top-rated free essay

Bribery

By Nguyenthutrang1 Apr 10, 2013 1083 Words
To bribe or not to bribe – it is a difficult decision for many business leaders today as they expand their market and operations to other countries for efficiency and more business opportunities. In many developing countries, bribery is an effective means for a new market entry to gain favorable treatment from the local government, or a business in general to win new contracts. Although bribery is prohibited in the law book of virtually every country, many international organizations still directly or indirectly engage in bribing local authorities where they operate, and suffering severe financial and reputation damage as a result. This paper will, using the model based approaches, focus on discussing ethical aspects of the problem.

First, we take a look at a recent example of corruption and bribery: SNC-Lavalin Group Inc, (“Reuters.com,” 2012) the largest engineering and construction company in Canada and top five Global Design firms in the world, has since early this year been under police investigation for $56 million in mysterious payments that were wrongly assigned to certain construction projects. SNC-Lavalin CEO stepped down in March 2012 after an internal investigation found he had authorized these payments. In May, the company was also alleged to have offered “huge bribes” to obtain a consulting contract overseeing the construction of a 6.5-kilometre bridge over the Padma River in Bangladesh.

Ethical issues identified in this case are the paying/taking of bribery and government neglect of control over the situation in foreign developing markets.
Agents
2
There are two active agents in a bribery transaction: the bribe payer - decision maker(s) of the business, and the bribe taker - often government officials or decision makers at client companies. Local governments can also be considered as active agents in bribery. Passive agents of bribery are the organizations which the payer and taker work for, other companies who pursue the same business, and the larger community in which the business operates in.

In our example we have SNC-Lavalin as the active agent, the Bangladeshi government officials as active agents, the two companies’ shareholders as passive agents, and the two economies/communities as passive agents.

Choices
The decision makers at SNC-Lavalin had the choice of paying or refusing to pay bribes for favours in return from the Bangladeshi government officials. Another choice that they had, as mentioned in class material, is to forge an industry agreement with their competitor not to pay bribes, creating a level playing field for everyone.

The bribe takers had the choice of receiving or rejecting the bribe. The Bangladeshi government could choose to turn a blind eye on or strictly punish bribery. Payoffs
The most obvious payoffs of bribery is perhaps the economic benefits for the bribe payer which are increased revenue, positive change in market capitalization and increased shareholders’ benefits. On the side of the bribe takers, I can agree with the idea discussed in class that bribery can help attracting talents to work in government sectors where compensations is commonly low by compensating low salary with possible income from bribes. 3

In a sense, bribery can also promote efficiency and growth “by removing bureaucratic rigidities and greasing the wheels of bureaucracy” (Cheung, Rau and Stouraitis, 2012). By paying bribes, companies lower the costs they would bear if they choose to comply with bureaucratic regulations in their target markets.

Consequences
Negative outcomes of bribery includes injustice for those who cannot afford or refuse to pay bribes, corrupting people and promoting corruption in that country, allowing inferior products and services to enter the marketplace (because responsible people have been paid to "turn a blind eye" to problems). In addition, positions and contracts can also be bought by the unqualified, “leading to massive waste” (csthmbestpractices.org, 2012). All of these negative outcomes will hold back the local economic development.

A model based approach – Utilitarianism
Under Utilitarianism (collective utility resulted from an action), bribery is wrong because it only benefits one organization (the bribe payer) and a certain number of individuals (who take the bribe) while it puts all other players who refuse to pay bribes in disadvantage, and hinder the economy development as a whole.

A model based approach – Deontology
Under Deontology (to choose only actions that embody universal norms): bribery is prohibited by law in virtually all countries in the world and, in SNC-Lavalin’s case, by their own company’s code of conduct, paying/taking bribes therefore definitely goes against universal norms. From a personal standpoint

