Lockheed Martin Corporation
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Lockheed Martin Corporation is an American aerospace organization that was established in 1912. It was initially referred to as Lockheed before it merged with Martin Marietta in 1995. The company was established by brothers Malcolm Loughead and Allan and was later renamed Loughead Aircraft Manufacturing Company. The organization was situated in Santa Barbara in California. Following its failure in 1926, Allan Loughead changed the company name into Lockheed Aircraft Company, but in 1929, the company was bought by the Detroit Aircraft Corporation.
Nevertheless, the company went bankrupt due to the great depression in the United States that negatively affected the aircraft industry. The company played a major role in the Second World War in that its new model, Lockheed Model 14 was used by the US and the British air force in prior and after the war. Despite its success, like any other company, Lockheed had its own challenges. Lockheed is a deceptive company because it has a number of past and present scandals. As a remedy to its scandalous reports, the company participated in the formation of the Foreign Corrupt Practices Act. Although the company has established its corporate ethics compliance programs, they do not address the controversial policy issues at the senior level of the organization.
Lockheed Corporation has been involved in numerous scandals in the past that have seriously affected its reputation and market in the world market. One of the scandals involved a Japanese politician known as Kodama who used his political power to create a large market for the Lockheed Corporation in Japan. Here, Kodama received a bribe worth $2.1 million from the Lockheed Corporation in order to influence most of the aircraft companies in the country. Because of the severe financial crisis it was experiencing then, the corporation indulged in that criminal activity in order to restore improve its performance in the market. Therefore, this fact makes the company a deceptive citizen corporation because bribery is a criminal case.
Still in Japan, the company collaborated with the Marubeni Corporation among other high-ranking members of the business, political, and underworld circles in Japan. Some of the dignitaries involved in the scandal were Minoru Genda (JASDF) and Eisaku Sato (Finance Minister). In fact, in 1957, the Japanese Self-Defense Force had an intention of purchasing the Grumman F-11 Super Tiger in place of the F-86 Sabre. However, this plan was destroyed by the influence the Lockheed Corporation had on senior officials of the military. Instead, the Force had to adopt the F-104. Although these acts led to a booming business in the corporation and japan, some Japanese business figures exposed the crime and the company was sued for it. As a result, Lockheed lost its good image among its customers.
Moreover, the company is a threat to public because of the scandalous activities associated with it in Saudi Arabia. This happened in 1970 and 1975, when the corporation paid $106 million to Adnan Khashoggi, a Saudi Arms agent. Khashoggi was used by the corporation as a marketing agent for its products in the country because of his influence in the Saudi Arms. The fact that the corporation increased its commissions from 2.5% to 15% encouraged him so that he totally gave in to marketing Lockheed’s products in the country. The constant entry, advice, strategy, and analysis that the dealer provided to Lockheed increased its sales in the country. Nevertheless, just like any other dubious act, this was exposed at a later date. Hence, the company suffered greater loss than before due to the corrupt activities.
In West Germany, the company paid some of the government officials a large amount of money so as to win contracts to sell its aircrafts in the country. In fact, it was realized that the German defense minister, Franz Joseph Strauss had been bribed with $10 million by Lockheed in 1961, in order to purchase 900 F-104 Starfighters. This was reported by the Lockheed lobbyist, Ernest Hauser who notified the senate investigators about the issue. Despite the intense investigation and provided evidence, the minister managed to deny the allegations and sued the lobbyist for slander, and eventually, the case was dropped. Later in 1976, the issue was reopened with the disappearance of the Lockheed’s documents in the Ministry of Defense. Upon investigations, it was established that German Bundestag had been bribed by the corporation through the payment of his air ticket of Manfred Worner to and fro Lockheed aircraft industries in the United States. With these facts, it is appropriate to say that Lockheed is a corrupt company and that it poses a great risk to the other business in the global market.
