Business Regulation Simulation: Alumina Inc

Business Regulation Simulation: Alumina Inc.

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Introduction

Alumina is a 4 billion dollar aluminum manufacturer based in the US. Although the company operates out of 8 different countries, 70% of Alumina’s sales derive from the US market. Five years ago, during a regular compliance inspection, Alumina was found to be in violation of environmental discharge norms due to high levels of PAH (Polycyclic Aromatic Hydrocarbon). Following this discovery, the EPA ordered a clean up and Alumina was found to be in compliance during subsequent inspections. Although this was Alumina’s first violation in history, the company recently found itself headlining the local news because of allegations by a city resident that Alumina was environmentally responsible for her daughter’s Leukemia.

As with many corporate ethical dilemmas, Alumina’s executives unexpectedly found themselves walking the difficult line between adhering to their personal values and helping their company to survive. When local resident Kelly Bates alleged that Alumina was responsible for her ten year old daughter’s Leukemia, company employees were not only faced with questions between right and wrong but also between right and right.

From an ends-based perspective, employees understood that Alumina wanted to arrive at a resolution that provided the greatest good to the company and its investors. For this reason, Alumina’s leadership team opted to limit the disclosure of its environmental compliance records rather than to disclose all the information that was available when the plaintiff requested to evoke the Freedom of Information Act. Under different circumstances, Alumina’s employees may have responded differently and allowed for full disclosure so the plaintiff could demonstrate the merits of her allegations or discover the lack thereof. After all, while a company’s reputation is a critical element of its success, it’s less relevant than humanity and life itself. However, given the circumstances, Alumina’s reputation was of central concern to its employees so protecting Alumina from negative press became the priority. As often is the case, circumstances and context have a compelling influence on how individuals will respond to ethical issues. If in fact Alumina was responsible for Mrs. Bates daughters’ Leukemia, then the company and its employees shared an ethical obligation to share their information in the spirit of true disclosure. It wouldn’t be ethical for Alumina to lawyer up and protect itself from consequences which were incurred as a result of known environmental violations. On the other hand, it would also be ethically wrong if Mrs. Bates were seeking compensatory and punitive damages from Alumina if the company didn’t have anything to do with her daughter’s Leukemia. Not only would Alumina’s reputation be tarnished but the likelihood that the company would take a financial hit from investors is significant.

When word first leaked regarding Mrs. Bates allegations in the local news paper, my recommendation for Alumina was to immediately conduct independent tests to assess the company’s current and historical environmental impacts on the local water. I chose this because I felt that it was necessary for the company to know where it stood against Mrs. Bates allegations. By conducting these tests, the results would come from a trusted source and the outcomes would remain private. An additional benefit to doing these tests privately is that if the results are favorable, Alumina could be publicized them to counter the published allegations. Ultimately the independent tests proved to be the right move in the scenario and the tests confirmed that the company’s PAH levels were lower than the prescribed limit. These results effectively blunted Mrs. Bates allegations that Alumina