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Devry ACCT439 case assignment




Question;Case;Study;Complete the case studies for this week.;Review the case studies below in the textbook. Prepare;a one-page report for eachof the following case studies;?;Case Study: Texaco: The Ecuador Issue, pg. 41;Review the document titled Requirements and Grading Rubric for Case;Studieslocated;in Doc Sharing for detailed information on the requirements for the case study;report and the grading rubrics for each report. When completed, submit all;of the case studies as one document.;Case Study;Ethics Case: Texaco: The Ecuador Issue;In 1964, at the invitation of the;Ecuadorian government, Texaco Inc. began operations through a subsidiary;TexPet, in the Amazon region of Ecuador. The purpose of the project was to;?develop Ecuador?s natural resources and encourage;the colonization of the area.?2 TexPet;was a minority owner of the project and its partner was Petroecuador, the;government-owned oil company. Over the years from 1968 to 1992, the consortium;extracted 1.4 billion barrels of oil from the Ecuadorian operations.;Ecuador benefited greatly during this;period. Ecuador received approximately 98 percent of all moneys generated by;the consortium in the form of royalties, taxes, and revenues. Altogether, this;amount represented more than 50 percent of Ecuador?s gross national product;during that period. TexPet?s operations over the years provided jobs for 840;employees and approximately 2,000 contract workers, thereby benefiting almost;3,000 Ecuadorian families directly, in addition to the thousands of Ecuadorian;nationals who supplied the company?s needs for goods and services. Also, TexPet;made substantial contributions to the Quito, Guayaquil, and Loja Polytechnics;and 40414142other institutions of higher education. Oil is Ecuador?s;lifeblood?a $1 billion per year industry that accounts for 50 percent of the;export earnings and 62 percent of its fiscal budget.;Unfortunately, problems also arose.;Although Petroecuador acquired 100 percent of the ownership of the;Transecuadorian pipeline in 1986, TexPet still accounted for 88 percent of all;oil production and operated the pipeline in 1987 when it ruptured and was;buried by a landslide. A spill of 16.8 million gallons (4.4 million barrels);occurred, which Texaco attributed to a major earthquake that devastated;Ecuador.;Other spills apparently occurred as well.;Although Texaco pulled out of the consortium in 1992 entirely (having retreated;to be a silent minority partner in 1990), three lawsuits were filed against it;in the United States?the Aquinda (November 1993), the Sequihua (August 1993);and the Jota (in 1994). The indigenous people who launched the lawsuits charged;that, during two decades of oil drilling in the Amazon, Texaco dumped more than;3,000 gallons of crude oil a day?millions of gallons in total?into the;environment. The indigenous people say their rivers, streams, and lakes are now;contaminated, and the fish and wild game that once made up their food supply;are now decimated. They asked in the lawsuit that Texaco compensate them and;clean up their land and waters.;Maria Aquinda, for whom the suit is named;says that contaminated water from nearby oil wells drilled by the Texaco;subsidiary caused her to suffer chronic stomach ailments and rashes and that;she lost scores of pigs and chickens. Aquinda and 76 other Amazonian residents;filed a $1.5 billion lawsuit in New York against Texaco. The class action suit;representing 30,000 people, further alleges that Texaco acted ?with callous;disregard for the health, well-being, and safety of the plaintiffs? and that;?large-scale disposal of inadequately treated hazardous wastes and destruction;of tropical rain forest habitats, caused harm to indigenous peoples and their;property.? According to the Ecuadorian environmental group Ecological Action;Texaco destroyed more than 1 million hectares of tropical forest, spilled 74;million liters of oil, and used obsolete technology that led to the dumping of;18 million liters of toxic waste. Rainforest Action Network, a San;Francisco-based organization, says effects include poor crop production in the;affected areas, invasion of tribal lands, sexual assaults committed by oil;workers, and loss of game animals (which would be food supply for the indigenous;peoples).;Audits were conducted to address the impact;of operations on the soil, water, and air and to assess compliance with;environmental laws, regulations, and generally accepted operating practices.;Two internationally recognized and independent consulting firms, AGRA Earth;Environmental Ltd. and Fugro-McClelland, conducted audits in Ecuador.;Each independently concluded that TexPet acted responsibly and that there is no;lasting or significant environmental impact from its former operations.;Nonetheless, TexPet agreed to remedy the limited and localized impacts;attributable to its operations. On May 4, 1995, Ecuador?s Minister of Energy;and Mines, the president of Petroecuador, and TexPet signed the Contract;for Implementing of Environmental Remedial Work and Release from Obligations;Liability, and Claims following negotiations with Ecuadorian government;officials representing the interests of indigenous groups in the Oriente. In;this remediation effort, producing wells and pits formerly utilized by TexPet;were closed, producing water systems were modified, cleared lands were;replanted, and contaminated soil was remediated. All actions taken were;inspected and certified by the Ecuadorian government. Additionally, TexPet;funded social and health programs throughout the region of operations, such as;medical dispensaries and sewage and potable water systems. That contract;settled all claims by Petroecuador and the Republic of Ecuador against TexPet;Texaco, and their affiliates for all matters arising out of the