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1.

1 INTRODUCTION

The reality of life, many people choose to be a businessman as a way to gain an
advantage and as a way to fulfill their daily needs. To becoming a successfull person, a
businessman must know how ethics in business. If the company has a good products quality
and useful for society because managed with proper management in the production, financial,
human resources and others, but do not have ethics that will be the cause of why a business
can fail. And what is business ethics ?

Ethics, sometimes known as philosophical ethics, ethical theory, moral theory, and
moral philosophy, is a branch of philosophy that involves systematizing, defending and
recommending concepts of right and wrong conduct, often addressing disputes of moral
diversity (Wikipedia)

A business, also known as an enterprise or a firm, is an organization involved in the
trade of goods, services, or both to consumers (Wikipedia).

And how shall we define business ethics ? A simple definition is easy enough. The
term is, just a combination of two very familiar words, namely business and ethics. Just
as we can talk about medical ethics as concerned with the morality of medical practice and
policies, or political ethics as concerned with morality of political affairs, so also can we talk
of something called business ethics as being peculiary concerned with moral issues in
business.
Business ethics is about rights and wrongs in the world of business. It is about
honesty, trust, respect, and fairness in all business dealings.
Business ethics in the company is a very important, it is to establish a good company
and can be a high competitiveness , and has the ability to create a high value. Business ethics
usually starting from strategic planning, good organization, the transparent procedures system
is supported by reliable company culture and company ethics are implemented consistently.
Basically the practice of business ethics will always be a profitable for a company,
because : able to reduce costs due to averted the possibility a friction of internal and external
companies, able to increase the motivation of workers, protect the principle of freedom of
trade , able to increase competitive advantage .
Inevitably, unethical actions by the company will provoke retaliation from consumers
and the public and will be counter- productive. This can reduce the value of sales and the
value of the company . While companies that uphold ethical values of business , in general
including companies that have high satisfaction ratings work as well , especially if the
company does not tolerate unethical. A businessman should understand that the qualified
employees are the most valuable asset for the company. Therefore, the company should have
to retain their employees as much as possible.



