The team of Lamberti (left) and Lopez.
Cost benefits By Dave Denison
A student competition tests business ethics
W
hen five pairs of Boston College undergraduates gathered in Fulton Hall on February 14 for a discussion of business and ethics, the issue they were asked to address did not concern wrongdoing—padding expense accounts, say, or taking insider-trading tips. It was a more difficult question: What is right? The situation they would explore centered on a proposed economic development project likely to affect two poverty-stricken African countries. The teams were competing in the third annual Walter H. Klein Business Ethics Case Competition, named in memory of the professor of strategic management who taught at the Carroll School of Management (CSOM) for more than 30 years beginning in 1969. The contest is cosponsored by CSOM and the University’s Center for Corporate Citizenship. The winners go on to represent Boston College at the Collegiate Ethics Case Competition, held in October
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at the Eller College of Management at the University of Arizona. The teams were split into two groups, with three presenting in the Fulton Honors Library, two in Fulton 150. Each had 15 minutes to make their arguments to a pair of judges, who then had 10 minutes for questions. This year’s judges were, in the Honors Library, David Lemoine ’70, a retired partner from Deloitte & Touche and a CSOM instructor in accounting, and Susan Klink, a current partner at Deloitte; and, in Fulton 150, Linda Boardman Liu, a lecturer in the operations management department at CSOM, and Michael Smith, a lecturer in CSOM’s first-year Portico program. The details of the development project were laid out in a 2001 Harvard Business School case study entitled “The ChadCameroon Petroleum Development and Pipeline Project.” In June of 2000, the World Bank directors had faced a decision: Should they provide $400 million
in loans to the governments of Chad and Cameroon as part of a $4-billion oil pipeline project that would involve constructing 300 wells on fields in Chad and laying 670 miles of pipeline to the coastal city of Kribi, Cameroon? The study presented arguments for and against the investment, without reporting the real-life outcome. The students were asked to assess the proposed project from the vantage point of the bank, without consulting the postdecision record. As the day unfolded—with presentations by all teams in the morning, followed by a two-team runoff in the afternoon—it turned out that all five pairs landed in more or less the same place, arguing that the World Bank should approve the funding. Sophomore finance majors Alex Ogura and Thomas Edwards, for example, acknowledged the risks of corruption (both Chad and Cameroon were controlled by entrenched dictators). They noted the potential for environmental damage if the pipeline, which would cross 17 rivers and five habitats, were to leak. And they allowed that a way of life was threatened owing to the project’s displacement of some of the 11,000 indigenous Bakola people dependent on Cameroon’s forests. But, the pair concluded, the benefits would be “massive.” The “ethical framework” advanced by Edwards was that “the people of Chad and Cameroon are most important.” At the same time, it would be critical to consider the “cost-benefit tradeoffs for the external stakeholders”—including foreign oil companies—“and for the Chad and Cameroon governments,” he said. “Looking at the totality”—the prospect of 7,000 construction jobs and 800 permanent positions, plus revenue earmarked per agreement with the bank for education, health, and rural development—“we feel the costs don’t outweigh the benefits. Lemoine asked Edwards and Ogura about the notoriously undemocratic and unstable governments of Chad and Cameroon. Referring to General Idriss Déby, Chad’s leader who had been dogged by allegations of human rights abuses, Lemoine asked, “Why should we loan money to someone like that?” “The ends justify the means, we feel, because the poverty is so desperate there,”
photograph: Lee Pellegrini