Dilemmas Surrounding Issues of Corruption that May be Faced by Multinational Corporations - Assignment Example

Dilemmas surrounding issues of corruption that may be faced by multinational corporations “Bribery is the criminal act or practice of voluntarily giving, offering, receiving, or soliciting a bribe to influence the official conduct of a person in a position or office of public trust”. Commercial bribery is defined as, “The voluntary giving, offering, receiving, or soliciting of a bribe to influence the discretionary conduct or decision of an agent, officer, or employee of a business” (Webster’s dictionary www.yourdictionary.com/law/bribery date accessed 22.03.2010) Both these definitions are off course dictionary definitions. However interestingly bribery in international community is not only limited as “bad” transaction of money that exchanges hands. Like the government clerical cadres are considered to be the “necessary evils” of the system, today some or the other way corporate officials come across situations where bribery seems to be an inevitable option to get the work done. However bribery howsoever prevalent is not appreciated by the international corporate world and wants some code to be issued in the same regard. There are several serious dilemmas facing the issue. The first and foremost is to define what exactly should be termed as bribery as the distinguishing lines are grey. In such situations business practices for relationship building also come under microscope. Let us look at prominent practices which could be termed as proscribed cases of bribery. Every business has to deal with government system for establishing the business in a particular country or a region. Payments termed as bribery are actually payments made towards officials who demand the payments. Now let us also know why such demand is made especially when the job that is expected out of him is a routine. When the position held by the official is a key post this is bound to happen. For example if an official is aware that certain decisions or permissions have to be given from his desk, a payment is demanded. The payment asked would be for passing of the particular file with positive remarks or approvals. In such case, the money that exchanges hands would certainly be termed as extortion. In other words this is known as “facilitation payments” or payments made to facilitate the work. Although this is a clear case of bribery it is very difficult to for a business to survive without getting into it. The added problem is inflated egos and a difficulty to push the papers through irrespective of the payments made. There is no clear cut international code which says anything about extortion payments made to government officials. Another severe problem lies in the mindset of the society the corporate is working into. The culture plays a major role in the decision of whether or not to get into bribery. Let us for example talk about corporate hospitability. Entertaining the business partners fast became a norm. But the line between extensive entertaining and bribing is very blurred. Entertaining business partners (here business partners are the people who are associated with the business) maybe a part of the specific culture but could be stated as “endemic or common bribery form”. Bribery and corruption is the issue which has been admitted as a far more serious issue that has been eating the economies world over. Hence need for international regulation was required. “In 1989 the OECD began discussing efforts to combat illicit payments in international business transactions, the OECD is intergovernmental organization that provides a setting to debate and cooperatively act upon issues of economic and social policy. The OECD regroups the countries that are committed to the value of the market economy. In 1994, the OECD adopted recommendations on bribery in international business transactions. The recommendations were principally motivated by the effect caused by bribery in distorting international competitive conditions. The recommendations direct member countries to take effective measures, to deter, prevent and combat the bribery of foreign public officials in connection with international business transactions” (By Abdulhay Sayed, page 212 April 2004) The business partners are multiple. As stated by Mr. Sayed common legislation for controlling of the bribery is urgently required. There have been a few NGOs and organizations like OECD who have taken initiative to come up with legislation against issues of bribery. Codes are set up internationally which are meant to help the business decisions. It is a welcome effort as the issue is very serious and concerns day to day business applications. These codes specify about bribery in three cases, people who are party to the bribery, active and passive version of bribery, actual bribery and the promise to pay bribery. There are practical difficulties in the implementation of the codes. If the definition of bribery is in itself vague then implementation of any regulation against it could be extremely difficult. Besides the codes themselves admit that it is impossible to cover the entire activities of bribery and regulate them. For some cases it can provide a guideline, for others a definitive course of action. The worldwide perspective of cultures comes in picture here. What is accepted in some part of the world may not objectionable in other parts. In such case regulating each and every course of action becomes vague. Like in case of facilitation payments, sometimes such payments are considered if they are meant to procure routine business