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Bill Steinman
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Richard Bistrong: I used win-win fantasies to justify the corruption

Marketing and sales people working in low-integrity places are usually far removed from the victims of nearby corruption. Compliance professionals supporting a far-flung work force need to keep that cultural isolation in mind.

I became aware of the issue when reading Why They Do it: Inside the Mind of the White Collar Criminal, by Harvard Business School Associate Professor Eugene Soltes. In his riveting work, Professor Soltes says “the human ability to sense the potential for harm is significantly affected by physical and psychological proximity.”

Professor Soltes had reached out to incarcerated executives to ask: What were the most significant pressures you faced, and how did the way you were compensated influence your decision making?

He then drew upon research in psychology, neuroscience, legal theory and philosophy to thread together common themes among violators and the “managerial institutions” in which they operated, and which ultimately failed.

Yet fly-in business teams, even (or especially) those working in poverty stricken countries, usually congregate in enclaves of relative comfort. They set up shop in the business center of a nice hotel where they stay, and enjoy great restaurants at the same hotel or nearby.

During their visits, the team members’ only exposure to suffering citizens might be the ride from the airport to the hotel. But that ride is often in the back seat of an armored SUV with other security vehicles trailing or leading or both.

The separation from local life usually blocks any chance to understand the local consequences of corrupt behavior, or to develop empathy for the victims. Beyond that, the isolation can lead to the false notion that corruption is a win-win proposition. That sounds too weird, I know. But it’s what actually happened to me.

As my thinking went, the bribery helped win the sale for the company, and I made quota, forecast and bonus. Maybe the company even added overtime or a second shift to manufacture the order, putting more money in a lot of other paychecks.

In addition, the intermediary could move on to the next transaction, and the public official, who might be earning what we think of as poverty wages, got a little something extra to makes ends meet. 

That’s a short version of the self-justifying win-win fantasy.

You might think the win-win fantasy is repulsive, especially given the norms and cultures at HQ. But HQ isn’t where everyone in the organization is tasked with success. Goods and services are finally marketed and sold in the field, sometimes in frontier markets, where ideas about corruption are often elastic at best, especially among the ruling elites.

So the win-win fantasy is affirmed by local norms, further interfering with the perception of harm. As Professor Francesca Gino points out, where unethical conduct is perceived as benefiting others, one might even think of it as “altruistic” and “morally acceptable.”

In this corrupt ecosystem, one can think that everyone benefits, and no one gets hurt. And as Professor Soltes points out, “without experiencing any negative consequences, you’re unlikely to feel that you’re committing them.”

On the contrary, he says, when corrupt behavior leads to success, “the offending act begins to resonate positively.”

How, then, can big companies doing business in far-flung places snuff out the win-win fantasy and replace it with reality?

The first step is admitting the fantasy exists, then confronting it. Many multinationals have volunteer days, where employees donate time to local  community service programs.

If you think that’s too daunting for an international team, read A Better World, Inc by Alice Korngold. She describes international corporate volunteering (ICV) initiatives. The aim is to engage overseas employees by deepening “their knowledge and understanding of the needs and cultures in emerging markets where opportunities abound.”

One result, Korngold says, is that field personnel involved in the pro bono work emerge from these experiences with “acute sensitivity and awareness” of their surroundings, while becoming “more effective in a variety of new and different cultures and work environments.”

It’s actually a career enhancing event, imagine that.

Outside the corporate structure, many faith-based groups have short-term overseas mission opportunities. Those programs aren’t just for doctors and dentists. Help is always needed from anyone willing to pitch in.

However the experience arises, a few days or weeks building local housing, digging wells, mentoring a young professional, or teaching in a dirt-floored school should end the win-win fantasies.

Think about how a book club can help us understand more about the victims of corruption. I’d recommend Sarah Chayes’ Thieves of State and Tom Burgis’ The Looting Machine.

Or watch some movies together and then talk about them. The “Year of Living Dangerously,” perhaps, or “Blood Diamonds.” Those films can help bring front-line personnel back to reality.

Sure, win-win fantasies about corruption are convenient and comforting. But they’re extremely dangerous to a compliance program and can land a company and some of its people in the middle of an FCPA disaster. I know. I’ve been there.

___

Richard Bistrong is a contributing editor of the FCPA Blog and CEO of Front-Line Anti-Bribery LLC. In 2010 he pleaded guilty to a conspiracy to violate the FCPA and served fourteen-and-a-half months at a U.S. federal prison camp. He now consults, writes and speaks about compliance issues. In 2015 he was named one of Ethisphere’s 100 Most Influential in Business Ethics. He can be contacted by email here and on twitter @richardbistrong.

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2 Comments

  1. Good post, Richard, with several useful insights re some of the subtle ways corruption or other malfeasance can engulf an organization. One point I’d underscore as especially helpful for senior executives as well as compliance and affiliated risk and security officers: truly effective (not merely well-architected) compliance, ethics, anti-corruption, and risk mitigation policies and programs must recognize and account for the fantastic diversity of cultural and idiosyncratic experiences and understandings which can germinate or quell all sorts of individual and collective fantasies, and which will, consequently, impact how corporate citizens respond to, accept, or reject otherwise thoughtful and well-intentioned institutional initiatives.

  2. I think you're being too hard on yourself, Richard. I think the real criminal in the picture that you paint is the fellow who insists on the bribe before the business goes forward; and the social-political framework that makes it acceptable for bribery to be an essential factor in granting awards and doing business. As I argue in my paper against strict liability for FCPA violations, without focusing on the real source of corruption — those only doing business for extra-legal quid-pro-quo — we aren't doing much to end bribery nor to truly undermine it. That's the Achilles heel of the FCPA in my mind.
    Of course, focusing on what you did and your own responsibility for the outcome is an extremely important contribution. Salespersons and executives face the ethical conundrum every day: Whether they are working internationally or in local communities in the U.S. But to only blame yourself — to only punish the salesperson — does little to stop the continuing cycle of corruption.
    I would love to read your thought on how the DOJ and US government should use the money gathered from FCPA violations to effectively stop corruption at its root.


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