Diploma in Business Management Assessed Assignment – Business Ethics VEDAN company Introduction In all means of communication media, business ethic is always a hot topic as it reflects the attitude of a business toward any public issues, especially matters related to environment and the damage to human’s life can collect the most concerns from public opinion. What is good, what is bad, which is right, which is wrong are the main concerns of business ethics. Saying in another way, business ethics is ‘being able to look at your face in the mirror’ (Drucker, 1996).
In recent years, since the issue of global warming has become more serious, people start to look back to the past and see what they have done to their environment. The case of Thivai River in Vietnam is a good example. Being extremely polluted by VEDAN Company, Thivai River as well as surrounded area is being destroyed day by day creating a strong flow of anger from local people. The report will briefly summarize the case, its impacts and criticize the involvement of relevant stakeholders, then finally recommend possible solutions in order to improve the situation.
The case The business man’s mission is to make the highest profit from limited conditions; however, many of them would break the business ethics rules and ruin their own reputation. VEDAN company, the object I would like to mention here, is one of them. VEDAN is the top MSC (Monosodium Glutamate) enterprises in South East Asia, established in 1991 with 100% capital of Taiwan (Vedan. n. d. ). Its main products are Organic Fertilizer and Feed Additives which are mainly made from CMS (Condensed Molasses Soluble) (ibid).
Manufacturing and trading to some main market such as Asia, Europe and America, they quickly gain some reputation in food area. VEDAN is located in Phuoc Thai Village, Long Thanh District of Dong Nai province, Near Thivai River (Vedan. n. d. ). Being a well-known company; however, their issues started in very beginning. Since it went to operation in 1994, the surrounded area especially Thivai River were getting polluted. Thousands of complaint letters from people in affected region were sent to the local government but it seems to be in vain.
An article on Saigon-gpdaily. com. vn published in October 2008 indicated that in June 1995, VEDAN Company spent about US $ 110,000 (at today exchange rate) for compensation; however, toward the public, this amount of money was paid under the condition of denying responsibility to local people. It is obviously a cunning behavior to cover their dishonest action but the local seem to be satisfied with this compensation. They were silent and the government, too. The case of polluting Thivai River fell into oblivion.
By now Thivai was nearly a dead river and in 2006, VEDAN was demanded to be investigated. After 3 months lying in ambush, investigators found out a secret pumping and pipeline system hidden underground which convey untreated wastewater directly into Thivai (vnbusinessnews, 2008). Also in this year, the Environment Protection Agency under the Ministry of Natural Resources and the Environment confirmed that VEDAN directly discharged waste water through 3 pipes and VEDAN was fined but it repeated its crime (ibid).
Even more, according to the Deputy Minister of Natural Resources and the Environment, there were uncovered 16 tanks (included 2 semi-undergrounded) with capacity of 6,000m3 to 15,000m3, which contain dirty water after operating (monre. gov, 2008). In the report of the Protection department of Dong Nai province, in February 2007, VEDAN Company was confirmed to release about 105. 6 million liters of liquid dirty water per month. The untreated water has the color parameter is 14 times higher than stipulate and the Parameter Coli form raised up to 2,400,000 MPN/100ml which is higher than the standard 480 times (Tintuc. alo. n. d. ) Two year later, after many denials of the crime, VEDAN was officially taken to court for the pollution it caused which contributed 89% to 90% of pollution rate and for dishonest behavior toward government as well as public during 14 years. Stakeholders and their involvement 1. The environment: Weetman (2006, p. 16) affirmed that the environment issues and the influences of business on the environment, recently, had become a strong element of public interest that has been aroused.
In this case, Thivai River seems to be the most miserable victim with 40 km got highly polluted included 10 km length of total 76 km river was dead (Thesaigontimes, 2008). Some environmental specialists predicted that up to 2050, Thivai River will become dead. The poison from chemical waste kills the aquatic life living in this river which becomes a huge loss for natural resources. It also affects on the tourism industry because of the smell and the repulsive sight of white foam and marine creatures’ corpse cover most of the river’s surface. . The Local people: 3. 1 ) For them, living in low and unhealthy standard condition is the main reason for infectious diseases such as diarrheal diseases, lower respiratory infections, and other skin infections. Moreover, due to their poverty, they cannot get in time treatment thus; those small kids who have low immunization suffered the most from these illness. When the flu is spreading, not only the small group of people nearby is affected but also the whole community is in danger. 3. ) Besides, people living along the river mostly are fishing man but the mass death of creature from VEDAN’s pollution makes them lose their livelihood. In fact, the local people are mostly uneducated; therefore they are unable to find a stable and high-earning job in the real world. From the oldest to the youngest, the river from their childhood is their closest source of living which connect them together and to nature. When Thivai River is killed, those unguided people find it difficult and sorrowful to leave their place; however, there is no way for them to survive if they stay. 3. The government:
Skillen in Report Public Justice (2007) pointed out : ‘Government’s responsibility is to assure that justice is done to the environment as a condition of all types of economic, technological, and scientific development. ’ In VEDAN’s crime, Vietnam’s government must not wait until ‘negative consequences of environmental degradation’ to solve this problem. In fact, they took 14 years to stop VEDAN’s crime (Vietnamnet, 2009). 4. The owner Obviously, the public can not blame all the consequences to the government because the person directly polluted Thivai River is the chairman of VEDAN- Yang Kun Xiang.
