Exxon Valdez Case Study

1. What has happened to the key players since the events in this case?

Since the events occurred in this case, there were many victims including wildlife & marine life, the environment, the fishermen, and the economy of the region. This event devastated the wildlife in the Prince William’s Sound by covering the natural habitat with over 11 million gallons of oil. Many wildlife species had perished during the oil spill and some have still not returned. The natural resources still have not recovered from the disaster.

The fishermen, who have relied on the Prince William Sound, are still not able to make a living due to restraints placed on them by the federal government. The federal government has banned the fishing of certain species of marine life due to their slow recovery from the oil spill. Despite the money that was awarded to the victims, there still is not enough to cover the debts of the fishermen and to recover the economy. Even though Exxon agreed to plead guilty of criminal charges and to pay restitution for the damages caused, the litigation had reached the Supreme Court.

This disaster had no effect on the company’s profits or stock price despite the large fines imposed. Even when damages were imposed on Exxon, with $5 billion in punitive damages, the company still continued to grow. The Supreme Court had outraged the victims by cutting the punitive damages amount of $5 billion to a minimal amount of about $500,000. 2. Were the consequences they experienced as a result of their role appropriate under the circumstances and why?

I feel that this disaster should have never occurred. Exxon Corporation did plead guilty to criminal charges and agreed to pay a fine. Exxon Corporation knew the ship’s captain had a drinking problem but they still let him command the ship. Exxon Corporation had a duty to ensure that the other employees on the Exxon Valdez were working in safe conditions.

Exxon Corporation also caused more harm than good when they left the Exxon Valdez with a reduced crew. Due to a reduced tanker crew, this left the employees fatigued which could have caused other safety issues aboard the ship. Exxon Corporation was liable for the actions or lack of actions that caused the catastrophic disaster in the Prince William Sound. Since Exxon knew the captain was still drinking and commanding the ship, the corporation should have stepped in. The corporation could have suspended the captain from commanding the ship until he had gotten help for his drinking problem or they could have terminated the captain for violating company policy and procedure. Any intervention the corporation could have done would have prevented this disaster from occurring. The corporation’s lack of responsibility towards its other employees was criminal.

Exxon Corporation could have taken many steps to ensure the safety of their employees. Since the entire crew of Exxon Valdez knew the captain had a drinking problem, the corporation should have instructed the other employees to come forward and report the captain. Also, the corporation was negligent for allowing the captain to drink and operate the tanker ship. 3. What preventative and detective controls can be put in place to prevent this from happening again?

There were many preventive and detective controls that Exxon could have used to avoid this disaster. The preventive controls would have allowed separation of duties while the detective controls would have identified the issues that already existed. Exxon Corporation’s management was responsible for the internal controls including the policies and procedures the Exxon Valdez employees should have been following. The preventative controls that can be put in place are to cover the policies & procedures with all employees, review the corporation’s code of conducts, and educate their employees about the dangers of alcohol abuse.

When a new employee is hired or an employee has failed to follow the policies, the corporation should step in and ensure that the employees understand what the corporation expects. The corporation should also have the employee’s sign that they had read and understood the corporation’s code of conduct. If the code of conduct rules and regulations are broken, using alcohol or drugs while working, the employee should understand that this would result in termination of employment.

The corporation should also drug and alcohol test its employees and captains to ensure they do not have any substance problems. If proper internal controls had been in place and followed then the captain would not have been commanding the ship. The corporation should have had a system set up for when an employee needed to report a problem with another employee confidentially. A whistleblowing hotline should have been set up and all employees should have access to report the captains drinking issue. If the employees had contacted the corporation and instructed them that the captain was drinking while working then the corporation should have taken action.

Detective controls should have been in place to alert the corporation of the deficiencies aboard the ship. The ships computer system could have been used to track the ships movements through the Prince William Sound. The computer could have had alarms that would have alerted the crew of the reef before the ship ran aground. The corporation could have gained access to the ships computer system to look at logs which would have detected issues with the captain. These logs should have been reviewed and audited on regular intervals.

The corporation could also place a digital camera system aboard the vessel which they could access through the ships computer. By reviewing and monitoring the crew’s actions the corporation would have realized the issues on the ship. This would not constitute a breach of privacy since the tanker ship is the property of the corporation and the crew is working while aboard the ship.

References Trusted Criminals: White Collar Crime In Contemporary Society, David O. Friedrichs. http://online.vitalsource.com/books/page69.

The Exxon Valdez Oil Spill Trustee Council. http://www.evostc.state.ak.us/facts/index.cfm