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Bribery, Corruption and the “Social Cocoon.”

In an October 22, 2014 article in Foreign Affairs, titled “Grappling With Graft, How to Combat the Growing Corruption Epidemic” authors Alexander Lebedev and Vladislav Inozemtsev (The Authors) state that corruption “wreaks havoc on the societies of developing countries, fuels social unrest and violence, and increasingly undermines the stability of the West.” Yet, as they argue, “despite all this attention, no adequate solutions to the problem have come to light.” Indeed, as I discussed last week, the article also calls attention to the link between corruption and the greater issues of international development and stability. As Lebedev well states, corruption “is fueling instability on the Western world’s periphery that increasingly threatens to spill over.”

In articulating their own policy recommendations, the Authors recommend “three broad steps,” the first of which is to “redefine the challenge by clearly distinguishing among different levels of fraud and identifying target areas for intervention.” While I will address the second and third steps, in a broad context, I would like to elevate the potential pitfalls of distinguishing among levels of corruption as creating great confusion to those who operate in the field of international business and giving the wrong compliance signals to multiple state and corporate entities.

The article describes the current definitions of corruption as “too broad for the international community,” as “there will always be individuals who use their access to administrative and financial resources to pursue self-enrichment.” Thus, the Authors seek a shift in approach by “introducing a crucial distinction between corruption and bribery.” Furthermore, they start  that reset  by stating that “bribery is mostly a low-level phenomenon, neither systemic or organized,” and that those who take bribes “do not act within organized networks and wield little influence over broader societal institutions.” Corruption, on the other hand, is labeled as “a high-level systemic phenomenon and is vastly more destructive.” In addition, they argue that those involved in corruption “not only abuse rules but set them.”

The Authors also describe a differentiator in terms of a ‘follow the money’ dynamic, as bribes stay in the local economy, whereas corruption “often involves moving and parking vast sums of money abroad,” thus draining away “critical resources needed for economic development.” Where this all converges is at the Authors recommendation that “the world’s focus must therefore be on fighting corruption not bribery.” Furthermore, the Authors argue that those countries that are increasing their efforts to fight corruption “should consider significantly relaxing the punishment for low-level bribery.” In fact, the Authors argue, “Bribe taking could even be reclassified as an administrative misdemeanor rather than a criminal act.” (Emphasis added) 

First, before expressing my deep reservations with respect to this “first step,” I want to express my appreciation for what the Authors have accomplished by publishing their work in Foreign Affairs.  In all three of their recommendations, the Authors address how the developing world can work together towards “stamping out the threat” of corruption by addressing those who abuse “power at home.” As I have found a lack (but growing) amount of debate and study of those who solicit and take bribes, I think this article’s publication in Foreign Affairs represents a significant elevation of the debate with respect to the demand side of corruption, and I hope that it will spur further discourse in order to address this “global epidemic threatening the very foundation of Western societies.” Accordingly, while I do not examine (in this post) the other  policy recommendations described as “A New Global Enforcer,” and “Beating Back the Epidemic,” I recommend them as further reading.

Small bribes: A “practical dilemma.”

As John Bray and Geert Aalbers (Control Risks), state inFacing up to demands for ‘operational bribes’: legal trends and practical dilemmas” (International Bar Association, September 2013, link here), “there is a clear trend on the part of both governments and companies towards the banning of all forms of bribery, including smaller operational bribes.” In addition, as Bray and Aalbers well point out, when it comes to small bribes the problems are “particularly acute in countries with weaker governance standards.” Indeed, as they state, in countries with such governance problems, “demands for operational bribes are likely to remain high on the list of corporate headaches for some time.”

So, if small bribery is here to stay where the institutions of state are weak, does reclassifying it as a somehow “misdemeanor” in any way serve the goals of those who seek to enforce anti-bribery conventions, or the citizenry of the host countries where the demands occur? Does it help to sort out the challenges which front-line international business groups face in such regions? I say not, and making such a distinction would clearly send the wrong message to those at the field level of international business who might interpret such a peculiarity, as “it is only a misdemeanor here,” and “everyone does it,” as leading ultimately to greater peril and the grand corruption to which the Authors refer.

