The Case of Dow Corning

Pentagate, as the media dubbed the problems with the Pentagon's procurement procedure, involves contractors who offer consulting services to companies trying to win contracts with the military. In most cases, these consultants formerly worked within the military themselves, and they maintain contacts within the Pentagon. This is what makes them valuable as contractors. At the same time, they feed "inside" information to companies regarding who else is bidding on a contract, which projects are likely to get funded, and even components of actual bids. Obviously, having this type of information can give a company a significant advantage over a company which is truly "blind" during the bidding process.

In each of these cases, the behavior which led to the unethical conduct is based on greed. In the case of Dow, the company wanted to reap the profits associated with a product that had high demand. Drexel earned fees and commissions from the junk bond deals, and the Pentagon consultants earned significant income from the fees they received while the defense contractors were able to receive contracts even when the military was shrinking its spending.

But the ethical questions that arose from these transactions are troubling because, with the exception of Dow Corning, there were no

t clear-cut life and death issues at stake. Dow's behavior is the more troubling because it is entirely possible that marketing decisions were weighed more heavily than health concerns.

Milken's situation is not as straightforward as the Dow case in that his actions did not result in anyone's life being put directly at risk. However, because of Milken's actions, a pool of investor companies was formed which essentially purchased each other's junk bonds. Pension funds and other institutional investors were thus put in the position of purchasing bonds that may not be able to pay the high returns they initially promised, which puts the income of those dependent on such funds at risk. Moreover, companies that are issuing junk bonds are hardly in a financial position to be purchasing the junk bonds of others, with the result that the jobs and immediate income of employees who have no control over their company's investment activities were also put at risk. Insider trading violates the "fairness" principle that has become popular in American business, but the other activities that Milken and Drexel participated in were perhaps of greater ethical concern since innocent, and unknowing, people and their incomes were put at risk.

Dow had potentially damaging medical studies on dogs that it did not reveal to the FDA when it obtained approval for the silicon implants. While the company has not revealed exactly why it did not release the studies, one can conclude that the company assumed that the studies would make it difficult to obtain approval for the product if the FDA were aware that the product did apparently cause an adverse reaction in some cases. But the company went ahead and marketed the product, downplaying or ignoring its own findings that suggested the implants could have long-term health effects for the women who had the procedure done. The ethical issue here stems not only from the decisi

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