Careful planning can avoid the
difficulties that accompany bribery requests – as can an understanding
of local cultures, says John Bray
Corporate codes forbidding the payment of bribes are now commonplace.
But what use are they if corruption is part of the system? What will
you say when the minister asks for a personal ‘gift’ of a million
dollars?
If the minister’s demand doesn’t come until the
last moment you may have left it too late. Successful anti-corruption
strategies require planning from the outset.
First, it
is important to understand the host country, the political pressures
that drive the government, and the underlying cultural values.
Understanding the local culture does not mean compromising your own.
This is where codes and legal regulations can play a useful role. In
China, some US companies distribute Chinese translations of the Foreign
Corrupt Practices Act (FCPA). This does not deter all bribery, but it
makes it easier to resist more brazen demands.
In any
case, bribery may not belong to the local culture as much as you
suppose. A group of Kazakh business people recently described how
foreigners arrive in their country expecting to pay bribes. So when the
first demand comes, they pay – usually quite unnecessarily – without
putting up any resistance and then face one demand after another. These
people probably think of themselves as experienced men and women of the
world. In Kazakhstan, they are seen as gullible fools.
Even in the most corrupt administrations, it is usually possible to
find honest officials who are trying to do a good job, or at least are
motivated by more than the narrow pursuit of financial gain. It is
important to find these officials and win their confidence.
To do this, you must demonstrate that your project brings wider
benefits to the host community. Like everyone else, a mayor in the
Philippines may prefer a down payment in cash. However, he will be
alive to the political benefits of attracting investment and jobs to
his constituency.
But back to the minister. In many cases
companies facing last-minute demands will have little option but to
walk away. Payment would involve too many legal and reputational risks,
as well as increasing the likelihood of further demands. However, there
are examples of successful resistance even at this stage. In Malawi, a
Swiss company recently protested when it lost a contract through
bribery: the minister was sacked. In West Africa, a US executive
explained that he could not pay because under the FCPA he would risk
imprisonment. Furthermore, his company would need to report to
shareholders why the project did not go ahead. The minister exploded
with rage, but then signed. Resistance pays.
John Bray is a consultant at Control Risks Group.
His report Beyond compliance: an anti-corruption toolbox
will be published in early 2001.