consortium?s;operations.;In the summer of 1998, the $40 million;remediation project was completed. On September 30, 1998, Ecuador?s Minister of;Energy and Mines, the president of Petroecuador, and the general manager of;Petroproduccion signed the Final Release of Claims and Delivery of Equipment.;This document finalized the Government of Ecuador?s approval of TexPet?s;environmental remediation work and further stated that TexPet fully complied;with 4243all obligations established in the remediation agreement signed;in 1995.;Meanwhile, in the United States, Texaco;made the following arguments against the three lawsuits;?;Activities were in;compliance with Ecuadorian laws, and international oil industry standards.;?;Activities;were undertaken by a largely Ecuadorian workforce?which Texaco believed would;always act in the interest of its community/country.;?;All;investments/operations were approved and monitored by the Ecuadorian government;and Petroecuador.;?;All;activities were conducted with the oversight and approval of the Ecuadorian;government.;?;Environmentally;friendly measures were used, such as helicopters instead of roads.;?;The;health of Ecuadorians increased during the years Texaco was in Ecuador.;?;Ninety-eight;percent of the money generated stayed in Ecuador?50 percent of GDP during that;period.;?;Jobs;were provided for 2,800.;?;Money;was provided for schools.;?;Independent;engineering firms found no lasting damage.;?;A;$40 million remediation program was started per an agreement with the;Ecuadorian government.;?;U.S.;courts should not govern activities in a foreign country.;The three lawsuits were;dismissed for similar reasons?the Sequihua in 1994, the Aquinda in 1996, and;the Jota in 1997. The Aquinda lawsuit, for example, was launched in New York;(where Texaco has its corporate headquarters) because Texaco no longer had;business in Ecuador and could not be sued there. The case was dismissed by a;New York court in November 1996 on the basis that it should be heard in;Ecuador. Failing that, the Ecuadorian government should have been involved in;the case as well, or that the case should have been filed against the;government and the state-owned Petroecuador as well as Texaco. At that point;the Ecuadorian government did get involved and filed an appeal of the decision.;This was the first time a foreign government had sued a U.S. oil company in the;United States for environmental damage. In addition, in 1997, the plaintiffs in;the Aquinda and Jota cases also appealed the district court?s decisions.;On October 5, 1998, a;U.S. court of appeals remanded both cases to the district court for further;consideration as to whether they should proceed in Ecuador or the United;States. Written submissions were filed on February 1, 1999. Texaco has long;argued that the appropriate venue for these cases is Ecuador because the;oil-producing operations took place in Ecuador under the control and;supervision of Ecuador?s government, and the Ecuadorian courts have heard;similar cases against other companies. It is Texaco?s position that U.S. courts;should not govern the activities of a sovereign foreign nation, just as foreign;courts should not govern the activities of the United States. In fact, Texaco;claimed the Ambassador of Ecuador, the official representative of the;government of Ecuador, noted in a letter to the district court that Ecuador;would not waive its sovereign immunity.;Notwithstanding Texaco?s;arguments, the case was sent back to the court that threw it out, on the basis;that the government of Ecuador does have the right to intervene. The question;of whether the case can be tried in the United States or Ecuador under these;circumstances will now be decided. Texaco claims that it has done enough to;repair any damage and disputes the scientific validity of the claims?the;Amazonians (or their supporters) seem to have the resources to continue;fighting this suit in the U.S. courts.Requirements and Grading Rubric For Case Studies;I. Requirements for Case Study Report;For each case study assigned, write;a one page (double spaced) summary of the most relevant facts of the case;studies assigned for a certain week. Don?t write more than one page, as there;should be a careful consideration of what is most important about the case;Your summary should include the following points;?;Present;the facts most relevant to the ethical issues;?;Answer;two of the questions from the list presented below which would assist in;understanding the ethical issues of the case or that might lead to a resolution;of the ethical problem.;? Questions of fact;? Questions of interpretations;? Questions of analysis;? Questions of synthesis;? Questions of evaluation;? Questions of application;II. Grading Rubric;1.;Format;a.;Typed;b.;Double-spaced;c.;Title Page with Assignment;title, Student Name, Course Name, Week # and Date;d.;Reference Page;2.;Grading;Rubric;a. Documentation;and Formatting - 5%;i. A;quality paper will include the items from format above;b.;Organization;Cohesiveness - 15%;i. A;quality paper will include an introduction stating the purpose/intent of the;paper (5%).;ii. The;body of the content will be derived from the assignment itself, and will be;properly subdivided into sections based upon what the paper must address;(5%).;iii. In;a quality paper, the conclusion will summarize the previously presented content;(5%).;c. Editing;? 10%;i. A;quality paper will be free of any spelling, punctuation, or grammatical;errors. Sentences and paragraphs will be;clear, concise, and factually correct.;d. Content;? 70%;i. A;quality paper will have significant scope and depth of analysis/research to;support any statements. Relevant;illustration or examples are encouraged.;A quality paper will employ sound use of reasoning and logic to;reinforce conclusion, and opinions


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