invirtiera $10 000 en una asociacin y que sta
cayera en quiebra con una deuda de $1 000000. Ya que los propietarios son responsables por las
deudas de una asociacin, a usted le correspondera cubrir una parte de la deuda de la compaa
y podra tambin ser responsable por la deuda total de $1 000 000 en caso de que los socios no
pudieran liquidar sus partes correspondientes. En conclusin, aquel inversionista que participa en
una asociacin se encuentra expuesto a una responsabilidad ilimitada. Por otra parte, si usted
invirtiera $10 000 en el capital de una corporacin que posteriormente cayera en quiebra, su
prdida potencial sobre la inversin quedara limitada a los $10 000 originalmente invertidos.' Estos
tres factores vida ilimitada, facilidad en la transferencia de los ttulos de propiedad y
responsabilidad limitada- hacen mucho ms fcil que las corporaciones obtengan dinero en los
mercados generales de capitales, principalmente en trminos de los problemas que suelen
encontrar las personas fsicas o las asociaciones.

Sin embargo, es posible limitar las responsabilidades de algunos de los socios mediante el
establecimiento de una asociacin limitada, en la que un socio se designa como el socio general y
los dems se designan como socios limitados. Las asociaciones limitadas son muy comunes en el
rea de las inversiones de bienes races, pero no funcionan bien en la mayor parte de los

10
negocios, incluyendo las firmas de contadores. Ello se debe al hecho de que es muy raro que un
solo socio est dispuesto a asumir todo el riesgo de un negocio.

En el caso de las corporaciones de tamao pequeo, la caracterstica referente a la

responsabilidad limitada es a menudo una ilusin, puesto que los banqueros y los administradores
de crdito ordinariamente requieren garantas personales de los mismos accionistas de empresas
pequeas y dbiles.

La forma de organizacin corporativa ofrece varias ventajas significativas con relacin a las
asociaciones y a las personas fsicas, pero tambin rene dos desventajas fundamentales: 1) las
utilidades corporativas estn sujetas a un doble gravamen -las utilidades de la corporacin estn
gravadas y, de ah, las utilidades que se paguen como dividendos se gravan nuevamente como un
ingreso para los accionistas-; 2) el establecimiento de una corporacin y la presentacin de los
avisos federales y estatales correspondientes, es mucho ms compleja y requiere de mucho ms
tiempo que el que se necesitara para instalar una persona fsica o una asociacin.

Aunque una persona fsica o una asociacin pueden empezar sus operaciones sin tener que
realizar muchos trmites, el establecimiento de una corporacin requiere que los socios contraten
los servicios de un abogado para que lleve a cabo la preparacin de la escritura constitutiva y de
los estatutos: La escritura constitutiva incluye la siguiente informacin: 1) nombre de la corporacin
propuesta, 2) tipos de actividades a las que se dedicar, 3) monto del capital social, 4) nmero de
directores y 5) nombres y direcciones de los directores. La escritura constitutiva se presenta en la
secretara de Estado del rea a la cual se incorpore la empresa. Cuando dicha escritura es
aprobada, se dice que la corporacin existe de manera oficial.' Posteriormente, despus de que la
corporacin haya iniciado sus actividades, deber presentar informes financieros y fiscales tanto
trimestrales como anuales ante las autoridades estatales y federales.

Los estatutos consisten en un conjunto de reglas que son emitidas por los fundadores de la
corporacin. Su propsito es ayudar a la regulacin de la administracin interna de la empresa. En
los estatutos se incluyen puntos como: 1) la forma en que se elegirn los directores (por ejemplo,
los directores pueden elegirse cada ao o la tercera parte del cuerpo directivo puede elegirse cada
ao para ocupar cargos por un periodo de tres aos), 2) si los accionistas actuales tendrn o no un
derecho prioritario para comprar cualesquiera nuevas acciones que emita la empresa y 3) los
procedimientos que se debern seguir para cambiar los estatutos, en caso de que las condiciones
as lo requieran.

11
El valor de cualquier negocio, excepto aquellos que sean de tamao muy pequeo, probablemente
se ver maximizado si se organiza como una corporacin. Ello se debe a las siguientes razones:

La responsabilidad limitada reduce los riesgos que corren los inversionistas y,

mantenindose todo lo dems constante, entre ms bajo sea el riesgo de una empresa,
mayor ser su valor.

Obsrvese que ms del 60 por ciento de las principales corporaciones de los Estados Unidos ha
sido registrado en Delaware. A lo largo de los aos, este estado ha proporcionado un medio
ambiente legal favorable para las corporaciones. No es necesario que una empresa tenga sus
oficinas generales o que realice sus operaciones en el estado en que se registra.

El valor de una empresa est sujeto a sus oportunidades de crecimiento, las cuales
dependen a su vez de la capacidad de la empresa para atraer capital. Debido a que las
corporaciones pueden obtener capital con mayor facilidad que las personas fsicas y las
asociaciones, tienen mayores oportunidades de crecimiento.

El valor de un activo tambin depende de su liquidez, lo cual se refiere a la facilidad con

que se puede vender un activo y convertirlo en efectivo a un "valor de mercado justo".
Puesto que una inversin en el capital de una corporacin es mucho ms liquida que una
inversin similar en una persona fsica o en una asociacin, esto tambin significa que la
forma corporativa de organizacin puede contribuir a aumentar el valor de un negocio.

Las corporaciones se gravan en una forma distinta a la de las personas fsicas y las
asociaciones; por lo general, los negocios deben pagar una mayor cantidad de impuestos
cuando se constituyen como corporaciones, pero bajo ciertas condiciones la carga fiscal
puede llegar a ser la misma. Este aspecto se analiza con detalle en el captulo 3.

Como se ver posteriormente en este captulo, la mayora de las empresas es administrada

teniendo como meta la maximizacin de su valor de mercado; esto a su vez ha causado que la
mayor parte de los negocios de gran tamao se organice como corporaciones.

12
Preguntas de autoevaluacin

Cules son las principales diferencias que existen entre las personas fsicas, las asociaciones y
las corporaciones?

Explquese por qu razn cualquier negocio, excepto uno de tamao muy pequeo, podra ver
maximizado su valor de mercado si se organizara como una corporacin.

Las finanzas en la estructura organizacional de la empresa

Aunque las estructuras organizacionales varan de empresa a empresa, la figura 1-1 presenta un
panorama tpico con relacin al papel que desempean las finanzas dentro de una corporacin. El
director financiero -quien lleva el ttulo de vicepresidente de finanzas- reporta al presidente. Los
principales subordinados del presidente de finanzas son el tesorero y el contralor. En la mayora de
las empresas el tesorero tiene una responsabilidad directa en la administracin del efectivo y de los
valores negociables de la empresa, la planeacin de su estructura de capital, la venta de acciones
y obligaciones para la obtencin de capital y la supervisin del fondo corporativo de pensiones. El
tesorero tambin supervisa al gerente de crdito, al gerente de inventarios y al director de

13
presupuesto de capital (quien analiza las decisiones que se relacionan con las inversiones en
activos fijos). El contralor es responsable de las actividades de los departamentos de contabilidad e
impuestos.

Preguntas de autoevaluacin

Quines son los dos principales subordinados que reportan al director financiero de la empresa y
cules son las principales responsabilidades de cada uno de ellos?

Las metas de la empresa

Las decisiones de negocios no se toman en el vaco --quienes toman decisiones siempre tienen
algn objetivo especfico. A travs de todo este libro operaremos bajo el supuesto de que la
principal meta de la administraci6n es la maximizacin de la riqueza de los accionistas, lo cual,
como veremos ms adelante, se traduce en la maximizacin del precio de las acciones comunes
de la empresa. Desde luego, las empresas tienen otros objetivos -los administradores en particular,
quienes toman las decisiones reales, se interesan en su propia satisfaccin personal, en el
bienestar de sus empleados y en el bien de la comunidad y de la sociedad a gran escala. Sin
embargo, como se expone en las secciones siguientes, la maximizacin del precio de las acciones
es la meta ms importante de la mayora de las corporaciones.

Incentivos de la administracin que conducen a la maximizacin de la riqueza de los accionistas

Los accionistas son los propietarios de la empresa y son quienes eligen al equipo de
administradores. Se espera que los administradores, por su parte, operen teniendo en mente los
intereses de los accionistas. Sin embargo, es bien sabido que debido a que las acciones de las
empresas ms grandes son posedas por un gran nmero de individuos, los administradores de las
corporaciones de gran tamao actan con mucha autonoma. Siendo este el caso, podran los
administradores perseguir metas distintas a la maximizacin del precio de las acciones? Por
ejemplo, algunos tericos han argumentado que los administradores de una corporacin grande y
bien establecida podran trabajar tan slo con el esfuerzo necesario para mantener los
rendimientos de los accionistas a un nivel "razonable" y dedicar entonces el resto de sus esfuerzos
a las actividades de servicios pblicos, a los beneficios de los empleados, a la concesin de
salarios ms altos para los ejecutivos o a la prctica del golf.

14
Es casi imposible determinar si un equipo administrativo en particular est tratando de maximizar la
riqueza de los accionistas o nicamente est tratando de mantener a los accionistas satisfechos, a
la vez que persigue otras metas. Por ejemplo, cmo podemos saber si los programas para el
beneficio de los empleados o de la comunidad estn incluidos entre los intereses a largo plazo de
los accionistas? De manera similar, los salarios relativamente altos para los ejecutivos son
realmente necesarios para atraer y retener excelentes administradores, o son tan slo otro ejemplo
de cmo los administradores sacan ventaja de los accionistas?

Es imposible proporcionar respuestas definitivas a estas preguntas. Sin embargo, sabemos que los
administradores de una empresa que opere en un mercado competitivo estarn obligados a
ejecutar aquellas acciones que sean razonablemente consistentes con la maximizacin de la
riqueza de los accionistas. Si se apartan de esta meta, corren el riesgo de ser despedidos de sus
empleos a travs de una adquisicin empresarial de tipo hostil o a travs de un litigio de
apoderamiento.

Una adquisicin empresarial hostil consiste en la compra que una compaa hace de las acciones
de otra empresa aun con la oposicin de sus administradores, mientras que un litigio de
apoderamiento implica un intento por obtener el control de una empresa haciendo que los
accionistas voten por un nuevo equipo administrativo. Ambas acciones se ven facilitadas por la
existencia de precios bajos de las acciones; por consiguiente, para conservar su lugar, la
administracin tratar de mantener el valor de sus acciones al nivel ms alto posible. Del mismo
modo, aunque algunos administradores podran estar ms interesados en sus propias posiciones
personales que en la maximizacin de la riqueza de los accionistas, la amenaza que significa
perder sus empleos los motivar para que traten de maximizar los precios de sus acciones. Ms
adelante, en este mismo captulo, tendremos mucho que decir acerca del conflicto que existe entre
los administradores y los accionistas.

Responsabilidad social

Otro aspecto que merece una consideracin especial es la responsabilidad social: deben los
negocios operar estrictamente por los mejores intereses de sus accionistas o son las empresas
tambin responsables del bienestar de sus empleados, de sus clientes y de las comunidades en
las cuales operan? Ciertas empresas tienen una responsabilidad tica por proporcionar un medio
ambiente de trabajo seguro, por evitar la contaminacin del aire o del agua y por elaborar
productos seguros. Sin embargo, las acciones socialmente responsables implican un costo y es
dudoso que los negocios estn dispuestos a incurrir en estos costos de manera voluntaria. Si

15
algunas empresas actan de una manera socialmente responsable mientras que otras se
abstienen de hacerlo, entonces las empresas socialmente responsables estarn en desventaja en
trminos de obtencin de capital. Como ejemplo, supngase que las empresas de una industria
determinada tuvieran utilidades y tasas de rendimiento sobre su inversin cercanas a los niveles
normales, es decir, prximas al promedio de todas las empresas y justo en el nivel suficiente para
atraer capital. Si una compaa tratara de ejecutar una responsabilidad social, tendra que
aumentar sus precios para cubrir sus costos adicionales. Si los dems negocios que participaran
dentro de su misma industria no siguieran este ejemplo, sus costos y sus precios seran ms bajos.
La empresa socialmente responsable no estara en condiciones de competir y se vera obligada a
abandonar sus esfuerzos. De este modo, cualquier acto socialmente responsable que se realice de
manera voluntaria y que aumente los costos ser muy difcil, si no es que imposible, de llevar a
cabo, principalmente en aquellas industrias que se encuentren sujetas a una competencia muy
aguda.

Observemos a manera de ilustracin el caso de las empresas oligopolsticas cuyas utilidades se

mantienen por arriba del nivel normal: podran tales empresas dedicar sus recursos a la ejecucin
de algunos proyectos de tipo social? Ciertamente que s. De hecho, muchas empresas grandes y
exitosas participan en proyectos comunitarios, en programas para el beneficio de los empleados y
en otros proyectos similares que se extienden hacia una mayor participacin de la que exigira el
cumplimiento exclusivo de las metas relacionadas con la maximizacin de las utilidades o de la
riqueza de los accionistas." Sin embargo, las empresas que son posedas por el gran pblico
inversionista se encuentran restringidas en cuanto a la realizacin de tales acciones debido a la
influencia de ciertos factores de los mercados de capitales. Supngase, por ejemplo, que un
ahorrador dispone de cierta cantidad de efectivo y est considerando dos empresas alternativas
para invertir sus fondos. Una de dichas empresas dedica una parte sustancial de sus recursos a la
realizacin de acciones sociales, mientras que la otra se concentra en las utilidades y en los
precios de las acciones. La mayora de los inversionistas probablemente desdeara a la empresa
socialmente orientada y de este modo la pondra en desventaja dentro del mercado de capitales.

Despus de todo, por qu deberan subsidiar a la sociedad los accionistas de una corporacin en
una mayor medida que los accionistas de otras empresas? Por esta razn, hasta las empresas
altamente rentables (aun cuando su capital sea posedo por un nmero reducido de personas en
vez de encontrarse en las manos del gran pblico inversionista) se enfrentan por lo general a
ciertas restricciones que obstaculizan la ejecucin de acciones sociales de tipo unilateral
tendientes a incrementar los costos.

