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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Bill Steinman
Contributing Editor

Sweating The Small Stuff

Public corruption isn’t a victimless crime, and whatever helps dispel the false notion that it is, is welcome in this space. Which brings us to . . . the United Nations. We haven’t spent much time praising that institution. In fact, we’ve never done it. But here goes.

The U.N.’s just-published Asia Pacific Human Development Report, Tackling Corruption, Transforming Lives, tells the story of public corruption in Asia. So what’s new? This time the story is told not from the perspective of bribe payers or bribe takers, but from the victims themselves. The report isn’t easy to read, not because of dry “technical” language or fuzzy jargon. There’s none of that. In fact, the language is surprisingly simple. No, it’s hard to read because the truth about public corruption isn’t fun to look at.

For example, the 248-page report describes a survey from Bangladesh, India, Nepal, Pakistan and Sri Lanka. It found that health workers often demanded bribes for admission to the hospital, to provide a bed, or to give subsidized medications. According to the report,

Among people using hospitals in small cities the proportion paying bribes rose to almost 90 per cent. In maternity hospitals mothers even had to bribe the nurses in order to see their babies.

“Invisible taxes” are everywhere in the poorest countries. In Bangladesh, a study of 3,000 households showed that 97% that bought land had to pay bribes for registration, 88% of the households who changed their land ownership within the family had to pay bribes, and 83% of landowning households had to pay bribes for land surveys.

The most common victims? Poor people. Police corruption, for example, hits those on the bottom rung hardest because they lack the influence needed to defend themselves. Amounts extorted by police can be relatively small but may be a big part of the victims’ income. Police sometimes harass whole neighborhoods, the report says, creating “an atmosphere of fear and apprehension.” In a riverside slum settlement in Northern India poor families described how police were fleecing them:

They have made our lives miserable. We do not know when we will be thrown out of our homes. They land up any time and demand money. They threaten us that if we do not pay, they would throw us out of our homes. . . . Last week my clothes were torn apart after my husband could not pay the money demanded. We were allowed to go free only after we sold our rickshaw and paid the money.

The U.N. reporters note that most studies about petty corruption don’t include any analysis of the impact on ordinary citizens. Why not? Probably because the amounts involved are relatively small, it’s hard to measure what’s happening, and also because the victims have little chance to complain. But the U.N., to its credit, went out and found people willing to talk.

In Indonesia, for example, one study involved ride-alongs with truckers on long-distance journeys that passed through some of the country’s infamous police “checkpoints.” Bribe expenses at the checkpoints constituted around 13% of the transportation cost which, though less than the fuel cost, amounted to more than wages. A report from Bangladesh found that a cattle trader had to pay extortion money at eight different places along the way to the market, both to the police and organized criminals – which added as much as 20% to the selling price.

Who would knowingly support that sort of exploitation? It’s unthinkable, of course. But here’s the problem. When well-known and respected multinational companies come to town and start greasing the palms of the local cops, health workers, land office-officials and postal workers, what’s the message? That the rich and powerful think petty bribery is OK? That it’s some kind of global best practice? And if brand-name companies are willing to make the small payments, how can local citizens, especially the poor and powerless, ever hope to change things?

Fortunately, a lot of compliance-minded companies now ban all bribes, including facilitating payments. That’s great news. They’ve decided that facilitating payments are too hard to control and account for; that the payments might violate local laws and have to be publicly disclosed back home; and that small bribes overseas might promote a culture of corruption and spoil the company’s effective compliance program. So there’s too much risk with facilitating payments, even if the Foreign Corrupt Practices Act allows them.

Other companies, though, are sticking with the dangerous idea that small-time bribery is just “cultural,” that it’s business-as-usual in various countries and doesn’t do any real harm. That sort of talk comes from business people and professionals who wouldn’t dream of breaking a law back home. But on the road they turn into serial bribers — under the banner of facilitating payments. It’s true, after all, that the Foreign Corrupt Practices Act allows bribes for routine governmental action — permits and licenses, visas and work orders, police protection, mail pick-up and inspections, phone service, power and water supply, cargo loading and unloading, protecting goods from spoilage, or any “actions of a similar nature.” Bribes for those purposes, the FCPA says, are OK. But should any corporate citizen endorse bribery anywhere, whether or not the FCPA allows it?

That question goes beyond legal compliance. It’s part of the “soft” subject of ethics, which is never easy to talk about in the business world. Ethics can’t be measured, and measuring things — costs, profits, losses — is what business is mostly about. That’s why it’s important sometimes to hear what those outside the business world are saying. The U.N.’s Asia Pacific Human Development Report is full of those voices, and they’re worth listening to.
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