case study 1

Topics: Term, Financial statements, Government Pages: 5 (1144 words) Published: July 5, 2014
Kevin Mack
MGMT 362
Week 3
Case Study #1

Ethical dilemma at Northlake

Synopsis Overview: Frank, the manager of corporate reporting at Amalgamated Forest Products recently came across a report to which he was not intended to see regarding the possible effects to their business from potential government environmental regulations. Now he has threatened to go public with information regarding a falsified report to the effect of “effluent controls” on the discharge of wastewater from pulp and paper companies, which has infuriated his superiors, Jim McIntosh and the company’s president Jim Letourneau. Mr. Letourneau is scheduled to testify before a legislative subcommittee and use the report titled, “Endangered Species: The Pulp and Paper Industry in the Upper Peninsula”, to give the corporate perspective regarding potential outcomes of the proposed legislation. The report in question which contained falsified financial information was prepared by Tina Pacquette, manager of financial analysis. While Frank and Tina’s work relationship has been sketchy at best, Frank has quite little confidence in Tina’s ability to perform her job. The report details how Amalgamated would suffer severely financially if forced to construct a lagoon to treat wastewater as the impending legislation would require. Frank knows the numbers used support this report were grossly exaggerated with percentages that were nearly triple the percentages reported in a similar report by Tina just one year ago. Northlake, a rural town with a population of roughly 10,000, is the home of Amalgamated’s corporate offices. Three of the company’s main mills were located in other more isolated areas of the province. The company has been experiencing financial difficulties because of the recent recession. The waste Amalgamated is dumping in the Wanawashee River is the same waste the competition had to clean up a few years ago and its remnants are still affecting the water supply of the aboriginal community located downstream from the mills. Finding of Fact #1: The first fact that jumps out at me is that Amalgamated Forest Products are damaging the local river. The same waste Northlake is dumping in the Wanawashee River is the same waste their competitor had to clean up years ago. No further corrective measure has been taken to mitigate the pollution and waste that the mills have been adding to the Province’s water supply. Frank assesses that effluent draining into the Wanawshee River was washing downstream into the drinking water of the Aborigine settlement. Recommendation #1: To avoid any sanctions or legal actions against the company which would result in further loss of corporate profits and negative outcome to the stakeholders of the firm, the upper management of Amalgamated Forest Products must retract the doctored report and be honest with the government. Chances are if the company takes a proactive stance in outlining the real problems and future pollution issues facing the province, the government will help create a series of plans to not only help curb the pollution caused by the mill and pulp industry, it will also help Amalgamated keep their mills up and running to ensure the economic stability of their local communities. By taking this corrective action, shareholders may see a small drop off in terms of short term profitability, but in the long term ensuring the sustainability and long term success, of the region will benefit shareholders and stakeholders alike. While I am not sure how the Canadian government’s environmental protection agency differs from the United States, the government could potentially offer Amalgamated some tax breaks for investing in more environment friendly technology and equipment. Overall, this action seems like the most logical step to take to ensure corporate survivability. Fact finding #2: The next fact that I offer to disclose is the argument that Jean Letourneau and Jim Macintosh present which simply underscores,...
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