“That’s not a bribe!”
In a developing nation somewhere, an underpaid policemen struggles with a drunk and disorderly citizen. During the arrest, the policeman’s hand is cut.
The next day, the policeman and the formerly drunken citizen reach an agreement. The citizen is charged with drunk and disorderly conduct, and he pays $5 to the policeman to compensate for the injury to his hand.
This is situation actually happened somewhere. Neither the leadership in the police department or the prosecutors’ office saw any problem with the situation.
Police Lieutenant: “It doesn’t matter that the injured party was a policemen, he was injured do to the drunken man’s actions. The result would have been the same (in our culture) if it had been two private citizens. So, there was no bribe.”
Response: “But this happened during the arrest, while the policeman was carrying out his government responsibilities. There were not charges laid for resisting arrest or assault of a police officer. This looks like a $5 bribe to avoid the extra charges.”
Answer: “Things happen in life. Not everything needs to be handled by official police activity. And the officer was satisfied and could pay for his medical expenses. This is a good result.”
While we may object to aspects of the story above, there are a few things that should catch the attention of international business people and their compliance officers.
Firstly, Neither the policeman or the police Lieutenant, or the first line prosecutors immediately saw this as a bribe.
They had all been trained by “Western” police schools, and “Commonwealth” law schools, and many, many western advisors. Indeed, when asked questions about identifying bribery or assaulting an officer in the abstract, they were able to spot the issues and identify the result accurately and quickly.
The result was different for these individuals when the “facts” were applied within a familiar cultural context. When in that cultural context, the traditional laws and rules for resolving problems took precedence, without anyone becoming aware that they had made a shift in evaluation criteria. They had undercut their own laws.
Is this corruption? or an ordinary, and natural attempt by people to harmonize long-standing traditional law practices with the modern legal environment?
The answer to this question, while important, does not provide a clear and rapid pathway to companies faced with developing compliance programs.
Eyes Wide Open
I recently had the chance to discuss the impacts of traditional law with a large mining company. “How do you handle these problems? And how do you identify the specific cultural conflicts that might slip unnoticed past your FCPA, ethics and other compliance programs?”
Answer: “We engage a local partner. We know that we can’t really learn enough about the local culture in our due diligence to identify all of these problems.” (Translation: “We hire local attorneys, engineers, and others who have [presumably] been trained in western law and practices and can help make sure that we don’t run into those sorts of cultural conflicts.”)
That’s a rational response. Except that it translates further as: “We hire those same kind of people that you described in the policeman story. Western trained, fully fluent in the English language, but unaware when they switch to application of the traditional laws.”
Having seen first hand the sometimes vast disconnect between behavior in the face of training for FCPA and government contracting that takes place in international settings, (e.g., rampant nepotism, interference with contracts, extortion and rent seeking), I can tell you that there’s a whole lot happening that executives and compliance officers would be unhappy to hear about.
In truth, these are not simple matters. But they are matters that local partners may not characterize in the same way as compliance officers in the U.S., U.K., or the E.U.
Due diligence can seem like an endless task. Indeed, there is no end to the list of things a company must be mindful of when operating in a foreign environment. Cultural studies on the potential conflicts between the formal and traditional law systems may not be available, or on point, at the time of purchase or operation start-up activities, for many countries.
That being said, once operations are underway, information can be obtained by compliance officers that can enhance corporate awareness of corruption risks. By formal or informal surveys, compliance officers, and other executives, can begin asking questions about the traditional law systems, and the cultural practices for transactions and dispute resolution. This information can help compliance officers “get the picture” of the potential “blindspots” that may exist within the operations of a country.
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