Good Corporation, Bad Corporation Corporate Social Corruption in International Business

Chapter 10 Corruption in International Business Source , 2012 ) 10 . A common practice worldwide ix for government to be in for in . Corruption ix not merely a problem in developing . In recent , American , German and Italian have been implicated in corruption , and international . The Problem of Corruption When a large corporation decides to enter a foreign market , it must usually secure a number of licenses , permits , registrations , or other government approvals . Certain types of business may be even be impossible or illegal unless the corporation is able to obtain a change or adjustment to the nations laws or regulations . Since the power to authorize the foreign corporation activities is vested in the hands of local politicians and , and since corporations have access to large resources , it should not be surprising Corruption in International Business I 133

Good Corporation , Bad Corporation 10 that some corporate executives resort to incentives to foreign . While certain incentives , such as promises to invest in local infrastructure , may be legitimate , any form of direct payment to the foreign that is intended to that public decisions will cross the line into illegal , also commonly referred to as bribery . Bribery is one of the archetypal examples of a corporation engaged in unethical . A number of problems can be attributed to business bribery . First , it is obviously countries have laws that prohibit the bribery of government the foreign company engaging in bribery exposes its directors , executives , and employees to grave legal risks . Second , the rules and regulations that are circumvented by bribery often have a legitimate public purpose , so the corporation may be subverting local social harming local , the giving of bribes may foment a culture of corruption in the foreign country , which can prove to eradicate . Fourth , in light of laws such as the US Foreign Corrupt Practices Act ( and the Organization of Economic Cooperation and Development ( Convention on ( cussed in greater detail below ) bribery is illegal not only in the target country , but also in the corporations home country . Fifth , a corporation that is formally accused or convicted of illicit behavior may suffer a serious public relations backlash . Despite these considerable , experts report that worldwide business corruption shows little signs of . Transparency International ( TI ) a leading ruption organization based in Berlin , estimates that one in four people worldwide paid a bribe in 2009 . It appears that the total number of bribes continues to increase annually . The World Economic Forum calculated the cost of corruption in 2011 at more than five percent of global ( US 26 trillion ) with over trillion paid in bribes each Governments and intergovernmental organizations have redoubled their efforts to combat the perceived increase in international business corruption . Globalization , which accelerated in the final decades of the twentieth century , is often cited by specialists as contributing to the spread of corruption . Corporations and businesses in every nation have become increasingly dependent on global networks of suppliers , partners , customers , and governments . The increased interaction between parties in different countries has plied the opportunities for parties to seek advantage from illicit incentives and payoffs . Although outright bribery is clearly unethical and illegal , there is great deal of behavior that falls into a gray zone that can be to analyze according to a single global standard . When does a business gift become a bribe ?

What level of business entertainment is right or wrong ?

Over the past two decades , governments and regulators have sought to clearly define the types of behavior that are considered unethical and illegal . Another factor that has heightened the sense of urgency among regulators is the of recent cases of corruption ( several of which are described in greater detail below ) The cost to shareholders as well as stakeholders and society has proven enormous . and international organizations have ramped up their enforcement of laws and sought increasingly severe penalties , sometimes imposing amounting to hundreds of millions of dollars . Largely as a result of these efforts , most multinational corporations have developed internal policies to ensure compliance with legislation . However , as we will see in the case study featured in this chapter , such also raises complex ethical dilemmas for corporations . It remains to regulate ethical behavior when social and cultural norms vary significantly from country to country . Corruption in International 134

