Wednesday, December 5, 2012

An Ethical Dilemma - Bribery in Developing Countries

By:  Adaobi Okafor
MSBA Class of 2012

In the MS in Business Analysis program at CUA we are taught to see ethics as an integral part of practicing business daily and not just the topic you consider when you have a difficult decision to make. In my Management With Integrity class with Prof.Attila Freska we discussed the Foreign Corrupt Practices Act (FCPA) of 1977 and how it addresses the need for businesses to practice accounting transparency requirements under the Securities Exchange Act of 1934 and refrain from bribery of foreign officials. We discussed how it was unethical for companies to bribe officials in order to facilitate their business interests in foreign countries and if it was mandated then they had an ethical responsibility not to succumb.  [Note: It is illegal for US persons and companies to pay bribes to foreign officials] 

However, I found myself thinking about the ethical issues surrounding bribery from the point of view of the local businesses in developing countries, for instance my home country of Nigeria. The US based businesses and their representatives have the luxury of deciding that they would not bribe officials for business because they have other options to generate income and profits. Local businesses in developing countries cannot be as rigid as their foreign US counterparts in their approach to bribery because if they do not play the game they might as well pack up and go home.

It is so commonplace and expected that you have to give something in order to get things done that if the request is not completely outrageous you do not consider it more than the cost of doing business. I have even heard it being compared to the culture of tipping for service that is provided in the United States and there is some truth to that when compared to the waiter whose expected tips are built in when determining the hourly wage. Most government workers do not make enough money compared to the standard of living in these countries so they have to make up that shortfall somehow. The problem with that analogy is that the amount to ‘tip’ is being dictated and required even before the service is provided.

Greasing the hands of the official at the desk to ensure that documents that you have filled and paid the fees as required are processed on time is the only way to ensure that you get things done on time. The bigger established companies can afford to stand on principle and refuse to pay the fees because they have enough cash flow to wait out the bureaucracy of the system. The smaller mom and pop establishments cannot afford to stick to their guns. Each day they dig in their heels is one day they come closer to closing their doors permanently and their families starving. In that case they consider how ‘reasonable’ the demanded fee is and they build it into the cost of operations and continue their business and I cannot say that I condemn them. 

I am in no way suggesting that bribing of officials should be sanctioned as a legal requirement of doing business but the situation has so many shades of grey that seeing it as black and white is not being realistic or fair to the local businesses in that environment. Until the governments of these developing countries at their core decide to commit to being ethical in their business practices, is it really fair to lay the ethical burden of bribery on the smaller businesses who cannot afford the time and money to fight to the bitter end for what is rightfully due to them.

Adaobi Okafor
MSBA Class of 2012

1 comment:

  1. I believe bribery in developing countries can be contained through first, strengthening of systems, creating a system of checks and balance, and finding a way to account for bribery so efficiency and productivity could still be attained.Otherwise, that it becomes a socially accepted norm.