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ISSUES IN ACCOUNTING EDUCATION Vol. 30, No. 4 2015 pp. 311-327 American Accounting Association DOI:2308/iace-51178 Brewing Up Controversy: A Case...

In this activity, you will locate and evaluate current ethics programs to provide a foundation for revising an existing ethics program. Considering what you have read in this course, begin investigating an organization’s ethics program by reviewing their website. You should select an organization of interest to you as a place in which you think you might like to work.

For your discussion:

  • Choose the ethics theory most applicable to the issue in the article you chose.
  • As a starting point for your investigation, review the organization’s documents and policies on their website. Many organizations have information on their ethics policies available. Identify current policy statement(s) and describe the current environment created by these policies.
  • Indicate whether the organization has a clear ethics program or if it has only an espoused ethics policy.
  • Identify at least two areas for improvement to create a strong ethical culture, based on the organization’s ethics program. 

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ISSUES IN ACCOUNTING EDUCATION American Accounting Association Vol. 30, No. 4 DOI: 10.2308/iace-51178 2015 pp. 311–327 Brewing Up Controversy: A Case Exploring the Ethics of Corporate Tax Planning Megan F. Hess and Raquel Meyer Alexander ABSTRACT: This instructional case explores the ethical issues surrounding the corporate tax-planning and tax-avoidance strategies of multinational organizations. Drawing on the real-world experiences of SABMiller, one of the world’s largest beverage companies, this case provides a launching point for students to consider the ethics of corporate tax planning. The ethics of multinational tax practices, especially the use of tax havens, has recently become the focus of media and legislative debate in both the U.S. and the U.K., and many well-respected companies, such as General Electric, Apple Inc., and Starbucks are now feeling the pressure to reform. In a post-case learning assessment, students demonstrated significant improvement in their understanding and indicated that they enjoyed discussing this controversial issue. The ‘‘ Implementation Guidance ’’ section and Teaching Notes offer guidance for in-class discussion of the ethical and tax issues in this case. Keywords: corporate tax planning; multinationals; ethics; tax havens. INTRODUCTION M aria Smith 1 put down her copy of The Guardian newspaper with a sigh. The headline read, ‘‘ Brewer Accused of Depriving Poor Countries of Millions in Revenue, ’’ ( Lawrence 2010 ). The article was written about Maria’s employer, SABMiller, and it presented her efforts to design and execute a sophisticated global strategy for minimizing the company’s tax payments as nothing less than a ‘‘ tax dodge. ’’ Maria had been recruited from America to work for SABMiller in London, based on her talent for corporate tax planning. Suddenly, her hard work had become the focus of a global debate over the ethics of such practices. How should SABMiller respond to these accusations? Were these critics right to question SABMiller’s practices? As the protesters began to gather in front of SABMiller’s London ofFce Megan F. Hess is an Assistant Professor and Raquel Meyer Alexander is an Associate Professor, both at Washington and Lee University. Supplemental materials can be accessed by clicking the links in Appendix C. Published Online: June 2015 1 Although the organizations referenced in this case study are real, we have created a Fctional protagonist to explore the individual-level, decision-making challenges presented by this issue. 311
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brandishing ‘‘ Stop Corporate Tax Dodging ’’ signs, Maria knew that she had an important decision ahead. The company would be looking to her to make an informed recommendation to the board of directors about whether SABMiller should change its approach to tax, and if so, how. BACKGROUND ON SABMILLER In 2010, SABMiller plc was one of the world’s largest brewers and home to many popular brands, including Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft, and Grolsch. Headquartered in London, the company employed more than 70,000 people and had operations in 75 different countries around the globe ( SABMiller 2010 ). Despite this global scale and reach, SABMiller recognized that brewing beer was ‘‘ essentially a local business: beer brands are typically rooted in local communities and have their own rich histories and heritage ’’ ( SABMiller 2010 ,5) . Thus, SABMiller worked to leverage the international appeal of its most popular brands while also cultivating a portfolio of local brands that might beneFt from the skills and efFciencies that had fueled the company’s past success. SABMiller’s vision was to be the ‘‘ most admired company in the global beer industry, ’’ ( SABMiller 2010 , 2). The company took its global reputation very seriously and was pleased that in Fortune’s 2010 ranking of the world’s most admired companies, SABMiller had risen to third place in the worldwide beverage sector ( Fortune 2010 ). To further advance its global reputation, SABMiller articulated its Fve core values as follows: ‘‘ Our people are our enduring advantage; accountability is clear and personal; we work hard and win in teams; we understand and respect our customers and consumers; and our reputation is indivisible ’’ ( SABMiller 2010 , 2). SABMiller was particularly proud of its efforts in developing nations. ±or example, it announced in December 2009 that 8.45 percent of the shares in its South African subsidiary would be placed under black ownership as part of the company’s commitment to the Broad-Based Black Economic Empowerment program in South Africa. The ‘‘ Zenzele transaction, ’’ as it was called, created some 40,000 new shareholders among SAB employees and qualifying retailers, and it also created a charitable foundation to beneFt the wider South African community ( SABMiller 2010 , 40). SABMiller’s chairman articulated the company’s philosophy toward corporate social responsibility as follows: ‘‘ We believe that the most effective way for SABMiller to meet its sustainable development objectives is by maximizing the success of the business ’’ ( SABMiller 2010 , 40). To that end, SABMiller hired locally, sourced locally, and worked with local suppliers to develop the quality and type of materials it needed for its operations wherever it could. According to internal performance measures used by the company, in 2010 SABMiller earned $1.9 billion in proFts, posting revenue gains of 4 percent and an earnings per share (EPS) increase of 17 percent. SABMiller attributed much of the growth in earnings to reductions in the company’s effective tax rate ( SABMiller 2010 , 1). Table 1 compares SABMiller’s 2010 Fnancial performance according to International ±inancial Reporting Standards (I±RS) with those of its primary competitors, Anheuser-Busch InBev and Heineken Holding N.V. These I±RS-adjusted results paint a much bleaker picture for SABMiller. Indeed, the company under-performed relative to its competitors in nearly every category. This comparison also suggests that both Anheuser-Busch and Heineken were even more aggressive in their tax-avoidance efforts than SABMiller. SABMILLER’S CORPORATE TAX PLANNING The Guardian newspaper article giving Maria such heartburn drew upon a lengthy report written by a tax advocacy group called ActionAid (2010) . ActionAid is a non-governmental organization (NGO) headquartered in Johannesburg, South Africa with a mission of ending poverty and injustice. ActionAid Frst became interested in SABMiller when the brewer bought Accra Brewery Limited, West Africa’s Frst brewery and the pride of Ghana. ActionAid was concerned 312 Hess and Alexander Issues in Accounting Education Volume 30, No. 4, 2015
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1 Running head: ARTICLE ANALYSIS Article Analysis
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Article Analysis
Utilitarianism theory of ethics applied in this case. SABMiller Company was...

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