16
Significa todo esto que las empresas no deben ejercer una responsabilidad social? Desde luego
que no, pero s significa que las acciones ms importantes tendientes a incrementar los costos
tendrn que ser promulgadas sobre una base obligatoria en vez de voluntaria, por lo menos
inicialmente, para asegurar que la carga financiera resultante se distribuya de manera uniforme
entre todos los negocios. Por consiguiente, los programas de beneficio social tales como las
prcticas justas de contratacin, el entrenamiento y la capacitacin de grupos minoritarios, la
seguridad de los productos, la lucha contra la contaminacin y las acciones antimonopolsticas
sern quizs ms efectivos si se establecen reglas realistas desde el principio y posteriormente se
refuercen a travs de las agencias del gobierno. Desde luego, es de gran importancia que la
industria y el gobierno cooperen en el establecimiento de reglas de comportamiento corporativo,
que los costos y los beneficios de tales acciones sean estimados y tomados en cuenta con gran
exactitud y que las empresas sigan el espritu y el contenido de las leyes en todas sus acciones.

La maximizacin del precio de las acciones y el bienestar social

Si una empresa trata de maximizar el precio de sus acciones, ser bueno o malo para la
sociedad? En general, ser algo bueno. Aparte de ciertos actos ilegales tales como tratar de formar
monopolios, violar los cdigos de seguridad y dejar de satisfacer los requerimientos para el control
de la contaminacin, los mismos cursos de accin que maximizan los precios de las acciones
tambin benefician a la sociedad. Primeramente, obsrvese que la maximizacin del precio de las
acciones requiere de la instalacin de plantas industriales eficientes y capaces de operar a un
costo bajo y que produzcan bienes y servicios de alta calidad al costo ms bajo posible. Segundo,
la maximizacin del precio de las acciones requiere del desarrollo de aquellos productos que los
consumidores desean y necesitan; por lo tanto, el motivo referente a las utilidades da lugar a
nuevas tecnologas, a nuevos productos y a nuevos empleos. Finalmente, la maximizacin del
precio de las acciones requiere de un servicio eficiente y de gran esmero, de la existencia
adecuada de mercancas y de establecimientos de negocios bien ubicados todos estos factores
son necesarios para que haya ventas y las ventas son necesarias para la obtencin de utilidades.
Por consiguiente, aquellos cursos de accin que ayudan a maximizar el precio de las acciones de
una empresa tambin son benficos para la sociedad a gran escala. sta es la razn por la cual
las economas de libre empresa motivadas hacia la obtencin de utilidades, han sido mucho ms
exitosas que los sistemas econmicos socialistas y comunistas. Toda vez que la administracin
financiera desempea un papel fundamental en la operacin de empresas exitosas y puesto que
las empresas prsperas son absolutamente indispensables para el logro de una economa
saludable y productiva, resulta sencillo ver por qu las finanzas son importantes desde el punto de
vista social.

17
Preguntas de autoevaluacin

Cul es la meta fundamental de la administracin?

Que acciones podran tomarse para despedir a un equipo de administracin si se apartara de la
meta consistente en la maximizacin de la riqueza de los accionistas?
Explquese la diferencia que existe entre una adquisicin hostil y un litigio de apoderamiento.
Cmo influye el precio de las acciones de una empresa sobre la probabilidad de que ocurran
dichos eventos?
Qu sucedera si una empresa tratara de ejercer una responsabilidad socialmente costosa,
mientras que sus competidores no ejercieran su responsabilidad social?
Cmo beneficia la meta de la maximizacin del precio de las acciones a la sociedad como un
todo?

La tica de la empresa

La palabra tica se define en el diccionario Webster como "conjunto de normas de conducta o de

comportamiento moral". La tica de una empresa puede concebirse como la actitud y el
comportamiento de una compaa hacia sus empleados, hacia sus clientes, hacia la comunidad y
hacia los accionistas. Las altas normas de un comportamiento tico exigen que una empresa trate
a cada individuo en una forma justa y honesta. El compromiso de una empresa con relacin a la
tica de los negocios puede medirse a travs de la tendencia de la institucin y de sus empleados
a adherirse a aquellas leyes y reglamentos que se relacionen con factores tales como la seguridad
y la calidad del producto, las prcticas justas de contratacin, las prcticas justas de
comercializacin y de venta, el uso de informacin confidencial para beneficio personal, la
participacin dentro de la comunidad, el soborno y la realizacin de pagos ilegales a los gobiernos
extranjeros para hacer negocios.

Hay muchos ejemplos de empresas que participan en un comportamiento no tico. Por ejemplo, en
aos recientes, los empleados de varias instituciones prominentes de banca de inversin de Wall
Street han sido sentenciados a prisin por haber usado ilegalmente, para su beneficio personal,
informacin interna sobre ciertas fusiones propuestas y E. F. Hutton, una empresa de corretaje de
gran tamao, perdi su independencia al tener que participar en una fusin forzada despus de
que fue acusada de defraudar a sus bancos por varios millones de dlares a travs de un esquema
que inclua ciertos documentos y ttulos de valor dudoso. Drexel Burnham Lambert, una de las
empresas ms grandes de banca de inversin, cay en quiebra y su "rey de los bonos chatarra",

18
Michael Milken, quien haba ganado $550 millones en slo un ao, fue sentenciado a 10 aos de
prisin y adems se le impuso una enorme multa por haber incurrido en violaciones contra la
legislacin de valores. Recientemente, Salomon Brothers Inc., se vio implicada en un escndalo de
una oferta de subasta de la Tesorera, el cual dio como resultado el despido de algunos
funcionarios de primer nivel y una reorganizacin significativa de la empresa.

A pesar de todo esto, los resultados de un estudio reciente indicaron que los ejecutivos de la
mayora de las empresas ms grandes de los Estados Unidos piensa que sus empresas deben
tratar de mantener siempre un alto nivel de normas ticas en todas sus operaciones de negocios.
Adems, la mayora de los ejecutivos piensa que existe una correlacin positiva entre la tica y la
rentabilidad a largo plazo. Por ejemplo, el Chemical Bank ha indicado que el comportamiento tico
ha producido un incremento en su rentabilidad porque dicha conducta: 1) evita multas y gastos
legales, 2) contribuye a la confianza pblica, 3) atrae operaciones de negocios de aquellos clientes
que aprecian y dan apoyo a sus polticas, 4) atrae y mantiene a empleados del ms alto calibre y 5)
da apoyo a la viabilidad econmica de las comunidades en las cuales opera.

Hoy en da, la mayora de las empresas ha instalado fuertes cdigos de comportamiento tico y
suele realizar programas de capacitacin diseados para asegurarse de que todos los empleados
comprendan el comportamiento correcto bajo diferentes situaciones de negocios. Sin embargo, es
imperativo que la alta administracin ----el presidente de la junta, el presidente y los
vicepresidentes---- se encuentre ampliamente comprometida hacia la prctica de un
comportamiento tico y que comunique este compromiso mediante sus propias acciones
personales, as como a travs de polticas formuladas por la compaa, por los directivos y por
medio de sistemas de castigo y de recompensa.

Preguntas de autoevaluacin

Cmo podra definirse a la "tica de los negocios"?

Es bueno el "ser tico" para la obtencin de utilidades a largo plazo? Y para las utilidades a
corto plazo?

Relaciones de delegacin de autoridad

19
Una relacin de delegacin de autoridad existe cuando una o ms personas (los directores)
contratan a otra persona (un agente) para que desempee un servicio y para que posteriormente
se le delegue autoridad para la toma de decisiones. Se dice que existen relaciones importantes de
delegacin de autoridad: 1) entre los accionistas y los administradores y 2) entre los accionistas y
los acreedores (los obligacionistas).

Accionistas versus administradores

Un problema potencial de delegacin de autoridad surge siempre que el administrador de una

empresa posee menos del 100% del capital social de la misma. Si una empresa se encuentra
constituida como persona fsica y es administrada por su mismo propietario, el propietario-
administrador operar presumiblemente de tal modo que mejore su propio bienestar personal.
Dicho bienestar se medir bajo la forma de un incremento en la riqueza personal, una mayor
comodidad o un mayor nmero de prestaciones." Sin embargo, si el propietario-administrador se
convierte en una corporacin y vende una parte de las acciones de la empresa a personas
externas, inmediatamente surge un conflicto potencial de intereses. Por ejemplo, el propietario-
administrador podra decidir en ese momento no trabajar tanto para maximizar la riqueza de los
accionistas, porque una menor cantidad de esta riqueza se acumulara para l, o podra asignarse
un salario ms alto o disfrutar de mejores prestaciones porque una parte de tales costos recaera
sobre los accionistas externos. Este conflicto potencial entre las dos partes, los directores (los
accionistas externos) y el agente (el administrador), es un problema de delegacin de autoridad.

Otro conflicto potencial que se presenta entre los administradores y los accionistas es aquel que
surge en una adquisicin empresarial apalancada (LBO). Este trmino se usa para describir una
situacin en la cual la administracin: 1) contrata una lnea de crdito; 2) hace una oferta, que se
denomina oferta formal u oferta directa, para comprar aquellas acciones que an no son posedas
por el grupo administrativo, y posteriormente 3) "privatiza a la compaa". En los ltimos tiempos
han ocurrido docenas de tales adquisiciones empresariales, cuyo objetivo ha sido el comprar
corporaciones de gran tamao, y es claro que existe un conflicto potencial siempre que se
contempla alguna de ellas. Por ejemplo, hace poco, el presidente de Nabisco RJR, Ross johnson,
trat de privatizar la compaa por medio de una adquisicin apalancada. Si hubiera tenido xito,
johnson y otros ejecutivos de RJR habran terminado siendo dueos de aproximadamente el 20%
de la compaa, con un valor de ms de mil millones de dlares. La administracin trat de allanar
el camino para la adquisicin apalancada en ciertas formas que resultaron muy dudosas desde el
punto de vista de los accionistas. La administracin argument que su oferta era en el inters de
todos los accionistas, pero muchos no estuvieron de acuerdo: si la administracin misma estaba

20
comprando las acciones, estara dentro de los intereses de la administracin mantener el precio a
un nivel bajo hasta que se completara el trato y as evitar que existiera un claro conflicto de
intereses?

En general, cuando existe un conflicto de intereses, qu se puede hacer para asegurarse de que
la administracin trate a los accionistas externos de una manera justa? Por alguna razn, la
Comisin de Valores y Cambios de los Estados Unidos (SEC), la cual se encarga de regular los
mercados de valores estadounidenses, requiere actualmente que la administracin revele toda la
informacin relevante relacionada con una transaccin propuesta y que se establezca un comit de
directores externos (personas que no sean funcionarios de la empresa) para: 1) buscar otras
ofertas para la compaa, 2) evaluar y comparar cualesquiera otras ofertas con la de la
administracin y 3) recomendar la mejor oferta para los accionistas. Adems, los miembros del
comit externo de directores no pueden tener ninguna participacin en una compaa
reorganizada; este requerimiento ha sido diseado para asegurar su independencia, as los pleitos
legales se resolveran rpidamente si se llegara a desarrollar una situacin conflictiva.

En el caso de RJR, el comit de directores externos recibi ofertas de varios grupos, incluyendo
una de Kohlberg Kravis Roberts (KKR) , una compaa de inversiones especializada en
adquisiciones apalancadas y que usa fondos de pensiones como su fuente principal de capital
contable (KKR generalmente obtiene financiamiento de alrededor de un 10% de capital contable y
un 90% de deudas, las cuales se dividen en prstamos bancarios a corto plazo y bonos a largo
plazo). Esto desat una guerra de ofertas y al final KKR derrot al grupo de administradores con
una oferta de $109 por accin, frente a una oferta original de la administracin de $75. Las ofertas
finales de la administracin y de KKR fueron similares, pero los directores externos recomendaron
a KKR, en parte como resultado del ampliamente difundido sentimiento de que la administracin
haba tratado de "robarse" a la compaa. Todo este episodio constituye un buen ejemplo acerca
del hecho de que las adquisiciones apalancadas representan un problema de delegacin de
autoridad bastante importante entre los accionistas y los administradores.

Se suelen utilizar varios mecanismos para motivar a los administradores a que acten en el mejor
de los intereses de los accionistas. stos pueden ser: 1) la amenaza de un despido, 2) la amenaza
de una adquisicin empresarial y 3) una compensacin administrativa.

La amenaza de un despido. Hasta hace poco, la probabilidad de que el departamento

administrativo de una empresa de gran tamao fuera despedido por sus accionistas era tan remota

21
que en realidad representaba una amenaza muy pequea. Esta situacin se cre porque la pro
piedad de la mayora de las empresas se encontraba tan ampliamente distribuida y el control de la
administracin sobre el mecanismo de apoderamiento (de votacin) era tan fuerte, que resultaba
casi imposible que los accionistas disidentes obtuvieran un nmero suficiente de votos para
despedir a los administradores. Sin embargo, hoy en da el 55% de las acciones de una
corporacin grande promedio es posedo por un nmero relativamente pequeo de instituciones de
gran tamao, en vez de miles de inversionistas individuales, y los administradores institucionales
del dinero tienen el poder necesario para influir en las operaciones de una empresa. Algunos
ejemplos de las principales corporaciones cuyos administradores han sido despedidos incluyen a
United Airlines, Disney y Bank of America.

La amenaza de una adquisicin empresarial. Las adquisiciones empresariales de tipo hostil (en las
que la administracin no desea que la empresa sea adquirida por un tercero) tienen ms
probabilidades de ocurrir cuando las acciones de una empresa se encuentran subvaluadas con
relacin a su valor potencial. En una adquisicin de tipo hostil, los administradores de la empresa
adquirida generalmente son despedidos y todos aquellos que logren permanecer en la institucin
pierden la autonoma que tenan antes de la adquisicin. De este modo, los administradores tienen
un fuerte incentivo para emprender aquellas operaciones que maximicen los precios de las
acciones. Como lo dijo el presidente de cierta compaa: "Si usted quiere mantener el control, no
permita que las acciones de su compaa se vendan a precio de ganga".

