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Gifts, Tips, Bribes, Grease…. Smoothing the Paths of International Business.

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Presentation on theme: "Gifts, Tips, Bribes, Grease…. Smoothing the Paths of International Business."— Presentation transcript:

1 Gifts, Tips, Bribes, Grease…. Smoothing the Paths of International Business

2 What’s a Gift?  A personal expression of affection, appreciation, or love.  ‘better’ if it reflects the recipient’s tastes.  Size isn’t relevant.  Not usually secret; can be acknowledged.  Given with no strings attached.  Not given to buy or compensate for anything.  SOURCE: adapted from John Noonan, Bribes.

3 What’s a Tip?  Payment for work (especially service), given to low-level employees, according to custom.  Builds no relationship between tipper and tippee.  Size is relevant, proportional to service.  Meant to reward past acts and influence future ones.  Gives the employee no conflict of interest related to loyalty to the employer.  SOURCE: adapted from John Noonan, Bribes.

4 What’s a Bribe?  NOT an expression of love or fondness.  Seeks to make the bribee do what the briber wants.  Impersonal medium is best (i.e., money).  Size matters; the larger the amount, the more pressure to perform.  Creates a conflict of interest for the bribee vis-a-vis the entity the bribee represents.

5  Accompanied by lies and deceit.  Are necessarily secret; damaging and shameful to the bribee if known.  If known, the bribee is prevented from meeting the briber’s expectations. SOURCE: adapted from Noonan, Bribes.

6 What is ‘Grease’?  A popular Broadway musical featuring smash hits such as “Summer Nights” and “You’re the One that I Want (oo, oo, oo).

7 Get Serious. What is Grease? According to the Foreign Corrupt Practices Act of 1977, Grease is a tip-like payment to a low- level foreign government official “to expedite or secure the performance of a routine government action.”

8 Examples of “Grease” Payments  obtaining permits, licenses, and official documents necessary to do business.  obtaining police protection or mail delivery.  obtaining provision of basic utilities and similar services; getting phones installed.  processing papers; or processing goods through customs properly.

9 THE JOURNALIST  Chris is a journalist who writes a feature article about a non-profit organization which has just moved into the community. After the story appears in the paper, leaders within the organization present Chris with a certificate of appreciation and a fountain pen worth $100.  Should Chris keep the certificate and the pen?

10 THE INSURANCE AGENT  Chris, an insurance agent who sells disability insurance, gives union officials $2100 in cash during a Christmas party. Two months later the union signs a contract allowing Chris to print the union symbol on business cards. The union also gives Chris access to the addresses and phone numbers, listed and unlisted, of the union’s 13,000 active and retired members.  Is there an ethical issue here?  Suppose that the gift had been a bottle of wine instead of $2100 in cash?

11 CUSTOMS  Your company is doing business in Country X, and you are Country Manager. Your company is a manufacturing operation and exports most of the goods made in X. You are told of a problem with delays in customs in X. It is customary to make cash payments to customs officials (whom you understand are very poorly paid) in order to expedite the handling of critical inputs to your manufacturing process. You have complained to higher officials in the past and some disciplinary actions were eventually taken. However, the system of payments still remains largely unchanged. Delays are expensive.  Would and should you make the payments? Why or why not?

12 THE MOTORCYCLE ACCIDENT  While traveling by motorcycle in Country X, Chris runs into an elderly man who had wandered into the street. Under local law, Chris was automatically the guilty party. A policeman approached Chris saying that something had to be done for the victim who was not badly hurt but had been knocked unconscious for a brief moment. The officer suggests US$200, which Chris knew was the equivalent of two years pay. Chris also believed that paying US$200 would avoid arrest.  What should Chris do?

13 THE CONTRACT  In order to bid on a construction contract in Country X, it is customary to meet with Ministry officials. At the meeting it became known that a payment would be necessary in order to have the bid seriously considered. You made the payment (a small amount), submitted a bid, and won the contract. The Deputy Minister then calls you to tell you how to arrange a 10% “fee” that is “due” to the Minister.  What should you do?

14 Sources  John T. Noonan, Jr., Bribes. New York: Macmillan, 1984.  Anecdotes developed by R. Edward Freeman, Darden School, University of Virginia.

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