85% Of Managers Resort To Bribery When Trading In Developing Economies – Forbes

Zie: http://www.forbes.com/sites/jwebb/2016/10/27/85-of-managers-resort-to-bribery-when-trading-in-developing-economies/#28ea9d133239

Oct 27, 2016 @ 04:55 PM

85% Of Managers Resort To Bribery When Trading In Developing Economies

Jonathan Webb, Contributor. Opinions expressed by Forbes Contributors are their own.

Research produced[i]from the Henley Business School shows that managers are willing to pay bribes when trading overseas. The study interviewed over 900 business executives during a period of 12 years.

Although the research focused upon British managers, it also covered[ii] businesspersons from China, Ireland, Germany and Russia.

Andrew Kakabadse, professor of governance and leadership at Henley Business School, noted that: ‘These suspect business practices are typically committed by concerned managers who feel that they have no alternative other than to pull out of the country in question.’

That is to say businesses trading in the emerging economies feel as though they face the dilemma of either paying bribes or ceasing trading in that market.

Within certain countries, bribery is considered an accepted or even necessary component of doing business. For many companies, this is simply part of ‘local custom’.

These attitudes have been challenged by recent legal developments.

In 2012, the UK launched its Bribery Act commonly considered one of the most stringent anti-corruption laws in the world. It became an offence under English law for a company to pay a bribe (or fail to prevent a bribe’s payment) anywhere in the world, as long as that firm traded in the UK.

Although many anti-corruption campaigners welcomed the new law’s introduction, businesses decried its potentially damaging impacts. One corporate lawyer complained to me that it was an act of ‘cultural imperialism’.

The implication here is that the new law trampled over the local practices of other countries and denied large businesses from competing on a level playing field when trading in emerging economies.

Companies from many countries are notoriously malleable in adapting to ‘local custom’. Singapore, for instance, which is commonly regarded as the least corrupt country in Asia, is often subject to fierce criticism for overlooking the questionable practices of its businesses abroad. Siemens, a manufacturer originating from the fair-trading German economy, has faced penalties under the US Foreign Corrupt Practice Act (FCPA) exceeding $800 million.

This underlines the view that corruption is not merely a problem of the developing world. Businesses from the West are supporting the local practices of corruption by readily paying bribes. Transparency International, the corruption research organization, regularly commissions a ranking of the countries whose companies are most likely to pay bribes when trading abroad. This study is called the Bribe Payers Index (BPI).

Transparency International Bribe Payers Index

Rank	Country	Score (/10)
1	Netherlands	8.8
1	Switzerland	8.8
3	Belgium	8.7
4	Germany	8.6
4	Japan	8.6
6	Australia	8.5
6	Canada	8.5
8	Singapore	8.3
8	UK	8.3
10	USA	8.1

Source: Transparency International, 2011

Interestingly, it is often the firms originating from the least corrupt countries that are most willing to pay bribes abroad. Of the 28 states included in the most recent study, the Netherlands and Switzerland score the worst. By contrast, in Transparency International’s Corruption Perception’s Index – a separate list of 167 countries ranked by the absence of bribery – the Netherlands is ranked 5th and Switzerland 7th. The message being that companies behave well at home, but badly abroad.

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Michel van Hulten adds:
Please note from the above article:

–         ‘ … Trading In Developing Economies’

–         ‘… concerned managers who feel that they have no alternative …’

–         ‘… bribery is considered an accepted or even necessary component of doing business. For many companies, this is simply part of ‘local custom’.

–         ‘… UK launched its Bribery Act … the new law trampled over the local practices of other countries and denied large businesses from competing on a level playing field when trading in emerging economies.’

–         ‘Businesses from the West are supporting the local practices of corruption by readily paying bribes.’

–         The Netherlands, rank number 1, score 8.8, top scorer on the Bribe Payers Index.

–         ‘ … in the most recent study, the Netherlands and Switzerland score the worst.

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