Aquellas operaciones que tienden a incrementar el precio de las acciones de la empresa y evitar
que se conviertan en una "ganga" son obviamente buenas desde el punto de vista de los
accionistas, pero otras tcticas que pueden usar los administradores para protegerse contra una
adquisicin empresarial de tipo hostil pueden no serlo. Dos ejemplos que ilustran la prctica de
tcticas dudosas son las pldoras envenenadas y el correo negro. Una pldora envenenada es una
operacin que una empresa puede desarrollar y por medio de la cual queda prcticamente muerta
y as se vuelve poco atractiva para los aspirantes potenciales. Algunos ejemplos incluyen el plan
de Disney para vender grandes cantidades de sus acciones a precios-bajos y slo a compradores
"amigables", la decisin de Scott Industries' de convertir inmediatamente en pagadera la totalidad
de su deuda si haba cambios en su administracin, y la decisin de Carleton Corporation,
consistente en proporcionar enormes bonos de retiro a sus administradores, cuyo monto
representaba una parte significativa de la riqueza de la compaa, si la empresa era sometida a
una adquisicin empresarial (tales pagos se denominan paracadas de oro).
El correo negro, que se parece mucho al chantaje, ocurre cuando:

22
un comprador potencial (una empresa o un individuo) compra un bloque de acciones de una
empresa, 2) la administracin de la compaa que se pretende adquirir se asusta ante la
posibilidad de que el adquiriente haga una oferta directa y obtenga el control de la compaa y 3) a
efecto de desarticular una posible adquisicin empresarial, la administracin ofrece pagar un
correo negro a travs de la compra de las acciones posedas por un corredor potencial a un precio
superior al existente en el mercado, pero sin ofrecer la misma posibilidad de compra a los dems
accionistas. Un buen ejemplo de correo negro fue la readquisicin del 11.1% de sus acciones que
hizo Disney a Saul Steinberg's Reliance Group, lo cual dio a Steinberg una rpida utilidad de $60
millones. Un grupo de accionistas entabl un litigio legal y los directores de Steinberg y de Disney
se vieron forzados a pagar $45 millones a los accionistas de Disney.

Estructuracin de incentivos administrativos. Las empresas estn vinculando cada vez ms las
compensaciones de los administradores con el desempeo de la compaa, lo que ha motivado a
los administradores a que operen en una forma consistente con la maximizacin del precio de las
acciones.

En la dcada de los aos cincuenta y sesenta, la mayora de los planes de incentivos que se
basaban en el desempeo inclua opciones para acciones de ejecutivos, las cuales permitan que
los administradores compraran un nmero de acciones en alguna fecha futura y a un precio
determinado. Puesto que el valor de las opciones estaba vinculado directamente con el precio de
las acciones, se supona que la concesin de opciones proporcionara un incentivo para que los
administradores hicieran movimientos que favorecieran la maximizacin del precio de las acciones.

Este tipo de incentivo administrativo perdi popularidad en la dcada de los aos setenta; ello se
debi al hecho de que el mercado general de las acciones declin y los precios de las acciones no
necesariamente reflejaban el crecimiento en las utilidades de las empresas. Era evidente que los
planes de incentivos deban basarse en aquellos factores sobre los cuales los administradores
tenan un control, y puesto que los administradores no pueden controlar el mercado general de las
acciones, los planes que incluan opciones para acciones no eran buenos como instrumentos de
incentivos. Por consiguiente, mientras que tan slo 61 de las 100 empresas ms grandes de los
Estados Unidos usaban opciones de acciones como su nica compensacin en forma de
incentivos en el ao de 1970, ni siquiera una de las 100 compaas ms grandes se bas
exclusivamente en tales planes en el ao de 1992.
En la actualidad, un importante plan de incentivos consiste en acciones de desempeo, que son
acciones de capital que se proporcionan a los ejecutivos sobre la base del desempeo tal y como
ste se mide por las utilidades por accin, el rendimiento sobre los activos, el rendimiento sobre el

23
capital contable y dems parmetros similares. Por ejemplo, Honeywell utiliza el crecimiento en las
utilidades por accin como una medida fundamental de desempeo. La empresa tiene dos
periodos de desempeo de cuatro aos cada uno; ambos periodos empiezan a dos aos de
distancia y se traslapan entre s. Al inicio de cada periodo, se asigna a los ejecutivos participantes
un cierto nmero de acciones de desempeo; por ejemplo, 10000 acciones para el presidente
hasta 1000 acciones para un administrador de rango bajo. Si la compaa logra un crecimiento
promedio anual del 13% como meta en las utilidades por accin, los administradores ganarn el
100% de sus acciones. Si el desempeo corporativo se encuentra por arriba de la meta, los
administra- dores de Honeywell podrn ganar an ms acciones, hasta alcanzar un mximo de
130%, lo cual requerir de una tasa de crecimiento del 16%. Sin embargo, si el crecimiento es
inferior al 13%, ellos obtendrn menos del 100% de las acciones y por debajo de una tasa de
crecimiento del 9%, obtendrn un margen de cero. Los ejecutivos deben permanecer con
Honeywell a travs del periodo de desempeo (cuatro aos) a efecto de recibir las acciones de
desempeo.

Todos los planes de compensacin de incentivos -las opciones para acciones de ejecutivos, las
acciones de desempeo, los bonos basados en las utilidades y similares- han sido diseados para
lograr dos cosas.

Primero, estos planes proporcionan un incentivo para que los ejecutivos acten sobre aquellos
factores que estn bajo su control en una forma tal que contribuyan a la maximizacin del precio de
las acciones. Segundo, la existencia de dichos planes de desempeo ayuda a las compaas a
atraer y retener ejecutivos de nivel superior. Los planes bien diseados pueden lograr ambas
metas.

24
Accionistas versus acreedores

Un segundo problema de delegacin de autoridad tiene que ver con los conflictos que surgen entre
accionistas y acreedores (los obligacionistas). Los acreedores son quienes prestan fondos a la
empresa a tasas de inters que se basan en: 1) el riesgo de los activos actuales de la empresa, 2)
las expectativas referentes al grado de riesgo de las adiciones futuras de activos, 3) la estructura

25
de capital existente en la empresa (es decir, la cantidad de deudas para financiamiento que utiliza)
y 4) las expectativas referentes a los cambios futuros en la estructura de capital. stos son los
factores que determinan el grado de riesgo de la deuda de una empresa, de manera que los
acreedores basan la tasa del inters que cargan en trminos de las expectativas concernientes a
estos factores.

Ahora, supngase que los accionistas, actuando a travs de la administracin, ocasionan que la
empresa emprenda nuevos negocios que conllevan mucho ms riesgo que el que hubieran podido
anticipar los acreedores. Este riesgo adicional causar que el valor de la deuda pendiente de pago
disminuya. Si los negocios arriesgados resultan tener xito, todos los beneficios se acumularn
para los accionistas, porque los acreedores obtendrn tan slo un rendimiento fijo. Sin embargo, si
las cosas salen mal, los obligacionistas tendrn que compartir las prdidas. Desde el punto de vista
de los accionistas, esto equivale al juego de "cara, yo gano; cruz, t pierdes", lo cual obviamente
no es buen juego para los obligacionistas.

De manera similar, si una empresa aumenta el uso de deudas en un esfuerzo por llevar al mximo
el rendimiento para los accionistas, el valor de la deuda antigua disminuir y por lo tanto
tendramos otra situacin del tipo "cara, yo gano; cruz, t pierdes". Como ejemplo, considrese lo
que les sucedi a los obligacionistas de Nabisco RJR cuando el director ejecutivo de tal empresa
les anunci su plan para privatizar la compaa a travs de una adquisicin empresarial
apalancada. Los accionistas observaron que el valor de sus acciones brinc de $56 a ms de $90
en tan slo unos cuantos das, pero los obligacionistas de RJR sufrieron prdidas de
aproximadamente el 20%. Los inversionistas se percataron inmediatamente de que la adquisicin
empresarial apalancada ocasionara que el monto de la deuda de RJR aumentara en forma
drstica y como resultado de ello su riesgo tambin aumentara. A su vez, esto condujo a una
enorme disminucin en el precio de las obligaciones en circulacin de RJR.

Todo el mercado industrial de obligaciones se vio sacudido por el anuncio de RJR, ya que los
inversionistas de obligaciones se percataron de que virtualmente cualquier compaa poda
convertirse en un blanco de ataque para una adquisicin empresarial apalancada. De hecho, el
administrador del fondo de pensiones del estado de hio anunci que estaba liquidando la
totalidad de la cartera de obligaciones industriales del fondo y que la sustituira por bonos de la
Tesorera debido al peligro de otras adquisiciones apalancadas.

La confusin del mercado de obligaciones tom por sorpresa a muchos expertos. Aun cuando los
inversionistas de obligaciones haban sido sorprendidos muchas veces en aos anteriores por el

26
advenimiento de numerosas reestructuraciones y adquisiciones apalancadas, la gigantesca
magnitud de la operacin de Nabisco RJR hizo que los inversionistas se dieran cuenta de que
ninguna empresa era lo demasiado grande como para que no fuera candidato de una adquisicin
apalancada. "Ahora, los inversionistas de obligaciones van a tener que prestar una atencin mucho
ms estrecha al contenido impreso de los contratos de crdito", coment un analista.
Posteriormente, el mismo analista dijo que "cualquier individuo que mantenga una obligacin
industrial que no est protegida contra algo como esto se encuentra simplemente sentado sobre un
montn de basura crediticia y txica."

La situacin de RJR increment el uso de las "opciones de venta envenenadas". Una opcin de
venta es aquella que le confiere a su tenedor el derecho de vender algo a un precio estipulado y
una opcin de venta envenenada consiste en una clusula que se incluye dentro de un contrato de
obligaciones y que permite al tenedor de la obligacin volver a vender tal instrumento al emisor a la
par en caso de que ocurra una adquisicin empresarial o alguna accin corporativa similar. Hemos
anticipado un incremento continuo en el uso de las opciones de venta envenenadas,
principalmente como resultado de la operacin que realiz Nabisco.

Pueden y deben los accionistas, a travs de sus administradores y agentes, tratar de expropiar la
riqueza de los acreedores de la empresa? En general, la respuesta es no. Primero, y debido a que
se han hecho tales intentos en el pasado, los acreedores de hoy en da se protegen a si mismos en
una forma razonablemente buena contra las operaciones de los accionistas a travs de la
imposicin de restricciones en los contratos de crdito. Segundo, si los acreedores potenciales
perciben que una empresa podra tratar de aprovecharse de ellos en varias y distintas maneras no
ticas, podran rehusarse a hacer tratos con dicha empresa o podran requerir una tasa de inters
ms alta de lo normal para compensar los riesgos de tales acciones "mal intencionadas". De este
modo, aquellas empresas que traten de hacer operaciones deshonestas con los acreedores slo
conseguirn perder el acceso a los mercados de deudas o se vern penalizadas con la imposicin
de tasas de inters ms altas, y ambas cosas tendern a disminuir el valor a largo plazo de las
acciones.

En vista de estas restricciones, se deduce que la meta referente a la maximizacin de la riqueza de

los accionistas requiere de un desempeo honesto hacia los acreedores: la riqueza de los
accionistas depende de la posibilidad de disponer de un acceso continuo a los mercados de
capitales, y tal acceso depende de la existencia de prcticas honestas y del apego al contenido
literal y al espritu de los contratos de crdito. Los administradores, como agentes de los
acreedores y de los accionistas, deben actuar en una forma tal que se refleje un equilibrio

27
adecuado entre los intereses de estas dos clases de tenedores de valores. Asimismo, debido a
otras restricciones y sanciones, aquellas operaciones de la administracin que logren expropiar la
riqueza de cualquiera de los participantes de la empresa (empleados, clientes, proveedores y
similares) sern en ltima instancia en perjuicio de los accionistas. Por consiguiente, la
maximizacin de la riqueza de los accionistas requiere de un trato justo hacia todos los
participantes de la empresa.

Preguntas de autoevaluacin

Qu es una relacin de delegacin de autoridad y cules son las dos principales relaciones de
este tipo que afectan a la administracin financiera?
Dense algunos ejemplos de problemas potenciales de delegacin de autoridad entre los
accionistas y los administradores.
Hgase una lista con varios factores que motiven a los administradores para que acten por los
intereses de los accionistas.
Dse un ejemplo de cmo un problema de delegacin de autoridad podra surgir entre los
accionistas y los acreedores.

Acciones administrativas tendientes a la maximizacin de la riqueza de los accionistas

Qu tipo de operaciones debe hacer una empresa para maximizar el precio de sus acciones?
Primeramente, considrese el aspecto referente a los precios de las acciones versus las utilidades:
conducir la maximizacin de las utilidades a la maximizacin del precio de las acciones? Al
responder esta pregunta, debemos considerar lo referente a las utilidades corporativas totales
versus las utilidades por accin (EPS).

Por ejemplo, suponga que Xerox tuviera 100 millones de acciones en circulacin y que ganara
$400 millones, o $4 por accin. Si usted fuera el propietario de 100 acciones del capital de esta
empresa, su participacin en las utilidades totales seria de $400. Ahora suponga que Xerox
vendiera otros 100 millones de acciones e invirtiera los fondos recibidos en activos que le
redituaran $100 millones de ingresos. El ingreso total aumentara a $500 millones, pero las
utilidades por accin disminuirn de $4 a $500/200 = $2.50. Ahora, su participacin en las
utilidades de la empresa seria tan slo de $250, frente a una cifra anterior de $400. Usted (y otros
accionistas actuales) habra sufrido una dilucin de utilidades, aun cuando las utilidades
corporativas totales hubieran aumentado. Por consiguiente, mantenindose lo dems constante, si

28
la administracin est verdaderamente interesada en el bienestar de sus accionistas actuales,
deber concentrarse en las utilidades por accin ms que en las utilidades corporativas totales.

Conducir siempre la maximizacin de las utilidades por accin a la maximizacin del bienestar
de los accionistas o deberan considerarse tambin otros factores? Pinsese en la oportunidad de
las utilidades. Suponga que Xerox tuviera un proyecto que ocasionara que las utilidades por accin
aumentaran en $0.20 por ao durante cinco aos, o $1 en total, mientras que otro proyecto no
tendra efecto sobre las utilidades durante 4 aos pero incrementara las utilidades en $1.25 en' el
quinto ao. Qu proyecto ser mejor? En otras palabras, es $0.20 por ao durante 5 aos mejor
o peor que $1.25 el quinto ao? La respuesta depende de qu proyecto contribuya ms al valor de
las acciones, lo cual a su vez depende del valor del dinero a travs del tiempo para los
inversionistas. De tal forma, la oportunidad en el tiempo es una razn importante para concentrarse
en la riqueza, tal y como sta se mide por el precio de las acciones ms que por las utilidades
consideradas aisladamente.