1.2 STUDY CASE

Lapindo Brantas Inc Mudflow

In concept development policies already incorporate environmental sustainability
factors as being absolute to be considered a mistake, but in its implementation policy
orientation that is reflected through the various laws related to natural resources. Rules are
make tend to optimize the use of natural resources without adequate protection, thus opening
space as possible for the owners of capital.
Weak implementation in the fields of law governing the conduct and supervision of
preservation occurs also in the environmental field. For example, the Environmental Impact
Assessment ( AMDAL ) and the General Spatial Plan (RUTR), implementation is only a
reactive policies and temporary or a policy that is a good concept, but the implementation is
not monitored continuously, weak in management control, tend to be consistent and
persistent. Something similar conveyed that the high damage of natural resources in
Indonesia because one of them is the number of sectoral policies and exploitative overlap in
the management of natural resources.
The impact of the exploitation of nature as a result of a mistake of implementation of
the development policy of the Indonesian people began to be felt in recent years. Various
disasters occur frequently occur, ranging from the disaster caused by the effects of natural
phenomena such as the tsunami in Aceh, landslides and floods in many areas until the
disaster that caused the human error factor in the attempt to exploit nature as Buyat case in
Sulawesi, in Freeport Papua up with who is now a national disaster that is the case of the
Lapindo mudflow in Sidoarjo, East Java.
Lapindo mudflow case is one example of the implementation of development policies
has been a shift in orientation, ie development policies tend to ignore environmental
sustainability factors. Or a policy that does not include environmental factors as being
absolute to be considered from the planning phase to the implementation phase. One example
is his unfulfilled environmental policies that should be taken into consideration before a
company gets permission to do business. Environmental policy considerations include: the
distance of houses with exploration location, standard operating procedures comply with
exploration techniques, and environmental sustainability for the future.
Broadly speaking, implementation, monitoring conservation and environmental
protection, among others, run the AMDAL law is a preventive procedure that provides a
thorough and detailed analysis of all the possible direct effects of the proposed project,
possible ways to overcome them and work plan manage, monitor and evaluate the impacts
caused and effective implementation of the work plan.
Lapindo Brantas Inc gas drilling contractor drilling through Medici Citra Nusantara
Inc which is an affiliated company of Bakrie Group. The contract was obtained Medici with
the tender of Lapindo Brantas Inc worth U.S. $ 24 million. But in the case of licensing
procedures have occurred at the misunderstandings that there are several levels of licenses
owned by Lapindo. Lapindo exploration concession granted by the central government in this
regard is the Oil and Gas Management Agency ( BP Migas ), while its concession license
granted by the Government of East Java, while approvals for activities issued by the Local
Government in Sidoarjo district that gives freedom to the Lapindo to conduct their activities
without realizing that the Spatial Plan ( RUTR ) Sidoarjo regency is not in accordance with
the plan of exploration and exploitation.
The impact of mudflows sourced from wells in the village Renokenongo, Porong,
Sidoarjo regency, East Java since May 29, 2006 This has resulted in a heap of mud mixed
with the gas as much as 7 million cubic meters, equivalent to a distance of 7,000 kilometers,
and this number will continue to grow when handling the mud flow is not seriously
addressed. Lapindo hot mud gas besides causing environmental damage, with average
temperatures reaching 60 degrees Celsius can also cause damage to the physical environment
of communities living around the mudflow. Writing above the physical environment is to
distinguish the natural environment and artificial environment, which in this case David
Silalahi consider this as the beginning of the crisis because of the human environment as well
as the perpetrators become victims. The destruction of the physical environment has been
perceived for various parties, there are :
1. Collapse of the industrial sector in Sidoarjo. Which is known as a buffer Sidoarjo East
Java, especially in Surabaya in the industrial sector. Until now 25 can not operate a
business sector which resulted in the loss of livelihood of thousands of employees
working in the industrial sector.
2. Collapse of the economic sector as a result of damage to terrestrial infrastructure such
as damaged roads, highways and other land such as economic track railroad etc.
3. Losses in other sectors such as agriculture, aquaculture etc. So far it has been
identified in the form of agricultural land area of rice fields were damaged, according
to the Director General of the Ministry of Agriculture Food Crops Sutarto Alimoeso
said agricultural area in Sidoarjo, East Java, which is exposed to the Lapindo
mudflow area of 417 hectares. Mud has inundated twelve villages in three districts, no
less than 10,426 units of houses submerged in mud, flooded public infrastructure,
stagnant About 30 factories were forced to suspend production and lay off thousands
of workers. Carrying 1,873 workers affected by the mud, and moving force of more
than 8,200 lives and displaced 25,000 people there.
4. The social impact of people's lives around as a means of shelter, education, health,
water supply etc. That the direct effect of mud causing respiratory tract infections and
skin irritation. Further explained that the sludge also contains carcinogens that
accumulate in the body when excessive can lead to cancer and excessive
accumulation in children will lead to reduced intelligence.
5. Laboratory test results also find that it contains Toxic and Hazardous Materials ie
content (B3) which already exceeds the threshold. The results of water quality testing
Lapindo mud on June 5, 2006 by the Public Works Department of East Java Province,
showed that laboratory testing of the water contained in phenol content. Direct contact
with the skin can cause skin itching like burnt and itch rash. Phenol can cause a
systemic effect or chronic effects if the phenol into the body through food. Systemic
effects of phenol can cause rupture of red blood cells ( hemolysis ), palpitations
(cardiac arrhythmia ), and renal impairment. This suggests that in addition to the
impact of physical environment, the mud also lead to other threats that are very
detrimental health effects in the future and this would not be known to the victim
community at large .

