Ethics Case Study
Ethics involves the consideration of societal expectations and moral values in decision making. Ethical values include honesty, fairness and responsibility and underpin ‘good’ decisions.
Trafigura Pte Ltd is a Singaporean based multinational company founded in 1993. It is one of the largest commodities trading groups in the world, with an annual revenue of US$98.1bn and an asset worth of US$41.2bn (Trafigura’s 2016 Annual Financial Report). The company trades in oil and petroleum, metals and minerals, and provides logistics and chartering services. However, in 2006, the company engaged in unethical business operations for commercial gain, which was cause of the scandal involving toxic waste dumping in the Ivory Coast. The company’s actions, which will be explored in further detail, bring to light the impact of businesses decisions in the global community and have prompted me to reconsider my view of ethics.
In January 2006, the tanker Probo Koala, chartered by Trafigura, used a petroleum refinery process called “caustic washing” to strip sulphurous products from coker gasoline to produce naphtha. This on-board process is illegal as it produces an acidic sulphide waste by-product and toxic fumes, however was used to save time and increase profit. Some of the workers experienced breathing difficulties, and three were reportedly admitted to hospital [greenpeace 49/50]. The company was responsible for ensuring the safety conditions for the workers, but neglected this by using an unethical process of product refining which was “as cheap as anyone can imagine and should make serious dollar” [37]. Trafigura financially profited by selling the naphtha for US$19 million but in doing so, created a health and environmental problem of chemical waste, which contained mercaptides, sulphides and sodium hydroxide, and an overpowering fume containing hydrogen sulphide, which can cause irritation, nausea and vomiting, respiratory problems and death in high concentrations [g102/103/104].
In June 2006, Trafigura contacted Amsterdam Port Services (APS), a company which handles ship waste in line with international standards (MARPOL and BASEL Conventions), however Trafigura did not provide transparent information on the nature of the waste. After samples revealed a high level of contamination, APS increased its quote 30-fold from US$34 per m3 to US$630,000. Instead of paying for the extensive treatment to neutralise the waste, Trafigura looked for a cheaper disposal option to keep profit margins.
Trafigura rejected two more offers to properly dispose of the waste, and in August 2006, the Probo Koala arrived in Abidjan signing a contract with a newly licensed company called Compagnie Tommy who agreed to discharge the waste at US$35 per m3. This decision was highly questionable as the executives, as evident in their internal emails, were aware that the chemical slops were dangerous and required proper treatment, and that Compagnie Tommy did not have the appropriate facilities to dispose of the waste lawfully[reference]. Trafigura’s decision was teleologically unethical as it led to a health crisis which greatly impacted both the citizens of Abidjan and the government.
528m3 of waste was spread across Abidjan and dumped in public dumps, landfills, rivers and even along roads in populated areas. Residents began noticing a strong smell some described as “rot, gas and onion” [183], and people reportedly experienced headaches, nausea, abdominal pains and the burning of lungs and skin. In total, 17 people were confirmed to have died, 23 hospitalised, 30,000 people received medical treatment for chemical exposure and 100,000 people sought medical attention. These large numbers are due to the fact that many people work in landfills sifting and collecting rubbish and were therefore most exposed to the untreated toxic waste. The chemicals also leaked into water supplies, affecting native wildlife and killing marine life. This greatly affected remote villages and farming communities that relaxed on fishing or farming for their livelihood. It was reported that 455 animals were culled and 109.5 hectares of crops belonging to 45 farmers were destroyed to prevent the contamination of the food chain [296]. This left farmers and their families with a loss of vital income and assets, and most businesses and workers did not receive compensation for their losses. Noticeably, Trafigura’s dumping actions have particularly affected people living in poverty through physical damage, but also it spread with it psychological distress, fear and anxiety into a society recovering from the instability of civil war. It was found in a survey that 114 out of 501 households surveyed were forced to move away from their homes [288] due to chemical exposure, displacing communities and families.
This crisis put an unprecedented strain on the government’s public health services. The UN Special Rapporteur noted that while the treatment was free, the number of doctors was limited and treatment was basic, often consisting of providing paracetamol or eye drops since doctors were not given information about the composition of the waste. This raises key ethical issues that Trafigura has taken advantage of an underdeveloped country and its people, evaded international and domestic laws, in order to maximise business profits.
Although Trafigura repeatedly denied that the company was liable for any of the damage, the company was responsible as they violated human rights because of their deliberate and negligent actions and inactions. This is set out in the UNSRSG’s Guiding Principles, that confirm that all companies have a responsibility to respect all human rights. A civil lawsuit in London was launched by almost 30,000 Ivorians against Trafigura. 3 years following the crisis, an out-of-court settlement was reached where the company announced it would pay more than US$46 million to claimants – many of which claimed to never have received the compensation [wiki 29/30/31]. The company also agreed to pay the Ivorian government £100 million for the cleaning up of the waste on the grounds that the government did not pursue any action against the company, essentially blackmail. The company was financially affected by the loss and their negligent actions sparked widespread media debate, also damaging the company’s reputation and consumer confidence.
Trafigura was directly accountable for the health crisis that unfolded, due to the company’s deliberate unlawful and unethical decision to not dispose of the waste properly and by taking advantage of the weak regulative and government system in an underdeveloped country to maximise company profit.
After evaluating the decisions made by Trafigura, I have come to understand that companies have the duty to ensure that they consider the possible implications of their actions on people in the local and global community and on the environment. From this case study, it is evident that modern ethics goes beyond providing goods and services, but must consider business operations through its whole cycle. In order for businesses to thrive and contribute to building a sustainable future, ethics must be the focus of all decision making.