Help with this Ethical Dilemma (longish)

[ashling]

Disclaimer: Sorry, as I started writing this hypothetical, I realized that it sounded like one of my law exams. You may want to turn back now! :)

You may assume facts not set out. If so, please state them.

Hypothetical Ethics Problem:
Middle Earth Widgets, Inc. is a franchiser of a fully developed system of manufacturing and marketing widgets. Its franchisees avail themselves of this fully developed manufacturing system, the good name and reputation of ME, and the benefits of all ME promotions.

As one of its promotions, ME provides an awards system to certain loyal users of its widgets. To avail themselves of this promotion, ME customers sign up as “questors” and receive points for each widget purchased from any ME franchise. They can then use these points to get free award widgets from any other ME franchise.

Under its fanchise agreement, ME franchisees are obligated to supply these award widgets when requested. ME then reimburses the franchisee which supplied the free widgets to its “questor.” The reimbursement is made at a base rate which is well below the rate the franchisee generally gets for its widgets.

However, if the franchisee happens to have contracts out for at least 90% of its widget capacity at the time that the award widgets are requested, then ME will reimburse them at the higher average rate they are getting for widgets at that time.

Frodo is a franchisee of ME. As such, Frodo regularly supplies award widgets for which it is reimbursed by ME.

Often times, Frodo supplies these award widgets for the base reimbursement rate. On many occasions Frodo’s capacity is nearly maxed out and Frodo is entitled to reimbursement at the higher rate.

Frodo is troubled by the fact that too many reimbursements are made at the lower rate. So Frodo devises a system to assure that the reimbursement rate will be as high as possible..

When Frodo’s capacity is between 75% and 90%, ie, high, but not high enough for the maximum reimbursement, Frodo employee’s enter information into Frodo’s computerized widget tracker which makes it appear that capacity is 90% when it is really less.

Samwise is an employee of Frodo. His job requires him to compile the daily reports from the computerized widget tracking system. One of his duties is to request reimbursements for award widgets. Though Samwise has refused to make any “adjustments” so as to erroneously indicate increased capacity, it is not always possible to determine if this has, in fact, been done by others. However, Samwise is aware that this has been done.

What ethical problems do you find? What course of action should Samwise take?

[ashling]

1. What, no takers?

:(

[flvegan]

2. Ethical derailment

Seems to specifically occur here:
When Frodo’s capacity is between 75% and 90%, ie, high, but not high enough for the maximum reimbursement, Frodo employee’s enter information into Frodo’s computerized widget tracker which makes it appear that capacity is 90% when it is really less.

It would appear, from the scenario, that Samwise is probably in a no-win situation. He might benefit from taking his ethics to a corporation that would appreciate/benefit from it.

[ashling]

3. How true.

Assume, however, that Samwise has been unable to exercise this option. He still has to deal with the situation.