Ethical Conduct Issue at RASCO

Creating a favorable working environment is vital for the systematic development of an enterprise. The efficiency of work at many companies anticipates the proper motivation of the personnel, which is the basis of success for any firm. The distinct system of the income distribution bears a particular importance at the companies dealing with oil production. Although oil is in great demand as non-renewable resource, the countries holding substantial oil deposits cannot ensure high living standards for their citizens because of internal difficulties. One of such countries is Libya. The unresolved issue of corruption in many African countries paralyzes the public sphere, health care, education, and business. The Libyan oil companies also suffer from corruption. Ras Lanuf Oil and Gas Processing Company (RASCO) is the firm where the issue of corruption remains unconsidered. Rethinking the management strategies, redistributing costs and incomes, optimizing production comprise the tasks enabling to overcome the problem.

Corruption identifies the violation of the financial norms by anticipating bribery and unfair assignation of the incomes to separate personalities having access to the costs. Certainly, the impact and statistics of illegal activity linked to corruption remain hidden; thus, it seems difficult to establish the statistics and the amounts of bribery. As the issue of corruption is the ethical problem, proper legal regulations with the account on historic events in Libya could serve to consider the ways of overcoming corruption. Despite the revolutionary events and the destruction of the Gadhafi regime in the country, the shifts to the changes go slowly as compared to Libya’s neighbors Algeria and Egypt (Zoubir & White, 2015). As oil comprises 95% of export in the country (Lima, 2015), RASCO is not the only company suffering after the revolution. Thus, ethical conduct should be based on educating the personnel, approving and controlling the legislation forbidding bribery, and establishing total quality management to overcome corruption at RASCO because it enables the staff to engage into the activity of the company, create an open market due to growth of private sector, and strengthen corporate ethics.  

The Analysis of Finances and Ethics RASCO

Oil production is vital for the Libyan economy. Comprising 95% of Libyan export, oil production makes the country dependent on the pricing on crude oil worldwide (Ali & Harvie, 2015). The lack of diversification and the presence of alternative fields to supplement gaining GDP incomes can lead to severe economic difficulties and lower the living standards of this developing country. That is why oil industry deserves peculiar attention in regulating its management policy.

RASCO follows the conception of environmental protection as a part of its policy and economic activity. Founded in 1984, the firm produces estimated 220,000 bbl/d (35.000 m3/d) of fuel resources (Saleh & Salem, 2013). The total number of employees comprises 3,552 individuals, including 285 managers and 128 quality employees (Saleh & Salem, 2013). The firm does not limit its activity to oil production, but it attempts to maintain a healthy environment and makes the utility products such as ethylene and polyethylene, tetrameter carbon mixture, thermal gasoline and fuel oil (Ras Lanuf Oil and Gas Processing Company, n.d.). Liquid Petroleum Gas (LPG), straight run Kerosene and Naphtha, diesel oil, fuel oil are among the fuel products that the company offers (Saleh & Salem, 2013). Determining the environment activity of the company with the establishment and prevention of detrimental impact, fighting against marine pollution and dumping or recycling the production waste are three primary goals of RASCO.

The study of financial condition of RASCO requires a profound work of analysts and scholars. Although the company attempts to produce and export a substantial amount of oil and gain high profits, the crisis following 2011 is visible in the company. The insufficient design of the website has little information on the company’s activity, the absence of the financial reports on the webpage show that RASCO needs profound changes and development. RASCO is a government agency, as it adheres to National Oil Corporation (NOC) (Ras Lanuf Oil and Gas Processing Company, n.d.). The previous years, particularly 2008 marked by world global crisis, also influenced Libya and RASCO in general. The drop of the overall economic indices was peculiar for the region, so the authoritarian regime followed. High crisis and the inability to gain higher income were the reasons of corruption in oil business and RASCO in particular.

A financial crisis is in close connection with the absence of ethics. The socialism peculiar for the North African region remains, and the government sector is incapable of establishing proper management aimed at business development. Underpaying the personnel and the absence of knowledge of how to make the public and media learn and inform of the facts of corruption lead to the stagnation of the company in general (Lima, 2015). As the financial state during the last five years worsened despite the successful sales of oil, the violation of financial processes took place. Considering the oil sphere, Ali and Harvie (2015) distinguish the increasing role of human resources as the increasing government development spending on human capital alongside with technical development and public capital stock arising from oil production can improve non-oil sector (p.3).

