Sometimes global entrepreneurs face hazards far more insidious
than unfamiliar languages and customs. One of the worst experiences
of doing business abroad: dealing with corruption.
"Bribery is a common way of doing business in a lot of
places," says Steve Veltkamp, president of Biz$hop, an
import/export business and consulting service in Port Angeles,
Washington. Veltkamp, 47, notes that bribery is most common in
underdeveloped countries. "Where basic jobs don't pay
well, it's tempting for an official to ‘supplement'
income that way," says Veltkamp. "It's deeply
ingrained."
Another contributing factor, according to Transparency
International, an organization that monitors international
corruption, is the degree to which officials perceive themselves as
immune to any penalties for demanding and receiving bribes.
Content Continues Below
From the perspective of U.S. entrepreneurs, bribery presents a
double-edged sword. While bribes are expected in many countries,
the United States' 1977 Foreign Corrupt Practices Act prohibits
payments made to foreign government officials with the aim of
gaining or maintaining business.
Not all payments are prohibited by the act. Some payments are
acceptable if they don't violate local laws. "Gifts,"
for instance, to officers working for foreign corporations are
legal, according to Veltkamp.
But it can be difficult to determine the difference between a
gift and a bribe in a given situation. "If you give a gift to
someone and it leads to a business deal, is that a bribe or a
gift?" asks Veltkamp. "In some cultures, gift-giving is
an entrenched part of doing business. If you look at it in a
certain sense, maybe it's a bribe, since they won't talk to
you until you've made that gesture."
Consider this: Until an anti-bribery convention proposed by the
Organisation for Economic Co-operation and Development (OECD) was
signed by 34 countries in 1997, many nations, including Germany and
Canada, allowed companies to deduct bribes as legitimate business
expenses. Many U.S. entrepreneurs who believe this placed them at a
disadvantage in the international business arena expect the OECD
act to level the playing field.
This hardly means corrupt officials and governments have stopped
demanding bribes. Transparency International lists the following as
the top 10 most corrupt nations, based on the prevalence of bribery
(in order): Cameroon, Nigeria, Indonesia, Azerbaijan, Uzbekistan,
Honduras, Tanzania, Yugoslavia, Paraguay and Kenya. (Interestingly,
the United States doesn't make the top 10 list of the least
corrupt, which is topped by New Zealand, Denmark and Sweden.) In
terms of countries most willing to pay bribes abroad, China tops
the list-the United States comes in 10th (tied with Germany) out of
19 countries.
What can you do if your overseas associate demands a bribe?
Veltkamp suggests staying out of the loop entirely. "I always
recommend that, if possible, you let the local nationals deal with
[government officials], because they know the system. Let them tell
you what fees have to be paid."
Veltkamp doesn't recommend asking embassies or consulates
for assistance, as "they have to stick to the official
line." Instead, he believes "the best resource in almost
every country of the world is the U.S. Chamber of Commerce, [where
you can find] Americans who live in the country and [understand]
how things are done."
Finally, watch your bookkeeping. The Foreign Corrupt Practices
Act requires all publicly held companies to keep records that
clearly indicate how funds are used-so bribes can't be
disguised in slush funds.
Moira Allen is a freelance writer in Mountain View,
California, and editor of Global Writers' Ink, an
electronic newsletter for international writers.
Contact Source