My company does services for various clients. We recently were offered a contract to perform these services for a guy in the city who does predictions, tarot, numerology and the like for people. He also promises to "bring you the person you love", "reverse any curse back to whomever cast it upon you" and other "otherworldly" services.
Personally this does not violate my ethics; I could not care less what people believe or disbelieve. If you think that burning a roll of tobacco and offering a bottle of whisky to someone who died a century ago will get you a good job, or get your soccer team to win the next game, knock yourself out.
One of my employees (who is otherwise a great worker, and someone I am personally proud to have working for me) objects to working on this contract on ethical grounds. The employee's point is that this potential client cheats people, and that by helping him sell his services online, we are basically helping him scam the poor and gullible. I can sympathize with my employee's viewpoint without necessarily agreeing with it.
I can assign him to a different project so that he doesn't have to work with this one, but I am concerned that other staff may see this as acceptable behavior and start objecting to tasks that are assigned to them.
As for this project in particular, if more staff are against it, I think I'll just tell this potential client that "we've got our hands full at the moment" (no contract has been signed yet, fortunately).
My staff are pretty intelligent people - each one is probably smarter in an individual level than I am - and I trust them enough that my decisions are heavily affected by their input. I just don't want to start a pattern where every projects have people opting to not undertake them based on personal beliefs and ideals. We have a lot of potential clients which are tied to sets of ideals (local branches of churches, political parties, the armed forces etc.)
What is an appropriate response to the situation?