Goad , Bad 10 Acts that are considered unethical in one country may represent a traditional way of doing business in another . One legal scholar explains the difference as follows A common misconception , held in both Western and developing countries , and even among many researchers on corruption , is to confuse what is corrupt with what is legal . Laws are defined by values , as are ethical norms , but the two are not In this chapter , we will explore the impact , reasonableness , and the effectiveness of laws and corporate compliance rules . Finally , we will discuss a case in which the line between corruption and traditional business practices remains to ascertain . The Scope of the Problem Recent cases of corruption in international business have attracted considerable media attention . Paying a to ignore a minor violation is unremarkable paying a senior government a secret bribe of millions of dollars to get a large contract signed is a different matter . While virtually all multinational companies have adopted policies , it is not clear how often these policies are fully implemented and internalized as part of the corporate culture . The emphasis on policies is relatively recent and , even in the most responsible organizations , such policies are still works in progress . However , there is some evidence that the implementation is not always as effective as might be hoped . For example , a study by Control Risks and the Economist magazine Intelligence Unit showed that while most companies acknowledge the need to combat bribery and corruption , many are complacent and unprepared to deal with scandals inside their own The review of global attitudes on corruption surveyed more than 300 senior lawyers and compliance heads in April 2013 . It painted a disturbing picture . The authors concluded that too many companies still fall short of best practices in their compliance Despite ranking high on most corporate agendas , the report noted a danger of complacency among companies , and as a result , the risk of a company itself in the middle of a investigation remains Transparency International Corruption Perceptions Index ( ranks countries and territories according to their perceived levels of public sector corruption . It is an aggregate indicator that combines different sources of information about corruption , making it to compare countries . Perceptions are used because corruption is generally a hidden activity that is to measure . The confirms that corruption remains a problem worldwide and takes place even in the wealthiest Research in 2012 by the economist Friedrich Schneider placed the annual loss to the German economy alone at The Dow Jones State of Survey in 2011 , which surveyed more than 300 companies worldwide , found that more than 55 percent of companies have found cause to reconsider working with certain global business partners due to concerns about possible violation of regulations . Additionally , the biannual survey indicated than more than 40 percent of companies believe they have lost business to competitors who won contracts unethically , an increase from only 10 percent in the 2009 study . Strict liability provisions in legislation like the UK Bribery Act make businesses responsible for the activities of their agents and partners overseas , and this is having a direct impact on the Corruption in International 135

Good Corporation , Bad Corporation occurrence of new business partnerships between firms , said Rupert de , managing director of Risk and Compliance , Dow Global social costs from corruption include the reluctance of investors to commit to projects in developing economies , inhibited growth of businesses due to off of revenues for bribes , and diversion of funds from food , medical , and educational aid grams . In addition , it seems likely that corruption hampers the development of executive talent in developing nations , given that frustrated local executives may seek to emigrate to countries where corruption is less prevalent . Consider for example , the long term impact of the necessity of paying a bribe to get running water in a household in rural This type of corruption can effectively exclude the poor from access to vital public services . Economist Daniel of the Harvard Institute of International Development cites public sector corruption as the most severe obstacle to development in developing and Notable Examples of Corruption The number and magnitude of recent corruption cases prosecuted by government is disconcerting . Moreover , these cases may represent only the tip of the iceberg Regulatory bodies focus principally on the bribery of public so that other forms of business corruption are . To date , the ten largest cases successfully tried pursuant to the are listed below ( in order of magnitude of ) Germany ) 800 million in 2008 ( USA ) 579 million in 2009 BAE ( UK ) 400 million in 2010 Total SA ( France ) 398 million in 2013 Netherlands SpA ( Italy ) 365 million in 2010 SA ( France ) 338 million in 2010 Corporation ( Japan ) million in 2011 AG ( Germany ) 55185 mi ion in 2010 ( France ) 55137 mi ion in 2010 10 . Germany ) 95 million in 2011 There are other recent examples of corruption in international business . in Mexico According to a report issued by the Mexican Employers Association in 2011 , operating in Mexico spend more than 10 percent of their revenue on corrupt acts . One of the most cases was the scandal that was brought to light in 2005 and resulted in the stock value dropping by as much as billion . Evidence unearthed by internal and external investigations revealed a widespread use of bribes , alleged to total over 24 million . The bribes were paid to facilitate the construction of stores throughout Mexico . The country is a huge market for in every five stores is in Mexico . As of October 2014 , the investigation Corruption in International 136

