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MANAGEMENT UNLEASHED

Bribery: Does it have a role in today's business?

Transparency is the key to reducing graft; a thank-you gift is not a bribe if it is declared and noted in accounts

A SUBSTANTIAL part of a company's compliance today has to do with bribery. Bribery is the act of giving or receiving something of value in return for something else of value which the other party might not have offered. It is a topic as old as prostitution and just as controversial. I frequently take clients out to lunch in order to have an informal setting to help them with often intractable problems. Am I bribing them? Certainly not intentionally.

What constitutes a bribe?

Is an expensive set of golf clubs for a big and profitable client bribery? So much of life is transactional that distinguishing bribery from generosity always has to do with motive and often has to do with quantum - how much value is involved. Golf clubs are not cheap and the gesture would certainly be considered a bribe unless there were some special circumstances and the transaction was fully transparent and audited.

In my business I always paid about 15 per cent above market rate - and then gave a 100 per cent bonus if targets were achieved. The system was slightly complicated as people had to set their own targets. It sounds like a pushover but it was no such thing. The higher the targets set, the higher the bonus and vice versa.

A manager and his team, who were rewarded the same way, had every incentive to set high targets - and every incentive to achieve them. No achievement, no bonus. No bribery here. Except that it was, in a way, an official bribe to do better.

But what if I had applied the same system to my distributors but paid the bonus in cash to the boss? That would have been bribery. Does form of payment therefore determine whether a payment is a bribe or not? In some cases it certainly can.

Make it transparent to reduce the negative impact

Should we ever condone bribery? Certainly not in principle. However, where very low paid workers depend on their tips to feed their families, I think it is permissible provided the quantum is small. It should be done transparently and openly, as far as possible. That won't make it right but it will reduce the risk of it being seen as underhand and illegal. In fact, transparency is the key to reducing corruption. That is an objective we should all have.

It is not the small tips for little services well rendered that create the problems associated with bribery. It is when a system of corruption is devised with the express purpose of robbing one or more parties for personal gain. For example, when a supervisor is overseeing a logging project and he is bribed to exceed the agreed quota. In cases like this, bribery is simply another form of theft and money laundering.

What happens when a gift is given, voluntarily and without any pre-knowledge, on completion of a project? For example, if I had built a substantial road and the day it was opened, the head of the contractor that has booked me gave me a very expensive watch. Would that be seen as bribery? Not if it was declared and offered to the company I worked for. In all probability they would tell me to keep it. But they would declare it to the auditors who might make a note in the company's accounts for all to see.

Keeping records

Big scale bribery would be on the rise but for the terms and conditions of employment and purchase often insisted on, especially for procurement officers and their staff. So strict can the conditions be that anyone in a position of potentially being threatened with a bribery accusation should keep and disclose a very thorough record of transactions beyond the normal company accounts. This is best done as a diary with, where appropriate, pictures of goods and transactions not officially recorded.

Working with Boys Clubs in the Bermondsey Docks immediately after World War II, I noticed that one of the organisers always received a bottle of Scotch at the end of each group of sessions. It came from one of the sponsors who thought this person did a very good job. I agreed with that. But the Scotch transaction seemed to be slightly furtive and I decided one day to face the person and find out what was going on. He was absolutely open about his bottle and explained to me that he didn't want to share it around as he didn't want to encourage the boys to drink. I thought his reason was totally acceptable and helped him bear the burden of his Scotch thereafter.

Keeping the quantum small

In some parts of the world, small scale bribery is accepted as part of the wages of the people being bribed. Stop it there and you reduce or wipe out their livelihoods altogether.

It is said that the doorman at the Ritz Hotel in London pays a considerable sum to the hotel to have the job because his tips are generous pickings. Tips are always bribes. They originated on British railways. They were To Insure Promptness - hence the abbreviation TIP. But a service charge, spread fairly and equally among the staff in an hotel or restaurant isn't a bribe, it is just part of the transaction. Bribery is something that happens all the time but we don't identify it as such. Kept fully transparent, openly recorded and provided the quantum is limited it can be countenanced while it is seen. Motive is always the determinant of bribery. While knowing others' motives is not always possible, most of the time we can make a sensible guess.

After all, when negotiating with another business, we want to achieve a good deal. And we also want to maintain harmony. A little give and take is always necessary.

If that is bribery then I don't think it is ever going to be completely eliminated.