The bribery in the Libyan government predetermines the absence of the regulatory policy and permissiveness of the state system. Corruption in Libya hinders proper governance of business and creates obstacles for foreign direct investments (FDI) (Alemu, 2013). Although Alemu (2013) does not distinguish Libya as corrupted country, the absence of morality towards RASCO workers and low motivation are unethical actions of the leadership of RASCO. The insufficiency of domestic cost and the competitiveness of oil can promote the acquiring of FDI, but corruption hinders proper business development and lowers the budget.

Misusing oil revenues and the military conflict of 2011 made the technical progress and the access to technical modernization at RASCO impossible (Ali & Harvie, 2015). The company exports oil to France, Italy, the UK, and to the rest of the world via Europe, which makes RASCO a global refinery. Low living standards in Libya and the serious exploitation of the personnel at RASCO violate their rights for payment and labor protection. Work in several shifts exhausts the personnel who do not see the financial results of their work (Saleh & Salem, 2013).  

The incomes coming as the result of economic activity concentrate in the hands of the authorities that limit the access to costs and distribute them to public after bribery. The absence of ethics at RASCO is in a system connection with financial problems and the lack of incomes in spite of profound potential of the company. The absence of workable legislation and anticorruption organs reduce the economic potential of RASCO. Implementing the legislation to protect labor and human rights can eradicate corruption within RASCO, help gain higher profits, and establish the fair and clear system of rewarding and financial responsibility for the commercial crimes. 

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The Ways of Overcoming Corruption at RASCO                     

Improving the management and directing the company staff towards higher performance are the key issues of RASCO. Still, raising the incomes is not enough to eradicate corruption. Creating equal access of the personnel to the information of the inflows and a clear system of cost distribution can help maintain healthy financing of the board and the subordinates.

The leadership model chosen for the organization suffering from corruption should take into account the thought of the majority. Such a conception anticipates democratic management within RASCO. At the same time, hierarchical organs are to deliver the managing decisions and control their implementation. Yet, if the heads of departments cannot perform their duties and violate the legal activity, assign costs of the company, then informing of their frauds should come into action (Marquet, 2012; Zoubir &White, 2015). If the leadership of firm assigns the company costs and the workers receive lower salaries, the organs protecting their interests are to implement the material responsibility measurements. The autocratic style of leadership in RASCO as well as the state regime of Muammar al Gadhafi anticipated limited access to costs and their management.

Managing petrochemical companies anticipates enhancing effectiveness and efficiency. Industrial production requires qualitative leadership, the result of which will be raising the quantitative income indices. Total quality management (TQM) is the way out of the crisis peculiar for RASCO. Thus, Saleh and Salem (2013) consider TQM at RASCO as necessitating proper recovery from the problems it deals with. Furthermore, Saleh and Salem (2013) mention 15 following factors emerging from RASCO activity: the absence of continuous improvement and innovation culture, the problem of employee resistance to change, the absence of teamwork, and insufficient management style. Furthermore, there comes the lack of internal and external customer satisfaction, government support, employee involvement and empowerment, the absence of quality strategic planning, unsatisfactory measurement and evaluation, the lack of resources and requirement of TQM and others (Saleh & Salem, 2013).

Educating the personnel on the requirements sufficient for business demand in the petrochemical sphere can help eradicate corruption within RASCO. As Alemu (2013) claims, the educative approach in improving business anticipates three views on the impact of education upon the business process. The first perspective reveals the impact of education on increasing labor “efficiency units”, which makes an employee more efficient. The second vision considers educated workers as capable of performing complicated tasks and non-substitutable by unskilled personnel. The third perspective oversees the education and skills of workers as learning and the creation of new technologies generating more output with the same input (Alemu, 2013). Therefore, educating can become the way to optimize the results of production as the way of gaining higher income for the company. Moreover, the educated personnel will be self-sufficient enough to learn and inform of the facts of fraud due to their deeper knowledge and a clear understanding of financial processes and their requirements (Alemu, 2013).

