An increasing number of countries and companies are adopting
anti-corruption legislation and strategies to stamp out bribery in business.
But will they succeed? asks John Parrish
If your company exports to China, the name Wu Yubo may be
familiar. A top customs agent in the port city of Xiamen, he made sure nothing
was off-loaded without his palm being greased first. But not any more – in
February Yobu was executed for taking bribes. While few nations advocate
execution for those found guilty, the practice of corruption is becoming
increasingly frowned upon around the world.
The International Chamber of Commerce, the United Nations,
the Organisation for Economic Co-operation (OECD) and Development, and the
Organisation of American States (OAS) have all developed initiatives and
legislation designed to stamp it out. The British government is currently
planning anti-corruption laws that would allow a Briton bribing an official in
a foreign country to be tried for this offence when he or she returns home. The
US has had such laws since 1977.
Companies that do business overseas need to be aware that
employees who pay bribes to secure contracts could land not only themselves but
also their companies in court. However, part of the problem with this is that
cultural differences mean what you may regard as a bribe others may regard as a
gift. Ron Berenbeim of the Conference Board, a global business think-tank based
in New York, has studied these differences.
"It’s not as simple as saying they do it this way in
Asia and this way in Africa," he says. "Often, you’ll find many
different practices in a single region. Take Asia for example. In Indonesia,
it’s all quite open and if you pay a bribe you’ll even get a receipt. But in
Singapore, they’ve worked very hard to eradicate corruption. And in Japan, it’s
different again. There is a tradition of lavish gift giving, which can be
extremely confusing – where it ends, how far you should go, nobody knows.
Fortunately, the Japanese are in the process of codifying this right now.
"A rule of thumb many businesses use in gift-giving
cultures is to neither accept nor give anything other than that which can be
consumed on the spot," says Berenbeim. "So, a bottle of wine is okay.
A case isn’t."
In Eastern Europe, gift giving, which can open the door to
corruption, isn’t so important. "I suspect solicitation for a bribe would
be more overt in somewhere like Russia," says Berenbeim. Given the grip
the Russian Mafia has on the economy it may be put even more bluntly. Pay up or
else.
Larysa Denysenko, of anti-corruption campaign group
Transparency International, is a lawyer fighting the problem in the Ukraine.
She believes the state is inextricably linked to corruption and warns that new
permits and licences are invented literally every month as corrupt officials
think up new ways to extract cash from businesses. "Corruption pervades
all levels of state power," she says.
The African continent – like Japan – has a tradition of gift
giving, and corruption here has evolved in highly sophisticated ways. "To
win a contract you may find you have to make a donation to a foundation that
does excellent community work," says Berenbeim. "But you may find
that there are a lot of highly paid people on the payroll with no apparent
function, and the work the foundation does helps prop up the political
system."
John Githongo, an anti-corruption campaigner in Kenya, backs
this up, saying that investors in many African countries soon realise that to
promote their business, it’s essential to "establish mutually beneficial
relationships with the head of state, his relatives and cronies
generally".
Dean Newlan, director of forensic accounting with consulting
firm KPMG in Australia, investigates corruption throughout Asia. "There
was one case in Hong Kong where a manager was found to be asking for bribes and
was sacked – not because he was asking for bribes, but because he asked for the
wrong amount," says Newlan. "The difficulty is in trying to
communicate a Western model of business ethics in a place where business has
been done in a different way for many years. I’m sure they would find our
business practices very strange," he adds. Nevertheless, larger companies
are increasingly adopting the Western model.
Shell has set a standard for them to follow by publicly
discussing the problem of corruption and equipping executives to deal with
it. "Shell companies insist on
honesty, integrity and fairness in all aspects of their business and expect the
same in their relationships with all those with whom they do business,"
says Shell’s London-based spokeswoman Cerris Tavinor. "Direct or indirect
offer, payment, soliciting and acceptance of bribes in any form are
unacceptable practices.
"We have a Group-wide policy and target of no bribes.
