Putting Profits over Ethics

Founded in the year 2002, Company-X is an Indian soft drink manufacturer. The company
established its factory in a district famous for rice cultivation. The area had rich groundwater
resources and fertile soil and agriculture was the main source of livelihood for the local
people. The factory was established in a backward region promising the local people to
provide them job opportunities with job security. The company assured the residents that it
would improve the village's education, infrastructure, and basic amenities. The villagers’
expectations were clearly raised as a result of the promises made by the company. The
villagers consented to the Company-X acquiring approximately 350 acres of land and
establishing the plant in their village vicinity. In the following eight months, the company
built a plant to manufacture soft drinks. When the facility started its operation, it was
discovered that there were about 1800 industrial workers in the plant, but only 120 of them
were from the local community. The remainder of the personnel employed by the company
were sourced from other areas or states. Additionally, the people from other regions were
provided with permanent jobs whereas locals were considered for temporary labourer
positions. Soon after the facility started production, i.e. after two months, people in the region
started noticing indications of water contamination, indicating that the drinking water was
becoming polluted and producing health concerns for the community. People living near the
factory have reported that the water in their wells and bore-wells has also become polluted.

The water has become unfit not only for drinking but also for other uses, particularly
cultivation. Water-borne infections began to spread, affecting people's health and
productivity. People protested against the Company-X over water pollution after learning
about the environmental difficulties caused due to operations of the factory. The company
then decided to compensate farmers by providing farm supplies, particularly fertilizers, for
their crops. However, the farmers soon discovered that the fertilizer was not suitable for crops
and soil.

Within the first six months of the company's operation, the locals started to notice the
negative influence of company’s activities on their lives. They staged a strike against the
company in 2001. It was a legal dispute between the region's citizens and the company.
According to reports, the people of that region said that the company intimidated them and
even offered them a large sum of money to halt the agitation. They claim that the company
believed that residents from such a small community had no chance against such a large
corporation. Even the local political parties supported Company-X and urged the people to
end the strike because the company provides a living for the inhabitants of the region and its
operations should not be halted. The legal struggle between the public and the company
lasted for four years. Meanwhile, the company established other plants all around the world,
and the company has made other purchases relevant to the quality of the drink.

It was also discovered that over 10000 tonnes of sludge were found in the drink produced by
them. According to reports, it was majorly the fertilizers and chemicals used on plants. There
was another disagreement between the residents of nearby areas and the company. The
company had agreed to use only one million litres of water per week from its six bore wells,
however, it was using more than double that amount, i.e., 2.5 million litres per week.

The water tables gradually depleted, and inhabitants in the surrounding regions did not have
access to safe drinking water. Agriculture was the main source of income for the people there,
and the lowering water table level posed serious problems. It was discovered that the water
included a high concentration of magnesium ions, sulphur, and calcium. Water samples
obtained near the plant were also found to be unsafe both for drinking and irrigation.

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In the early years, the farmers in that region supported the Company-X. The farmers received
free fertilizer and other agricultural inputs for their crops. However, they eventually
discovered that the fertilizers provided by the corporation were unsuitable for the plants, and
consequently, the soil quality had deteriorated. According to a study, the contamination
generated by the Company-X contained the following elements: 2,100 mg/kg of lead, 100
mg/kg of cadmium, 190 mg/kg of phosphorus, 1,580 mg/kg of zinc, and 5000 mg/kg of
aluminium.

The investigation discovered that Company-X violated multiple laws including the Land
Utilisation Act, the Pollution Control Act, the Ground Water Authorities Rules, and the
Environment Protection Act among others. For years, the company's operations in that region
contaminated the region's water and food sources. Every single person in that section of rural
India has been affected by the poisoning. The agricultural industry was practically destroyed
due to lack of suitable water, deteriorated soil due to fertilizers of sub-par quality. The legal
battle lasted 5 years. However, it took nearly ten years for the company to fully cease its
operations in the region. While fighting the legal struggle against the company, the people
had to overcome various obstacles. Finally, in 2020, the firm ceased all operations in that
region, and the factory is now only manned by 2-3 security guards; the state's high court has
ordered the company to pay compensation to the residents, which is yet to be paid. People
cannot return to their normal life unless they receive compensation. That is the extent of the
company's destruction to a little village. This was one of the most serious incidents of ethical
breach and incompetence in Indian history. The firm demonstrated a lack of concern for the
people and their land. Furthermore, the firm attempted to bribe the people to vote in their
favour while harming nature and depriving the people of their most fundamental need, that of
drinking water. Despite the fact that the Company-X claims to carefully adhere to its business
principles and rules and has done so for a long time, the reality is quite different.

