Mordida, Baksheesh, Pot-de-Vin, Schmiergeld, Bribes

Wikipedia places the annual estimate of global bribery of governmental officials at a cool trillion dollars, not quite the total of income tax paid by all Americans, but close. There are large parts of the earth where nothing gets done without the “lubrication” of cash under the table, lavish gifts, or even more modest treatments to games of golf, expensive restaurants. When I lived in Lebanon as a child, there were virtual rate cards of what you were expected to pay for various government “permissions and services,” cash paid to the officer making the decision over and about any sums remitted to the state. Everybody knew the rules, and the government officials were legendary for their girth.

Until fairly recently, the cost of bribing foreign officials was considered such a basic business need that some nations – like France and Germany – actually permitted the indigenous businesses to deduct such “costs,” quite legitimately, as a business expense in connection with their domestic income tax returns (bribing local officials, however, was not deductible!). For the most part, bribes are actually serious crimes – at least on the books – of the countries where the bribes are paid, but the deductions were considered simply a reflection of the reality of doing business in some countries.

According to internationalbusiness.wiki.com, all that changed – with a lot of pressure from the United States: “[In 1997, the] Organization for Economic Co-operation and Development (OECD)... an international organization that is made up of thirty countries that resolve economic, environmental, and social issues... organized the making of the OECD Anti-Bribery Convention (officially called the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions) in order to make an equal opportunity for companies involved in international business.

“On December 17, 1997 The Federal Republic of Germany as well as many other member countries [like France and the U.S.] signed the convention. The law was placed into [German] national law under the Act of Combating Bribery of Foreign Public Officials in International Business Transactions on September 10, 1998. Not until February 15, 1999 was the Act forced into legislation to adhere to the regulations of the convention. Prior to this new piece of legislation, only bribery of domestic public officials was a punishable crime by German law and those involved with bribery of foreign public officials was not. This Act gave equal punishments to those who commit bribery of domestic as well as foreign public officials. A separate provision was also created to prohibit the bribery of foreign members of parliament an d members of parliamentary assemblies of international organizations.”

The United States began coming down hard on U.S. companies operating overseas in 1977, making it illegal to bribe governmental officials to exercise their discretion in favor of the bribing company... a felony to be precise with a nasty fine to boot under the Foreign Corrupt Practices Act (FCPA). The 1977 law predated parallel efforts in other developed countries, and the U.S. felt that its statutes put their companies at a competitive disadvantage against foreign companies that not only were allowed to bribe overseas but deduct the costs against their taxes. Hence the pressure, and the U.S. updated the FCPA in 1998 to comply with the above-noted OECD Anti-Bribery Convention.

“The anti-bribery provisions of the FCPA make it unlawful for a U.S. person, and certain foreign issuers of securities, to make a payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. Since 1998, they also apply to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States.” Wikipedia. It means if you hire an expediter, and even if the contract with that expediter says he or she cannot bribe, if you are pretty sure that they will ignore that clause, you are still guilty under the American law.

Enforcement of the FCPA has been spotty at best over the years, but in the last few years the Department of Justice has found a new religious fever in prosecuting both American companies and their senior management where violations have been uncovered. And the list and level of the companies being charged by the feds is pretty impressive; according to the March 24^th Washington Post: “To win computer business with the South Korean government, IBM allegedly delivered cash bribes in shopping bags... In pursuit of Ni­ger­ian construction contracts, ­­Halliburton and its international business partners allegedly routed illicit payments through bank accounts in Switzerland and Monaco… In recent years, the Justice Department and Securities and Exchange Commission have filed an increasing number of foreign corruption cases, charging companies such as Tyson Food s, General Electric, Alcatel-Lucent and Daimler, the maker of Mercedes-Benz cars and the former parent of Chrysler.”

If bribery is a fact of life in many countries, and other nations are lax in their enforcement of their own anti-bribery laws, should U.S. officials just look the other way to keep America competitive… or is morality worthy of enforcement? Guess where I stand. But sometimes, bribery is anchored in “harsh coercion .” In the case of Libya, corruption provided the cash flow to repress his people. The March 25^th New York Times: “In 2009, top aides to Col. Muammar el-Qaddafi called together 15 executives from global energy companies operating in Libya’s oil fields and issued an extraordinary demand: Shell out the money for his country’s $1.5 billion bill for its role in the downing of Pan Am Flight 103 and other terrorist attacks…If the companies did not comply, the Libyan officials warned, there would be “serious consequences” for their oil leases, according to a State Department summary of the meeting….

“The episode and others like it, the officials said, reflect a Libyan culture rife with corruption, kickbacks, strong-arm tactics and political patronage since the United States reopened trade with Colonel Qaddafi’s government in 2004. As American and international oil companies, telecommunications firms and contractors moved into the Libyan market, they discovered that Colonel Qaddafi or his loyalists often sought to extract millions of dollars in ‘signing bonuses’ and ‘consultancy contracts’ — or insisted that the strongman’s sons get a piece of the action through shotgun partnerships… ‘Libya is a kleptocracy in which the regime — either the al-Qadhafi family itself or its close political allies — has a direct stake in anything worth buying, selling or owning,’ a classified State Department cable said in 2009, using the department’s spelling of Qaddafi.” And you can plainly see the most horrific examples of wrongful empowerment when that line is crossed!

I’m Peter Dekom, and to watch bribery cases being prosecuted against people you know is a pretty harsh reminder that no one is or should be truly above the law.