Legal issues on overcoming corruption at RASCO are as valuable as better management. The systematic regulation of finances at RASCO and their governance by the state power are achievable due to the understanding of the common good for the country as prevailing over the individual interests (Lima, 2015). The economic problems associated with the unethical conduct and lower budget at RASCO are possible to eradicate due to the introduction of strict laws anticipating criminal responsibility for corruption.

The shift of oil production to private sector can serve as the alternative for corruption. Nationalizing the oil sphere also has positive and negative sides. On the one hand, the federal control of the field can help enrich budget and raise sufficient sums for the public sphere, health care, and other non-industrial fields (Marquet, 2012). As the role of RASCO in oil production is high, the financial expectation and sustainability in exporting oil and receiving high incomes remain stable (Lima, 2015). On the other hand, in the conditions of widespread corruption, the state power deals with tremendous costs and tempts to assign the financial results of the workers. That is why arranging private sector, introducing the taxation could provide better ethics and enroll the educated personnel to regulate the activity of the oil production company for this purpose (Saleh & Salem, 2013). As RASCO’s activity does not concentrate on oil and fuel production solely, it needs the qualified personnel for the production of environmentally friendly products. Diversifying of business requires qualified staff in many spheres. Such people are not inclined to be corrupt, but they direct their activity towards success.

Better education, legislation of finances, and the shift to private entrepreneurship are the ways of eradication of corruption at RASCO and in the country in general. The measurements to take for such a company as RASCO can have a profound impact on the entire economy. Certainly, introducing legal changes will influence other firms, but overcoming corruption is the problem of the country since it spreads to the region and it is difficult to defeat. The mentioned possibilities can have a positive influence on the economics, oil industry, and single companies.

Results and Discussion

Developing the management information on the access of the real cash inflows resulting from selling the produced oil will prevent numerous complications in the measurements of business ethics, guarantee the safety of business, and eradicate the possibility of bankruptcy. In this aspect, TQM can help regulate the understanding of the obligations at RASCO, provide access to the financial information. Knowing of the financial conditions of the company is vital, as each employee could be able to come up with suggestions on the improvements to imply.

Concentrating on the human capital is vital for RASCO because it would prevent developing unemployment and improve business ethics. Certainly, education costs would require high expenditure (Saleh & Salem, 2013). Still, overcoming corruption in this aspect would be workable as intelligent individuals could avoid bribery quicker by knowing laws and obeying them. Educating the non-substitutable staff on the abilities to resolve the complicated issue is what RASCO needs to provide proper ethical conduct (Zoubir & White, 2015). Enrolling IT personnel in web-design, advertisement, and creating more jobs at the company could provide profitable jobs and business growth resulting in higher GDP.

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The workability and direct implementation of anti-corruption laws are more efficient that their mere adoption. Separating the legal authority and state officials can allow ensuring the overall satisfaction of material needs of all sides and fields of economy. As the country depends upon oil export, providing capitalistic laws exercising the financial activity and profit distribution, establishing sufficient wages for the employees, their legal protection, and social security are the paramount aims of Libya’s legal policy in the oil sphere.

Conclusion

The combination of oil and gas production with making environmentally friendly materials is a unique combination peculiar for RASCO. Making ethylene and polyethylene recyclable products requires the knowledge of resource and fuel waste distribution. For this purpose, RASCO enrolls the educated personnel to meet its business aims and satisfy the interests and motivation of the boarding staff and lower-rank employees. Corruption within the firm due high incomes of oil export remains unconsidered and durable difficulty RASCO is to handle.

Introducing legal norms to assume material and criminal responsibility for bribery and financial crimes require control for practical application. The legislative measurements and management changes alongside with human resources are the perspectives to defeat corruption. The combination of the mentioned ways can have promising results under the condition of a system approach. If the law protects the workers of RASCO, they can inform of the facts of frauds and know how to avoid corruption. At the same time, the qualified staff can solve more complicated tasks.

The issue of education in the spheres of oil production and environmental protection can help eradicate unemployment. Teaching the personnel at RASCO to cope with the challenging tasks, one of which is corruption combined with total quality management and legal protection, comprise a workable strategy capable of suppressing corruption and making Libya a prosperous country able to handle any difficulties and problems.

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