Otro punto de discusin es el que se refiere al riesgo. Supngase que se espera que un proyecto
incremente las utilidades por accin en $1, mientras que se espera que otro aumente las utilidades
en $1.20 por accin. El primer proyecto no es muy riesgoso -si se emprende, es casi seguro que
las utilidades aumenten en $1 por accin-o Sin embargo, el otro proyecto es del todo riesgoso y,
por lo tanto, aunque nuestra mejor prediccin afirma que las utilidades aumentarn en $1.20 por
accin, debemos reconocer la posibilidad de que no haya ningn incremento y an que se
produzca una prdida. Dependiendo de qu tanta aversin sientan los accionistas hacia el riesgo,
el primer proyecto podra ser preferible al segundo.

El grado de riesgo asociado con las utilidades por accin proyectadas (EPS) tambin depende de
la forma en que se financie la empresa. Tal y como lo veremos, muchas empresas caen en quiebra
cada ao y entre ms grande sea el uso que hagan de deudas, mayor ser el peligro de que
caigan en quiebra. En consecuencia, aunque el uso del financiamiento por medio de deudas puede
incrementar las utilidades por accin proyectadas, las deudas tambin incrementan el grado de
riesgo de las utilidades proyectadas hacia el futuro.

Otro punto de inters es el que se relaciona con el pago de dividendos a' los accionistas versus el
retener las utilidades y reinvertirlas dentro de la empresa, causando con ello que la corriente de
utilidades crezca a lo largo del tiempo. A los accionistas les gustan los dividendos en efectivo, pero
tambin les gusta el crecimiento en las utilidades por accin que proviene de la reinversin de
utilidades dentro del negocio. El administrador financiero debe decidir en forma exacta qu

29
cantidad de las utilidades de cada periodo se deben pagar como dividendos en vez de retenerlas y
reinvertirlas dentro de la empresa, lo cual se conoce como decisin de poltica de dividendos. La
poltica ptima de dividendos es aquella que maximiza el precio de las acciones de la empresa.

En sntesis, podemos observar que el precio de las acciones de la empresa depende de los
siguientes factores:

Utilidades por accin proyectadas

Oportunidad de las corrientes de utilidades
Grado de riesgo de las utilidades proyectadas
Uso de deudas
Poltica de dividendos

Toda decisin corporativa de trascendencia debe ser analizada en trminos de sus efectos sobre
estos factores y, por ende, sobre el precio de las acciones de la empresa. Por ejemplo, supngase
que la divisin de carbn de la Occidental Petroleum est considerando la apertura de una nueva
mina.: En caso de que ello se hiciera, podra esperarse que aumentaran las utilidades por accin?
Hay alguna probabilidad de que los costos excedan a las estimaciones, que los precios y la
produccin caigan por debajo de las proyecciones y que las utilidades por accin se vean
reducidas como resultado de que se haya abierto la nueva mina? Cunto tiempo se necesitar
para que la nueva mina produzca utilidades? Cmo debera obtenerse el capital necesario para
abrir la mina? Si se adquirieran deudas, en qu cantidad incrementara ello el grado de riesgo de
Occidental? Debera Occidental reducir sus dividendos actuales y usar el efectivo ahorrado de tal
forma para financiar el proyecto o debera mantener su nivel de dividendos y financiar la mina con
capital externo? La administracin financiera ha sido diseada para ayudar a responder preguntas
como stas, adems de muchas otras.

30
Preguntas de autoevaluacin

Conducir siempre la maximizacin de las utilidades a la maximizacin en el precio de las

acciones?
Identifquense los cinco factores que afectan al precio de las acciones de la empresa y explique los
efectos de cada uno de ellos.

El medio ambiente externo

Aunque las operaciones de la administracin ciertamente afectan al valor de las acciones de una
empresa, algunos factores externos tambin influyen sobre los precios de dichas acciones. Entre
tales factores es posible incluir las restricciones legales, el nivel general de actividad econmica,
las disposiciones fiscales y las condiciones del mercado de valores. La figura 1-2 presenta en
forma de diagrama estas relaciones genricas. Al desempearse dentro del conjunto de
restricciones externas que aparecen en el recuadro del extremo izquierdo, la administracin toma
un conjunto de decisiones estratgicas de poltica a largo plazo, las cuales dan lugar a una
trayectoria futura para la empresa. Estas decisiones de poltica, junto con el nivel general de
actividad econmica y el nivel de impuestos sobre ingresos corporativos, influyen sobre la
rentabilidad esperada por la empresa, la oportunidad de sus flujos de efectivo, su eventual
transferencia a los accionistas bajo la forma de dividendos y el grado de riesgo inherente en las
utilidades y dividendos proyectados. La rentabilidad, la oportunidad y el riesgo afectan al precio de
las acciones de una empresa, como tambin lo afecta otro factor, las condiciones que ocurren en el
mercado de valores como un todo. Esto se debe a que, en cierta medida, todos los precios de las
acciones tienden a desplazarse hacia arriba o hacia abajo en forma conjunta.

31
Preguntas de autoevaluacin

Identifquese algunos de los factores que van ms all del control de una empresa y que influyen
en el precio de sus acciones.

Los administradores financieros son responsables por obtener y usar los fondos en una forma que
maximice el valor de sus empresas.

Las tres principales formas de organizacin de los negocios son la persona fsica, la asociacin y la
corporacin.

Aunque cada forma de organizacin ofrece algunas ventajas y desventajas, la mayor parte de los
negocios se organiza como corporaciones, principalmente porque esta forma organizacional
maximiza el valor de la mayora de las empresas.

La meta principal de la administracin debe ser maximizar la riqueza de los accionistas y esto
implica maximizar el precio de las acciones de la empresa. Por otra parte, aquellas acciones que
maximicen los precios de las acciones tambin incrementarn el bienestar social.

Un problema de delegacin de autoridad es un conflicto potencial de intereses que puede surgir

entre: 1) los propietarios de la empresa y su administracin o 2) los accionistas y los acreedores
(los obligacionistas).

Hay un nmero de formas para motivar a los administradores para que acten por el mejor de los
intereses de los accionistas, las cuales incluyen: 1) la amenaza de ser despedidos, 2) la amenaza
de las adquisiciones empresariales y 3) la oferta de incentivos administrativos estructurados en una
forma adecuada.

El precio de las acciones de la empresa depende de sus utilidades por accin proyectadas, de la
oportunidad de sus utilidades, del riesgo de las utilidades proyectadas, del nivel de deudas que
utilice y de su poltica de dividendos.

Las empresas de tamao pequeo son muy importantes cuando se les considera en forma
conjunta; por lo tanto, a lo largo de todo este texto expondremos diversos puntos de inters con
relacin a las empresas pequeas.

32
Preguntas

1-1 Cules son las tres formas principales de organizacin de los negocios? Cules son las
principales ventajas y desventajas de cada una de ellas?
1-2 Ser igual la tasa "normal" de rendimiento sobre la inversin para todas las industrias?
Cambiaran las tasas "normales" de rendimiento a travs del tiempo? Explique su respuesta.
1-3 Si la tasa de inflacin aumentara, cmo se vera afectado el papel del administrador
financiero? Aumentara o disminuira su relevancia con relacin a la de otros ejecutivos? Explique
su respuesta.

33
7/5/12 IBS Case Studies

IBS
Mumbai
Date: 05/07/2012 Time: 00:39:36

HROB/108

IBS Center for Management Research

License to use IBS Mumbai

for Sem I, class of 2014

The Julie Roehm Saga at Wal-Mart Stores, Inc.

This case was written by Syeda Ikrama, under the direction of Debapratim Purkayastha, IBS Center for Management Research. It was compiled from published sources, and is
intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.

2008, IBS Center for Management Research. All rights reserved.

To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra
Pradesh, India or email: info@icmrindia.org

www.icmrindia.org

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HROB/108

The Julie Roehm Saga at Wal-Mart Stores, Inc.

I think part of my persona is that I am an envelope pusher. The idea of change in general can be uncomfortable for many
people, and my persona as an agent of change can prompt that feeling .[1]

- Julie Roehm, Former Senior Vice President Marketing, Wal-Mart Stores, Inc., in 2006.

When we fired Ms. Roehm, we had no intention of sharing the details of her flagrant personal and professional misconduct,
even as she made disparaging the company a centerpiece of her self-promotional campaign. Now, we must respond to her
lawsuit and are in a position where we have no choice but to share the real story of what happened .[2]

- Wal-Mart Stores, Inc. in 2007.

It isnt often that the dismissal of a mid-level executive makes national news. But Julie Roehm is no ordinary executive
Given her colorful career, Roehms hiring by one of Americas most colorless companies always struck friends and industry
insiders as odd.[3]

- BusinessWeek, in 2007.

BURYING THE HATCHET

In November 2007, Julie Roehm (Roehm), former senior vice president of Marketing Communication of the worlds largest retail store
chain Wal-Mart Stores, Inc. (Wal-Mart), announced her decision to drop her lawsuit of wrongful termination against the company. I
have decided to accept Wal-Marts decision to terminate my employment and move on. I am not receiving any money or other
compensation to settle my case,[4] said Roehm. This put to an end one of the most talked about episodes in corporate America during
2006 and 2007.
Wal-Mart had hired Roehm, who was considered a highflier in the automotive industry, in early 2006 to shake up its marketing
communication. At Wal-Mart, Roehm led an advertising agency review process for the companys US$ 580 million account, among
other things. But ten months after she joined Wal-Mart, and barely a month after Draft FCB[5] (Draft) had been selected as the
companys ad agency, Roehm was fired from the company amidst rumors of her violating Wal-Marts ethics and gratuity policy. Sean
Womack (Womack), the vice president of communication architecture at Wal-Mart, who reported to Roehm, was also fired and the
contract with Draft was cancelled.

Shortly afterward on December 15, 2006 Roehm filed a civil suit in Oakland County, Michigan District, against Wal-Mart for
unlawfully terminating her employment, infringing compensation agreements, and also for slandering her in the press. She also claimed
that she was a victim of a culture clash at Wal-Mart and that her image as a change agent had led to her ouster. In its counterclaim
filed on January 18, 2007, Wal-Mart refuted Roehms claims and also accused her of violating its employment policies.[6] In the
counter-suit, Wal-Mart claimed: Corporate executives are held to an especially high standard compared with other employees and
for good reason. They make business decisions that affect the lives and well-being of employees and shareholders. Their actions shape
the future of the company, its image, and its dealings with the public, customers, and contractors.[7]

Roehm denied the accusations and responded by accusing Wal-Marts executives, including the CEO, of breaching the companys
ethics policies. As the incident turned uglier by the day, it became regular fodder for the media. It finally ended with Roehms decision
to drop her suit against the company. The company too decided not to pursue the case against her. We are satisfied with the resolution
and are ready to put this behind us and move on,[8] it said. However, analysts felt that this incident at the largest private employer in
the US, had given industry experts and HR professionals food for thought regarding various issues such as organization culture,
organizational change, office politics and organizational communication, managerial ethics, employee misconduct, employee surveillance,
etc.

BACKGROUND NOTE
Spurred by the thought of saving money for his customers and of earning margins through volume, Sam Walton (Walton) founded Wal-
Mart in 1962. It later became the archetype for leadership, success, and technology in the retail world. Walton established Wal-Marts
first discount city store in Arkansas, US, and within a span of five years, Wal-Mart was operating 24 retail stores reporting sales
revenues of US$12.6 million. After its incorporation, in 1970, the company was traded over the counter for the first time as a publicly-
held company. Growing phenomenally, by 1980, Wal-Mart revenues touched US $1.248 billion with 276 stores, 21,000 associates[9],
and a presence in eleven states of US.

During the year 1987, the retail behemoth celebrated its 25th anniversary. The same year, the companys Satellite Network[10] was
completed. Wal-Mart was the first company to introduce computers to link its store and warehouses in order to keep track of items and
reduce stock misappropriations. Waltons philosophy of cost-cutting enabled the company to develop into a retail giant in the US with
1,198 stores and sales figuring around US $15.9 billion with 200,000 associates. In 1988, Walton stepped down from the post of the
CEO and David Glass (Glass) took over his position. By the end of the 1980s, Wal-Mart had its retail stores, distribution centers, and
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CEO and David Glass (Glass) took over his position. By the end of the 1980s, Wal-Mart had its retail stores, distribution centers, and
super centers in almost 26 states of USA.

When Walton died in the year 1992, Wal-Mart witnessed a leadership turmoil. However, during the same decade, its international
operations started flourishing as it entered the South American and European markets. It was constantly leveraging on the super store
concepts like neighborhood and Sams Club. The sales revenue reported by the global retail giant by the end of 1999 was US$137
billion. In the year 2000, H. Lee Scott Jr. (Scott) was named CEO, replacing Glass.

In the early 21st century, the company was getting worldwide recognition such as being continuously present in the top order of the
Fortune magazines list of Most Admired Companies (Refer to Exhibit I for Wal-Marts key financials and to Exhibit II for its
Fortune 500 ranking in 2007). In the philanthropy and corporate citizenship circuit too, Wal-Mart made a mark for itself, winning many
accolades and honors. In the year 2005, its sales revenue figured at US$312.4 billion. There was no doubt that Wal-Mart had brought in
innovation and efficiency into the global retail scenario, compelling rivals to imitate it; however, it also drew a lot of criticism for
allegedly taking away business from local retailers. Its low-pricing strategy started faltering with customers complaining about low
quality products and making allegations of predatory pricing, conflicts with the labor union, etc. These forced the retailer to create a
marketing and PR campaign to revamp its image (Refer to Exhibit III for criticisms against Wal-Mart).

CHANGES AT WAL-MART?
During the year 2005, while Wal-Mart was struggling to increase its revenues, its earnings fell steeply, and stock prices were lower
than at any other time since 1999 (Refer to Exhibit VI for Wal-Mart Stocks prices). It was no longer the growth engine it had once
been. Therefore, for the first time in its history, Wal-Mart decided to move away from the low-price edict to explore other options as
well. Scott and his top management team studied with interest the approach of young marketers to brand building and edgy advertising.

In 2006, the management decided to freshen up the brand as its everyday low prices strategy apparently wasnt providing the same
results in the twenty-first century as it had in the earlier years. It was searching for a new marketing strategy as part of a turnaround.
They thought that the new strategy would move away from the everyday low prices, that primarily appealed to the less affluent, and
attract a wider audience among the middle class. To execute the strategy, Wal-Mart even came out with its own designer labels like
George. As part of the new emphasis on marketing, Wal-Mart hired a 36-year-old executive, Roehm, from DaimlerChrysler AG[11]
(Chrysler) to churn up its marketing department. Though the companys ad spending was huge US $580 million in measured media in
2004[12] and US $563 million on advertising during 2005[13] analysts felt that Wal-Mart did not provide a lot of emphasis on
advertising. The ads were used just to remind people about the low prices with smiley faces.

