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Greasing Palms Makes For Dirty Business

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If corruption were a global industry, it would be the third largest, accounting for 5 percent of the global economy.

In many parts of the world, bribery and corruption are simply considered the price of doing business. However, corruption (both in business and in politics) undermines people’s trust in these institutions. Corruption also forces many people and businesses out of the marketplace and out of the political arena: those with more money are always at an advantage. Transparency International is a German-based organization that works to end corruption. Their video explains what corruption is and how it can be stopped.

Corruption and bribery are not problems restricted to the developing world (where rule of law is often weak). According to The Christian Science Monitor, U.S.-based companies who do business in the developing world grapple with bribery.

In October, the drilling firm Layne Christensen Co. agreed to pay nearly $5 million in federal fines over allegations that it paid bribes in Africa to win business. But here’s the real news: Because the company self-reported the “improprieties,” the penalty was about half of what it might have been. A confession led to mercy in enforcement.

In the United States, an estimated one-third of cases brought under the 1977 Foreign Corrupt Practice Act have been a result of companies self-disclosing bribery in their overseas transactions. One reason for this high level of legal – and moral – compliance is a 2010 law that gives whistle-blowers greater protection to report corruption.

The Organization for Economic Cooperation and Development (OECD), based in Paris, works to help governments restore confidence in national markets and financial dealings. This, the OECD says, helps create stable and sustainable economic growth.

The OECD released a report on December 2 that outlines the scale of international bribery:

Bribes are generally paid to win contracts from state-owned or controlled companies in advanced economies, rather than in the developing world, and most bribe payers and takers are from wealthy countries.

Almost two-thirds of cases occurred in just four sectors: extractive (19%); construction (15%); transportation and storage (15%); and information and communication (10%).

Bribes were promised, offered or given most frequently to employees of state-owned enterprises (27%), followed by customs officials (11%), health officials (7%) and defence officials (6%). Heads of state and ministers were bribed in 5% of cases but received 11% of total bribes.

In most cases, bribes were paid to obtain public procurement contracts (57%), followed by clearance of customs procedures (12%). 6% of bribes were to gain preferential tax treatment.

“Corruption undermines growth and development. The corrupt must be brought to justice,” said OECD Secretary-General Angel Gurría.

Transparency International believes there is hope. They see a trend: the world’s largest companies are increasingly committed to stopping bribery and corruption. Bribery makes for dirty business and dirty politics. The more willing governments and businesses are to self-govern regarding corruption and bribery, the easier it will be to create a more just global atmosphere.

Read “When companies come clean on bribery” at The Christian Science Monitor.

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Elise Hilton Communications Specialist at Acton Institute. M.A. in World Religions.

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