Goad , Bad 10 , having implicated management at the most senior levels of complicity or awareness . in China In September 2013 , China news agency reported that a police investigation into bribes paid by drug manufacturer ( indicated that the bribes were organized and paid by China and not by individuals operating on their own prerogative as had been reported by the company initially . Police also alleged that the parent merely went through the motions of an internal audit process , indicating a knowledge and acceptance of the bribery . This very recent case suggests that the Chinese government widely publicized arrests and convictions for bribery have not yet served as a deterrent to corrupt practices by foreign corporations . in Costa In January 2010 agreed to pay Costa US 10 million in reparations for social damage caused by payment of US 25 million in bribes to get a contract to provide mobile phone services in that country . This case is notable for its application of the concept of damage and the resulting order of compensation to the citizens of Costa . Laws and Regulations The major international law was the United States Foreign Corrupt Practices Act ( adopted in The bribery of foreign public by American business enterprises . Initially , the was not well received . Few other countries followed suit and US companies complained that the shut them out of the competition for billions of dollars worth of overseas business contracts . Slowly , however , the push for concerted measures gathered momentum , and governmental institutions such as the , the African Union , and the United Nations eventually adopted conventions . Further support for a global agenda was provided by the lending institutions such as the World Bank , by such as Transparency International , and by the rapidly evolving movement . Notable among these efforts was the Communist Party of China promulgation of a code of ethics to the widespread corruption within the Communist of The applies only to bribes paid ( or offered ) to foreign government to obtain or retain business or to develop an unfair competitive advantage . The concepts of bribe and foreign government can be interpreted broadly . While companies and charged with violations have often sought to characterize their payments as business gifts , this has not shielded them from liability when there was evidence that the payments were intended as a means of obtaining illicit objectives . However , where payments have been characterized as facilitation or lubrication payments , meaning that they merely created an incentive for an to promptly execute legal actions , such as mandatory customs inspections , the payments have been allowed . In numerous countries , the state owns all or part of commercial enterprises so that a great number of business executives could be classified as foreign government . Corruption in International 137

Good Corporation , Bad Corporation 10 In 1997 , the established legally binding standards for bribery in national business transactions . Similar to the , the Convention focuses on the bribery of public . Like the , the also potentially ates the opportunity for companies to circumvent the regulations by hiring consultants or agents ( this topic will be the focus of this chapter case study discussion ) Notably excluded from the scope of the Convention is a prohibition against bribing parties . Despite such loopholes , the Convention was an important step in the right direction . By 2012 , countries had the agreement and begun its implementation . Corruption and Culture Prior to the expansion of international trade in the nineteenth and twentieth , most commerce was local and followed traditional norms and ethical standards . With the expansion of international trade , however , businesses began to operate across cultural and linguistic boundaries . Misunderstandings and transgressions , both intended and unintended , became commonplace . To some extent , perceptions of corruption may derive from cultural differences , because behavior that is considered corrupt in one society may represent a normal business practice in another . One example can be found in the Chinese concept of , which refers to the reciprocal obligations and benefits expected from a network of personal connections . A person with a powerful level of is considered a preferred business partner because such a person can utilize connections to obtain business or government approvals . can derive from extended family , school friends and alumni , work colleagues , members of common clubs or organizations , and business associates . Chinese businesspeople seek to cultivate an intricate and extensive web of lifelong relationships . The key tion in networks is reciprocity in the granting of favors the failure to reciprocate is considered a breach of trust . The greater the favor asked or granted , the greater the favor owed . thus generates a cycle of favors over time . Among the questionable practices facilitated by are certain types of corrupt as nepotism ( favoring family members ) and ( favoring friends ) In fact , relatively high levels of nepotism or are accepted and tolerated in many cultures , not only in China . As applied to business transactions , opens doors and creates opportunities for ness relationships and dealings . In itself , is not corrupt . However , strong connections and obligations can serve as an incentive to corruption . Many traditional business practices around the world are rooted in concepts analogous to , as in the practice of using business gifts or personal connections to speed up transactions both large and small . Russians use the term blot to refer to the ability to get things done through personal networks or contacts with people of . The Japanese have adapted the English word connections to coin a term of their own , In Pakistan , the use of personal ( recommendation ) refers to the ability to make contact with the right on the most favorable French expression for bribe is pot do vin ( jug of wine ) which implies friendly relations . In and Hindi , petty bribes are known as ( tea water ) In West Africa the term is English colloquial term grease and the German ( grease money ) imply a lubrication or easing of resistance to Corruption in International 138

