Exercise 10. Give synonyms to the following words and word combinations

in cash

vendor

transaction

lay off

enforcement

lawbreakers

to govern their conduct

ethical performance

abuse

remote

pricey

ethical injunction

Exercise 11. Work in groups and discuss the problem of major ethical principles that can be violated by the employees and employers.

 

Exercise 12. Discuss these questions before reading the article

1. What to your mind is the role of the large oil companies in price hikes?

2. What do you know about the bribery scandal connected with oil contracts in Kazakhstan?

3. Have you ever heard about Exxon's case? Speak about it.

Exercise 13. Read the article

Big Oil’s Dirty Secrets

EVEN as it celebrates soaring profits — thanks to higher prices during the war and soaring share prices, now war is over, the oil industry faces a new danger largely of its own creation. It will surprise nobody to learn that oil and ethics mix about as well as oil and water. But, just as the tobacco industry and Wall Street gained a false sense of security because for years they got away with well-known practices of an ethically shady nature, only to pay a hefty price later, so too oil's hour of reckoning may be approaching.

There are several reasons, including a high-profile bribery scandal; the growing political sensitivity of the oil industry; changing attitudes to corporate governance; and some potentially explosive lawsuits. The bribery scandal, which seems certain to grow larger as more details emerge, concerns the battle to win oil contracts in Kazakhstan. During the 1995, several big oil firms fought for the right to exploit the oil riches of the region, including Chevron Texaco, on whose board Condoleezza Rice served prior to joining the Bush administration. And, if prosecutors are to be believed, executives at some firms behaved over-zealously as this battle raged.

This week, Swiss investigators were reported to have added a bribery and money-laundering probe involving, among others, Credit Agricole, a French bank, to continuing American investigations into alleged Caspian corruption. Last month, a grand jury in New York issued indictments against two Americans —James Giffen, an independent banker with close ties to the Kazakh president, Nursultan Nazarbayev, and Bryan Williams, a former executive of Mobil. Both deny wrongdoing. America's Justice Department is also looking into whether Mobil, now merged with Exxon, took part in a plan to pay $ 78 m from American and European oil firms into Swiss bank accounts belonging to Mr. Nazarbayev, among others. Exxon Mobil, the world's biggest oil firm, says it knows of no wrongdoing.

Oiling the Wheels

This is already the largest investigation by American authorities into alleged bribery abroad. As it unfolds, it seems certain to provide plenty of colorful stories that will keep it in the spotlight. It involves well-known Russian businessmen and politicians, payments for speedboats and fur coats, and — if only because they too were involved in bidding for Kazakh contracts — other big oil firms besides Mobil, including firms with connections to senior Bush administration officials other than Miss Rice.

 

It may also provide the sternest test yet of America's Foreign Corrupt Practices Act (FCPA), which outlaws bribery. When the act was introduced in 1977, many American oil firms groused that the law handicapped them against foreign competitors when dealing in the undemocratic and unscrupulous parts of the world where oil is often found. That fear was not entirely groundless, as is clear from the current trial of former officials of France's Elf Aquitaine (now part of Total), where bribery seems to have been a core competency. Some American oil-industry executives privately grouse that, if anybody is found guilty, it will be due to carelessness.

The FCPA, they admit, can be skirted by careful use of "signature bonus" payments to middlemen brokering contracts and via "arm's-length" transactions involving law firms based, more often than not, in London. On the other hand, argues Scott Horton of Patterson Belknap, a New York law firm, the FCPA has prompted American oil firms, though generally opposed to transnational laws on corporate behaviour, to support efforts led by the OECD to impose an international ban on bribery.

The current scandal in the Caspian can only bolster such efforts to bring some transparency to this mucky business. But will it also lead to a greater questioning of some of the techniques used to get around the FCPA? Amy Jaffe, of Texas's Rice University, insists that the current investigation "is going to force every legal department at every major oil firm to ensure they have a clear picture of what their agents, advisers and everyone else in foreign countries are doing. The Giffen case will define what you can and can't do." Big oil is also facing legal troubles over its famed love of nature. This week, lawyers for aggrieved indigenous folk filed suit against Chevron Texaco in Ecuador. For a decade, legal activists have been trying to sue Texaco for dumping contaminated water in open ponds in that country's rain forest that, they claim, harmed both health and the environment. The firm denies wrongdoing, noting that there were no specific laws in Ecuador when it operated there that forbade its practices.

At first, the litigants pursued their claim in American courts, but a judge finally bounced the case back to Ecuador as the proper jurisdiction for the matter. That appeared to be a victory for the oil firm, but in order to have the trial moved south, Chevron Texaco had to agree to respect the ruling of the Ecuadorian court. If it does not, the American judge has retained the right to step into the matter once again. Joseph Kohn, a lawyer for the villagers, is already talking of $ 1 billion as his team's estimate for cleaning up the damage allegedly done by the firm — even before any compensation for suffering and so on.

 

But legal attacks on alleged human rights abuses committed overseas may prove to be the most nettlesome of all for the oil industry. Consider the sort of public denial prompted by a lawsuit filed last month against an American oil firm: "Occidental has not and does not provide lethal aid to Colombia's armed forces." Even if the firm does indeed prove not to have provided "lethal aid," it faces a high-profile trial exposing its relationship with a regime with an, ahem, uneven record on human rights. Similarly, Exxon is being accused of complicity in abuses committed by the Indonesian military in Aceh, and Unocal stands accused of benefiting from forced labour deployed by the military government in Myanmar. Both firms have consistently denied any wrongdoing.

These cases are tests of America's Alien Tort Claims Act (ATCA). As the law dates back to 1789, its critics note that it does not deal with the precise circumstances of today's cases: it was probably intended to give foreigners a legal forum when in America, rather than offer a domestic remedy for American misdeeds abroad. Oil industry lobbyists have been pushing Congress to repeal the ATCA.

Last year, the Bush administration took the unusual step of intervening in a law^suit brought by the International Labour Rights Fund (ILRF) against Exxon, arguing that applying the ATCA in this case might hinder America's efforts to fight terrorism. Even so, points out the ILRF'S Terry Collingsworth, starting in 1980, this statute has indeed been applied in human-rights cases where foreign states or victims have been involved. Now, particularly with two separate cases related to Myanmar in American courts, it may end up applying to corporations that are judged to be "knowingly complicit" in abuses.

Could this be enough to transform an industry that is famously shameless, not least in America? Maybe. A few big legal losses, lots of bad headlines, and an impending Presidential election with an oilman on the ballot might work wonders.

"The Economist''