CHAPTER 3
The Costs to Individuals, Companies and Society IT
IS LESS SHAMEFUL FOR A KING TO BE OVERCOME BY
FORCE OF ARMS THAN BY BRIBERY.
– G A I U S S A L L U S T I U S C R I S P U S ( C . 8 6 -35 / 34 B. C. ) BECAUSE IT IS EVERYWHERE,
everyone has a word for it. The Russians call it N A L E V A . Arabs and many Africans call it B A K S H E E S H and the Chinese refer to H O N G B A O . It is K I T U K I D O G O in Kenya, and U N A M O R D I D A in Mexico. The Germans call it S C H I M E N G E L D and the Italians B U S T A R E L L A . The Americans sometimes call it grease, the British just call it plain bribery or perhaps more politely “a transaction expense.” No matter what you call it, the plague of bribery and corruption perpetuated by the givers and takers in the business world has a much greater impact on the lives of hundreds of millions of people than you would think. Payoffs to facilitate a deal, accelerate a bureaucracy or overcome competition are one of the world’s dirty little secrets. As ancient as it is ubiquitous, official corruption has been casually accepted as an inescapable fact of life as far back as the time of the Pharaohs. Today, unethical business practices, especially corruption and bribery, represent real costs in terms of time, money and social well-being, not only to corporations and governments but also to individuals. For decades, international organizations such as the World Bank and the International Monetary Fund (IMF) refused to get involved, claiming it was mostly an internal affair of the countries that received their loans. Today, however, with the increase in international investment, the World Bank and the IMF, along with the United Nations, are convinced that corruption erects a barrier to prosperity. Just how widespread is the rot? A late 1990s World Bank survey of 3,600 firms in 69 countries showed 40 percent of businesses paying bribes. The figure in industrial countries was 15 percent and in the former Soviet Union it climbed to 60 percent.
An American Restaurateur in Moscow “When I look back, I guess I really never had a chance to make it,” mourns an American businessman who attempted to open a restaurant in Moscow in the mid 1990s shortly after the fall of communism. “Before I even rented a property or bought a piece of equipment I had spent almost US$150,000 to bribe city officials, pay for protection and hire the niece of a local mafia don as an assistant manager. Not a day went by when I didn’t
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