4
“Do as the Romans do” - It was raised during class discussion that bribery is indeed a culture in some countries, and that it is wrong to impose Western culture (of anti-bribe) on these foreign markets. I think it would be wrong to consider bribery a culture because no government in the world officially allows it, no business would publicly acknowledge it, no individual would proudly list it and no nation would prohibit their own culture. Some companies would argue that their operations, including making ‘facilitation payments’, is for the greater good of the local communities as they create jobs, bring in foreign investment capital, transfer technology and skills etc. In my opinion these companies have ignored the fact that if not for their bribes, the local communities might have enjoyed greater benefits because their decision makers, without bias, could have chosen the even better business partner. In the end, bribery, no matter how beneficial it was to the company who facilitated it, once exposed, is a hard blow to any company’s reputation and causes severe consequences, including senior executive exits, loss of business, market devaluation and questioning of past operations. In SNC-Lavalin’s case, although the investigation is still ongoing, the company CEO had to step down in March. The accusations of bribery also prompted the World Bank to suspend a US$1.2 billion loan and temporarily barred the SNC-Lavalin subsidiary from bidding on other contracts in Bangladesh (“Calgary Herald”, June 22, 2012). Also in legal and reputation crisis there are the cases of Walmart who is now facing a multibillion penalty for bribery in Mexico ( "NYTimes.com,” April 2012, ), or Siemens AG whose bribing activities in China has led to the company being under investigation by SEC and the death sentence for a Chinese senior executive (“Caixin.com,” June 2011). With no exception, all bribery cases and their damages are strong evidences of how consequences of bribery could totally out-weight the economic benefits it brings. Bribery can and should be resisted.

Cite This Document

Related Documents

  • Bribery

    ...A bribe is defined as “something, such as money or a favor, offered or given to a person in a position of trust to influence that person’s views or conduct.” It is said that bribery occurs in international business for many reasons, such as a company paying a public official to expedite, or complete a transaction. Although the United St...

    Read More
  • bribery

    ... Economic analysis of bribery is imbalance in the distribution of wealth. (Masami Mustaza, 2009). The rich family will become richer and the poor family will become poorer. The poor pay a higher share of their income on bribes than the rich. An IMF study shows that an increase of just 0.78 percent in corruption reduces the income growth of th...

    Read More
  • Ethics- Bribery in the International Commu

    ...Ethics- Bribery in the International Community “Con” By: Macha Shinhoster Sr. Kaplan University, Online Class: LS501-01 Ethics and the Professional 10 February 2012 The issue is bribery in the International community and why is it illegal and unethical. Before 1977 some countries had less stricter sanctions on bribery depending on...

    Read More
  • Bribery – the Dilemma

    ...Everyday U.S. managers in developing countries face the dilemma of furthering their business concerns in countries such as India, China, Russia and Mexico where bribery is commonplace while at the same time trying to ensure that they do not violate their companies code of conduct or worse the government’s Foreign Corrupt Practices Act (FCPA). ...

    Read More
  • Siemens bribery case

    ... Siemens Bribery Scandal By: Courtney Miano, Nancy Gonzalez, Mohamed Jawhar, Vernita Leslie, and Ferba Hines Siemen’s is classified as a large German electronics firm. In December of 2008, Siemens had to settle lawsuits and pay fines due to the fact that they were caught using bribes to win business all...

    Read More
  • The Difference Between Lobbying and Bribery

    ...The Difference Between Lobbying and Bribery Abstract The purpose of this paper is to try and identify the difference between lobbying and bribery. The Difference Between Lobbying and Bribery Lobbying is the practice of private advocacy with the goal of influencing a governing body by promoting a point of view that is conducive to...

    Read More
  • Ethical Issues in an Organization- Bribery

    ...Ethical Issues – Bribery In this paper on ethical issues, I will be presenting my perspective on the issue of Bribery in doing business. I will be summarizing three distinct articles from different sources, namely, Harvard Business Review, Bloomberg Businessweek and The Wall Street Journal, respectively. Later in this paper, I will provide ...

    Read More
  • Siemens Bribery Case

    ...of Global Business Professor Portillo BSAD 113W 18 February 2013 Assignment #3: Siemens Bribery Scandal Before 1999 the use of bribery in Germany was not illegal and could be deducted as a business expense in a company’s taxes. This allowed companies like Siemens to gain the upper hand and have an unfair advantage over their competition in ac...

    Read More

Discover the Best Free Essays on StudyMode

Conquer writer's block once and for all.

High Quality Essays

Our library contains thousands of carefully selected free research papers and essays.

Popular Topics

No matter the topic you're researching, chances are we have it covered.