COUNTERING THE 10 MOST COMMON EXCUSES FOR

No. 2I didn’t do it for me,I did it for my organiSation!This excuse is often used by employees whopromise, offer or actually give an undueadvantage to a client.7 Employees may findthemselves in a situation where they have tocompete against perceived corrupt competitors,or where they face a solicitation request from acounterparty. In such situations, employees mayfeel that the only way to achieve their businessobjectives, for example to win a contract, isthrough corruption.Such employees will need an excuse to justifysuch unethical behaviour, so that they canstill consider themselves as good people,and maintain their sense of self-worth. Suchjustification cannot admit selfish interests, suchas the fear of losing a business opportunitywhich directly impacts their own remuneration.A more altruistic excuse is often sought. Inthis case, the employees convince themselvesthat they actually acted in the interest of theircompany or organisation, to help achieve itsobjectives, and so avoid negative consequencessuch as the laying off of peer colleagues.XNo e cuses – Facing the facts!Corruption is illegal, irrespective of theunderlying intention: Major anti-corruptioncodes, such as the United NationsConvention against Corruption, or theOECD Convention on Combating Bribery ofForeign Public Officials in InternationalBusiness Transactions, leave no room forconsideration of motive. Prominent nationallaws, like the United States Foreign CorruptPractices Act, the United Kingdom BriberyAct 2010 or the Brazilian Clean CompaniesAct likewise have no such provisions.The underlying motive is always employeebenefit: Perceived motives, whethergenerous, heroic or noble, to help thecompany, turn out to be less altruistic uponcloser inspection. Even if the employeedoes not receive a direct financial gain,such as a bonus or higher salary, fromusing illegal acts to win a contract, theremay be a motive for indirect gains. Thesecould include an elevated status for gettingthe job done or a promotion, or greater jobsecurity.The entire company is put at risk: Seekingto obtain an undue advantage from apublic official or a business partner, evenif perceived to have the best or most78Such business partners include national public officials,foreign public officials, officials of public internationalorganisations or representatives from a private sector entity.

noble intentions, carries enormous risks.Such employees put themselves at risk ofpunishment, individually. In addition, legal,commercial and reputational penalties8often apply to an entire company and itsmanagement. As a result, naively goodintentions can be disastrous. For example,an entire company might be banned from alucrative market, ultimately even leadingto staff cuts, as the company is forced tocut costs.8 “Doing it for the company” may be perceivedby some employees as a noble motive forconducting a corruptive act. However, suchaltruistic behaviour is often only a cover, tomake the employee feel less guilty. And evenwhen corruption is used with the best intentions,it is still an illegal act and will be prosecuted,regardless. Corruption can have severe negativeeffects for the individual employee and the entirecompany.A comprehensive overview of legal, commercial andreputational penalties can be obtained from HUMBOLDTVIADRINA Governance Platform, “Motivating business tocounter corruption: A Practitioner Handbook on Anti-CorruptionIncentives and Sanctions”, 2013.9