Moreover, Lockheed is one of the most unethical companies in the world because it deceives the client that it is doing well in business, yet it only survives by engaging in corrupt deals with government agencies of various countries. This is also evidenced by the scrupulous deals that it undertook in Italy. There, it managed to bribe politicians belonging to the Christian Democrat movement in order to persuade the government to buy Lockheed’s C-130 Hercules planes for transport for the Italian Air force. These allegations were made known to the public through the publications made in the political magazine. In the magazine, the allegations were targeted at the top government officials especially the Giovanni Leone, the then president, who in turn, was compelled to resign from office in 1978.
Another instance of the Lockheed corrupt activities is an incidence that occurred in Netherlands. Here, Prince Bernhard is said to have received a bribe worth $1.1 million form the corporation in order to ensure that it won a contract of selling aircrafts in the government. Bernhard was praised of his efforts to promote economic welfare of the country having been in many influential committees in over 300 hundred companies in the country. Despite denying charges, Bernhard is reported to have admitted taking the bribe before his death in 2004. These corrupt reports about the Lockheed Corporation are enough prove that it is a deceptive corporate citizen in the business world.
As a result of the numerous scandalous cases of different corporations in the world, the department of the Justice (DOJ) in conjunction with the Securities and Exchange Commissions (SEC) conducted investigations via the Foreign Corrupt Practices Act. The Lockheed Company is said to have participated in the formation of the act in an attempt to eradicate the corrupt cases in the corporate world. The FCPA is an act that entails three antibribery provisions by business firms. All the provisions are geared towards promotion of transparency, integrity and sincerity in any business transaction that involves foreign corporations in order to get rid of corruption in the world.
Following the dubious act involving Lockheed and Titan corporations, Lockheed pled guilty for the bribery acts that it had committed against the FCPA rules and regulations. Consequently, it agreed to withdraw the merger plans with Titan and pay the FCPA penalty that amounted to $21.8 million fine and a civil settlement of $3 million. It also cooperated and paid a total of $24.8 million that was calculated from the other fine requirements. Its compliance with these rules and regulations was a clear indication that Lockheed Corporation was in total support for fight against corruption in the business world. Therefore, steadily, but gradually, the company began rebuilding its poor reputation in business.
Ethics and compliance programs are highly indispensable responsibilities in any organization that aims at boosting its performance in the global market. Nevertheless, mere introduction of the programs is useless if there is no proper elements and effective implementation by the company. Therefore, it is notable that every business firm that intends to succeed in its global operations develops programs that have correct elements in them. An effective compliance program must involve implementation of written procedures, policies, and standards of conduct; effective training; designation of a compliance officer and committee; efficient communication channels; internal auditing and monitoring; prompt response to criminal offences; and enforcement of standards via clear disciplinary measures.
In its further attempts to fight corruption, the company introduced corporate ethics compliance programs for its entire staff. In fact, the corporation has come up with self-governance compliance program that entails a set of standard code of ethics for the employees, agents, clients, suppliers, contractors, and representatives. The standards require that the company conducts any transaction with honesty, trust, respect, citizenship, and responsibility. The corporation also recognizes the shareholders, employees, communities, customers, and suppliers as entities of which it is obligated to offer fair an appropriate treatment. Additionally, the corporation ensures that there is a safe and favorable environment for its employees, adherence to the rules, knowledge of the laws, proper and accurate records of work, protection of fellow employees, and careful bids, contracts and negotiations, and avoidance of illegal or questionable favors from the governmental, non-governmental, and informal personnel.
In its self-governance compliance program, the corporation has ensured that there is an effective committee that oversees all its functions and responsibilities. This committee is the Corporate Ethics and Business Conduct Steering Committee. Additionally, the heads of the committee are the operating officer and the company president. It also consists of other senior company officials, such as, the vice president, chief financial officer, senior vice president, general counsel, and the internal audit’s vice president. In order to provide direction, counsel, and guidance, the committee regularly meets. Through such meetings, the committee ensures that there is compliance with policies, regulations, rules, and ethics, and programs in the corporation.
