An easy way to make useful connections in some countries is to bribe officials.
Lots of Us
Countless American companies of all sizes participate in global commerce, not just big name companies. We source parts, materials, and products; offshore support (help desks) and professional services (CPAs); sell and license goods, equipment, technology, movies, software, the range of intellectual property, etc., and professional services. As a result, this topic applies to more American businesses and leaders than expected. So:
A caution on bribery abroad: Don’t Do It.
The Grease
It’s widely joked, It takes grease to keep the machinery running smoothly abroad. That may be true in some places, but the U.S. Foreign Corrupt Practices Act (FCPA) along with other federal and state laws prohibit companies issuing stock in the U.S. from bribing foreign officials for government contracts and other business—a practice that is common and expected in many countries.
Some U.S. companies engaged in international business retain FCPA lawyers to create guidelines and compliance programs. Leaders can simplify the message:
This company and its employees must avoid any activity
that could be seen as bribery.
Facilitating Payments
FCPA allows for “Facilitating Payments” as an exemption, but it’s fraught with unclarity. Our foreign contact may assure us that they certainly are not asking for a bribe! No, no, this is normal. It’s just something to help him out. Plus, no need to worry; it will be completely under the radar.
It might be called a Facilitating Payment, or the grease may seem out of sight, but enforcement of the FCPA by the SEC is real and ongoing. Glancing over the SEC’s year-by-year list of prosecuted companies—both famous and unknown—as well as individual executives, is a powerful reminder to avoid foreign bribery.
Blackmail
There is also the added concern of blackmail. If we participate in bribery, the same fine people who require a little grease may be the same people who would blackmail us, turn us in under a federal whistleblower provision, or otherwise use it against us. Not exactly the kind of business partners we want.
Can I Get A Witness?
In addition to becoming familiar with the FCPA, seeking advice from knowledgeable counsel, and clearly communicating the rules within your company, you might also get a witness.
U.S. officials were aware that our company was doing business in Russia. I wanted to stay clear of the bribery charges that had impacted other international deals. During a meeting in the Moscow offices of Ernst & Young, I took the opportunity to discuss FCPA compliance in the presence of our Russian partner. When the E&Y guys and I finished, my partner simply nodded, “Da.” He understood that he should not involve RAFF or me in his necessary grease dealings with Russian officials. Having those British CPAs witness my expressed and real intent not to breach the Act gave me comfort.
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It may takes grease to keep things running smoothly abroad,
but we Americans cannot apply it.
