Tuesday, March 28, 2000

how bribery affects multinational businesses

For this assignment I will examine how bribery affects multinational businesses today. In the paragraph below I used Russia as one example in which bribery is the norm in business. I countered with the second paragraph on how United States attacks bribery as an ethical issue in itself.

Russia is one of the most corrupt countries on the planet where bribes are happening multiple times daily. Transparency International would give Russia 2.1 points out of ten; meaning ten is no corruption and 0 is the most corruption. Corruption is about 20% of the country’s Grouse Domestic Product (GDP) at 300 billion. Eighty percent of businesses do bribes. It’s an endemic because the media, citizens and politicians have open discussions about the benefits of bribes. In some cases, companies used “Bribes for survival” in which case they use bribes in order to be left alone from the government. An interesting fact is that the Russian government governs for the state not the people so it is the state officials that reinforce the bribery that takes place in their country. There is one man who is trying to clean up the corrupt and his name is Dmitry Medvedev. He started legislation to clean up corruption by asking the bureaucrats to declare their own and family income and assets; however, families were defined as spouse and under-age children, which did not include adult children. An income in Russia is confidential and only available to other bureaucrats. As of March 4, 2009, a man named Mikhail Khodorkovsky, an oil typhoon in Yukos, Siberia, who was accused of embezzling $25 billion in laundering 13.9 billion from his oil company. He is presently on trial for his innocence vs. the state theory which is fraud and tax evasion. His oil company is already divided among state-owned companies. (economist x2, 2008), (Timeonline.uk, 2009)

Using Russia as an example, one can surmise that doing business in other countries, as well as in Russia, where bribery is second nature, ethical issues can arise. Bribery is an illegal act in itself. The United States has laws against bribery. The US has the Foreign Corrupt Practices Act (FCPA) which addresses two main purposes, one is accounting transparency requirements of Securities Exchange Act of 1934 and the second is concerns with bribery of foreign officials. FCPA cases filed continued to increase to this day, other countries are rapidly increase their investigation and prosecution of corrupt payments as well. Some of the countries that are presently changing their tune in corruption are China and Germany. China is campaigning against commercial bribery and Germany is investigating allegations that the country's largest companies made corrupt payments to government officials. In order for US companies to maintain legal and moral grounds, they need to say no to bribery and institute clear corporate codes that employees are bonded to. Violators face heavy corporate fines, executives may face imprisonment or additional fines or both and possibly be disqualified from doing business with the US government. Although FCPA encourages fair treatment in competition for business abroad, the US may be at a disadvantage, because the FCPA applies to only American business and not foreign business; thereby, making it tougher for an American business to compete with business from other countries where bribery is commonplace for their gain. However, in the present day, there is still room for US corporations to expand in Russia in products such as automotive products, household goods, financial services, retail products, a healthcare system, telecommunication, and major construction equipment even with the knowledge that their government has some input in our business. (OEC, 2009) (BuyUSA.gov, 2009)( University of Pennsylvania.edu, 2002) (Business Ethics, pp. 279-281, 2008)

It is clear to me, that our American businesses that wish to adventure and prosper with their business prospects in other countries desperately need to learn the country’s culture and the rule of law of their land. Knowledge is power and it defines how their business practices determine right or wrong actions accordingly to the particular culture of that country. Finally, the ‘no to bribery’ should be the upmost importance of any corporation’s culture when dealing with multi-national corporations.


References

Anonymous. (2008, September 18). Oil, politics and corruption

Retrieved March 14, 2009, from Economist.com:

http://www.economist.com/specialreports/displaystory.cfm?story_id=12080765

Anonymous. (2008, November 17). Grease My Palm

Retrieved March 14, 2009, from Economist.com:

http://www.economist.com/surveys/displaystory.cfm?story_id=12628030&fsrc=rss

Anonymous. (2002, October 23). How Bribery and Other Types of Corruption Threaten the Global

Marketplace Retrieved March 14, 2009, from University of Pennsylvania:

http://knowledge.wharton.upenn.edu/article.cfm?articleid=646

Haplin, T. (2009, March 04). Russian oil tycoon, Mikhail Khodorkovsky, in court for fresh trial

Retrieved March 14, 2009, from Timesonline.uk.com:

http://www.timesonline.co.uk/tol/news/world/europe/article5840301.eceAnonymous. (2008). Doing Business In Russia: A Country Commercial Guide for U.S.

Companies – 2008 Retrieved March 14, 2009, from BuyUSA.com:

http://www.buyusa.gov/russia/en/ccg.html

Anonymous. (2009). OECD Convention on Combating Bribery of Foreign Public Officials

in International Business Transactions Retrieved March 14, 2009, from OECD.com:

http://www.oecd.org/document/21/0,3343,en_2649_34859_2017813_1_1_1_37447,00.html#text

Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Bribery.

In Business Ethics Ethical Decision Making and Cases (pp. 279-281).

Boston, New York: Houghton Mifflin Company.

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