Ethical Obligations and Decision Making in Accounting, 4/e 1
Case 6-7 Getaway Cruise Lines: Questionable Payments to
do Business Overseas (a GVV case)
Kirsten had her dream job, combining her love of accounting with traveling. She’d just had a big
promotion to Director of International Accounting for Getaway Cruise Lines. As the director in
the Houston office, she was currently overseeing final contracts accounting for the docking of
two small cruise ships during the 2016 Olympics in Rio de Janeiro, Brazil.
The idea behind using a luxury cruise ship as a hotel choice for the sporting events was based
upon high-end travelers wanting luxury, individualized attention, and security in a high crime–
ridden city. The marketing for the cruise lodging included secure transportation to and from the
ship to the sport venues each day and for evening entertainment. The ship also offered onboard
Kirsten called headquarters in Miami, Florida, to talk to her boss, Matt Davies, about the issues
of concern to her and directions on how to handle them. She wondered if the additional
requirements from Bob were legal payments.
Matt returned her call within the hour, but the conversation was not encouraging. He seemed in a
hurry and impatient with the request for guidance on the problems.
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“Now, don’t get too excited yet. I’m sure that all of these fees and requests for electricity and
water are just a normal way of doing business in Rio. Are you sure you understood Regan
correctly? Maybe you should use our translator and have the contracts re-translated so that the
details of the request are clear and there are not any miscommunications. I’m sure the translator
will show you that this is all just a misunderstanding. Use the water and electricity pricing sheet
and make sure that the contract states that any sales of water and electricity are on a surplus
basis, after the needs of our guests are met.”
“Matt, I do not mind using the translator; I am very concerned about the possibility of making
improper payments and the unease I feel about this. Maybe…”
“John, can you see why this situation has me so stressed? Do you think I am overacting?”
“You do have a sticky situation on your hands. You were the one that spoke with Regan. I know
that your intuition has been spot-on in the past and you should not ignore it in this situation. Say,
didn’t you mention that the CEO of Getaway had set a high ethical tone at the company as a top
goal of the line? If you feel the fees and sale of electricity and water are improper, and if it
doesn’t look like Davies will take a stand on it, can you contact the CEO? Don’t you think the
CEO would want to know if the company was about to make questionable payments or engage in
corruption?”
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The next morning Kirsten felt calm and confident that she could confront any prospect of bribery
with integrity. First, Kirsten met with the translator to get a new translation of the contracts.
Then she had a conference call with Bob Regan in the Rio office.
Bob was as overbearing as Kirsten remembered. He stressed how the “facilitation fees,” as he
called them, must be paid within a week or the ships would not be allowed to dock in the Rio
harbor. Kirsten asked more about the facilitation fees, whether a standard pricing list for the fees
was available, why he was requesting the amount for three ships when only two would be
docking, and more details on the sale of surplus electricity and water from the ship.
“But our obligations to our guests…”
“Yes, but if we do not help with utilities, the line will have to pay a fine of $100,000 a week for
not sharing the utilities.”
“But that was not part of the agreement.”
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“Are these additional requirements bribes to do business in Brazil even when the company has
an existing contract? That would not be honest nor in keeping with the company’s policies or
U.S. laws.”
“I do not think these requirements are bribes but rather the cost of doing business in Rio.”
Kirsten thought about how she would present the issues to Matt and wondered about the future
and alternatives open to her. After a brief period of reflection, she dialed Miami and asked to
speak with him. Matt was in a meeting, so she left an urgent voice mail and another message
with his assistant. While she waited for him to call back, she considered what might happen to
her if Matt was adamant about the cruise line making the requested payments. What about her
future with the line? Then she returned to the most important point, which was to be true to her
values.
Questions
1. Do you think the two payments are facilitation payments or bribes? Explain.
Under the Foreign Corrupt Practices Act (FCPA), a bribe is money or a gift given to
someone to change their behavior and perform an act or service that is not part of their
2. How might Kristen best explain her point of view to Matt while being true to her
values?
As Getaway Cruise Line’s representative in the Rio office, Bob Regan is likely to view
the facilitating payments and provision of surplus electricity and potable water to the
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passengers to make these payments and sooner rather than later. It will be a challenging
task for Kristen to explain her point of view to Matt in an effective manner.
It’s highly questionable whether an ethical reasoning approach will work with Matt. The
best thing for Kristen to do is emphasis the cruise line’s responsibility to provide for
passenger needs first and foremost with respect to the electricity and potable water. She
3. What are the likely reasons and rationalizations Matt will give for making the
payments discussed in the case?
Matt is likely to stress the need to satisfy the government to solicit its cooperation on
other matters of concern to Getaway. In a complex situation such as exists in this case,
4. Are there any levers that Kirsten can use to counteract the reason and
rationalizations and persuade Matt about the right thing to do?
In addition to the ethical concerns she has, Kristen can stress the amount of money the
government will make from passenger spending during the Olympics. This will provide