What is the cost of bribery and corruption? We’re seeing it played out daily in Bangladesh as each body is pulled out of the rubble of the Rana Plaza, where there are now more than 600 confirmed deaths in what has become the worst disaster for Bangladesh’s $20 billion-a-year garment industry.
If your company is a U.S. or EU purchaser of such finished products, what should your response be? In a New York Times article entitled Some Retailers Rethink Role in Bangladesh, reporter Steven Greenhouse noted that the Walt Disney Company “in March ordered an end to production of branded merchandise in Bangladesh.” Greenhouse said, “Disney’s move reflects the difficult calculus that companies with operations in countries like Bangladesh are facing as they balance profit and reputation against the backdrop of a wrenching human disaster.”
But is this the right response? In an article in the Financial Times (FT) entitled “Business must lead in Bangladesh,” John Grapper wrote: “The first thing western companies need to do is the simplest: to stay in the country and to keep providing jobs for women, not to withdraw because they fear being tainted by association. Despite everything, the industry provides better-paid jobs than the alternative – working on rural farms – and has helped to emancipate women.”
Many have argued that western governments in particular have no place in enforcing their version of morality, in the form of the U.S. Foreign Corrupt Practices Act (FCPA) or UK Bribery Act. But rarely is the flip side of this argument discussed, that being where a business solution can help to end corruption. Gapper notes this reality with the following, “Collectively, companies could push the government to overcome the obstacles of corruption, hidden army influence and factory owners who double as politicians. They hold the buying power in a sector that makes up 13 percent of gross domestic product.” Perhaps this may be a lesson from the tragedy in Bangladesh.
Thomas Fox is a contributing editor of the FCPA Blog.