His target when opening a business is maximizing the profit without any concern about social responsibility. The amount of waste water he discharge into Thivai River in 14 years as well as his sophisticated actions of covering the truth over the public and the government are the main reason which directly affect to environment and the local people. 5. The employees Employee is apart of a company who implement the company’s policy. Therefore, they were also lack of responsibility when follow their boss without informing the illegal activities of releasing untreated water into Thivai.
However, they also the one who loss their job if the company is forced to close. Ethics and Values According to BBC (2008), VEDAN was asked to deposit US $17,000 fine which has been the highest punishment by law for Environment crime. The total amount of money they had to pay includes the fine and to compensation for local people was an approximated US $ 7 millions (Vietnamnet, 2009). VEDAN was also requested by Natural Resources and Environment Ministry to reduce productivity of some factories by between 20% – 80% and close some temporarily until achieving waste treatment environmental standard (BBC, 2008).
Stop running company would bring hard period for stake holders, especially employees for losing their jobs. However, it seems to be the best choice at that moment. To have a general view, business ethic factor does not make profit of a business; however, if a company wants to survive for a long-term, they should concern deeply in this area. The way they behave toward the world is the way public evaluate their own value on market and it is also the best way to gain reputation.
Taking the ISSO, the International Organization for Standardization award as an example, it is the prize only given to the enterprises which has good attitude toward environment and takes the right of other people as their concern. The business which has a weak social responsibility can not keep their market share. Solution Since all things are considered, there are several solutions for Thivai case which have been done so far as well as being recommended for future improvement. 1. First of all, as I mentioned above, the company was rought to court and required to pay US $7. 7 million for what they have damaged to the river, also for local people (Vietnamnet. vn, Aug09). Up to now, the company has used the money to improve the river as well as the nearby living condition, to pay pollution tax and other fined fees due to their irresponsibility. Paying compensation seems to be the best and fastest choice at that moment; however, the compensation required of the case is US $7. 7 million however it will take long time for the money to be delivered to the local people in a full lump sum.
And a question was raised: Was it enough for what the people living in that affected area had to suffer for such a long time? The answer is no! 2. Additionally, the company was forced to close temporarily some factories until achieving the treatment water system. Nevertheless, this solution will create other side effects such as increase in the number of unemployment. And the increase in unemployment rate will lead to rising in crime and poverty. Moreover, VEDAN stops producing means the national income will be affected as well.
In the side of VEDAN, it was obviously a huge fence but if they would like to come back, they must follow strictly requirements such as putting investment into their waste treatment systems in order to guarantee the standard condition of the river. 3. The firm should keep anticipating in cleaning and clearing all the waste still floating in the river. In fact, VEDAN was invested about US $ 31. 1 million on improving environmental protection (tinmoi, 2009). According to Minister Pham Khoi Nguyen, Thivai River has visual signs of being revived (ibid). . There should be a policy in educating all stakeholders of the firm about the seriousness of pollution, its consequences and social responsibility to the company in particular and for the whole community in general. Although it will take much time to apply, for the long-term advantages, it is the best choice. Evaluation In my own opinion, despite wasting too much time (14 years) to stop VEDAN’s crime, Vietnam’s government are running the best way to improve the environment condition and correct the mistake in the past.
Combining between paying compensation, setting their own treatment system and investing to clear the river is the most effective way to be out of this issues. VEDAN’s problem was the significant example for other companies; hence, being educated about social responsibility is critical for the society in long way. Conclusion Looking back to the case of Thivai River, it is one of the most remarkable topics in the last 10 years showing a serious damage to the environment from the waste of VEDAN Company. Not only the river was killed, local people are also suffered harmful influences.
The consequences were criticized due to weak interference of Vietnamese government as well as wicked and sophisticated cheats of VEDAN to cover their irresponsibility. Although the company has been forced to close temporary and paid its fine of $7. 7 million, it seems to be not enough to wipe away what they have caused to the death of Thivai River. Overall, this is an urgent message to wake up the awareness of companies about business ethics before it is too late. Bibliography 1. BBC. (2008). Decision processing company VEDAN. Available: http://www. bbc. co. k/vietnamese/vietnam/story/2008/10/081008_vedan_fine. shtml . [Accessed 15 Mar 2010]. 2. James W. Skillen. (2007). Report public justice: Conserving the Environment: Guideline #10 for Government and Citizenship. Available: http://www. cpjustice. org/PJR2007Q2/EnvironmentGuideline10. [Accessed 15 Mar 2010]. 3. P Weetman (2006). Finacial and Management Accounting. 4th ed. Italia: Pearson Education Limited . p16. 4. Police want Vedan officials to remain in Vietnam. (2008) Available: http://www. monre. gov. vn/monrenet/Default. aspx? tabid=259&ItemID=51311. [Accessed 05 Mar 2010]. . Saigon-gpdaily. (2008). Vedan Pollution Kills River Creatures: Can Gio Farmers to Sue. Available: http://www. saigon-gpdaily. com. vn/Law/2008/10/66046/ [Accessed 11 Mar 2010] 6. Thesaigontimes. (2008). Vedan Vietnam faces doomsday. Available: http://english. thesaigontimes. vn/Home/business/property/1181/. [Accessed 05 Mar 2010]. 7. Tinmoi. (2009). Vedan “corrective” signs Thi Vai river revival . Available: http://translate. google. co. uk/translate? hl=en&sl=vi&u=http://www. tinmoi. vn/Vedan-ldquosua-sairdquo-song-Thi-Vai-co-dau-hieu-hoi-sinh-051939