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Sometimes global entrepreneurs face hazards far more insidiousthan unfamiliar languages and customs. One of the worst experiencesof doing business abroad: dealing with corruption.
"Bribery is a common way of doing business in a lot ofplaces," says Steve Veltkamp, president of Biz$hop, animport/export business and consulting service in Port Angeles,Washington. Veltkamp, 47, notes that bribery is most common inunderdeveloped countries. "Where basic jobs don't paywell, it's tempting for an official to 'supplement'income that way," says Veltkamp. "It's deeplyingrained."
Another contributing factor, according to TransparencyInternational, an organization that monitors internationalcorruption, is the degree to which officials perceive themselves asimmune to any penalties for demanding and receiving bribes.
From the perspective of U.S. entrepreneurs, bribery presents adouble-edged sword. While bribes are expected in many countries,the United States' 1977 Foreign Corrupt Practices Act prohibitspayments made to foreign government officials with the aim ofgaining or maintaining business.
Not all payments are prohibited by the act. Some payments areacceptable if they don't violate local laws. "Gifts,"for instance, to officers working for foreign corporations arelegal, according to Veltkamp.
But it can be difficult to determine the difference between agift and a bribe in a given situation. "If you give a gift tosomeone and it leads to a business deal, is that a bribe or agift?" asks Veltkamp. "In some cultures, gift-giving isan entrenched part of doing business. If you look at it in acertain sense, maybe it's a bribe, since they won't talk toyou until you've made that gesture."
Consider this: Until an anti-bribery convention proposed by theOrganisation for Economic Co-operation and Development (OECD) wassigned by 34 countries in 1997, many nations, including Germany andCanada, allowed companies to deduct bribes as legitimate businessexpenses. Many U.S. entrepreneurs who believe this placed them at adisadvantage in the international business arena expect the OECDact to level the playing field.
This hardly means corrupt officials and governments have stoppeddemanding bribes. Transparency International lists the following asthe 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 leastcorrupt, which is topped by New Zealand, Denmark and Sweden.) Interms of countries most willing to pay bribes abroad, China topsthe list-the United States comes in 10th (tied with Germany) out of19 countries.
What can you do if your overseas associate demands a bribe?Veltkamp suggests staying out of the loop entirely. "I alwaysrecommend that, if possible, you let the local nationals deal with[government officials], because they know the system. Let them tellyou what fees have to be paid."
Veltkamp doesn't recommend asking embassies or consulatesfor assistance, as "they have to stick to the officialline." Instead, he believes "the best resource in almostevery country of the world is the U.S. Chamber of Commerce, [whereyou can find] Americans who live in the country and [understand]how things are done."
Finally, watch your bookkeeping. The Foreign Corrupt PracticesAct requires all publicly held companies to keep records thatclearly indicate how funds are used-so bribes can't bedisguised in slush funds.
Moira Allen is a freelance writer in Mountain View,California, and editor of Global Writers' Ink, anelectronic newsletter for international writers.
Contact Source
- Biz$hop, (800) 949-8029, www.bizshop.com
