A Business Ethics Case Study
Natalia Garcia ’23 graduated with a major in economics and minor in international business and was a 2022-23 Hackworth Fellow with the Markkula Center for Applied Ethics.
Tim worked as the senior vice president for a Fortune 500 savings and loan company, in Dallas, Texas.1 At 29 years old, he was tasked with the crucial responsibility of representing the buyer of a multi-million dollar loan purchase deal involving ten loans worth $130 million.
This deal held tremendous significance for Tim, not just because of the exorbitant sum of money involved, but also because the success or failure of the deal would directly impact his reputation and career. If he succeeded, he would receive all the glory, a substantial bonus, and earn respect within the public company. However, if he failed, he would be held accountable for the loss, damaging his reputation and potentially jeopardizing his future prospects. Moreover, the implications of this deal were enormous, and it would garner significant attention in the media, making Tim’s performance all the more critical.
Sam, who was about 60 years old, was Tim’s counterpart for the deal and represented the seller. After weeks of collaboration on the transaction, Sam called Tim to his office for final discussions before closing the deal. However, when Tim arrived, Sam revealed a new agreement that Tim hadn’t seen before. Tim soon recognized it as an altered “agreement of purchase” required by federal regulators for deals of this magnitude, and Sam pressed him to sign it for “regulatory reasons.” To Tim’s shock, Sam also slid an envelope filled with $85,000 in cash across the desk.
Tim, who was struggling with a significant amount of student loan debt, saw an opportunity to alleviate his financial burdens and provide for his wife and young children. However, accepting the cash was accompanied by significant risks, not only to himself but also to others involved in the deal. It didn’t feel right either.
To make matters worse, Tim didn’t have a great relationship with his boss, and his job was at risk if the deal fell through. The pressure to succeed and provide for his family was overwhelming, and the temptation of the bribe made his decision even more difficult.
Tim knew that whatever transpired would remain confidential between him and Sam. Accepting the bribe could potentially ensure a seamless transaction, eliminating the risks of jeopardizing the deal or facing repercussions from his boss, and it would go a long way in addressing his financial struggles.
How should Tim navigate this dilemma?
1This is a version of a real case that occurred in the 1980s.
Questions to Consider
- Identify what you think are the most significant ethical values at stake in Tim’s decision? It will be important to identify these values on all sides of this dilemma. Consult the section, “Six Ethical Lenses” from the Framework for Ethical Decision Making by the Markkula Center for Applied Ethics.
- What risks are associated with Tim’s decision? How might it affect the buyer, the seller, and other stakeholders involved?
- How does Tim’s financial situation, including his student loan debt and his family’s financial needs, influence his decision-making process?
- How might Tim’s decision impact his self-esteem, personal values, and overall sense of integrity? How might it affect his relationships with his family or work colleagues?
- How does Tim’s strained relationship with his boss influence his decision-making process? What are the potential consequences of reporting the encounter to his boss, and how might it affect his job security?