The Facilitation Payment and the Tender
Ceylon MedTech (Pvt) Ltd is a family-owned medical device supplier bidding for a LKR 900 million Ministry of Health tender. Its agent in Colombo says the tender file will not move without a 'facilitation payment' of LKR 4.5 million to a named customs official, and that 'everyone pays'. The CEO tells the sales director, Ms Fernando, that the payment should be treated as a marketing expense and routed through a Dubai consultant. The company has a code of ethics that prohibits bribery, but no whistleblowing hotline; the CFO is the CEO's cousin. Ms Fernando's bonus depends on winning the tender; she has a disabled child and is the sole earner. She is also aware that a junior colleague was dismissed last year after raising a pricing concern. The company is not listed but supplies state hospitals and wants a bank facility; the bank has asked for an anti-bribery declaration.
1. Analyse Ms Fernando's dilemma using at least two ethical theories.
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Utilitarian analysis. Ms Fernando might reason that the LKR 900 million tender protects jobs and her family. But the payment is illegal, creates criminal exposure, and rewards a corrupt official; the likely long-term harm to the company, patients and her own career outweighs the short-term gain. Rule utilitarianism supports a rule against bribery because systems where bribes decide public contracts produce worse outcomes for everyone.
Deontological analysis. Kant's categorical imperative asks whether the maxim 'pay a bribe when it is necessary to win' could be universalised. It cannot: the practice would destroy fair tendering and treat the official and competitors as means only. She has a duty not to deceive and not to participate in a criminal act.
Virtue ethics. Integrity and courage require her to refuse, even at personal cost. Her financial vulnerability is real, but virtue is about acting rightly under pressure. The junior colleague's dismissal shows the culture punishes courage, which is itself an ethical failure by management.
2. What should Ms Fernando do about the payment, and how should she protect herself?
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She should refuse to authorise or route the payment, state the legal position in writing, and ask for the instruction to be confirmed in writing. She should preserve the agent's message and report the matter to the board or, if no independent channel exists, to the audit committee or independent director, the CIABOC or police, and seek legal advice. She should not use the Dubai consultant; a conduit does not change the character of the payment and adds money-laundering risk.
If she is dismissed or threatened, she should document retaliation and seek legal protection. She may also make a protected disclosure to the bank, which has asked for an anti-bribery declaration; a false declaration would create further exposure. Her personal circumstances explain the pressure but do not make participation lawful or ethical.
3. Evaluate the company's control environment and recommend anti-bribery and whistleblowing measures.
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The code is only paper. There is no whistleblowing hotline, the CFO is the CEO's cousin, and a junior employee was dismissed after raising a concern. The CEO's instruction to book a bribe as marketing shows tone at the top is corrupt. The company needs a board-approved anti-bribery and corruption policy, a gifts and hospitality register, risk-based due diligence on agents, contractual anti-bribery clauses, training, and a confidential whistleblowing channel with a non-retaliation policy.
Transactions should be approved by an independent committee, and the bank should be given accurate information. The company should also consider whether it can continue in public procurement until controls are credible. The board should review the agent's contract and suspend it pending investigation.