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how a state of readiness can stave off corruption

December 2000

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.




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