No. 3No one gets hurt,it is actually a Win-Win!The argument that corruption can be a“victimless crime” makes an especiallyappealing excuse. The notion that it canbe beneficial for all parties, in this way,is primarily heard from employees usingactive bribery to obtain an undue advantagefrom a public official or business partner.For example, an employee may face anespecially tortuous bureaucratic process,such as applying for a work permit. In sucha situation, the employee may prefer to pay apublic official to speed up the process, oftenreferred to as “greasing the wheel”.got hurt”, and that their arrangement wastherefore beneficial for both parties.XNo e cuses – Facing the facts!Facilitation payments essentially “sandthe wheels”: Let’s start with the perceptionthat there is no victim when employeesuse small, improper, unofficial paymentsto speed up bureaucratic processes. Thepopular belief is that these payments“grease the wheel”, even assisting underresourced public institutions. But evidencepoints in the opposite direction.9The nature of such so-called facilitationpayments is that they are often rather small,and therefore perceived not to impact thecompany’s bottom line. In addition, as theexcuse goes, the payments may actually bebeneficial to the perceived, underpaid publicofficial counterparty. The payments maytherefore be seen merely as a tip, donation,or altruistic payment.However, such an attitude can escalate tomore substantial payments or arrangements,to win or conclude business deals. In thiscase, the employee may collude with thecustomer, granting some kind of undueadvantage under the contract terms, to winthe deal. The advantage – whether financialor other – is often not paid out directlyfrom the company’s resources, but is ratheranticipated and directly calculated into thebusiness transaction. The employee wins thecontract without paying additional costs,while the customer obtains their undueadvantage. Both sides feel that “no one10 They are illegal: No matter how small,facilitation payments are bribes, andtherefore prohibited under most nationallaws. They are unjustified: It is true that in somecountries they may still be considerednormal practice, or even necessary to dobusiness. It may also be true that publicofficials in many parts of the world areindeed poorly paid. However, they are notlegally entitled to request extra, unrecordedmoney. These payments provide an extrasource of earnings, depriving the country ofmuch needed income tax revenues. They do not speed up bureaucraticprocesses: Through such payments,officials are motivated to introduce9For example Pierre-Guillaume Méon and Khalid Sekkat, “Doescorruption grease or sand the wheels of growth?”, Publicchoice 122.1-2, pages 69-97, 2005; or Daniel Kaufmann andShang-Jin Wei, “Does “grease money” speed up the wheelsof commerce?”, National bureau of economic research - No.w7093, 1999.

additional, unnecessary steps or delays inpublic processes, to solicit more money.Gradually, ever more “grease” is needed toobtain permits and licenses. They are not small: While such paymentsare perceived as insignificant each timethey are paid, and even beneficial giventhe services that they provide, such asreduced waiting times, they can add up toa significant burden on the company overtime. For example, in the documented caseof Westinghouse Air Brake TechnologiesCorp.’s Indian subsidiary, Pioneer FrictionLtd., such individual payments were assmall as 31.50 per month, but totalledmore than 40,000 in one year.10 They aggravate over time. When tolerated,facilitation payments undermine a cultureof zero-tolerance for corruption within anorganisation, and may ultimately lead toa perception that bribery is acceptable,regardless of its size. They are harmful for the businessenvironment, and for the overall economy:Eventually, on the national scale, suchpayments erode standards in public officeand in business, creating a spawningground for much larger public sectorbribery and state theft.There is also no win-win in large scalecorruption: In the case of larger payments,the absence of a perceived, direct victimmay again mislead the employee and their10 Taken from Transparency International UK, AdequateProcedures - Guidance to the UK Bribery Act 2010, 2010customer to believe that this is beneficialfor all sides. But there is a victim: thegeneral public. If the “wrong” supplier ischosen, taxpayers get less value for publicexpenditure. Even if the “right” supplieris selected, the cost can be above themarket price. The country ends up eithergetting a poor deal, or spending too muchon products and services. And there canbe further, negative knock-on effects forsociety, including political instability,widening inequality, and mistrust in publicinstitutions. The economy can also sufferif unfair competition discourages privateinvestment, ultimately leading to lowergrowth.11 Corruption is not a victimless crime. Bothlarge-scale and petty corruption has acorrosive effect on everyday life, and on acompany’s operations and ultimately its bottomline. To counter corruption effectively, companiesmust go further than simply prohibiting corruptionaccording to their rulebook, for example in theirCode of Conduct. Employees must be persuaded.And this starts with appealing to “hearts andminds” through two key messages: counteringcorruption must be done and can be done.1211 For example Mohsin Habib and Leon Zurawicki, “Corruptionand foreign direct investment”, Journal of internationalbusiness studies, pages 291-307, 2002; or Peter Egger andHannes Winner, “How corruption influences foreign directinvestment: A panel data study”, Economic Development andCultural Change 54.2, pages 459-486, 2006.12 There are tangible solution approaches on how companies cancounter corruption. For example Transparency InternationalUK, “Countering Small Bribes”, 2014; or United Nations GlobalCompact / World Economic Forum (PACI), InternationalChamber of Commerce / Transparency International, “ResistingExtortion and Solicitation in International Transactions”, 2011.11