Goad , Bad 10 the transaction . In Mozambique , one term for corruption is or , which is derived from the saying a goat eats where it is The universality of such terms suggests that various forms of business bribery and graft are prevalent worldwide . However , business activities that are considered acceptable in some societies may be considered taboo in others . Thus , the American practice of legislators and governmental agencies would be considered an illegal form of buying in many other countries . In some societies , gift giving to chiefs , elders , or religious leaders is considered not only acceptable and appropriate , but even a mandatory traditional expression of respect and obligation . A survey conducted by in the United Kingdom found that while 80 percent of respondents agreed that the UK Act was an admirable attempt to address the problem of corruption , percent believed that the Act was impractical and ignored the reality that bribery is an accepted way of doing business in many countries . Other similar studies have revealed widespread international criticism of US law as hypocritical in light of the American business practice of offering gifts to potential customers or clients ( trips to conferences , golf outings , tickets to entertainment and sporting events , use of luxury facilities such as spas , condos , and country clubs , Case Study The Chinese Agent The case subject for this chapter is based on the issue of determining the ethics of employing a agent . In our case , an American institution , which we will call Cleveland College , is opening a Shanghai campus to offer United college programs in China . There is a ready market in China for prestigious US baccalaureate degrees . However , Cleveland College needs to satisfy a lot of red tape to be accredited in China and obtain the necessary licenses for an educational institution in the Shanghai area . On an exploratory trip to Shanghai , the President of Cleveland College , Mark Rollins , is approached by a prominent businessman , Wang Li , a former member of the Shanghai city government who is familiar with the educational bureaucracy . Wang offers to assist as a public relations agent , but his fee is so hefty ( per year ) that Rollins fears that Wang is going to use much of it to grease palms . Research with local authorities indicates that Wang is well respected and has a high level of with local educational . Wang promises to get Cleveland College all the necessary in much faster time than it usually takes , and also promises to prevent bothersome audits and bureaucratic problems . Should Cleveland College sign him on ?

What danger would this entail ?

Corruption in China Over the past decade , the Chinese government has joined the global community in crying corruption and initiating regulations and laws , and stating a strong intent to clamp down on corruption . Thus , in a widely publicized 2011 statement by China Premier , Wen , actions were emphasized as a primary task in 20113 This was interpreted as an indication that increased enforcement of laws will be a top government priority and that these prohibitions must be taken seriously by foreign corporations operating in China . Corruption in International 139

Good Corporation , Bad Corporation 10 A number of recent cases have illustrated the extent of the Chinese down on corruption . One notorious case was that of the former Huang , who was sentenced to death for accepting billion yuan in bribes . In another case , Wang and eight other senior of the provincial in and provinces were convicted of corrupt actions that took place between 1998 and former president ofthe Supreme Court and the former vice president of the China Development Bank were charged with taking bribes and then convicted to life in prison . In 2011 , China sought the repatriation of Lai from Canada after twelve years there . As former chairman of national Corporation , was accused of absconding with billion dollars . His defense against the repatriation was that he would face torture and execution . Some observers have questioned the resolve of the Chinese government and have suggested that the small number of corruption prosecutions concluding with extreme punishments may have less to do with ending corruption than with sending a message to those who engage in corruption beyond an acceptable level . Others have suggested that prosecutions may be an alternative means of conducting political purges . A more positive but still skeptical interpretation is to view the cases as an expression of support for global , an encouragement to foreign investors who fear corruption , and a way of appeasing the Chinese citizenry . According to Yan Sun , Professor of Political Science at the City University of New York , it was corruption , rather than democracy as such , that lay at the root of the social dissatisfaction that led to the protest movement of 1989 . Foreign Educational Institutions in China Accompanying China meteoric economic development over the last three decades has been a corresponding growth in sophisticated higher education . The number of institutions of higher education in China has doubled in the last ten years . By 2020 , China intends to have produced 195 million college graduates . The Chinese government has determined that it must not only increase the number of college graduates , but also make China an education destination for students . Accomplishing these goals will increased cooperation with Western institutions of higher education In an interview with University World News in 2013 , Michael , head of the higher education policy unit at the European University Association ( reported that , just a few years ago , it was very to convince European that Asia was not just a provider of students . Now no one in Europe can ignore that China has become important globally for research and will continue growing in In 2013 , China vice minister for education announced that China would take efforts to attract more foreign students . By 2020 , China hoped to attract some international students , making the country the largest Asian destination for international . students . Currently about foreign students are studying in China . With 37 million students studying in over universities and colleges , China has the largest system of higher education in the world . The rapid growth of demand for leges and universities in recent years has resulted in a number of problems , including rushed and poor quality construction , high ratio , shortages of faculty , and questionable academic quality , not to mention allegations of corruption . Corruption in higher education in China has been widely reported , including of widespread plagiarism , selling of degrees , favoritism in admissions , and bribery Corruption in International 140

