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Dealing With Corruption-Doing Business Without Becoming Corrupt

If you are doing business outside of the United States, the English-speaking world, Western Europe, Israel and Japan, the chances are that you may end up being faced with corrupt practices. These practices may vary from country to country and culture to culture. They can also vary based on how high level your business is. If your company is doing business with the government, you may be expected to do “favors” for certain officials. On the other hand, doing business at a lower level may not require certain practices.

Whether you decide to engage in certain practices is up to you, and it may be that the corruption makes it not even worth doing business in that country to begin with. The entity Transparency International (2020 - CPI - has a Corruption Perception Index which a good starting for analyzing how corrupt a country is perceived to be. Transparency International isn’t the only organization out there, and looking at several of these can enhance your analysis before deciding whether it is worth doing business in a certain country.

But if you decide to do business in a country that has somewhat higher levels of corruption than what we are used to in the West, you need to accept that some level of corruption is part of how the game is played. It may not be right and it may not be fair, but it can be the price of doing business in the country; like some sort of a tax. For people who aren’t used to dealing with corrupt practices, some general principles need to be recognized:

1.) Dealing with corrupt officials could get you in trouble in the U.S.

There are certain rules for U.S. companies encountering corruption overseas, and they can sometimes vary from country to country. While you may feel that you have no choice but to pay off one or several government officials to get the contract, doing so could land you in trouble with U.S. authorities. This could be especially true if the subject country has relations with the U.S. government that are somewhat questionable.

2.) Dealing with corrupt officials could get you in trouble in other countries.

Depending on relations that your country in question has with third countries, being close to corrupt officials could hinder your attempts to business in that third country. Overall, being known as a corrupt company tied to corrupt officials isn’t usually a great reputation to have as you attempt to do business internationally.

3.) Paying bribes could get you in trouble within the country itself.

Recognize that bribery is officially illegal in most countries, whether or not that is observed in practice. Having paid a bribe, you have legally committed a crime in most countries. If your government official is powerful and stays in power, this might not be a problem. But if he is deposed, or replaced in the general course of government activities, his replacement may not look too kindly on people and companies/entities that are considered to be supporters of the prior official. They can use the legal system to prosecute you (or your personnel) for the bribe. I once knew someone whose employee tried to bribe the wrong official. The official in question was a supporter of a competitor company. The official had the company owner (not the employee) thrown in jail. Such things can happen in the most corrupt of countries.

Given these factors, generally the best policy if one is doing business in a corrupt country is to limit bribery (as sometimes nothing moves without it in certain countries) to purchasing things you are entitled to anyway. For example, if obtaining a license that is customarily obtained by everybody requires filling out a form, but you know that you won’t receive it unless you pay a bribe to a low level official, then this is a situation where paying a bribe might be advisable. Or if you have provided everything required for say a visa and that the bribe is the difference between receiving your documents in 6 months or tomorrow, then paying a bribe may be advisable.

Navigating corrupt societies is a tricky business, and the rules can change from country to country (and even from government official to government official). But navigating it is a necessary skill to do business in many parts of the world. However, a good general rule for navigating the corruption is this: if it is for something for which you are legally entitled according to the laws of that country, then you can consider paying some sort of bribe. But if it is for anything else or to obtain an advantage over the competition, then it is advisable in all cases to avoid bribery.

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