To assist the sale of your products in a particular foreign market, it is suggested that you pay a 10 percent commission to a “go-between” who has access to high-ranking government officials in that market. You suspect, but do not know, that the go-between will split the commission with the government officials who decide which goods to buy. Should you do it ? Does it make a difference if your competitors routinely pay such commissions?
Paying a commission to a “go-between” who may split it with government officials raises serious ethical concerns. Engaging in bribery or corruption to gain a competitive advantage is not only illegal in many countries but also goes against principles of fair competition, transparency, and integrity.
Here are some points to consider:
- Ethical concerns: Engaging in bribery undermines the principles of fair competition and may perpetuate corruption within the government. It can lead to an unhealthy business environment and hinder the growth of legitimate businesses.
- Legal implications: Paying bribes can be illegal in both the home country and the foreign market. Many countries have laws like the Foreign Corrupt Practices Act (FCPA) in the United States and the UK Bribery Act that prohibit companies from engaging in corrupt practices abroad.
- Reputation damage: Being associated with bribery or corruption can severely damage a company’s reputation both in the foreign market and globally. This can lead to a loss of trust from customers, partners, and stakeholders.
- Long-term risks: While paying such commissions may offer short-term gains, the risks of exposure and potential legal consequences can have severe long-term impacts on the company’s operations and financial stability.
- Competitor actions: The fact that competitors may be engaging in similar practices does not justify or excuse the behavior. Instead, it may be an opportunity to stand out as an ethical and principled company.
Instead of resorting to unethical practices, consider the following alternatives:
- Compete on merit: Focus on the quality and uniqueness of your products, competitive pricing, and excellent customer service.
- Build strong relationships: Work on building genuine relationships with partners, customers, and government officials based on trust, transparency, and ethical business practices.
- Compliance and integrity: Establish and enforce a robust compliance program that strictly adheres to all relevant laws and regulations, both in your home country and the foreign market.
- Report suspicions: If you suspect corruption or unethical practices in the market, consider reporting the matter to the appropriate authorities.
Doing business ethically may present challenges, but it is essential for the long-term success and sustainability of your company. By demonstrating integrity and responsible business conduct, you can build a positive reputation and trust with customers and stakeholders.