Goad , Bad 10 for grades . A my by University Professor Shen Yan showed that academic theses was a one business in 2009 , and that 70 percent of the theses were plagiarized . John Bray , author of Facing up to Corruption , a Practical Guide , 15 reports that parents in China often have to pay for a spot in a university for their child . Compounding these problems is the growing level of unemployment among recent Times reported a percent employment rate among the seven lion graduates in The decline in the perceived value of Chinese higher education has created an opportunity for foreign universities . There is a perception that a degree from a Western university is more credible and that its graduates are more employable than ates of Chinese institutions . Carl Fey , Dean of University Business School China , discusses the growing number of foreign campuses opening in China . At his school , they spend the first year teaching students English , so they learn to work , study , and speak in English before diving into subject matter . Your diploma looks exactly the same whether you graduated from , UK , or , China , Fey said . That because the education actually the 17 The number of foreign universities operating in China is changing rapidly as from Europe , the United States , and other Western countries enter the fray . This course is not without operational hurtles , as was noted when Harvard University pulled out of a high and widely published and joint venture with its Chinese counterpart , the prestigious Beijing University . Harvard cited several reasons for ending the relationship , including low enrollment , high operating expenses , and issues within the Chinese language program . One of the problems faced by Western universities operating in China is that the for government censorship places severe limitations on academic freedom . While this is the most notable issue , there are many other challenges , mostly related to cultural differences . The red tape involved in getting the appropriate licenses , and building permits from the various governmental agencies involved in local , regional , and centralized government is a daunting task for a foreigner . Most foreign institutions find it more expedient to partner with established Chinese universities than to attempt to open a new university , but even then , there are all the usual issues related to operation of a ship or joint venture , all complicated by the cultural differences . Topic for Debate To Hire , or Not to Hire a Consultant Who May Be Bribing Officials on Behalf of the University Should Cleveland College hire the local Chinese agent , or public relations consultant , who requests a sizeable enough retainer that we may reasonably suspect he is making cash donations to obtain the goodwill of local educational institutions ?

Affirmative Position Cleveland College should hire the local Chinese consultant . Corruption in International 141 Goad , Bad 10 Possible Arguments ' Secret cash payments may act as a lubricant to facilitate exchanges . Corruption is an inevitable part of the process of opening up new and developing ' Companies that elect to comply with the letter of the law in the strictest sense may be at a severe competitive ' Payment of fees to can serve as an incentive to development , cutting through unnecessary ' Corruption as in this context is a Western concept and may not be plicable in all ' In many societies , the gift culture is a form of appropriate behavior based on traditions of exchanging favors . Negative Position Cleveland College should not hire the local Chinese consultant . Possible Arguments ' Paying an agent a fee , who then bribes a government does not necessarily relieve the college of the risk of violating ' Paying an agent to bribe a government sets a precedent that can lead to ongoing demands for ' If the organization pays a bribe , and they do not get what they paid for , they have no is a form of ' If the college goes down the path of bribing for any purpose , using the justification that it is a traditional and acceptable way of conducting business , it implicitly condones a lack of ethics to its next step would be to sell grades , diplomas or admissions . Readings Corruption from a Perspective Hooker , John . Corruption from a Pittsburgh , PA Carnegie Mellon University . October The world is shrinking , but its cultures remain worlds apart , as do its ethical norms . Bribery , kickbacks , and nepotism seem to be more prevalent in some parts of the world , and one wants to know why . Is it because some peoples are less ethical than others ?