work. Although these payments are not illegal the organization should not get into such practices. The regulations become dicey. In fact dealing on case to case basis is preferred. Again when it comes to gifts and entertaining the regulations are on the borderline of what seems to be an acceptable business practice and what comes under bribery. With these main areas getting hazy the international business community would definitely not be happy with the regulations. Another problem associated with these regulations or codes is their implementation. The anti corruption culture has to come from within the organization as well. Even when we speak about cultural differences no culture or business environment in any part of the world would accept corruption as a norm, which is a very hopeful situation. The regulations themselves specify the procedure of implementation of the code rather than what is to be specifically regulated at least the legal help is available internationally. While working closely with each other what is definitely required is cooperation from each other. International business communities would require tremendous cooperation for implementation of the anti bribery regulations. These norms should form a part of legislation worldwide. According to their own cultures and community ethics, acceptability parameters could be set. The international machinery can take a note of this to provide a common guideline to the business community. A clue can be taken from other international norms which are effectively implemented internationally. Example can be taken of environmental and ecological issues where everyone is willing to cooperate. Businesses directly affect the economic and social developments of a nation. If corruption is eating into the development in turn affecting the lives of the commoners then the issue must be dealt with a firm hand. Businesses cannot survive without unfair means and practices and expecting businesses to function absolutely clean is a utopian idea. However if the line between what is acceptable and corruption is very thin then it becomes all the more necessary to admit and implement the difference. Internationally it is vital to respect the cultures but it is also required to be watchful to not to overstep the boundaries. Regulations will give a tool to control and protect businesses but self control and cooperation between businesses and the countries is the required practical solution. (Human Resources chp12, 2009, transparency International date accessed 22.03.2010) Businesses that go international are by no means small businesses. They may be small when they start going global but they cross the boundaries to grow and definitely grow. Hence it is required that the self control and cooperation be implemented more strongly at the initial levels only. Globally businesses cross borders to poorer countries for business, growth and profits, in which case it is unfair to the growing economy. Even while achieving growth how advisable it is to get into unfair practices needs to be understood. Accountability needs to be established first. “For multinationals, bribery enables companies to gain contracts (particularly for public works and military equipment) or concessions which they would not otherwise have won, or to do so on more favorable terms. Every year, Western businesses pay huge amounts of money in bribes to win friends, influence and contracts. These bribes are conservatively estimated to run to US$80 billion a year—roughly the amount that the UN believes is needed to eradicate global poverty.” (Dr Susan Hawley June 2000, date accessed 22.03.2010) There would always be dilemmas faced by multinationals when it comes to what is acceptable and what is not when it comes to bribery and corruption and also how to implement anti-bribery and corruption policy in day to day practices. Even if there is a regulation set cooperation and understanding seems to be the most acceptable and practical way for solving the issue effectively. References: 1. www.yourdictionary.com/law/bribery, date accessed 22.03.2010 2. Corruption in International Trade and Commercial Arbitration By Abdulhay Sayed, pg 212 OECD convention and Implementing National Legislations, Kluwer Law International P O Box 85889, 2508 CN The Hague, The Netherlands April 2004 3. Dr Susan Hawley, Exporting Corruption; Privatization, Multinationals and Bribery, The Corner House, June 2000 (http://www.globalissues.org/article/590/corruption#GlobalizationMultinationalCorporationsandCorruption) date accessed 22.03.2010 4. Exporting Corruption Privatisation, Multinationals and Bribery by Sue Hawley The CornerHouse (http://cornerhouse.icaap.org/); Briefing 19; June 2000 (http://www.psrast.org/corrupt.htm), date accessed 22.03.2010 5. Human Resources Chapter 5 page 12 Business Principles for countering bribery ©2009 Transparency International. ISBN: 978-3-935711-13-5 Transparency International – the global coalition against corruption http://www.transparency.org/, (home > global priorities > private sector > business principles ) date accessed 22.03.2010 6. Bribery in International Business Organisation for Economic and Co-operation Development http://www.oecd.org/department, date accessed 22.03.2010 7. Corruption in international business transactions: The perspective of Norwegian firms Tina Soreide (2004) CMI Report http://www.cmi.no/publications/publication/?1868=corruption-in-international-business-transactions, date accessed 22.03.2010 8. MNCs In India...M A K Babi IPF Online.com (http://www.ipfonline.com/IPFCONTENT/articles/mncs-in-india.html), date accessed 22.03.2010 Read More