Causes And Consequences Of Bribery In International Business - Essay Example

Summary Corruption is rampant in China. It ranked 72 in 2007 in the Corruption Perception Index designed by Transparency International. Any company that wants to do business in China has to face the affects of this corruption. Chinese Government is strictly trying to stop the practice of corruption. New regulations have been issued to stop the practice. The “10 Taboos” for acts of party members that violate political, personnel and financial regulations have raised hopes of decrease in corruption levels of the country.

The taboos include: lobbying higher officials of higher ranks, handing out pamphlets, or souvenirs without authorization, holding social activities to form groups, offering or taking bribes, Making phone calls, giving gifts, holding banquets or conducting visits to win support, covering up illicit activities, spreading hearsay against others, using intimidation or deception, and arranging jobs for others. Earlier regulations against corruption focused on companies in China only. Foreign companies often had to pay for getting licenses, indulge in black market, evade customs, pay for foreign trips of officials, payments of their kids’ foreign education, or form cartels to overcome the system.

The loose implementation of FCPA made it easier for US companies to indulge in corruption practices. The “Criminal Law of the PRC” covers acts of bribery of state officials, and employees of state-owned enterprises. The “Law Against Unfair Competition of the PRC” stops companies from giving money or property to customers. The presence of grey areas such as the issue of gifts below the monetary value of $600 makes it less effective. The laws are framed in such a way that any kinds of gifts to anybody can be interpreted by manipulation of the law.

The case example shows the typical behavior and attitude as a result of the presence of corruption practices in the country. To control corruption practices, the US Company while starting its business in China, should modify its policies and procedures to suit the culture of the country, along with continuous training and reminding of the rules. The comments by the US Foreign Services Agent highlight the shortcomings in the existing law, and the inclination of agents towards helping US companies in corruption matters to provide them a level playing ground field with other coutry’s companies.

Answers 1. The different types of bribes, payments or favors are: payment for licenses to import and export, payment for foreign trips of Chinese officials, payment for foreign apartment, foreign education of kids, payments to sell or purchase goods, payments to state officials in return of some favors, payments to evade customs. 2. Payment for licenses to import and export: may be as a result of extortion by the government official, or as lubrication by the company to speed up the process (Syed, 2002).

Payment to evade customs: subornation Payment to state officials in return of some favors: extortion, subornation, or lubrication Payment for foreign trips, education: extortion or subornation Payment to sell or purchase goods: subornation 3. FCPA states that nay payment with a wrong intent is illegal and covers payment made to foreign official, a foreign political party or party official, or any candidate for foreign political office. 4. Even in absence of the FCPA, all the activities seem to be unethical on grounds of being unfair to some other party. 5. Legitimate business expense: The expense of Corporate Jet from San Francisco to Florida, the fees of the consultant Illegal expenses: family member’s trip to Las Vegas, Rome, Paris, and Pebble Beach; gifts such as Sony cameras, luxury outfits. 6. The comments by the former US Foreign Service Agent highlight the flaws in the legal system, and unethical behavior of the agents.

It is unethical as well as illegal to assist business by providing them the best corruption practices. The consultant rightly points out the moral duty of the company to modify its policies and practices to suit Chinese culture. 7. There is no ethical or legal alternative of paying bribe. However, some methods that can be used are: a. Payment for foreign trips: easy to account for by claiming that the trip was meant for business negotiation. They may prove very costly. b. Payment by land, apartments, or cars: Difficult to account when a lawsuit arise. c. Payment by means of education sponsoring: Easy to account by claiming it to be company policy to provide education on lines of Corporate Governance. d. Payment by gifts: Less expense, but harder to account for.

References Syed, Shahabuddin, 2002. Causes and Consequences of Bribery in International Business, International Journal of Management.