Baksheesh, dessous-de-table, schmiergeld – bribery in any language: do you go with the flow or try to change the world?
by Fil Fraser
The Case: The President of a South Asian country used to be known as Mr. Ten Per Cent. Graft? Bribe? Secret commission? Like baksheesh, some of the terms can have double meanings; a tip or gratuity rewarding good service is quite acceptable. But they can also mean payments, sometimes but not often illegal, to secretly grease the wheels of a deal in which not all of the money ends up where it should be. Karlheinz Schreiber described his kickbacks as earned commissions. You are in a highly competitive bidding war for an international contract that could save your company, which is still trying to dig its way out of the recession. Someone tells you that you can clinch the deal if you agree to a secret commission. You wouldn’t be surprised if one of your competitors offered a bribe. So do you go with the flow or try to change the world?
But, as we’re learning from the Americans (who spend billions doing it), business lobbying not only helps maintain a level playing field, but can tip the scales – sometimes unfairly and perhaps illegally – either in your favour or that of your competitor. As a matter of course and at the same time, not-for-profit and volunteer organizations lobby government on behalf of their own causes as well.
The Panel
Shirley Lowe: Executive Director, Old Strathcona Business Association
Richard Wong: General Manager, Sutton Place Hotel, Edmonton
Janet Keeping: President, Sheldon Chumir Foundation for Ethics in Leadership
Shirley Lowe: No one would find themselves in this position as a surprise. Most of us didn’t crawl out from under a rock yesterday – we know that when we are dealing with some countries and some situations (and that even in our own country there will be situations where people are willing to deal on the basis of a payback) we have to prepare ourselves to either go with it or to stop and simply say no.
Richard Wong: I think this is a subject that challenges a lot of people. When you’re dealing in business, you’re often dealing with different cultures. The world has changed so dramatically, has become much smaller. We’re now doing business not just with North America, but, increasingly with the world. That exposes us to a whole new arena.
Janet Keeping: I have a fairly un-nuanced view of this question. I think that Canadian business people should say no to corruption. And if that means that you and your company cannot work in a given jurisdiction because corruption is pervasive – when you simply cannot get a contract without making a payment – then I think you have to turn your back and look elsewhere for business.
If you take that position, there are parts of the world that are closed to you. One of the means the less corrupt countries of the world have is to use the leverage of saying to those places which are very corrupt, “We would love to deal with you, but we can’t under these circumstances.” And if you say no, what you will sometimes find is that refusal will be accepted, and you will, in fact, be able to make the deal.
Lowe: In the case of a developing or third world country, you have to ask yourself what benefit you bring to that place or to those people; does it, at least temporarily override the bad ethic of giving in to a bribe. For instance if whatever product or information you’re providing is essential to the lives of people it’s meant for, then it could, to some extent, balance out the fact that you were being asked for a bribe. What you did after that would depend on whether you were there to save the world or not, because not providing the goods or information is probably not going to stop the practice of people asking for money for contracts. You would have to develop a strategy to work around that. You could either go back to your government and work with them to apply pressure for change. Or if it’s such a deeply ingrained part of someone’s culture that nothing is going to happen without amazing pressure and you don’t have that kind of power, then you have to assemble it, or just back off. There are ethical questions in both choices.
Wong: People need to be educated about the fact that these cultures do exist in different parts of the world and, in some places, it is the way that business is normally conducted. Those cultures, where nothing gets done without something being slipped into someone’s palm, are foreign to most North Americans. The key is in understanding, and not being ignorant of these realities. I follow the Rotarian four-way test:
- Is it the truth?
- Is it fair to all concerned?
- Will it build goodwill and better friendships?
- Will it be beneficial to all concerned?
Those are the guiding principles I follow in all my business affairs. It’s about integrity.
Keeping: There are countries, such as Russia, where there are people in the public service who have traditionally been paid very low wages. They have been expected to collect the rest of what they need, or want, through the extraction of bribes or kickbacks. I call it corruption when you are paying for a public service, but the payment you are making goes into a private pocket. You just shouldn’t do it. Corruption for Russians is a disaster.
