Until recently, paying bribes to foreign government officials was considered an acceptable business practice, or even a “necessary” expense eligible for a tax write-off. Those days are over. As the Economist points out, countries are becoming more and more stringent on how they view – and punish – bribery abroad. It is not just America’s Foreign Corrupt Practices Act (FCPA), originally passed in 1977, that is much more strictly enforced. Britain, Germany and other countries whose companies do business all around the world are now paying attention, too, after a string of high-profile cases of questionable business practices abroad. And the issue is not just what the company itself does since the courts increasingly hold multinationals responsible for the conduct of their local suppliers and distributors.
So what should companies operating in highly corrupt environments do to maintain integrity but also not to lose competitive advantage to less scrupulous firms? The answer is simple: in order to fight corporate bribery, companies must become better corporate citizens wherever they conduct business. This means above all improved transparency and internal anti-bribery programs, as outlined in the Business Principles for Countering Bribery. It also means a commitment at the highest levels of management to good corporate ethics, for instance by joining the UN Global Compact whose tenth principle addresses anti-corruption or by supporting the UN Convention against Corruption. But equally important is that foreign companies support local business organizations and other NGOs who work to improve the business environment in their countries and create a bribery-free level playing field for domestic and foreign businesses alike. It is not enough to make bribery stop being the norm in international business dealings with government officials. As long as corruption remains the norm domestically in so many countries, businesses of all shapes and sizes will suffer.
Published Date: November 27, 2009