This article introduces basic considerations about corruption in business.
First off, without beating about the bush or prettifying the subject one can define corruption as misuse of power for private benefit or advantage. This power may, but need not, reside in the public domain. Besides money, the benefit can take the form of protection, special treatment, commendation, promotion, or the favors of women or men.
A more differentiated approach discloses a remarkably multiplex cluster of mores that is value-judged quite differently from culture to culture and, where its ramifications are concerned, accordingly heterogeneous. In some cultures presents and reciprocal personal favors are a part of the code of expected conduct and social behavior. In others the person who wishes to show gratitude for professional assistance rendered with personal gifts can quickly bring discredit on himself and the beneficiary.
Business corruption around the world
Whereas some countries permit bribes to be deducted from TAXes as ‘operating expenses’ or ‘special outlays’, other countries such as the United States have anti-corruption legislation that even makes the bribing of foreigners in a foreign country a punishable offense. For companies based in diverse parts of the world this legislative motley leaves them with varying degrees of elbow room in coming to terms with corruption.
In the Federal Republic of Germany bribing an official is a criminal offense for which both briber and bribed can be punished. If the bribe changes hands abroad, however, it is (still) TAX-deductible, a fact that would seem to indicate a certain understanding on the part of the lawgivers that double standards are a fact of life. Under the German law against unfair competition so-called ‘commissions’, i.e. fees paid for favors done in business dealings – for example, to a company employee who in his or her job capacity gives preferential treatment to a certain firm – also open both parties involved to punishment.
'The German Act against Unfair Competition refers to a set of provisions from German laws which regulate certain special aspects of fair trade on the German market. The violation of such provisions regularly constitutes unfair competition in the German market to the detriment of other fair competitors. '
Because the arrangement includes granting possible price reductions to the firm placing the order, however, this sort of wrongdoing might better be defined as fraud or breach of trust and punished accordingly. Since such deals are shadowy and the parties to them are locked in conspiracy (briber and bribee both in the same boat), it is extremely difficult to prove their existence, so that relying solely on legal redress is in apposite. For this reason it is useful to consider the problem in the context of corporate ethics.
Common features of business corruption
In sum, generally speaking corruption encompasses four main distinguishing features:
- Misuse of a position of power.
- Gaining of advantage for those who, actively and passively, are parties to the misuse.
- Undesirable effects on third parties (ramifications).
- Secrecy of the transaction.
Because both the dimensions of a position of power and the undesirable consequences can vary greatly and because of its significance for moral reasoning, we need to differentiate further.
Before we consider the moral differences among the various forms that the phenomenon of business corruption takes, two further provisos. Not every business is susceptible to it to the same degree. Experience shows that construction firms that specialize in infrastructure and other large-scale projects and manufacturers of big-ticket capital equipment such as turbines or aircraft are especially vulnerable, most notably when the decision on a contract hinges on just a few people or even on one person alone.
Ailing companies with noncompetitive products and services are more likely to stoop to corrupt behavior than healthy companies who enjoy a salient marketing edge thanks to excellent products and services.
Sweeping statements about ‘the’ developing countries, for example, and ‘everyone’ there who carries responsibility are out of place as well. Payments tainted with corruption may indeed occur more frequently and involve various officeholders more often and to that extent be a condition of business. This does not mean, however, that corruption is practiced everywhere and in every case and that upright officials are nowhere to be found.