With this occurrence, it is understandable that the company did not do a satisfactory job. It
was one of the most serious incidents of corporate negligence in the state’s history. They
nearly poisoned the villagers’ water resources. The compensation that should have been paid
to the people is still pending. The company refused to acknowledge its flaws in the first place
and has done nothing to address the water contamination problem. The Company-X factory
was not a development initiative for the people; rather, it was a gigantic corporate onslaught
on people and their lives. According to the community, the drinking water had never been a
problem for the villagers in the past, however, the issue is very serious in current context. The
corporation had degraded the water to the point where it could no longer be used for basic
necessities. The fertilizers provided by the firm devastated their crops, therefore robbing
individuals of their lives and posing a threat to society.

CONCLUSION
The violation of ethics by the company needs to be addressed urgently. Most big corporations
tend to leverage their size, capital, and connections to seek benefit from the underprivileged.
Had this issue not been handled properly, it would have gotten out of hand and destroyed the
entire village. When a company uses a community’s resources, it is its responsibility to repay
the community in one way or another. However, in most cases, we observe corporations
continuing to use resources, which mostly involves land encroachment, toxic waste disposal
into water bodies, smoke and sound pollution, and a variety of other practices.

The primary goal of any firm should not be to maximize only profits; companies should also
take initiatives to contribute to society. Even while the Company-X claims in their business

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ethics code that they are doing everything possible to help the socioeconomic upliftment of
society, it has proven that this is only on paper. The fact that the corporation has engaged in a

legal battle to continue operating in rural India demonstrates the company's profit-driven
approach. The legal struggle lasted over thirteen years. The residents stated in a public

statement that the government did not respond to their requests to halt the company's
operations. People alleged that the company was so powerful that it bribed the government
officials to avoid complaints of the regional people. However, the company was eventually
forced to cease operations. Most businesses have a division for CSR activities, but the
question is how much they are willing to act for it and how much they actually accomplish.
They may have a large number of service activities listed in their documentation, but the
reality is often different. When the Company-X first reached out to local people for setting up
a factory, the firm pledged "economic reforms" to the people. The license was simply
obtained by the Company-X from the local council. In certain ways, the government is
indirectly helping corporations, perhaps solely for profit and without regard for the general
population. This case of Company-X demonstrates the global capitalistic power of
corporations. If the company itself does harm to the people, the entire human race will suffer
greatly. To do this, every corporation should follow the business ethics model by
demonstrating social responsibility, often known as corporate citizenship.

Q.1 From the given case, identify (point out) the ethical issues and their consequences
with a complete discussion of the values and a framework for resolution.

The incident with Company-X is a prime example of corporate irresponsibility and ethical
misconduct. The company, which established a factory in a region famous for rice cultivation,
promised job opportunities, and improvements in infrastructure and basic amenities.
However, the company failed to live up to its promises, and the villagers' expectations were
not met. The factory contaminated the water, rendering it unfit for drinking and cultivation.
The company also provided sub-par fertilizers to the farmers, which further deteriorated the
soil quality. The company violated multiple laws, including the Land Utilisation Act, the
Pollution Control Act, the Ground Water Authorities Rules, and the Environment Protection
Act. The legal battle between the company and the public lasted for five years, during which
the company continued to operate, contaminating the water and soil. It was not until ten years
after the incident that the company ceased all operations in the region. The state's high court
has ordered the company to pay compensation to the residents, which is yet to be paid. The
incident highlights the importance of corporate responsibility and the need for companies to
adhere to ethical standards and regulations.

Q.2 Suggest alternatives that the Company-X could have adopted to avoid ethical
breaches. Also, mention the benefits and shortcomings of the suggested
alternatives.

This case highlights the importance of corporate social responsibility (CSR) and ethical
practices in business. Companies have a responsibility towards the society and the
environment in which they operate. The case of Company-X demonstrates how neglecting
these responsibilities can have devastating consequences, not only for the local community
but also for the company's reputation and bottom line. Companies should prioritize the
welfare of the local community and environment, as it is the foundation on which their
business operates. They should also ensure that their operations comply with the relevant

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laws and regulations, and that they are transparent and accountable to stakeholders. This case
also shows that the

consequences of unethical practices can last for years and can be difficult to reverse, and that
it is crucial for companies to take responsibility for their actions and make amends.