Business ethics

I’m not a businessman, and I doubt I ever will be. But here’s a hypothetical

for you:

You’re a television executive at Screen Gems International, and you strike

a deal to sell fifty feature films into the UK. The price of each title has

been individually negotiated with the buyer. The day after you report the deal

to your accounting department, you’re visited by a senior corporate person.

He hands you a sheet of paper revising the prices. A few of the films have gone

down in price, and others have gone up; the total value of the deal is unchanged.

He explains that by using the original prices Screen Gems would have to pay

two of its producers a couple of hundred thousand dollars, and that by submitting

the revised deal the way he wants it, the company would save money.

The question, of course, is whether you accept the revised pricing. On the

one hand, as an executive at Screen Gems, you have a fiduciary duty to the company

to maximise its revenue. On the other hand, Screen Gems, as a signatory to deals

with various film producers, has an obligation to share with them proceeds from

certain films, and the proposed revision is a blatant attempt to hide those

proceeds where they can’t be touched.

Norman Horowitz is very proud of the fact that he refused

to accept the revised deal. But nowadays, I get the feeling that most executives

wouldn’t think twice about tweaking the deal. Would you?

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