Or is it because they have different ethical systems and regard these behaviors as acceptable ?

phenomenon of corruption provides a good illustration of these realities . ruption is best understood as behavior that corrupts it undermines the cultural system in which it occurs . Because cultures can operate in very different ways , very different kinds of behavior can corrupt . Practices that Westerners consider questionable , such as and nepotism , may be functional in other cultures . Practices that are routine and acceptable Corruption in International 142

Good Corporation , Bad Corporation 10 in the West , such as bringing a lawsuit for breach of contract , may be corrupting in a wide range of cultures , Western and , but for very different reasons . The West tends to be universalist in its outlook every society works , or should work , essentially the same way . Its business practices , for example , should be based on a market system that is characterized by transparency and regulated by laws that apply to everyone . A country that fails to conform to this model is seen as underdeveloped or dysfunctional . It follows from this view that that corruption is basically the same in Sweden as in . The reality , however , is that different cultures use radically different systems to get things done . Whereas Western cultures are primarily , most of the worlds are . Westerners tend to trust the system , while people . by personal honor , duty , friendship , or mutual obligation . Loyalty to cronies is suspect behavior in the West but represents high moral character in much of the world . What is corrupt in the West may be acceptable elsewhere . The classic example of the purchasing agent illustrates this point . The Western purchasing agent is expected to award contracts based on the quality of bids and transparently available tion about the bidders . An agent who favors personal friends is viewed as corrupt , because this system . It creates a of interest A choice that is good for the agent and his or her cronies may not be good for the company . In much of the world , however , is a foundation for trust . A purchasing agent does business with friends because friends can be trusted . He or she may not even ask to see the company , since this could insult the others honor . It is assumed that cronies will follow through on the deal , not because they fear a lawsuit , but because they do not wish to sacrifice a valuable relationship in an economy where relationships are the key to business . In such a system it is in the interest for the agent to do business with friends , and may therefore present no of interest . What is acceptable in the West may be corrupt elsewhere so basic a practice as negotiation , which is routine in the West , can disrupt harmony in Confucian cultures . Westerners tend to organize their affairs around agreements , deals , or contracts , relying on a concept of covenant that traces back to the ancient Middle East . These agreements are hammered out in negotiation , as for example when labor and management sit across the table from each other . This practice is functional and constructive , so long as it proceeds according to rules of fair play and good faith . Confucian cultures . based primarily on loyalty and obligation to friends , family or superiors rather than on a system of rules . Facing up to Corruption A Practical Business Guide Bray , John . Facing up to Corruption A Practical Business London Control Risks . Direct and Indirect Bribery Indirect bribery is one of the most sensitive policy issues facing international . A typical example would be a case where a company employs a commercial agent to help it win a government contract . The agent is paid by commission based on a percentage of the contract fee part of that commission is passed on to a government . The agents employers do not do not wish to happened . Corruption in International 143

Goad Corporation , Bad Corporation 10 The Convention explicitly covers payments made directly or intermediaries to secure a business advantage . US and other international legal practice already includes several cases where companies have been prosecuted for paying bribes via agents . or not a defence . broad understanding of corruption includes certain kinds of , although tie boundary between acceptable and unacceptable forms of is often hard to . A series of cases in the US and other countries have drawn attention to the ethical issues surrounding political lobbying . In principle , political lobbying is legitimate . One of tie main roles of industry associations is to lobby government on their members behalf . Individual companies , like ordinary citizens , are entitled to seek assistance from their and diplomatic representatives . Problems arise when such contacts appear secretive , when there is a suspicion of favouritism or when a company appears to be both and against the wider public interest . In many societies it is common to speed up both larger and smaller transactions personal connections The use of personal contacts is both commonplace and useful . However , as with political lobbying , it becomes problematic when the connections lack transparency and when break rules on behalf of their business friends , or seek favours in return . In cases of doubt , the newspaper test provides a useful indicator would a proposed transaction cause you or your company embarrassment when reported in the press ?