What is more, Lockheed Company has facilitated the development and distribution of its code of conduct to over 125, 000 workers. This way, the corporation ensures its entire staff understands and complies with the rules, policies and the organizational ethical behaviors as stipulated in the code of conduct. In fact, the corporation updated its code of conduct in 2003 in order to integrate sections 301 and 406 requirements of the Sarbanes-Oxley Act. This code of conduct offers all the same reference for the ethical direction for the entire staff in the company. At first, every supervisor would distribute the code to every individual employee. With these attempts to maintain ethical behaviors in the company, it is justified to say that Lockheed is a true corporate citizen.
Another way in which Lockheed Corporation is appears to be a true corporate citizen is through its communication programs. The company also has helpline services for all the employees in order to facilitate effective communication. These services are very useful whenever there is any reporting to be done in the corporation. The Lockheed ethics officers are available for both corporate level and operating units for all the employees. Through training programs, the corporation employees are taught how to use the available materials and resources fearlessly in order to have their issues settled in time. In fact, the organization has put in place a policy that allows all the employees to freely inquire, report any violations regarding business, and express concerns related to work.
Lockheed Corporation is also involved in the ethics and compliance initiatives through the training programs developed for its employees. These are programs that the organization develops centrally, but administers them locally. Additionally, the programs are designed so as to ensure that the staff is sensitive to the corporation standard and ethical issues. The programs are also instrumental in creating employees awareness of the business conduct, regulations, and applicable laws in accordance to their job requirements and specifications. Besides, the training programs are beneficial as they inform the company and its employees about the serious consequences of any possible violations. Therefore, the corporation’s efforts to comply with the ethical standards are an explicit indication that the company is a sincere corporate citizen.
In its commitment to ethical issues, Lockheed Company has come up with column in its newspaper, Lockheed Martin Today. In these columns, the company posts its ethical issues so as to reach out to all its employees. Every ethics column in the newspaper emphasizes on the present activities of the Office of Ethics and Business Conduct, and other issues in general. More so, there is another column for a periodic guest published as a solid proof that the corporation is involving the top management in the compliance programs. In addition, there are other related materials, links, and items that are made available to all the employees in different corporation websites.
Another effective program that the company has adopted in attempt to promote ethical compliance is the bi- annual survey conducted on employees on confidential and voluntary basis. These surveys are carried both on paper and on-line and the results are used by the management to comprehend the ethics views of the employees and identify essential adjustments for effective ethical and compliance programs. There is also a policy that has been adopted so as to enhance voluntary disclosure of the irresponsible government officials who violate the laws, and any possible worker misconduct. This is a very effective method of ensuring total compliance to ethical behavior, and eradication of any improper conduct in the corporation.
On the contrary, the company commitment to ethical compliance is unsatisfactory because they do not apply to the higher management. Although the corporation’s newspaper has an executive’s column, the initiative does not majorly focus on the senior employees. Because they are at the supervision level, the management fails to observe the codes of conduct, hence frustrating the other employees’ ethical compliance efforts. Following the scandalous deals that the company entered with foreign governmental authorities, investigations indicated that the main culprits in the organization are the top officials. This is because the management in influential and has a lot of access to foreign transactions compared to the ordinary employees. Therefore, the company ought to initiate plans that incorporate the development and implementation of its policies at the senior levels.
In conclusion, despite the ethical compliance programs that Lockheed Corporation has developed, the company reputation has not effectively changed. This is because of the corporation’s failure to incorporate the programs in the development and implementation of the senior level policies. Without doubt, it is justified to say that the company is a deceptive corporate citizen because it has numerous dubious deals. Its involvement with the formation of the FCPA is a mere cover-up of its many corrupt activities. Therefore, it ought to fully participate in the promotion of ethical compliance efforts in order to promote its image in the corporate world.