No. 4You don’t understandhow business is done here This excuse is often used by employees operatingin business environments where corruption isperceived to be deeply embedded or endemic indaily life. Employees will argue that the “rulesof the game” are different, and companies haveno choice but to accept them. An employee mayapply this excuse across a range of situationsand behaviours, including client expectationsfor gifts or hospitality; regulations encouragingthe use of local partners; offset arrangements;and the handling of security issues.Employees using this excuse may resort to thelabel, “culture of corruption”, to convey that itis impossible to operate in any other way, in aparticular sector or jurisdiction. The implicationis that local corrupt practices are so deeplyembedded in how people think and act that it isimpossible for an individual to change anything.For example, employees working abroad mayfeel that moral values and codes of conductin “far-away” corporate headquarters are notapplicable to or realistic for them.Employees at companies with a strong anticorruption culture may try and buck the trend,and argue against corruption, when dealingwith local business partners in high-riskareas. They may also be confronted with thisexcuse. When they counter the excuse, they mayeven be accused of trying to impose “westernstandards”.12XNo e cuses – Facing the facts!Corruption is illegal, irrespective ofthe jurisdiction: Companies seeking tooperate in high-risk countries are oftentorn between two extremes. Operatingin such environments often yields higherreturns. But this may come with a pricetag in the form of higher risks, includingcorruption. Such companies must acceptthat corruption is not an option, andmust embrace the task of avoiding it. Theinternational legal framework does notdifferentiate between corruption in lowrisk and high-risk countries. Corruption isillegal, and culpable employees, alongsidetheir companies and management, will bepunished.The fight against corruption is universal –not a “western standard”: The United NationsConvention against Corruption (UNCAC)embodies the principle that corruption mustnot be tolerated. More than 170 countrieshave ratified the UNCAC. The principle thatcorruption is wrong therefore applies tocompanies and their employees operatingin the vast majority of countries worldwide.The structures are to blame, not the people:Using the label “culture of corruption” mayattempt to imply that a particular country

is somehow intrinsically more corrupt.This can be a powerful excuse, becauseit adds to the impression of individualpowerlessness. How could anyone changethe national character of a whole country?However, in fact, human values are thesame everywhere. Integrity forms the basisfor education, regardless of the country.Regardless of the country or culture, it isunacceptable to use a common fund forpersonal gain. Corruption prospers not as aresult of a difference in national values, buta lack of accountability and transparency,as a result of weak government orexcessive concentration of power amongcertain officials.Everyone can make a difference: There aremany inspiring examples where companiesadhere to the highest standards of integrityand still successfully conduct businessin high-risk business environments.Success starts with establishing an anticorruption programme within a company’sown operations, followed by sincereengagement with local business partners.But this is not enough. Regardless of theirsize, power or influence, companies shouldalso collectively engage with peers andother stakeholders to address issues ofsystematic governance failures. Collectiveaction can serve as a practical long-termapproach (see also excuse No. 6: “We arealone not going to make any difference ”).Businesses have a responsibility to act:Fixing a systemic failure of governancerequires both private initiatives and stronggovernment action. Even in the absenceof the latter, however, companies cannotsimply “sit and wait”. Adherence toprinciples of corporate responsibility assistthe orderly functioning of markets, so vitalfor economic growth and development, andtherefore for business opportunities. TheOECD Principles of Corporate Governanceand Guidelines for Multinational Enterprisesare a good example. Corruption is not a matter of national culture. Noris countering corruption a “western standard”.Companies that seek to do business in high-riskenvironments, perhaps anticipating a higher rateof return compared with other markets, must alsosincerely address the risk of corruption. Fallinginto a state of paralysis, waiting until everythinggets better, is unacceptable. Every company has aresponsibility to shape its business environment.Proven approaches, including initiatives forcollective action, show that taking responsibilitycan yield successful results.13