Therefore, through Spencer Stuart[14], Roehm was contacted in September 2005 to fill up a newly created position of senior vice
president, marketing communication. The company also brought five marketing executives from one of the leading consumer goods
company PepsiCo Inc. into the company in 2006.

ROEHM & HER WORK

Roehm was hired in January 2006 to fill the newly created position, and she joined the company officially on February 8, 2006. She was
asked to report to the chief marketing officer (CMO) John Fleming (Fleming). Roehm was primarily brought into the company to
review an advertisement agency selection process and sketch a contract of US$580 million with the agency selected. This new ad
agency would replace GSD&M Advertising[15] and Bernstein-Rein Advertising, Inc.[16], Wal-Marts previous agencies. When
Roehm joined Wal-Mart, the company spokesperson Kevin Thornton said, Julie is really going to be showcasing our marketing
message that we are relevant to a broad range of customers.[17] Roehm had 11 years of experience in the automobile industry, with
Chrysler and Ford Motor Company[18] (Ford), where she had made a name for herself for her edgy advertising.

Roehm was born in Wisconsin State of USA. She obtained a graduation degree in civil engineering from Purdue University in 1993.
She went to University of Chicagos business school and got a management degree in marketing. Her professional career began with
her joining Ford as the product planner in 1995. After four years, she created a successful buzz and word-of-mouth marketing
campaign for Fords new product Ford Focus Compact cars which brought her a promotion in the year 2000. Later, when her boss
moved to Chrysler, she followed him and was put in the marketing team to handle the Dodge brand. There, she promoted Dodge with
racy advertisements and also introduced the return-on-investment (ROI) technique for agencies to develop hard measures for an
advertisement campaign to succeed.

She experimented with videogames and the Internet to promote Chryslers Jeep brand. At Chrysler, she handled the sixth largest
advertising budget in the US.[19] Later in 2005, she shook up the advertisement business with her proverbial attack on the television
networks ad time purchases, which she believed should be sold like stocks on the Nasdaq Stock Market. In this connection, Joe
Tripodi, CEO of Allstate Corp.s[20], said, She woke everyone up. We werent going to see substantial change in the upfront until the
big-spending car companies and Procter & Gamble stood up. She was the first to stand up.[21] She was famous for her peppy,
attention-seeking tactics. Analysts said that she was about speedy cars, rock-and-roll, and sex and was a perfect fit for the automobile
industry. They felt that some of her ideas were radical and it was this in part that was responsible for her gaining a lot of attention in the
industry (Refer to Exhibit V for Julie Roehms accomplishments). Chryslers chief spokesperson Jason Vines, recalled, Were
probably the edgiest automaker in terms of the things we try. And the times Julie went over the edge have been well documented. But
we realized you dont know where the edge is unless you are willing to go over it once in a while.[22]

LIFE AT WAL-MART
The new position with Wal-Mart meant that Roehm had to relocate to Bentonville, Arkansas, from the suburban Detroit with her
husband and two kids. In her compensation package, Wal-Mart promised to pay a base salary of US$ 325,000, a signing bonus of US$
250,000, plus restricted stock of about US$300,000, stock options valued at approximately US$ 500,000, and an annual performance
bonus of up to US$ 400,000. It also promised to pay the mortgage amount for her Detroit home until the house was sold. While she
reported to Fleming, her two direct reports at the company were Terry Nannie and Sean Womack. Womack, working at the company
on a contract basis, was made a regular employee at Wal-Mart in early 2006 with the designation vice president of communications
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on a contract basis, was made a regular employee at Wal-Mart in early 2006 with the designation vice president of communications
architecture.

Roehm was a key decision maker in the team where she tried to de-emphasize the low prices with her edgy advertising tactics. With
Wal-Mart interested in getting its customers to cross shop in new segments, Roehm focused on fitness and home dcor, and, to
attract customers, rolled out ads in magazines such as Vogue[23] and Glamour[24]. Wal-Mart also started stocking upscale items such
as iPods, flat-panel TVs, sushi, and wine in its stores. Roehm was also behind the Metro 7 brand of fashionable apparel for urban
women. She described herself as a change agent in the company. On her first day at Wal-Marts office, she brought in paints and
brushes, and transformed the gloomy windowless offices and walls with a stylish, perky look using chartreuse and brown trim colors in
her office dcor.

One of Roehms first assignments was to arrange a shareholders meeting which she transformed into a Broadway extravaganza,
signing up a troupe of New York actors who sang songs such as The Day That I Met Sam, revering the companys late founder.
Some analysts saw this as an indication of the long-awaited cultural change at the company. But some of the longtime executives of
Wal-Mart did not particularly welcome the changes. She was also involved in the production of a TV ad for Wal-Mart which featured a
couple discussing an undergarment before their extended family. The ad was soon withdrawn after some viewers complained against it.
In the meantime she produced new ads that took a dig at Wal-Marts rivals, and also sponsored football on ESPN[25]. In addition to
this, Roehm said that she had also introduced advertising ROI techniques in the company and that this had led to significant cost
savings.

However, her biggest assignment was leading an advertising agency review process for Wal-Marts US $580 million account. During
summer, after just three months on the job, Roehm, Womack, and three other colleagues jetted around the country visiting almost 30
advertising agencies who were bidding to take Wal-Marts account. In October 2006, the team selected Draft.

WAL-MART FIRES ROEHM

In November 2006, news came out that Roehm and Womack had left the company. Roehm said, I was hired by Wal-Mart as a
change agent a little less than a year ago. One of my first orders of business was to help spearhead a comprehensive agency review.
Now that I have established the marketing communications organization and completed the agency review, its time to tackle my next
challenge. I have enjoyed my time at Wal-Mart and I wish my many friends and colleagues there much future success.[26] However,
it soon came out into the open that the company had fired the two executives. Rumors that the duo had been fired for violating Wal-
Marts ethics and gratuity policy started doing the rounds.

Meanwhile, Wal-Mart cancelled the agency review process which had been led by Roehm and started a new process which Draft was
barred from entering. This time around, the account was awarded to The Martin Agency[27] and MediaVest[28].[29] The cancellation
of Drafts contract just days after Roehm was fired led to a lot of speculation. One source said that during the agency review process,
a lot of gratuitous gifts had been exchanged between the parties and that as Wal-Mart had a stringent gratuity policy, Roehm had to
face the consequences. Some felt that an unrelated ad of Draft in Creativity magazine almost immediately after the Wal-Mart contract
had led to an uproar at Wal-Mart and called into question Roehms judgment in selecting the ad agency. In the ad, the agency touted its
achievements in winning the Cannes Lions Awards with the visual of two lions mating and the caption: Its good to be on top.[30]
Adam Hanft, CEO of Hanft Unlimited Inc.[31], said, I think Roehms firing is a window into the internal strife at Wal-Mart. It could
be that Wal-Mart wasnt particularly impressed with Draft in the first place. But Roehm was a leading advocate for Draft. So with her
departure, it became easier for Wal-Mart to lose Draft.[32]

There were also speculations that Roehm had been fired because she had allegedly had an inappropriate relationship with her
subordinate Womack, violating the companys strict ethics policy of fraternizing with subordinates. However, some refused to read too
much into the incident and said that Roehm was ousted as the company wasnt experiencing any increase in revenues. They pointed
out that the retailers sales were nearly flat and negative (-0.5%) in the months of October and November.[33],[34]

Roehm filed a civil suit on December 15, 2006, in Oakland County, Michigan District, against Wal-Mart for unlawful termination of her
employment, infringement of compensation agreements, and also for slandering her in the press. According to the court documents,
Roehm was seeking a compensation of US$ 1.5 million in actual damages, which covered severance pay, stock options, restricted
stock, and bonus. She also alleged that the company did not return personal belongings that were in her old office.[35] These included
her Media Exchange files; materials from presentations that she had worked on before joining Wal-Mart, and copies of her Outlook
files, including personal folders and her Contacts list. In the lawsuit, Roehm alleged that Wal-Mart had cited that she was not fulfilling
the expectations of an officer of the company, as the reason for firing her but claimed that the company had failed to produce any
relevant instances.[36]

In her interviews in the media, Roehm claimed that she was a victim of the culture clash at Wal-Mart and that her image as a change
agent had ultimately led to her ouster from the company. Later, she also asserted that though corporations knew that change was
essential, they usually refused to accept the desired change in much the same way as the human body sometimes rejected an organ
after an organ transplant. [37]

Roehm contended that the allegations against her were sparked by office politics.[38] She hinted at a lack of teamwork in the
marketing department and said that there was a general sense of animosity toward her. For instance, Stephen Quinn, who was in
charge of the consumer research and marketing strategy department and reported directly to Fleming, allegedly did not invite Roehm to
strategy meetings or return her phone calls. Perhaps some did not like following or taking the advice of a woman,[39] she said.
Roehm also described Wal-Marts culture as passive and aggressive and hostile to the outside world.

WAL-MARTS COUNTERCLAIM

In Wal-Marts counterclaim filed on January 18, 2007, the company refuted Roehms claims saying that the allegations set forth vague
and broad legal propositions that require no response.[40] Regarding her alleged misconduct, the lawsuit read, Instead of working
solely in WalMarts interest, (Roehm) frequently put her own first. She did not merely fail to avoid conflicts of interest, she invited
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solely in WalMarts interest, (Roehm) frequently put her own first. She did not merely fail to avoid conflicts of interest, she invited
them.[41]

It was mentioned in the documents that Roehm was not eligible for the executive-incentive stock options as she had not been with the
company all through the fiscal year that ended January 31, 2007. According to the company rules, the stock options were to be vested
over three to five years, provided Roehm stayed with Wal-Mart. Roehm was also denied recovery of her electronic records from her
Bentonville office, but the company said that she could pick up the step ladder and paint supplies she had left behind.[42] In line with
the statements referred to in the documents, the following were the major allegations based on which Roehm was ousted from Wal-
Mart:

During her stay at Wal-Mart, Roehm wasted Wal-Marts time and resources by getting involved in an inappropriate romantic
relationship with her subordinate Womack.

Roehm was involved in inappropriate transactions and relationships with an advertising agency which was to do business with
Wal-Mart.

Roehm used her stature and authority to accept gifts and gratuities and secure individual benefits from impending suppliers and
to seek employment prospects from a supplier.

When Roehm was asked about these incidents, she had lied and denied their occurrence.

Wal-Mart charged that at Roehms behest, Womacks employment relationship with Wal-Mart had been extended and he had become
a permanent employee directly reporting to her during his limited term at the company. Further, the company alleged that the
relationship between Roehm and Womack had grown more intimate and become undeniably inappropriate. The suit claimed that
Womacks wife Shelley Womack (Shelley) had learnt about Roehms and Womacks relationship, and as a result, the couple had
separated. Also the lawsuit alleged that Roehm displayed increasing and inappropriate favoritism toward Draft, one of the participants
in the advertising agency review process, particularly with Tony Weisman (Weisman) the then global growth officer of Draft. Roehm
and Womack, at the behest of Weisman, had extended their stay at various places during the review process, resulting in additional
costs to Wal-Mart, it charged. In the suit, it was mentioned that the two executives in question had infringed the well-known strict
corporate policies of Wal-Mart by accepting costly dinners and gifts and gratuities from Wal-Marts prospective clients.

The company also alleged that the two officers had been interested in advancing their own careers in Wal-Marts prospective client
agency Draft, and in return, they had provided advice and assistance to Draft regarding Wal-Marts agency review process. Following
the conduct and behavior of the two officers, Wal-Mart alleged that they had given conflicting accounts to the investigating officers of
the company about their relationship, about the agency review process, and also about their relationship with Draft.
Finally, the company accused Roehm of breaching two of her fiduciary duties - the duty of care and the duty of loyalty. The company
provided emails exchanged between Roehm and Womack as evidence of an alleged affair between them, and the emails exchanged
between the duo and the executives of Draft as evidence of Roehms allegedly unethical conduct. For instance, one email from Roehm
to Womack read: I think about us together all the time. Little moments like watching your face when you kiss me.[43] In another
email, Roehm apparently thanked a Draft employee for a case of Effen vodka, valued at nearly US$400.

The company prayed for the damages, costs, and expenses it had incurred on the court proceedings. Speaking about the counterclaim,
Wal-Marts spokesperson said that the company had no intention of bringing these gory details out into the open, but the combative
stance adopted by Roehm and her attack against the company had forced them to retaliate.

ROEHMS RESPONSE
According to an excerpt from a statement by Roehms lawyers, It is not a coincidence that in Wal-Marts proposed counterclaim,
Wal-Mart -- which apparently reads its employees e-mails -- has chosen only to excerpt small portions of some of those e-mails in its
filings. Wal-Mart deliberately chose to take the e-mails out of context, eliminating from its filing some of the substance of those e-mails,
and then editorializing about the few actually quoted words that it left behind, putting its own spin on them to create sensationalism.[44]

Roehm replied to Wal-Marts counterclaim on May 24, 2007. Following were her replies to the allegations leveled against her in the
lawsuit:

Throughout the course of her employment, her conduct and actions had far exceeded the standard of conduct and actions set by
other executive employees of Wal-Mart.

Under the agreement between her and Wal-Mart, she was supposed to be fairly compensated for executing her responsibilities
and foregoing continued employment with Chrysler, but Wal-Mart did not fulfill its obligations under that agreement, so she had not
been fairly compensated.

Roehm denied that she had violated any of her fiduciary duties or responsibilities to Wal-Mart.

She denied that she had engaged in any inappropriate dealings or relationships with any advertising agencies seeking to do
business with Wal-Mart.

She refuted the charge that she had used her position and authority to secure personal benefits from potential suppliers and also
said that she had not accepted and retained items for which she did not pay, nor had she solicited employment opportunities from a
supplier.

Roehm also denied that she had expended Wal-Marts time and resources in the course of an inappropriate romantic
relationship.
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relationship.

Lastly, she denied Wal-Marts allegation that she had lied about the charges against her.