If it would , do not do it . The Cost of Corruption A Discussion Paper on Corruption , Development and the Poor Evans , Bryan The Cost of Corruption A Discussion Paper on Corruption , ment and the Poor , UK , 1999 ) accessed December , 2014 , Far from being a victimless crime , corruption infringes the fundamental human right to fair treatment . All persons are entitled to be treated equally , and when one person bribes a public he acquires a privileged status in relation to others . He becomes an insider while others are made outsiders ( and the more outside they very poor , the landless , women , ethnic more they will be hurt ) Clare Short , the UK Secretary of State for International Development , notes a report in the Indian magazine Outlook to the effect that the bribe for a new water connection was effectively excluded the poor from access to running water , with all the health and that this entails . Corruption is thus profoundly in its has a Robin character . Hugh , introducing a bill to create offences of international bribery and corruption , went so far as to say that bribery is a direct transfer of money from the poor to the . ramifications spread yet further . Productive foreign investment may be lost . Before the Asian crisis of there were some who argued that corruption was not harmful , it merely greased the wheels of commerce . It was pointed out that some countries which ranked high in surveys of the level of corruption , also excelled in economic growth . The World Development Report notes that the question of predictability ( the amount to be paid , the certainty of outcome ) throws some light on this apparent paradox . For a given Corruption in International 144

Good Corporation , Bod Corporation 10 level of corruption , countries with more predictable corruption have higher investment rates . However , the Report went on to state that even in these countries corruption had an adverse impact on economic performance , because the higher transaction costs and creased uncertainty put of potential investors . Time magazine quotes research by Professor Wei of Harvard School of Government to the effect that the high level of ruption in Mexico compared with Singapore was the equivalent of a 24 per cent increase in the marginal rate of taxation . A conservationist , Olsen , in a letter to the Transparency International letter notes that political corruption is a major feature of the political habitat in which wildlife conservation efforts sink or When corruption breaches regulations designed to protect the environment , everyone suffers in the long term , as the loss of primary forest leads to soil erosion , local climate change , but it is the poor who have the smallest resources with which to weather environmental degradation . Corruption can also have ugly and unpredictable consequences for the ( Western ) briber . As soon as he pays he begins to lose control . Ifhe does not get what he paid for he is in no position to complain . Having broken the law he is vulnerable to blackmail . If he tries to break the corrupt relationship he may face a variety of threats , including the threat of violence . Synthesis Questions . Consider the following hypothetical example An American college seeks to obtain a good image among Chinese educational regulators and by inviting a number of them , all expenses paid , to a conference in Hawaii . Is this morally acceptable ?

Does it constitute a form of bribery ?

Why or why not ?

In the past two decades , a number of very large corporations have paid large fines for corrupt behavior . Presumably , the executives who authorized the payments were , experienced , professional people . Why do you think they failed to speak up against the corruption ?

This chapter explores the concept of . Do you think is morally wrong , or rather , is an acceptable form of traditional practice that must be allowed to continue ?

What are the prospects for in the future ?

Clean Business is Good Business , International Chamber , Transparency International , the United Nations Global Compact and the World Economic Forum Partnering Against Corruption Initiative ( accessed 26 , 2014 , Sharon , Corruption in International Business The Challenge of Cultural and Legal Diversity , Friends University , accessed October 29 , 2013 , in International Business . Corruption in International 145

, Bad 10 . International Business Attitudes to Corruption Survey 2013 . Control Risks Groups Limited , accessed 26 , Theresa , High on Corporate Agenda , Low in Practise UK Study , a Poi , 15 , 2013 , Corruption Perceptions Index 2013 . Transparency International , accessed 26 , results . Corruption will cost Germany Tbe , March 16 , Dow ones Risk and Compliance . Dow Jones State Compliance Survey , Dow Jones , March 31 2011 , Mukti ain Campion , Bribery in India a Website for Whistleblowers , News , une 11 , 2011 , accessed on December , 2014 , Daniel . Corruption The Facts . Summer 1997 . 10 . Richard , France Total SA Cracks Our Top 10 List , Blog , May 29 , 2013 , 11 . A Resource Guide to the . Foreign Corrupt Practices Act . US . Dept . of , accessed 26 , 12 . China Communists Get New Ethics Code . News , 24 , 13 . Chinese Premier Renews Call for Fight Against Corruption . March 25 , 14 . Sharma , Yojana . Beijing Wants More HE Links with Europe . News . May 11 , 15 . Bray , ohn . Facing Up to Corruption A Practical Business Guide . Control Risks Group . 16 . Chen , Lu . Employment Rate for China College Graduates Lowest Ever . August , 17 . Why Foreign Colleges Are Entering China . Corruption in International 146