No. 5If we don’t do it,someone else will This is a common excuse for corruptionamong sales staff and their managers. Theroot cause can be a pressured environment toseal business deals in the face of fierce, andperhaps perceived unfair, competition.Significant business opportunities can beprotracted affairs, subject to cancellation,delay and renegotiation, with much at stake.The process of bidding for a large, internationalcontract can take years, where failure istherefore all the more costly, since the nextopportunity could be far off. Such a competitiveenvironment creates enormous pressure tosucceed, with a “win big, lose-big mentality”at the front line. Linking of salaries and bonusschemes to demanding performance targetsmay fuel a perception that the company’s anticorruption policy either does not apply, or elseis secondary, and simply “out of touch withreality”.Although most managers disapprove of corruptpractices today, there can be a perception thatfollowing the company’s policies will jeopardizeshort-term opportunities, and that corruption issimply a necessary part of doing business.Perpetrators may justify using bribery to wina business deal by referencing a “culturally”or “historically” corrupt environment. They mayargue that their rivals routinely flout ethicalvalues, and so they must either do the same, orelse go out of business.These rationalisations are not theoretical:they reflect what sales managers actuallyreport when doing business. Corruption is stillendemic in parts of today’s business world. Andglobalisation is driving ever stiffer competition.“A sales person trying to make a living in ahigh-risk region who’s looking for an excuse topay a bribe never has to look too far”.13This excuse becomes even more powerful whencombined with the altruistic excuse No 2: “Ididn’t do it for me; I did it for my organisation”.Combined with the feeling of having no realalternative, this is a dangerous combinationwhich employees may feel justifies illegalbehaviour.XNo e cuses – Facing the facts!Everyone is put at risk: Employees shouldbe constantly reminded that winningcontracts through corrupt means is illegalalmost everywhere. The short-term benefitsof winning business deals illegally arean illusion. Corrupt behaviour burdens acompany, its management and employeeswith significant legal, commercial andreputational risks. The hope that thesenegativeconsequencesmaynevermaterialise, because of a perceived lowrisk of getting caught, is increasinglymisplaced (see Excuse #9).13 Richard Bistrong, “When corruption becomes normal”, FCPABlog, 30 June 201514

There are solutions on the “supply side” ofcorrupt payments: Sales people often voicethe perception that they have to competeon an “un-level playing field”. Theircompetitors may offer an expensive giftor other advantages to a client, to securea deal. The problem of competing againstunfair peers may be a reality. The goodnews is that more and more front-line staffdisapprove of corrupt practices. The badnews is that they are often unsure whetheranything can be done. Such employees needto be persuaded, not only of the potentiallysevere, negative consequences of corruption,but also of practical and proven solutions.Collective action initiatives may serve asinspiring examples, where many convincingsuccess stories already exist.14 Suchinitiatives demonstrate how cooperationbetween companies and governments cansignificantly reduce the risk of corruption.Solutions also exist to address the“demand side”: Companies may not onlycompete against corrupt competitors.Bribery solicitation and extortion alsorepresent serious concerns in many partsof the world. In such situations, companiesmay feel that they have to “give in to suchrequests”, or otherwise face serious shortterm consequences, for example losinga deal. Again, companies have positiveopportunities for tackling solicitation and14 For more information please refer to the InternationalCentre for Collective Action (ICCA) Initiatives at http://www.collective

countering excuses for corrupt behaviour 4 no. 1 i didn’t know this was corruption! 6 no. 2 i didn’t do it for me; i did it for my organisation! 8 no. 3 no one gets hurt; it is actually a win-win! 10 no. 4 you don’t understand how business is done here 12