She also rebuffed the allegations of her relationship with Womack and about her favoritism toward Draft. She claimed that Wal-Mart
had drafted a plan to fire her so that it can avoid difficult questions about its fundamental unwillingness to change its corporate culture
and modernize its marketing strategies.[45]

In addition to this, Roehm alleged that the Wal-Mart executives accepted gifts, gratuities, and considerations, which was against the
companys gratuity policy. Despite Wal-Marts assertion that it had strict policies prohibiting conflicts of interests, and misuse of Wal-
Marts resources, she insisted that its executives used them for personal advantage. She alleged that the CEO Scott too was guilty of it.
Roehm alleged that Scott had bought yachts and a large pink diamond at a preferential price from companies run by Irwin Jacobs
(Jacobs) who ran Jacobs Trading Co.[46].[47]

Reacting to Roehms allegations, one of the companys representatives said, This lawsuit is about Julie Roehm and her misconduct.
Her document shows how weak her case is. We will address these issues in court. Certainly, we dispute the allegations involving our
CEO and Irwin Jacobs.[48] In June 2007, Jacobs filed a defamation suit against Roehm.[49]

ROEHM BLINKS FIRST

In August 2007, Roehms lawsuit was dismissed from the Michigan court as the judge ruled that it should have been filed in Arkansas,
where Wal-Mart was headquartered.[50] Roehm had earlier submitted in court that she was a resident of Michigan and was only
temporarily staying at Arkansas and as such had filed the suit there. However, the court ruled that the lawsuit should have been filed in
Arkansas as Roehm had signed an agreement to the effect that any legal action relating to her employment would be brought in state or
federal courts in Benton County, Arkansas. Some analysts felt that Roehm had filed the lawsuit in her former state Michigan believing
that the employment laws were more favorable there.[51] Analysts also noted that Roehm would find it extremely difficult to carry the
fight forward considering that she was up against one of the most powerful companies in corporate America.

In November 2007, Roehm, who had since been working as an independent consultant with Womack, announced that she had dropped
her lawsuit against Wal-Mart, and admitted that certain statements which she had made earlier about Scotts relationship with Jacobs
had some inaccuracy.[52] She said that the litigation had drained her financially and hence, she had decided not to pursue the case.
Following this announcement, Jacobs too withdrew the defamation suit against her. Wal-Mart also decided not to pursue the case
against Roehm. Roehm, however, said that she had not received any money to drop the case.

DISCUSSION

This incident at Wal-Mart turned out to be the most talked about episode in corporate America during 2006 and 2007. With the
countrys largest private employer at the center of this controversy, analysts felt that the incident had provided ample food for thought
to industry experts. Analysts felt that the incident had set out issues which ought to be critically analyzed such as organizational culture,
organizational change, office politics, and organizational communication, managerial ethics, employee misconduct, and employee
surveillance.

Organizational culture and change

Analysts felt that Wal-Mart used the violation of its employment policies to get rid of Roehm, who they described as a cultural misfit at
the company.[53] Analysts felt that organizational culture was an important factor and both the company and Roehm had
underestimated this aspect. In this connection, Steven Gundersen, CEO of executive-search firm Gundersen Partners, said, Wal-Mart
is unique in its heritage and DNA. They do have a very distinctive culture; its strong and deliberate[54] and probably the fit might not
have been right. Some analysts felt that Wal-Mart should not have hired Roehm if they did not want to make any changes for it was
very evident from her past accomplishments what she stood for. Some sympathized with Roehm and said that it was not that
uncommon for companies to bring in change agents from outside, but to find a pretext to get rid of them when the going got tough.[55]
Some viewed this incident as evidence that there would not be any fundamental change in the company culture in the near future.
However, some analysts also blamed Roehm equally for the fiasco. They felt that Roehm should have foreseen the challenges that lay
ahead when she decided to join the company. Being a highflier who was on the growth curve of her career, one would have expected
her to at least research the company properly for cultural fit before she joined, they said.
Office politics and communication

Some analysts felt that office politics might have played a part in the fiasco. For instance, the rumors that surfaced regarding the
alleged affair between Roehm and Womack were largely a result of office politics, they said. Some felt that Roehms personality might
have led to animosity. Her high profile image might have been resented by other people at Wal-Mart. Analysts felt that Roehm should
not have created such a high profile for herself, as she was a part of a team, and that too in a company such as Wal-Mart which had a
conservative culture. She might have rubbed some executives the wrong way by being too outspoken and by challenging the status quo.
Her decision to skip the Friday meetings conducted in the presence of Scott too was a big mistake, according to analysts. But while she
continued making such mistakes, there was no one who told her what she should or shouldnt do. This showed a gap in the
organizational communication between Roehm and her immediate superiors. In addition to this, there also seemed to be problems of
delegation and authority in the company, they said. Some felt that she had been guilty of other political missteps such as not keeping
the senior management closely informed about the agency review process.[56] In fact, some analysts felt that some of the executives,
including Fleming, were looking for reasons to oust her.[57]
Managerial ethics, employee misconduct, and employee surveillance

Some analysts had criticized Roehm for conducting herself in a way that led to her being accused of unethical conduct. She should not
have accepted gifts and costly dinners from Draft (even if she had paid back the agency) when Wal-Marts employment policy was
clearly against this, they said. They felt that she should not have gone to the agencys Ad Forum new-business presentation during the
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clearly against this, they said. They felt that she should not have gone to the agencys Ad Forum new-business presentation during the
middle of a review. Regarding the allegations about office romance, they said that even if they were false, she shouldnt have acted in a
way in public that would set off such rumors.[58]

Industry experts believed that Wal-Mart followed a strict ethics policy concerning its executives and ruthlessly dealt with employee
misconduct. However, the incident also brought into the open Wal-Marts employee surveillance. Analysts felt that though employee
surveillance appeared to be legal, it was unethical. The company supervised phone conversations and personal mails of employees and
also employed a special team of 400 people in the security department to police the employees. Analysts felt that while official emails
were considered company property, personal emails did not belong to that category.[59] In this particular case, the company was
alleged to have obtained the personal emails from Womacks estranged wife Shelly by using pressure tactics. The company also forced
Draft to hand over emails between its executives and Roehm and Womack.

As such, industry experts observed that Wal-Mart, which used cutting-edge monitoring systems, had fired several employees which it
had found guilty of minor offences. But during the process of monitoring employees, it went beyond most companies in sleuthing them.
With regard to this, a former employee of Wal-Mart said that it used the sophisticated surveillance operation to spy not only on
employees but also on stockholders, critics, and the consulting firm McKinsey & Company.[60] However, the company contended that
this incident showed that Wal-Mart was determined to enforce its employment policies. Kenneth H. Senser, who headed Wal-Marts
security department, said, Its been very clear from these investigations that the company has taken a definitive stand The chips are
going to fall where they may. If its a senior vice president or cashier in the store, we are going to look at the allegations the same way
and not give somebody a pass.[61] He also added that the company or its security staff were not after the employees but only
wanted to ensure that the company was being run properly and ethically and the shareholders were benefited.

By and large, analysts felt that such incidents did not do anyone any good. For both Roehm and Wal-Mart, it had led to a lot of negative
publicity. This could hamper Roehms chances of getting a good job anywhere, some felt. Her brand value as a quality marketer might
have been dented by her early departure from Wal-Mart. But with the ugly allegations that followed, there might be no takers for her.
Roehm would have been better served if she had put the disappointment behind her like other high profile executives who had been
forced out for one reason or the other (the list was long with big names such as Lee Iacocca, Sandy Weill, Jamie Dimon, and John
Mack), and concentrated on being successful in their next career.[62]

On the other hand, Wal-Mart, which had for long faced allegations of unethical business practices (also employee-related), could surely
have done without this controversy. They felt that Wal-Mart did not have a very good image and its public battle with Roehm could only
strengthen that negative perception. They argued that if a company fostered an atmosphere of mistrust, not only would the employees
mistrust it but also the consumers.[63] As James Cox, a law professor at Duke University, said: Some of these things are better off
being put quietly to bed if youll excuse the pun. This kind of publicity does nobody any good even if you are right.[64]

Exhibit I

Wal-Marts Key Financials: 2003-2007

Percentage
Net Sales (in Cost of Sales (in Income from Continuing
Year Increase in Net
US$ million) US$ million) Operations (in US$ million)
Sales
2007 344,992 11.66 264,152 12,178
2006 308,945 09.75 237,649 11,408
2005 281,488 11.35 216,832 10,482
2004 252,792 11.61 195,922 9,096
2003 226,479 - 175,769 7,940
Adapted from Wal-Marts Annual Report 2007.

Exhibit II

The 2008 Fortune 500: Americas Top Ten Corporations by Revenue

Revenues Profits
Rank Company Industry
(US$ billion) (US$ billion)
1 Wal-Mart Stores* Retail 378.80 12.73
2 Exxon Mobil Oil & Natural Gas 372.82 40.61
3 Chevron Oil & Natural Gas 210.78 18.69
4 General Motors Automotive 182.35 -38.73
5 ConocoPhillips Oil & Natural Gas 178.56 11.89

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7/5/12
6 General Electric
7 Ford Motor
8 Citigroup
9 Bank of America
Corp.
10 AT&T
* Wal-Mart Stores was also ranked #1 in the years 2007, 2005, 2004, 2003, and 2002. In 2006, it was in the second position
behind Exxon Mobil.
Adapted from http://money.cnn.com/magazines/fortune/fortune500/2008/full_list/.
Issues
Anti-unionist
Employee discrimination
Employee surveillance
Poor working conditions
Low wages
Health insurance
Overseas labor concerns
Predatory pricing and The company was also accused of intentionally selling the
supplier issues
Adapted from various sources.
115.249.252.231/casestudies/mumbai/HROB108.asp
IBS Case Studies
Diversified 176.66 22.21
Automotive 172.49 -2.72
Financial Services 159.23 3.62
Financial Services 119.19 14.98
Telecom 118.93 11.95
Exhibit III
Criticisms against Wal-Mart
Description of Issues
Since the 1970s, Wal-Mart had been anti-unionist, taking the stand that
it was adhering to an open-door employee policy.
The company was charged with discrimination against women
employees in 2003.
A former employee of Wal-Mart contended that the retailer carried
out a large surveillance operation, sneaking on employees,
shareholders, critics, etc.
Wal-Mart was accused of forcing its workers to work off-the-clock,
denying over-time payments, child-labor laws infringements, and of
employing illegal immigrant workers.
The retail giant was charged with discouraging labor costs and of
paying lower wages to its workforce.
Critics alleged that employees were paid so little that they could not
afford health insurance, and if they could afford it, they preferred the
states health insurance program to Wal-Marts.
Critics accused Wal-Mart for its supervision of overseas operations,
where issues like poor working conditions, employing prison labor, low
wages, etc., were allegedly prevalent.
merchandize at low costs, driving competitors away from the market.
It was also alleged that it used its scale to squeeze the margins of its
suppliers.
Exhibit IV
Wal-Mart Stocks Performance
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7/5/12 IBS Case Studies

Source: www.bigcharts.com.

Exhibit V

Julie Roehms Achievements

Year List of Awards and Recognitions

2004 Marketing All-Star for 2004 by Automotive News
Automotive Marketer of the Year by BrandWeek
Among Working Mothers Top 25 Women of 2004
Initiated in the AAF Advertising Hall of Achievement for outstanding
performance in the field of marketing and advertising to executives under 40 years
old.
2005 Inducted into the Automotive Hall of Fame and was noted as one of the Top 100
Most Influential Women in the Automotive Industry.
Under Julie Roehms leadership, Chrysler was named Interactive Marketer of the
Year by Ad Age.
2006 Named as runner-up Corporate Media Executive of the Year by the Delaney
Report.
Awarded Distinguished Alumni award by University of Chicagos Graduate
School of Business.
Source: Julie Roehms Bio, www.imediaconnection.com, June 25, 2007.

Suggested Readings and References

1. Enid Burns, Wal-Mart Taps Online Advocate Julie Roehm, www.clickz.com,
January 19, 2006
2. Wal-Mart Appoints Julie Roehm, 95, as Senior Vice President, www.chicagogsb.edu, February 28, 2006.
3. David Kiley, Walmarts Roehm Up to Her Old Publicity Marketing Ways, www.businessweek.com, November 17,
2006.
4. Exec Who Led Plan to Retool Wal-Mart Out, www.msnbc.msn.com, December 5, 2006.
5. Sandra OLoughlin, Roehm Exits Wal-Mart, www.adweek.com, December 5, 2006.
6. Sandra OLoughlin, Roehm, Womack Exit Wal-Mart, www.mediaweek.com, December 5, 2006.
7. Jim Burt, Wal-Mart Discontinues Roehm, www.thecarconnection.com, December 6, 2006.
8. Tom Siebert and Sarah Mahoney, No Smiley Face for Roehm: Wal-Mart Marketing Exec Axed,
www.publications.mediapost.com, December 6, 2006.
9. Michael Barbaro and Stuart Elliott, Wal-Mart Fires Marketing Star and Ad Agency, www.nytimes.com, December 8,
2006.
10. Parija B. Kavilanz, Ad-agency Flap Wont Hurt Wal-Marts Holidays,www.money. cnn.com, December 8, 2006.
11. Sarah Gilbert, Julie Roehm Too Sexy for Wal-Mart; Proves Bentonville Still Honors Sams Values,
www.bloggingstocks.com, December 8, 2006.
12. McCain, Walmart Babe Canned by Good Old Boys? www.rightpundits.com, December 10, 2006.
13. Gary McWilliams, Suzanne Vranica, Neal E. Boudette and Russ Fagaly, How a Highflier in Marketing Fell at Wal-Mart,
Wall Street Journal, www.walmartwatch.com,

December 11, 2006.

