When corruption is ‘just part of doing business’
Making a commitment to ethical business practices on a global scale
Nov 25, 2014
By Brian Kreissl
When managing employees overseas, a balance must be struck between supporting a commitment to business ethics and legal compliance on the one hand and supporting effective international business practices while avoiding ethnocentricism on the other.
The truth is cultural values vary significantly and what is considered to be ethically sound in one country may be frowned upon elsewhere. Business practices in particular vary according to the legal and regulatory environment and national culture that is prevalent in the country in question.
I have written about this before, but some people argue that our notion of “fundamental” human rights is ethnocentric because they are viewed through the paradigm of Western values. Business ethics and corporate social responsibility are very similar in that regard.
I am referring in particular to issues such as bribery and corruption, since in some countries bribing public officials and business contacts is accepted as being simply part of doing business. Some would argue our idea of “corruption” may be clouded by our values and relative prosperity, which result in us having a somewhat “holier than thou” attitude.
Nevertheless, there are certain global standards relating to bribery and corruption, and even in countries where such practices are tolerated, they are often technically illegal, just as they are in countries such as Canada and the United States. And just because corrupt activities are committed in other countries doesn’t mean Canadian business people are beyond the reach of Canadian law and Canadian courts.
It’s a sad fact of life but sometimes it is quicker and easier just to bribe a foreign government official to secure the necessary approval for locating a factory in a foreign location (not that such practices are completely unheard of even in Canada). That’s not to say doing things the correct and proper way won’t eventually lead to the desired results, but companies that don’t grease the palms of foreign public officials can sometimes find their projects tied up with bureaucracy and red tape.
While some people argue Western companies that play by the rules are effectively disadvantaging themselves, refusing to be part of the problem can help combat corruption and level the playing field. Perhaps countries where corruption is endemic will finally get the message and do more to stamp out such practices.
The Corruption of Foreign Public Officials Act
As mentioned, Canadian businesspeople working abroad are governed by Canadian law in the form of the Corruption of Foreign Public Officials Act (CFPOA), which prohibits the bribery of foreign public officials. CFPOA came into being as a result of Canada’s international treaty obligations as a signatory to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. That convention requires signatories to criminalize the bribery of foreign public officials to the same extent that the bribery of domestic public officials is prohibited.
Last year, I discussed the case of R. v. Karigar, which concerned a Canadian businessman who was involved in a conspiracy to bribe officials of Air India on behalf of a Canadian company in connection with the purchase of airport security systems (primarily facial-recognition technologies). Of particular significance was the fact that there was no evidence a payment was ever made to Air India officials.
Nevertheless, Karigar was convicted under the CFPOA and sentenced to three years’ imprisonment this past May. This case should serve as a warning to organizations doing business outside Canada that bribery of foreign public officials will not be tolerated.
The role of HR
But, how can HR help to combat corruption and maintain ethical business practices?
As I mentioned last year, an organization’s policies should prohibit unethical and illegal practices such as bribery, kickbacks, secret commissions and “off the books” transactions. A paper I read recently by Melissa A. Silver from XpertHR argues that implementing effective anti-bribery policies and procedures is one of the top challenges faced by global employers.
The paper argues it is important not only to comply with laws in the organization’s home country or head office location, but also those that apply in the host country as well. Policies need to be accompanied by anti-corruption training for employees, due diligence and risk assessments of countries where the organization operates and a clear commitment to zero-tolerance of corrupt practices wherever the company does business.
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Brian Kreissl is the product development manager for Thomson Reuters Legal Canada's human resources, OH&S, payroll and records retention products and solutions.