In a grammatical sense, corporate crime is a violation or criminal offense committed
by the corporation, which is certainly related to civil relationship, meaning that the
relationship that raises the criminal offense is a civil action. Drilling aimed at the mining
Brantas gas block by Lapindo Brantas Inc, According to the definition of corporate crime is a
criminal act, while the continued existence of the human error or human error and result in a
loss for others is a criminal act.
Human error made by Lapindo Brantas is not the installation of casing pipe in drilling
activity resulting in the disaster. Installation chasing ( casing ) is not done earlier by Lapindo
can be used as an omission of a corporation with the non-performance drilling safety
standards prior to implementation. Corporate crime corporate crime in question is the field of
the environment, which is the action of pollution and environmental destruction committed
by a corporation called Lapindo Brantas Incorporated. The impact caused by the presence of
such corporate actions detrimental not only materially, but also have adverse environmental
community Sidoarjo. Things like this can be regarded as a criminal act.
In the case of Lapindo found several violations of the law could be charged under
provisions in the legislation include environmental law (UULH), criminal law (KUHP) and
civil law (KUHPer). Up to this time that efforts in the response to the perceived impact of the
various sub-optimal compared to the damage that occurred. Until now, the real action of
Lapindo Brantas (Lapindo) as holders of exploration permits and exploitation in the Brantas
Block new limited indemnification against physical damage suffered by the citizens of the
affected areas. While efforts to stop the mud flow and the response to impact damage and
other environmental pollution as a result of the disaster has not been handled properly and
systematically. These events are certainly inviting the public to comment on the question
where and to what extent the location of Lapindo Brantas Inc accountability.
From the description above cases, it is known that negligence by Lapindo Brantas Inc
is a major cause of the overflow of hot mud in Sidoarjo, but instead argued Lapindo and
reluctant to take responsibility. When viewed from the side of business ethics, what is done
by Lapindo Brantas Inc has clearly been violated business ethics. Lapindo Brantas Inc has
done over exploitation and negligence to cause a major disaster which resulted in severe
damage to the environment and social .

Ethical view of the Lapindo mudflow

Large-scale exploitation by Lapindo Brantas Inc proves that is willing to justify any
means to gain an advantage . And reluctance Lapindo Brantas Inc is responsible for proving
that Lapindo Brantas Inc prefer to protect their assets than do the rescuers and improvements
over the social and environmental damage that they cause .
This is done by Lapindo Brantas Inc has violated the principle - ethical principles
exist. The principle of the right and deontology which emphasizes that every human being
has the right to environmental quality, but with the events of the mud, residents experienced
the impact of poor environmental quality. While the perspective of utilitarianism asserts that
the environment no longer be treated as an economic externality. If environmental impacts
are not taken into account in the cost benefits, this approach becomes unethical especially if
environmental damage imposed on others. However, in the case of Lapindo Brantas Inc
precisely extract resources in Sidoarjo to economic interests alone, and are less likely doing
maintenance on nature, as evidenced by operational cost savings on installation of chasing, so
menumbulkan great distress. Furthermore, the damage caused by such errors Porong impinge
on innocent citizens.
Business ethics on the principle of distributive justice is also violated by Lapindo
Brantas Inc, because the company does not do justice in terms of equality, the principle of
fair saving, and social justice Lapindo Brantas Inc was judged not to have concern for fell/
ow human beings or the environment, because it considers the event a natural disaster
which is then used as an excuse to escape liability company. With all the actions taken by the
Lapindo Brantas Inc is automatically also means virtue ethics has been violated.
It is proved that the business ethics held by a company will greatly affect the viability
of a company. And all kinds of business ethics waiver would threaten the security and
continuity of the company itself, the environment, natural, and social .




3.0 QUESTIONS

1. What are the systematic, corporate, and individual ethical issues raised by this case?
2. As a big company, why Lapindo Brantas Inc doesnt take responsibility for the
disaster is caused by their negligence as a gas company?
3. What the governments response to business ethics conducted by Lapindo Brantas
Inc?
4. Is there a possibility Lapindo Brantas Inc already cooperating with the government in
a negative context to not make this tragedy into law?
5. The condition of Lapindo Brantas Inc which is a source of livelihood and employment
of local people, especially residents in Sidorjo, East Java. What will happen to them
after this tragedy?
6. Does its incident could lead to rising unemployment and poverty in Sidoarjo?
7. How to evacuate local residents from the effects of Lapindo mudflow?
8. For the local government, what should they do with the disaster?
9. Whether ethical standards in the problem of Lapindo mudflow?
10. How responses Supreme Court related problem being faced by the Lapindo Brantas
Inc and Sidoarjos resident
11. How government to anticipate a similar incident which could possibly occur in
companies in the same field?
12. Who would be responsible for the accident of Lapindo mudflow? Is it Lapindo
Brantas Inc as a manager or the government as a provider as a business license?
13. As a injured residents, what should they do to sue Lapindo Brantas Inc as a manager?
14. As we know that this conditions was since 2006, is it possible to stop the disaster?
15. What is the most realistic way for local resident to faced this tragedy?