Desperate Air Corporation (dac)

Desperate Air Corporation (DAC) flies routes along the east coast of the United States. DAC acquired a number of hotels and undeveloped properties five years ago as part of a short-lived diversification strategy. However, this diversification strategy did not go entirely as planned as the company is now facing serious financial shortfalls. Substantial losses, negative cash flows, and possible bankruptcy face DAC if they are unable to reduce high labor costs.

A new CEO, Benton Williams, was recently brought on-board to turn the company towards a better future. As part of the this new CEO’s vision, he has directed the Vice President of Real Estate, Mr. Nash, to sell a large and underdeveloped piece of ocean-front property to generate positive cash flows and stem the losses recently experienced. Mr. Williams has reiterated to Mr. Nash the vital importance that this sale has on the company, encouraging him to close the deal as soon as possible.

Mr. Nash found a possible buyer for the property in Fledgling Industries, a new developer specializing in high rise retirement villas. Fledgling Industries are interested in creating a complex of high rise retirement condos, featuring elaborate trails and recreation facilities. As part of the sale, DAC has completed a full environmental audit that discovered no issues with the property. However, Mr. Nash became aware through a friend of extremely toxic waste contamination on the property. Mr. Nash investigated the claims and found several cracked metal containers marked “Danger! Biohazard Medical Waste” buried on the property that were seeping liquid into the ground. The ethical dilemma facing Mr. Nash was whether to disclose the new revelation of biohazard waste to Fledgling Industries.

This ethical dilemma is similar in background to the Seglin’s article “How to Make Tough Ethical Calls”. I would advise Mr. Nash to follow the “Mirror Test” immediately and ask himself Augustin’s 4 questions:

1) “Is it Legal?” Sadly, because this is Florida, it is perfectly legal to not disclose hazardous substances on commercial property as long as there hasn’t been direct fraudulent misstatements about the condition of the property.

2) “Would you think it is fair if someone did it to you?” No, although at the time of negotiations this was not known. By not disclosing this finding before the sale is closed, this would not be fair.

3) “Would you be satisfied if it appeared in your hometown newspaper?” No, as it would blemish the good word and ethical reputation of the company.

4) “Would you like your mother to see this?” This is the most important question for Mr. Nash to ask himself in this particular dilemma as this case would negatively affect the people living in the retirement