The “social cocoon” of corruption.

But where this all becomes relevant is through a “must-read” work by Jamie-Lee Campbell and Anja S. Goritz in The Journal of Business Ethics (2014) titled “Culture Corrupts! A Qualitative Study of Organizational Culture in Corrupt Organizations.” First, I view a country as being an “organization” and given that some of those who they interviewed were public officials, I do not see that as an academic or practical stretch. Accordingly, it then becomes clear that in such organizations, where bribes, even small bribes, “might be baked into the economic order,” (Ellis, How to Pay a Bribe, Chapter 8, Wrage, 2014), then what we have, as the Authors describe, is a corrupt organizational culture where “employees see corruption as a customary behavior, and employees behave criminally.” In other words, the work of Campbell and Goritz make the critical link between the lowest levels of petty corruption to the organizational culture in which such behavior exists.

I have personally witnessed regions where corruption was exhibited up and down the organizational chart of State ministries, in a way that while formally unorganized, was clearly linked. Thus, trying to cut out the criminality of “small bribes” which Bray and Aalbers describe as “relatively small-typically less than US $100.00,” from greater corruption, could definitely lead to some significant policy and behavioral repercussions. As Bray and Aalbers state, quite often small bribes come along with “a threat such as ‘if you don’t pay your business will suffer.” Letting those who use small bribery as a means of extortion think that their behavior is no longer criminal, presents great opportunity for contradictory messages to those who confront small bribes in international business and to those that seek them.

Campbell and Goritz set out to describe the mechanisms of rationalization, socialization and institutionalization that constitute a social cocoon of organizational culture because “it forms assumptions, values, and norms of employees to support corruption.” Furthermore, “this corrupt organizational culture has the purpose to ensure employees’ support of corruption.” While the leaders of corrupt organizations might establish offshore accounts and more sophisticated means of corruption “employees, by contrast, implement corrupt tasks in their work routines.” Maybe that is soliciting a bribe in lieu of a traffic ticket, or, as in Tunisia, permission to open up a fruit stand, but it is all the same, employees of the state, as part of a corrupt organization, behaving criminally.

Thus, why roll back and attempt to divide those who lead corruption and those ‘on the take.’ As Campbell and Goritz state, those in the social cocoon of corruption “facilitate corruption, expect their colleagues to act corruptly and punish those who refuse to engage in corruption.” Why would anyone deserve a “traffic ticket” for being a part of this system? Accordingly, it is here where I take greatest exception to Lebedev and Inozemtsev when they state that those who demand small bribes “do not act within organized networks and wield little influence over broader societal institutions.” The very act of solicitation as a State employee is entirely organizational in nature, and as events in Tunisia established, such demands have a tremendous influence over societal institutions. As Campbell and Goritz state, “employees are often  engaged in only a small part of a corrupt transaction because the division of labor forks corruption into different tracks.”

Also troubling is how those who demand bribes, large and small, perceive society and their fellow citizens. As  Campbell and Goritz describe, “employees in corrupt organizations perceive human beings as evil. That is, all individuals play unfair.” Thus, to allow those who engage in such behavior to be written off as “misdemeanors” sends a troubling message to everyone involved in the chain of corruption, and perpetuates a view of society which we have recently seen boil over in the events which triggered and sustained the Arab Spring. Sending any message of tolerance is a danger to all, including those who confront bribery on the front lines of international business, to the societies which are victimized by it.

As having once faced the ‘social cocoon’ of foreign corruption in my own career, I can see how Lebedev and Inozemtsev’s  “step one” recommendation to deal with the threat of corruption through “defining it better,” as resulting in a reversal of the existing gains in anti-corruption initiatives. In addition, such an institutional redefinition of petty bribery would also create future challenges by sanctioning such behavior via a criminal “downgrading” which is entirely unnecessary.  Those on the front lines of international business already face tremendous challenges in their work where they confront corruption risk. Institutionalizing petty bribery, as a misdemeanor in the host countries, would only reinforce the field level illusions and rationalizations that bribery is “the way things get done here,” by a “it is not even criminal here” mentality. From my own perspective and experience, it would be a perilous step back.

#RichardBistrong

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