14. Liz Handlin, What Can We Learn from the Julie Roehm/Wal Mart Split? www.ultimate-resumes.blogspot.com,
115.249.252.231/casestudies/mumbai/HROB108.asp 9/12
7/5/12 IBS Case Studies
14. Liz Handlin, What Can We Learn from the Julie Roehm/Wal Mart Split? www.ultimate-resumes.blogspot.com,
December 11, 2006.
15. Marc Brownstein, Echoes of the Wal-Mart/Roehm Account Review Debacle, www.adage.com, December 11, 2006.
16. A Yucky Way To Go - Julie Roehm, Wal-Mart, www.jibberjobber.com/blog, December 13, 2006
17. David Kiley, An Open Letter to Walmart, Julie Roehm and Draft/FCB, www.businessweek.com, December 14, 2006.
18. Holly M. Sanders, After Scandal, Wal-Mart Hires Two Ad Firms, www.nypost.com, January 13, 2007.
19. Fired Exec Says Wal-Mart Couldnt Take Change, www.wakeupwalmart.com, January 24, 2007.
20. Nicole Maestri, Roehm Says Wal-Mart was Not Ready for Change, www.reuters.com, January 24, 2007.
21. Betsy Spethmann, Julie Roehm Sues Wal-Mart, www.promomagazine.com, January 26, 2007.
22. Sandra OLoughlin, Wal-Mart Denies Roehm Allegations, www.allbusiness.com, January 26, 2007.
23. Aaron Baar, Roehm Suit Keeps Wal-Mart Saga Alive, www.allbusiness.com,
January 29, 2007.
24. Marcus Baram, The Fired Wal-Mart Exec and the Friendly E-mail, www.abcnews.go.com, February 6, 2007.
25. Robert Berner, My Year at Wal-Mart, www.businessweek.com, February 12, 2007.
26. Rachel Sklar, Roehm & Womack: Wal-Mart Drama, But the Conference Must Go on, www.huffingtonpost.com,
March 20, 2007.
27. Wal-Mart vs. Julie Roehm: Battle Grows More Sordid, www.autoobserver.com, March 20, 2007.
28. Kim Mickelsen, The Wal-Mart/Roehm Beat goes onand onand on, www.marketinginsideout.com, March 21, 2007.
29. Kristina Cowan, Julie Roehm: Did the Walmart Scandal Shatter Her Career? www.blogs.payscale.com, March 26,
2007.
30. Ex-exec Slams Wal-Mart for Smear Campaign, www.money.cnn.com, March 28, 2007.
31. David Vinjamuri, Wal-Mart Turns Small Headache into a Big Problem, www.thirdwayblog.com, March 29, 2007.
32. Michael Barbaro, Bare-Knuckle Enforcement for Wal-Marts Rules, www.nytimes. com, March 29, 2007.
33. Dominic Rushe, Sex Dispute Exposes Wal-Marts Snoopers, www.business. timesonline.co.uk, April 1, 2007.
34. Inside Wal-Marts Threat Research Operation, www.msn.com, April 5, 2007.
35. Wal-Marts Paranoid Spying Operation,www.soxfirst.com, April 13, 2007.
36. Devin Leonard, How Wal-Mart Got the Love e-mail, www.money.cnn.com, April 17, 2007.
37. Accusations Fly in Wal-Mart Case, www.bbc.co.uk, May 22, 2007.
38. Aaron Baar, Roehm: Wal-Mart Execs Took Gifts, www.adweek.com, May 25, 2007.
39. Lauren Coleman-Locher and Margaret Cronin Fisk, Ex-Wal-Mart Chief Accuses Executives of Taking Gifts,
www.bloomberg.com, May 27, 2007.
40. Zac Bissonnette, Wal-Mart Should Bring Julie Roehm Back, www.bloggingstocks. com, May 27, 2007.
41. Hotlines: Roehm Responds to Wal-Mart Claims in New Court Filing,
42. www.entertainment_industry.fresh-hot-news.net, May 30, 2007.
43. Wal-Mart Supplier Files Defamation Case, www.reuters.com, June 4, 2007.
44. Beauty and the Beast, www.starkmanassociates.com, July 10, 2007.
45. Anita French, Roehm Hires Big Gun in Fighting Wal-Mart, www.nwaonline.net,
June 15, 2007
46. Julie Roehms Bio, www.imediaconnection.com, June 25, 2007.
47. Gina Keating, Michigan Judge Dismisses Roehms Wal-Mart Suit, August 22, 2007, www.reuters.com.
48. Jeffrey V. Mehalic, Wrongful Termination Lawsuit Reveals Wal-Marts Surveillance Practices,
www.wvbusinesslitigationblog.com, September 9, 2007.
49. Chuck Bartels, Wal-Mart Ad Executive Drops Lawsuit, www.nytimes.com,
November 5, 2007.
50. Peter Lattman, The Decline and Fall of Roehms Litigation against Wal-Mart, www.blogs.wsj.com/law, November 5,
2007.
51. Noreen OLeary, Roehm, Wal-Mart End Legal War, www.adweek.com, November 5, 2007.
52. Statements of Roehm, Jacobs in Wal-Mart Employment Case, www.online.wsj.com, November 5, 2007.
53. Steve Painter, Ex-executive gives up Wal-Mart Lawsuit, www.nwanews.com, November 6, 2007.
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7/5/12 IBS Case Studies
53. Steve Painter, Ex-executive gives up Wal-Mart Lawsuit, www.nwanews.com, November 6, 2007.
54. Ann Zimmerman and Gary McWilliams, Inside Wal-Marts Threat Research Operation, www.wakeupwalmart.com.
55. Kevin Brass, Behind the Curtain: Wal-Marts Change Agent, www.metrostew.com, October 2007.
56. The Wal-Mart Spy Saga and Lesser Tales, www.someoneinusa.blogspot.com.
57. Youre Fired! Wal-Mart vs. Julie Roehm, www.fusionbrands.blogs.com.
58. www.bigcharts.com
59. www.en.wikipedia.org.
60. www.thewritingonthewal.net
61. www.walmart.com
62. www.walmartfacts.com
63. http://money.cnn.com/magazines/fortune/fortune500/2008/full_list/

[1] Michael Barbaro and Stuart Elliott, Wal-Mart Fires Marketing Star and Ad Agency, www.nytimes.com, December 8, 2006.
[2] Rachel Sklar, Roehm & Womack: Wal-Mart Drama, but the Conference Must Go on, www.huffingtonpost.com, March 20, 2007.
[3] My Year at Wal-Mart, www.businessweek.com, February 12, 2007
[4] Chuck Bartels, Wal-Mart Ad Executive Drops Lawsuit, www.businessweek.com, November 5, 2007.
[5] Draft FCB is a global advertising agency network owned by one of the leading marketing communication and marketing services firm, Interpublic
Group.
[6] Betsy Spethmann, Julie Roehm Sues Wal-Mart, www.promomagazine.com, January 26, 2007.
[7] Dominic Rushe, Sex Dispute Exposes Wal-Marts Snoopers, www.business.timesonline.co.uk, April 1, 2007.
[8] Steve Painter, Ex-executive Gives up Wal-Mart Lawsuit, www.nwanews.com, November 6, 2007.
[9] Wal-Mart refers to its employees as associates.
[10] Satellite Network is the largest private satellite communication system in the US which linked all operating units of company and General Office
with 2-way voice, data and one-way video communication
[11] DaimlerChrysler AG (now known as Daimler AG), headquartered in Stuttgart, Germany, is a German car corporation and one of the worlds
largest car manufacturers. In 2007, Daimler sold an 80 percent stake in Chrysler Holding to a private equity investment firm, Cerberus Capital
Management. The US automotive unit now operated as Chrysler LLC.
[12] Wal-Mart Appoints Julie Roehm, 95, as Senior Vice President, www.chicagogsb.edu/news,
February 28, 2006.
[13] Sandra OLoughlin, Roehm, Womack Exit Wal-Mart, www.mediaweek.com, December 5, 2006.
[14] Spencer Stuart, based in USA, is one of the worlds leading executive search consulting firms with clients ranging across industries, large scale
companies, start-ups, and countries.
[15] GSD&M Advertising, presently called as GSD&M Idea City, is an advertising agency located in Austin, Texas, USA.
[16] Bernstein-Rein Advertising, Inc. is an advertising agency located in Kansas City, Missouri, USA.
[17] Enid Burns, Wal-Mart Taps Online Advocate Roehm, www.clickz.com, January 19, 2006.
[18] Ford Motor Company, headquartered in Dearborn, Michigan, USA, is the worlds third largest automobile company by worldwide vehicle sales.
[19] Wal-Mart Appoints Julie Roehm, 95, as Senior Vice President, www.chicagogsb.edu/news,
February 28, 2006.
[20] Allstate Corp. is the largest publicly held personal lines insurer in the US which sells auto insurance, home insurance (in certain localities), life
insurance, umbrella insurance, and commercial insurance to name a few.
[21] Gary McWilliams, Suzanne Vranica, Neal E. Boudette and Russ Fagaly, How a Highflier in Marketing Fell at Wal-Mart,
www.walmartwatch.com, December 11, 2006.
[22] Robert Berner, My Year at Wal-Mart, www.businessweek.com, February 12, 2007.
[23] Vogue is a fashion and lifestyle magazine published and circulated in several countries by Cond Nast Publications.
[24] Glamour is a womens magazine published monthly by Cond Nast Publications in the US. It was originally called Glamour of Hollywood.
[25] Entertainment and Sports Programming Network (ESPN), is an American cable television network dedicated to broadcasting and producing
sports-related programming.
[26] Sandra OLoughlin, Roehm Exits Wal-Mart, www.adweek.com, December 5, 2006.
[27] The Martin Agency is an American advertising agency based in Richmond, Virginia, USA.
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[28] MediaVest is a division of Starcom MediaVest Group (SMG), which offers brand-building and business solutions to its clients.
[29] Holly M. Sanders After Scandal, Wal-Mart Hires Two Ad Firms, www.nypost.com, January 13, 2007.
[30] Tom Siebert and Sarah Mahoney, No Smiley Face for Roehm: Wal-Mart Marketing Exec Axed, www.publications.mediapost.com, December 6,
2006.
[31] Hanft Unlimited Inc., headquartered in New York City, USA, is a branding and advertising company.
[32] Parija B. Kavilanz, Ad-agency Flap Wont Hurt Wal-Marts Holidays, www.money.cnn.com, December 8 2006.
[33] Exec Who Led Plan to Retool Wal-Mart out, www.msnbc.msn.com, December 5, 2006.
[34] Sandra OLoughlin, Roehm Exits Wal-Mart, www.adweek.com, December 5, 2006.
[35] Marcus Baram, The Fired Wal-Mart Exec and the Friendly E-mail, www.abcnews.go.com,
February 6, 2007.
[36] Betsy Spethmann, Julie Roehm Sues Wal-Mart, www.promomagazine.com, January 26, 2007.

[37] Nicole Maestri, Roehm Says Wal-Mart was Not Ready for Change, www.reuters.com, January 24, 2007.
[38] Marcus Baram, The Fired Wal-Mart Exec and the Friendly E-mail, www.abcnews.go.com,
February 6, 2007.
[39] Dominic Rushe, Sex Dispute Exposes Wal-Marts Snoopers, www.business.timesonline.co.uk, April 1, 2007.
[40] Betsy Spethmann, Julie Roehm Sues Wal-Mart, www.promomagazine.com, January 26, 2007.
[41] Kristina Cowan, Julie Roehm: Did the Walmart Scandal Shatter Her Career? www.blogs.payscale.com, March 26, 2007.
[42] Aaron Baar, Roehm Suit Keeps Wal-Mart Saga Alive, www.allbusiness.com, January 29, 2007.
[43] Kevin Brass, Behind the Curtain: Wal-Marts Change Agent, www.metrostew.com, October 2007.
[44] Rachel Sklar, Roehm & Womack: Wal-Mart Drama, but the Conference Must Go on, www.huffingtonpost.com, March 20, 2007.
[45] Aaron Baar, Roehm: Wal-Mart Execs Took Gifts, www.commercialalert.org, May 25, 2007.
[46] Jacobs Trading Co., based in Plymouth, Minnesota, USA, is a firm that buys and sells returned and leftover merchandise from Wal-Mart.
[47] Lauren Coleman-Locher and Margaret Cronin Fisk, Ex-Wal-Mart Chief Accuses Executives of Taking Gifts, www.bloomberg.com, May 27,
2007.
[48] Aaron Baar, Roehm: Wal-Mart Execs Took Gifts, www.adweek.com, May 25, 2007.
[49] Wal-Mart Supplier Files Defamation Case, www.reuters.com, June 4, 2007.
[50] Gina Keating, Michigan Judge Dismisses Roehms Wal-Mart Suit, www.reuters.com, Aug 22, 2007.
[51] Noreen OLeary, Roehm, Wal-Mart End Legal War, www.adweek.com, November 5, 2007.
[52] Chuck Bartels, Wal-Mart Ad Executive Drops Lawsuit, www.nytimes.com, November 5, 2007.
[53] David Kiley, An Open Letter to Walmart, Julie Roehm, and Draft/FCB, www.businessweek.com, December 14, 2006.
[54] Tom Siebert and Sarah Mahoney, No Smiley Face for Roehm: Wal-Mart Marketing Exec Axed, www.publications.mediapost.com, December 6,
2006.
[55] Liz Handlin, What Can We Learn from the Julie Roehm/Wal Mart Split? www.ultimate-resumes.blogspot.com, December 11, 2006.
[56] Tom Siebert and Sarah Mahoney, No Smiley Face for Roehm: Wal-Mart Marketing Exec Axed, www.publications.mediapost.com, December 6,
2006.
[57] Jim Burt, Wal-Mart Discontinues Roehm, www.thecarconnection.com, December 6, 2006.
[58] David Kiley, An Open Letter to Walmart, Julie Roehm and Draft/FCB, www.businessweek.com, December 14, 2006.
[59] Marcus Baram, The Fired Wal-Mart Exec and the Friendly E-mail, www.abcnews.go.com, February 6, 2007.
[60] Inside Wal-Marts Threat Research Operation, www.msn.com, The Wall Street Journal, April 5, 2007.
[61] Michael Barbaro, Bare-Knuckle Enforcement for Wal-Marts Rules, www.nytimes.com, March 29, 2007.
[62] Beauty and the Beast, www.starkmanassociates.com, July 10, 2007.
[63] David Vinjamuri, Wal-Mart Turns Small Headache into a Big Problem, www.thirdwayblog.com, March 29, 2007.
[64] Dominic Rushe, Sex Dispute Exposes Wal-Marts Snoopers, www.business.timesonline.co.uk, April 1, 2007.

Exit

115.249.252.231/casestudies/mumbai/HROB108.asp 12/12
Note: the following case is copyrighted and may be copied and used only by current
users and owners of the textbook, BUSINESS ETHICS: CONCEPTS AND CASES
by Manuel Velasquez.

