A trusted employee of Outback Tours was caught in the act of embezzling funds. He confessed to earlier embezzlements but retracted the confession on the advice of his attorney. Over the course of the most recent quarter it has been determined that $20000 was embezzled.
Outback Tours has suffered adverse publicity in the recent past because of serious injury to five tourists that occurred during a two week "Winter Wilds Adventure" tour. The company has therefore decided to avoid publicity and has agreed to drop all charges against the embezzling employee. In return the employee has agreed to a notation of "Terminated-Not to be Rehired" to be appended to his personnel file.
Required:
1. Who are the stakeholders in the decision not to prosecute?
2. Was it ethical for the company to decide not to prosecute? Explain.

1. The stakeholders include
The embezzling employee
The other employees
Company management
Other companies who might hire the embezzling employee
2. The company was certainly within its legal rights not to prosecute the embezzling employee. However the decision not to prosecute may not be ethical. First it does not serve public justice. The embezzling employee could find a job elsewhere and harm someone else financially. Second to the extent that other employees know of the act and of the decision morale may be harmed. The decision is also not the best one for the employee. Having never been forced to face the consequences of his dishonest acts he is not deterred from (and may even feel encouraged to) commit similar acts in the future. The one argument that would support the premise that the decision was ethical is that the public disclosure would cause harm greater than that caused by keeping silent. Even this argument lacks force because it implies a lack of moral courageousness.