IRRESPONSIBILITY ACT OF

PT LAPINDO BRANTAS

By:

Syndicate 5

Alliya Rahmania 29116017

Rifky Adhlan Yudhatama 29116019

Jordy Saragih 29116032

BUSINESS ETHICS LAW AND SUSTAINABILITY

1. Introduction
 Business is live amongst the people around it, thats what a lot of people said.
Because of that the social responsibility is evitable for every business established. There is a
lot of critics about business that has not gone for social responsibility, constantly ignoring the
surrounding factors amongst them. In this case, it is threatening the sustainability of the
business in near time. Social responsibility is some sort of responsibility that need to be done
in the scope of the business for the purpose of increasing the solidarity in doing a business. It
doesnt matter with the size of the business, every business just needs of that but then the
scaling and porting might be different for every type of business.

Ethics is considered as a philosophy related to rightness or morality from the human

behavior. Ethics also can be defined as a set of rules that cant be breached and that rules is
bound by them and accepted by the community as a whole. Alternatively, business ethics
considered as a standard and value in which it is applied to a manager, employee, and
everyone of organization in making a decision and operate business ethically. At the end,
Business ethics is a direct implementation of social responsibility of the business.

2. Discussion

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 Lumpur Lapindo (Hot Mud Lapindo) is a tragedy where the flow of hot mud is
coming off from the ground, this site is caused by the drilling activity of PT Lapindo Brantas
in Renokenongo village, sub-district Porong, district Sidoarjo, East Java, since 29 May 2006.
This site itself caused many havoc around it as during the tragedy happened, this site was
used as a settlement, and industrial area is located around the site as well. Lumpur Lapindo is
very hazardous and poisonous, periodic interaction with human can cause respiratory system
disorders, sort of skin disease, and etc.

The company seems to prioritizing the safety of the assets rather than overcome the
environmental and social problem caused by malpractice of exploration activity. Eventually,
the company had agreed to pay for the compensation of losses to the victim about Rp 2.5
million per square meters for the land & building established on that site before. However,
the social impact of the problem is way too great. Even after 100 days, it doesnt show any
kind of improvement, hindrance of education and source of income from the residents,
uncertainty of repairmen, and physical pressure as well as social crisis established during this
tragedy.

From the discussion above it is known that negligence done by PT Lapindo Brantas is
a reson why Lumpur Panas Lapindo is coming off the ground, nevertheless of that, from the
side of PT Lapindo they still think that it is out of their responsibility. From the ethical point
of view, PT Lapindo has violate the ethics in doing the business. Where PT Lapindo has done
much of exploitation and did some negligence that because the huge tragedy happened which
is cause a massive destruction to the social and environment.

A huge exploitation done by PT Lapindo proves that this company do any means
necessary to gain advantage of getting more profit. And the resistance of PT Lapindo in
taking responsibility show that theyre more concern on saving their assets rather than having
some rescue and repairment toward the disaster caused. As the ethical behavior is being
ignored the reciprocity is going back to them, the share price starts to drop since that tragedy
and community have a planted negative perceptions about PT Lapindo.

Ethical seems to be taking lightly by the company, as they may not really feel the
benefit in the short term. In 1999, Journal of Business and Society review stated that amongst

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300 company that is committed to the public with ethical code applied, it will improve the
market value added into two or three times higher than the one that doesnt care about ethical
things.

The Lapindo case show us that business ethics of the firm give significant impact to
the sustainability of the company. And for every form of ethics ignorance will threaten the
safety and continuity of the company itself, surrounding environment, nature, and social.
Proving that single unethical behavior change a lot of community perspective to the company.
Moreover, being labelled as an irresponsible company and had a bad reputation makes the
investors no longer willing to invest in this company. And in the end, the company will suffer
because of its action.

3. Conclusion

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 Business relationship between PT Lapindo Brantas with community is clearly
violating the business ethics. Where PT Lapindo Brantas had done much exploitation and did
some negligence that cause the huge disaster, causing a massive destruction to the social and
environment. The ethical behavior of PT Lapindo Brantas is not appropriate with the concept
and requirement of business ethics, which is social contract of the company towards the
society.
In resolving the issue regarding the Hot Mud that is involving environment,
economic, and business sectors, PT Lapindo should having a synergy with the government
and other related instances to overcome the environmental issue caused by the exploration
activity of PT Lapindo. Additionally, for the government that has the authority over this, they
should assess profoundly the risk and the benefits of the activity that involved the
stakeholders interests and the one that related to the environmental matters.

LIST OF REFERENCES

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Bimbingan n.d, Awal Terjadinya Lumpur Lapindo, <http://www.bimbingan.org/awal-
terjadinya-lumpur-lapindo.htm>

Mahysar, Y 2013, Tanggung Jawab Sosial Suatu Bisnis, <http://emilyaumil.blogspot.com/

2013/12/tanggung-jawab-sosial-suatu-bisnis.html>

Prasta 2012, Pelanggaran Etika Bisnis PT Lapindo Brantas, <http://prastaeltanin.

blogspot.com/2012/01/pelanggaran-etika-bisnis-pt-lapindo.html>

Rossy 2012, Usaha-Usaha Pemerintah dan PT Lapindo Dalam Mengatasi Lumpur Panas,
<http://wwwallaboutrossycom-rossy.blogspot.com/2012/05/usaha-usaha-pemerintah-dan-ptla
pindo.html>