Bribery a given for 85% of British companies abroad

28 October 2016

Bribery a given for 85% of British companies abroad

I have worked for many Western corporations as strategic adviser, leadership developer, senior coach and mentor and also adviser to boards in both developed and developing countries. 

Professor Andrew Kakabadse conducted a 12 year enquiry into the use of bribery by British companies working in emerging markets. Below he expands on why he undertook the investigation and reflects on the results.

"I have worked for many Western corporations as strategic adviser, leadership developer, senior coach and mentor and also adviser to boards in both developed and developing countries. Through trying to improve the performance of top managers and their organisations, a particular trend strongly emerged - that of how do organisations, operating governance regimes, alien to their own, effectively compete and function.

It became clear that operating in countries, such as Russia, most Eastern European states, most African states, the Middle East (except Oman), most South African states, bribery and corruption are a normal practice. In fact, bribery and corruption are so endemic, that is probably impossible to trade and make sales without entering into undesired facilitation payments. Therefore, I came to the conservative conclusion that over 85% of British businesses bribe monthly as a normal practice.

"Bribery today is a highly sophisticated matter, conducted through professional agency relationships in order to win contracts, especially with government."

The reason for bribery is deep inequality in society and corrupt government. Most Western organisations of a particular size have to deal with government directly or indirectly, in order to win and deliver on contracts. Usually a percentage of the contract is taken as the facilitation payment and with certain contracts, up to 10% of the total value of the exercise, substantial sums are handed over. Most Western organisations have a number of agency relationships covering the practices that operate underneath the surface. From my experience, bribery is well known by both the board, top team and general management.

Most boards would enter into protocols and disciplines to show that their organisation is bribe free, when, in fact, it is intimately understood that this is not the case. Similarly the executive would set targets, particularly pertaining to sales, knowing that these are impossible to achieve without facilitation payments being made. Thus, the vulnerable executive is the general manager, ie country head, regional head, country or regional sales head. In order to achieve the target set they bribe through established agency relationships, whilst denial of bribery takes place at both executive and board levels.

"It became clear to me that we are positioning good people to do suspect things."

The anti-bribery and corruption legislation seems to have little effect. The reason is, the practice of bribery and corruption is so widespread that targeting any one institution or manager, is unproductive and changes nothing. Governments need to intervene with other governments in order to establish a climate of no bribery.What is deeply worrying is that boards are placing their general managers at risk knowingly in order to achieve sales targets, whilst protecting themselves.

Furthermore, the ordinary citizen in the developing country is sick and tired of living in a bribery culture. That citizen does not want to pay extra to see a doctor, or hire some other service, and look to the Western corporation to establish a much more equitable way of working in their own country. This is not taking place, and in fact, bribery and corruption is now more widespread globally, with no indication of any improvement on the horizon"

* This story has been covered in both The Telegraph and Forbes

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