In 97 countries, Shell companies have procedures above and beyond the Group’s
control measures to prevent and identify possible breaches of the ‘no bribes’
policy," she adds. Third-party agents working on Shell’s behalf are not
excluded from the no bribes policy. "To avoid inadvertently becoming
involved with corrupt practices through the use of intermediaries, Shell
companies in 71 countries operate a procedure to ensure the use of
intermediaries does not compromise business integrity," says Tavinor.
To protect your company from becoming embroiled in
corruption and bribery, Ron Berenbeim recommends setting up what he calls a
"compliance culture". The first step is high-level commitment from
the CEO and other senior executives who are seen to back anti-corruption
measures. Next, the company has to clearly state exactly where it stands and
make sure that all staff, joint venture partners and suppliers know about this.
Discussion and training are vital. Third, the implementation of anti-corruption
procedures must be supervised and properly resourced. Finally, compliance
certification is essential.
Filling in a compliance form tends to focus the mind of an
employee who might otherwise be tempted to offer or take a bribe. And although
unpopular with employees, whistle-blowing hotlines are another useful measure.
Unfortunately, it’s not always that straightforward if you
are a small or medium company that can’t afford to lose business, says the
Australian-based director of one US company, who preferred to remain anonymous.
"Anti-bribery drives are all very well for Shell, but some of us can’t
afford to lose business," he says.
"I do a lot of deals in Thailand and they couldn’t be
done without people being paid off. The payments are ‘lost’ through another
company that is set up locally. Really, I think this whole anti-corruption
drive has come from back-office types who’ve never done a business deal in their
lives. Greasing palms is the way business is done in Asia – and always has
been. If I don’t, my competitor will."
A cynical attitude no doubt, but it is backed by statistics.
A survey of international businesses by international security and risk consultancy
Control Risks Group revealed that 95%
of respondents believed US companies used middlemen to get around
anti-corruption legislation. The golden rule then seems to be, "Don’t get
caught". This underlines Ron Berenbeim’s assertion that if you do have an
anti-corruption compliance procedure, you had better make sure it’s well
supervised.
League of corruption
Where do you think you are most likely to have to pay a
bribe to win business? US anti-corruption campaign group Transparency
International compiles an annual report which examines perceptions of
corruption. The lower the score – on a scale of 1 to 10 – the more corrupt a
country is perceived to be.
– With a score of 10, Finland is seen as the world’s most
honest country.
– Nigeria, 90th and last nation on the list, scores 1.2,
making it the most dishonest country.
– Close to the bottom of the table, with scores ranging from
1.3 to 2.1 are Ukraine, Azerbaijan, Indonesia, Angola, Cameroon, Russia and
Kenya.
– The UK has a rating of 8.7, making it the world’s tenth
most honest nation. Australia comes in at 13th with 8.3 and the US is 14th with
7.8.
– Italy scores poorly with 4.6, making it joint 46th with
Jordan in the honesty league.
– The Philippines scores just 2.8, joint 69th with India in
honesty, and Vietnam comes in at 2.5, making it joint 76th with Tanzania.
To bribe or not to bribe
Here is a scenario Shell presents to its senior managers:
A Shell company involved in a joint venture in a foreign
country is trying to get one of the minister’s officials to grant a concession.
The country’s government is also in discussion with a competitor who, according
to a reliable source, does not shy away from buying off politicians. In this
country, bribery is the rule, not the exception. The Shell company learns that
a condition for obtaining a concession is the donation of a substantial sum of
money to the president’s campaign fund.
– Is it acceptable, given the great importance of winning
the concession, to honour this request?
– Is the fact your competitor has fewer scruples a good
reason to go ahead and find a way of satisfying the president’s wishes?
– Does the fact that such practices are common in the
country change the situation?
From the Shell perspective, the answer to all these
questions is a firm "no".
Further information
– Information about the fight against corruption can be
found at Transparency International’s Website at www.transparency.org
– Go to www.shell.com  for the company’s information on bribery and
corruption, including excellent case studies that your managers can work
through.
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– The International Chamber of Commerce at www.iccwbo.org  has links to documents on corruption and has produced a manual for
employees.
