The Role of Ethics in Business

Pennsylvania State University

Role of Ethics in Business

Finance 301: Corporation Finance

Instructor Weber

September 8, 2013

Ethics in business is the act of an individual’s own judgment on what is right and wrong. All businesses or individuals should behave ethically and do what is right for the company, employees, customers, and culture. The story I decided to choose from the news is about the company Trafigura. Trafigura is a worldwide company, formed in 1993, that trades base metals, energy, and oil. Trafigura makes around $80 billion a year (Hynes, 2011). The company was performing unethical and illegal acts. Not only did Trafigura commit one unethical act but they also committed several unethical acts, which I think is horrendous. These acts include their oil-for-food scandal, the dumping of toxic waste in Côte d’Ivoire, a chemical explosion in Norway, and their controversy in Malta.

Trafigura’s first unethical act includes their oil-for-food scandal. This scheme was talked about in February of 1998 but did not happen until May and August of 2001 (Farge, 2012). Trafigura chartered a tanker named Essex; the tanker was topped of with an extra 272,000 barrels of crude oil after United Nation’s monitors had left the boat (Farge, 2012). The UN found out later that Trafigura helped the Essex crew smuggle extra oil out of Iraq. The Essex was stopped off the coast of Curaçao before the ship could offload the extra oil. Trafigura claimed that they paid Ibex, the oil supplier, forty cents per barrel over the United Nations selling price (Farge, 2012). After investigations it was found that Trafigura never paid extra money for the oil they helped smuggle out of Iraq. After the whole scandal wrapped up the costs for Trafigura were up to five million dollars, which led to an altercation between Trafigura and Ibex (Farge, 2012). If I were the UN, I would have shut down Trafigura right after this incident because of all their upcoming incidents.

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