This is true in many countries across the world. Corruption is a disaster for ordinary people in those countries and all you do by playing the game is perpetuate the disaster.
There’s a fundamental distinction between the private and public sector. In the private sector, if an owner chooses to run a restaurant in such a way that if I am patiently waiting in line and somebody marches past and hands the maitre d’ money (essentially a bribe) so that he or she can be seated ahead of we who have been waiting in line – my solution to that is to not go to that restaurant again, and to tell everybody I know that this is how it works there.
It’s harder to do that if it’s a public official. So when I talk about corruption, I’m not talking about paying people in the private sector to get to be treated a little differently. In the private sector you can vote with your feet – but you can’t do that in the public sector.
Lowe: The pragmatic question is, what is the greater benefit? There are elements of harm reduction. For example if your company employs a large number of people and the product that you are marketing is of real value, then you can make a case for the greater benefit to get past this gate keeper and try to solve the ethical issue at some other level. In our daily lives we try to do the least amount of harm and the greatest amount of good. You have to ask how many of your own people would suffer from the consequences of your choice. You have some responsibility for the livelihoods of your employees. You may have to balance your personal ethics against the survival of your enterprise.
I think that we have a responsibility to raise the ethical bar in countries that allow for this kind of corruption. I don’t know that we can do it individually. I think there are enough other competitors who will fill the gap if your refuse to do business that way. The pressure has to come from governments, in a political way.
If you were offering a product or a service that would raise the educational level and the standard of living in a country, you would be ethically remiss if you didn’t do it. I hate it when people tell me “this has been going on forever and you can’t stop it.” I think you can play a role. Every time you look the other way, everything slips a little bit. And if your absolute survival didn’t depend on it, it would be in your own best interests not to get involved. It could put you and your company in a very vulnerable position.
This issue has come up from time to time in the Old Strathcona Business Association. We have been offered kickbacks to send certain things out to our members. We absolutely refuse. But people will do that – it exists virtually everywhere – people trying to get an unfair advantage. Some have promised us favours if we lobby in favour of a certain position. It could involve asking us to seek exemptions from certain regulations – they suggest that if we could get the exemption there would be some money in it, not for me personally, but for the association. It’s not much of an ethical challenge. We just don’t do it.
Wong: In the hotel business we encounter situations where a patron will slip the maitre d’ an extra 10 or 20 bucks to get a certain table when the dining room is fully booked. Is it part of the game? Yes it is. Is it part of the business strategy? Yes it is.
CEOs face the challenges of balancing principles against profits all the time.
Keeping: Many Canadians are trying to do the right thing, either on the ground, or by supporting organizations like Transparency International (www.transparency.ca) or Lawyers without Borders (www.lawyerswithoutborders.org), who are making improvements in those parts of the world where people are suffering from the consequences of high levels of corruption. For example, in Eastern Europe, Transparency International has supported people trying to do clean business – people trying to do the right thing without paying bribes – and put pressure on corrupt government officials who are standing in the way of those businesses. Every year Transparency International publishes a “corruption perception index,” which is having a significant effect.
THE FINAL WORD
It’s just a fact of both personal and business life that some people will go to extraordinary lengths to gain an unfair advantage. Bribery is as old as human culture. It’s true that there are differences between the private and public sectors. In business, the practice of offering secret commissions or kickbacks seems to increase with the size of the deal, when there is a lot at stake. But, at least in the first world, there are legal remedies at hand, and, in our system, cheaters tend to get found out sooner or later.
But in the public sector of many countries, whether you’re trying to cross a border, trying to get something through customs, or seeking legitimate papers for immigration, baksheesh is common. The cost is not always monetary. It can be sexual, as we have seen in immigration cases even in our own country, or it can involve being forced to carry out an illegal act to the benefit of the gatekeeper. But as businesses and governments relate to each other on a global scale, many of these practices are being challenged, and changed.
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