Over the past few weeks I have had a chance to read How To Pay A Bribe, Thinking Like a Criminal to Thwart Bribery Schemes (2014, edited by Alexandra Wrage, Seven Wirz), and while I have enjoyed a number of the chapters, including those by Andrew Feintsein and Matteson Ellis (which is the subject for this post), I did find the book’s title to be somewhat confusing. I think there is a difference between serious academic and practical treatment of bribery issues, which this book clearly represents, versus a subtitle of “thinking like a criminal” to thwart future schemes. In any case, I have a great deal of respect for Ms. Wrage’s organization, as having had the recent pleasure of being a co-panelist with Eileen Radford (Director, Advisory Services, Trace International) at the C5 Anti-Corruption Forum in London; thus, I draw this distinction not in a negative context but just to call attention to my own observations.
- Boom and bust economic cycles
- The prevalence of state-owned companies
- Weak government institutions
- Concentrations of wealth and power in a small elite
- Family ownership of companies
1. Getting what are often a multitude of signatures on an order in order to secure the “final” purchase order and how an agent needs to “take care” of people in order to get the order ultimately confirmed, including all associated paperwork, e.g. letters of credit, completed.
2. The common need for regulatory and import licenses, for example on Defense goods, and end user paperwork needs which might need to get signed. Again, more opportunities for third parties to leverage legitimate and corrupt services by the claim of “toll paying” to get the signatories “on-board” to perform what are normal governmental functions.
3. Inspections and/or acceptance protocols at the destination point which are needed to clear the goods for end user receipt or release of funds. As I once shared with a colleague, these are often procedures designed to benefit a multitude of parties all who can demand small bribes lest your product “rot in a warehouse.” I have seen these events degenerate into demands for bribes in the context of getting product cleared from customs, as well as bogus inspections designed to fail product in order to secure small bribes for “re-inspection.” This type of behavior is not possible where protocols and the institutions from which they are issued are strong and stable.
4. Paperwork that needs to be secured for final remittance. Here, front line personnel, who often have incentive compensation indexed to that final payment, now often encounter third party claims of how “tolls” must be paid in order to get the paperwork finalized so that everyone can get paid. Here is where I also have seen third parties renegotiating their own commissions, as they explain how they need to make more money for corrupt disbursements. To a front line businessperson, this is all mind numbing, as there is no independent information, the finance department is exerting pressure to get paid, and everyone starts looking at “you.” At such a point the thinking can evolve into“ what do I need to do get this all over with.”