CASES FOR DISCUSSION

Philip Morriss Troubles

Financially speaking, 1995 was an outstanding year for Philip Morris, a combination tobacco, food,
and beer company. Total company profits before taxes increased by 15 percent over the previous year; in
the tobacco segment of the company worldwide profits rose by 16 percent; profits in its food segment
increased by 7 percent and the beer segments profits increased by 8 percent.1 Yet all was not well. As of
the end of 1995 there were 125 lawsuits pending against the company for recovery of damages to health
alleged to have been caused by the companys tobacco products. Its beer segment was under attack by
several consumer groups claiming that alcoholic beverages imposed heavy costs on society including
numerous deaths attributable to drunk driving. And activists were accusing the company of laundering the
dirty money it had made in the cigarette business by using it to buy up clean food businesses, in effect
protecting these funds from any potential liability that might strike its tobacco business.
Philip Morris, with 1995 revenues of $53 billion, profits of $5.45 billion, and 151,000 employees, is
both the nations largest cigarette manufacturer and its largest food company. Philip Morris was already
the largest tobacco company in the United States by the late 1960s when virtually all of its revenues were
derived from tobacco sales. Then, accelerating a long-term strategy of diversifying away from the tobacco
industry, (a strategy that would become common in the tobacco industry) Philip Morris used the huge
cash flows streaming from its tobacco businesses to acquire Miller Brewing Company in 1970. In 1985 i t
bought General Foods for $5.6 billion, setting a record for the biggest nonoil merger in history. Three
years later Philip Morris paid $12.9 billion for Kraft, then the largest food company in the United States.
In 1990 the company acquired Suchard, a Swiss coffee and confectionery company, for $3.8
billionmaking it the worlds largest food companyand in 1993 it purchased Freia Marabou, a
Scandinavian candy company, for $1.3 billion. Among the companys well known cigarette brands are
Benson & Hedges, Marlboro, and Virginia Slims. Its beer brands include Miller Genuine Draft, High Life,
Lowenbrau, Miller Lite, and Milwaukees Best. Food brands include Post Cereals, Kraft Jell-O, Birds Eye,
Maxwell House, Velveeta, and Oscar Mayer. In 1995 the companys tobacco operations accounted for 50
percent of the companys revenues and 63 percent of its profits while food products accounted for 42
percent of revenues and 32 percent of profits. Beer brewing provided 7 percent of revenues and 4 percent of
profits. The companys financial and real estate ventures accounted for the remaining 1 percent of revenues
and profits.2
Philip Morriss Marlboro brand, the worlds best-selling cigarette, held 31 percent of the U.S.
market in 1995 and the companys other tobacco products held an additional 16 percent of the U.S. market,
for a total U.S. market share of 47 percent. The company had captured 12 percent of the market outside the
United States and in some regions such as Germany, Western Europe, and Latin America, its market share
was well over 20 percent. Total world sales of Marlboro cigarettes were estimated to be well over $10
billion. International sales accounted for 50 percent of the companys total revenues and 40 percent of its
operating profits in 1995.
The domestic beer market had been in the doldrums since going into decline in the early 1980s. In
spite of a continuing overall contraction in the market from 180 million barrels in 1994, to 171 million in
1995, however, Philip Morris Miller had managed to increase its market share, doing so at the expense of
Coors, Stroh, Heilman, and some smaller regional brewers.
 Hurt by the recession of the early 1990s, the food industry had also not been doing well. 3
Nevertheless, by reducing its workforce, implementing cost reductions, and pushing aggressively into new
international markets, Philip Morris had managed to raise its food income per employee by 43 percent
between 1991 and 1995, raise food income margins to 15.3 percent in 1995, and increase 1995 food income
by 7.5 percent.
In 1991 Michael Miles became CEO of the company, the first nonsmoker to run the company. Under
Miles the company continued to increase its share of the cigarette market in spite of a decline both in the
number of cigarettes sold each year and in the number of Americans smoking. The average adult smoker in
1994 had consumed 2470 cigarettes, down 26 percent from 3370 in 1985. In 1995 U.S. consumers smoked
1.7 percent fewer cigarettes than in 1994. Nevertheless, although U.S. consumption of cigarettes had
declined since the early 1960s, Philip Morris continued to increase both its sales and its market share. By
1994 Philip Morris held 45 percent of the market, followed by R. J. Reynolds with 27 percent, Brown &
Williamson with 11 percent, Lorillard with 7 percent, American with 2 percent, and Liggett with 2
percent. Competition in the contracting industry was now extremely intense.
Competition, however, was not Philip Morris main headache. In 1995, the Federal Drug
Administration (FDA) had intensified its attacks on the industry with the announcement that 400,000
Americans died of causes related to smoking each year, more than 1000 deaths a day. An average of five and
a half minutes of life are lost for each cigarette smoked. While smoking among adult men had been
declining, smoking among children was rising rapidly. So many adult women had taken up smoking that
lung cancer now killed more women than breast cancer. The FDA claimed that smoking illnesses
accounted for 11 percent of the aggregate costs of all illnesses in the United States. For men between 45
and 64, 25 percent of disability days were associated with cigarette smoking. Indirect economic losses
from reduced productivity and lost earnings were estimated at $37 billion per year, and total economic
losses at $65 billion a year.
Since the 1950s the tobacco industry had been buffeted by studies linking smoking with cancer. Large
scale studies published in medical research journals in the early 1950s associated repeated cigarette use
with high rates of lung cancer. In 1954 the widely read magazine Readers Digest published a popular
article summarizing the medical research that linked smoking and cancer intensifying the concern of the
public. In spite of bitter protests from the industry, the Surgeon General of the United States in 1964
released its own report linking cigarette smoking to cancer. In 1966 Congress required health warnings t o
be placed on all cigarette packages, a law that it amended in 1969 to require sterner warnings and again in
1985 to require rotating health warnings indicating the relationship between cigarette smoking and lung
cancer, heart disease, emphysema, fetal injury, and premature births. A new concern had surfaced in 1986
when the Surgeon General of the United States and the National Academy of Sciences reported that
nonsmokers were at increased risk of lung cancer and respiratory illness when exposed to environments
containing second-hand smoke.
In 1994 the Food and Drug Administration turned its attention to the addictive nature of cigarettes.
The Surgeon General had already issued a report in 1988 summarizing research that nicotine was addictive.
The FDA now announced it was prepared to recommend that because of their addictive nature,
cigarettesa nicotine delivery deviceshould be regulated like a drug under the jurisdiction of the
FDA.
In 1994 Congress held hearings on the question whether the nicotine in cigarettes is an addictive
drug and whether the cigarette industry was manipulating the nicotine levels of cigarettes. The executives
of all the tobacco companies were called to testify. At the hearings, William Campbell, head of Philip
Morriss tobacco unit, in a sworn statement, denied that nicotine was addictive and said that the company
does not manipulate nor independently control the level of nicotine in our cigarettes. ... [N]icotine
contributes to the taste of cigarettes and the pleasures of smoking. The presence of nicotine, however, does
not make cigarettes a drug or smoking an addiction.4
 On April 1, 1994, Congressman Henry A. Waxman announced that a committee he headed had found
evidence that Philip Morris had suppressed a 1983 study by Dr. Victor DeNoble that had produced
definitive evidence of the addictive qualities of tobacco in rats, and that Philip Morris had, therefore,
known since that time that tobacco was addictive. Waxman stated that the discovery goes to the basic
question that was raised in our hearing: Have the American people been manipulated into thinking that
smoking is a matter of choice, or in fact is it a choice denied them because of the possible intentional
manipulation of nicotine levels to keep them addicted? 5 Waxmans findings were corroborated when,
on March 19, 1996, the FDA released sworn statements from two Philip Morris research scientists and a
Philip Morris plant manager contradicting Campbells testimony.6 Jerome Rivers, the plant manager,
outlined a sophisticated manufacturing process in which the levels of nicotine in tobacco were carefully
monitored and during which tobacco whose nicotine levels were out of spec was pulled out and
reprocessed. Ian Uydess, one of the research scientists testified that Nicotine levels were routinely
targeted and adjusted by Philip Morris in its various products at least in part and that Dr. DeNobles
research on nicotine analogues was known in the company where there was a growing concern among
Philip Morris management about the use of the term addictive and where internal reports were
increasingly scrutinized by Philip Morris management. Dr. W. Farone, former director of the companys
applied research also testified to the companys sequestering of much good science. Earlier an internal
Philip Morris document written about 1992 by a Philip Morris employee had surfaced stating that people
smoked mainly to deliver nicotine into their bodies and comparing nicotine to cocaine, atropine and
morphine in its effects on the brain.7 Jeffrey Wigand, a former manager for Brown & Williamson, one of
Philip Morriss main competitors, had testified on November 29, 1995 that Brown and Williamsons
CEO had also lied to Congress during the hearings when he had said I believe nicotine is not addictive.8
The U.S. government now initiated a criminal investigation of U.S. tobacco industry executives t o
determine whether they had lied at the hearings and fraudulently concealed from the public the addictive
nature of smoking nicotine products. Several class action suits were filed against Philip Morris alleging
damages to health arising from the companys failure to warn of the addictive nature of smoking. The
Food and Drug Administration announced in August 1995 that it was considering sweeping new rules t o
regulate the advertising and sale of tobacco particularly to minors.
In addition, several states and two insurance companies had filed new suits seeking reimbursement
of the medical costs alleged to have resulted from caring for citizens who had used the products of the
tobacco companies. Philip Morris, together with the other cigarette companies, had responded that states
were already compensated for smokers health costs through heavy excise taxes, that smoking imposes
few costs on government and may save states money when sick people die early, and that once tobaccos
contributions to the economy are factored in tobacco makes a positive economic contribution to a states
economy. A report released in late January 1996 by the Centers for Disease Control, however, calculated
that the direct medical cost of smoking totals $50 billion a year, more than twice the $21 billion in state
revenues from tobacco growing and manufacturing.9 On the other hand, an earlier 1993 report by the
Office of Technology Assessment claimed that in 1993 smokers paid $13.3 billion in excise and sales taxes
but cost governments only $8.9 billion in health-care expenses.
As of December 31, 1995, over 125 cases were pending against the company seeking compensatory
and, in some cases, punitive damages for cancer and other health effects claimed to have resulted from
cigarette smoking or exposure to cigarette smoking. While previously sued more than 300 times in court,
cigarette companies had never lost a case. Among the defenses used in litigation by Philip Morris, was the
argument that complying with the 1965 Federal Cigarette Labeling and Advertising Act, particularly as
amended in 1969, protected the company from claims that it failed to warn smokers that cigarettes were
dangerous, a defense that five federal courts of appeal had upheld.10
 Philip Morris also argued that the studies linking smoking to lung cancer were not conclusive. In
particular, the company claimed that since not all smokers got lung cancer, there was no demonstrable
cause-effect relationship between smoking and lung cancer. The company also argued that smoking was not
addictive and, consequently, smokers were free to quit smoking any time they wanted. Smoking, the
company claimed, was a matter of personal choice and all individuals should be left free to exercise their
personal right to smoke when, where, and as much as they choose. Moreover, even if cigarette smoking
were dangerous, the company claimed, the warnings on cigarettes required by the federal government gave
smokers a knowledge of the risks associated with smoking and so it could not be argued that they did not
willingly assume those risks.
While escalating health concerns were creating a declining market in the United States, citizens of
other countries who were not as educated about the risks of smoking were a rising opportunity. The
governments of many countries, especially in the Third World, did not spend much money on antismoking
campaigns, and many were reluctant to give up the tax revenues associated with cigarettes. As U.S.
markets declined, therefore, tobacco companies, particularly Philip Morris, moved into foreign markets,
especially into Third World and, more recently, into East European markets. The company was one of the
first American companies to sell its cigarettes in China, and had expanded vigorously into Eastern Europe
after the collapse of the Soviet Union in 1990. While United States per capita consumption of cigarettes
declined by 25 percent between 1985 and 1994, U.S. tobacco exports rose by 367 percent, from 64 billion
to 235 billion cigarettes. Much of the rise in exports was the result of U.S. government pressures that had
forced the dropping of import barriers in Turkey, Japan, Taiwan, South Korea, Thailand, and the members
of the former Soviet Union, all countries where American-blend cigarettes, especially Philip Morriss
Marlboro brand, were becoming highly popular. Turkey was considered a key location since it borders the
former Soviet Union and is a stepping stone to Asia. Moreover, Turks are heavy smokers and Turkish
cigarette consumption was expected to grow 3 to 9 percent annually.
Philip Morriss beer business was also under pressure. Growing awareness of the large social costs
associated with alcohol consumption and drunk driving had been spurring lawmakers into passing a
variety of alcohol regulations. The Alcoholic Beverage Labeling Act of 1988 already required a l l
alcoholic beverages to carry warnings associating the consumption of alcohol with health problems, the
risk of birth defects, and a lowered ability to drive a car or operate machinery.
Even the companys forays into the food industry were being assailed by critics. Critics pointed out
that Philip Morris was using the revenues being generated by its tobacco units to buy food companies. The
company, critics alleged was in effect laundering its tainted cigarette money by transferring it into
the food industry where it would be sheltered from the litigation threatening its cigarette division.

QUESTIONS

1. Discuss the utilitarian, rights, justice, and care issues that are raised by Philip Morriss activities in the
tobacco, beer, and food industries.
2. Both the tobacco and the beer industries have been characterized as sin industries. Comment on the extent
to which virtue theory she ds light on the companys activities in these industries.
3. What, in your judgment, would be a morally appropriate course of action for the government agencies involved
in the case?

NOTES

1. Philip Morris, Annual Report, 1995.

2. Philip Morris Companies, Inc., Securities and Exchange Commission Form
10-K, 1991, p. 1.
3. U.S. Department of Commerce, U.S. Industrial Outlook , 1994, (Washington: Government Printing
Office, 1994), pp. 3411 to 3421.
4. Alix M. Freedman, Philip Morris Memo Likens Nicotine to Such Drugs as Cocaine, Morphine, W a l l
Street Journal, 8 December 1995.
5. Philip J. Hilts, Philip Morris Blocked 83 Paper Showing Tobacco Is Addictive, Panel Finds, New York
Times, 1 April 1994, p. A21.
6. Tim Friend, New Heat on Tobacco Firm, USA Today, 19 March 1996, p. A1; Tobacco Industry Under
Fire, USA Today, 19 March 1996, p. B2; Dough Henry, Whistleblowers Wreak Havoc, USA Today , 19
March 1996, p. B2.
7. I b i d .
8. Alix Freedman, Cigarette Defector Says CEO Lied to Congress About View of Nicotine, Wall S t r e e t
Journal , 26 January, 1996, p. A1.
9. Does Tobacco Pay Its Way? Business Week , 19 February, 1996, p. 8990.
10. Philip Morris Companies, Inc., Securities and Exchange Commission Form
10-K, 1991, p. 4.