Bribes, Gifts, and Corrupt Practices:

Bribes, Gifts, and Corrupt Practices:

Intro

Daniel Fordice Finance concentration, expected graduation 2012

Matthew MarksFinance concentration, expected graduation 2010

Topic: If it would be profitable for an American business to operate in Russia, but it must pay a bride to operation there, should the American business operate in Russia?

Position: The American business should NOT operate in Russia

Intro Ethical Principles Excerpts Article Advantages Disadvantag

esPersonal Position

Ethical PrinciplesGovernment Requirements (Hobbes and

Locke) In a democratic society, “Never take any action that violates

the law, for the law represents the minimal moral standards of our society.”

• Russia is a democracy, and bribery is illegal for any U.S.A. business, whether domestically or internationally.

Economic Efficiency (Adam Smith) “Always act to maximize profits subject to legal and market

constraints and with full recognition of external costs, for maximum profits under those condition are the sign of the most efficient production

• It is illegal, and external costs are great on the local Russian community as they distort the economic system; so the economic system would not operating as efficient as possible


esPersonal Position

ExcerptsColoplast Corp.’s Code of Conduct on Corruption

and Bribery Coloplast does not accept or solicit bribery of any kind. Bribery is the offering, giving or accepting of any undue

pecuniary or other advantage to or by: a public official, at national, local or international level; a political party, party official or candidate; and a director, officer, employee or agent of a private enterprisein order to obtain or retain a business or other improper advantage, e.g., in connection with regulatory permits, taxation, customs, judicial and legislative proceedings (ICC Rules of Conduct and Recommendations 2005).


esPersonal Position

Daimler BenzFrom 1998-2008, Daimler (formerly known as Daimler-

Chrystler) paid between 10-25 million euros(~$5-20 million, depending on the exchange rates at the times) in brides to officials in at least 22 countries, which netted them ~€35 million in pre-tax profits.

April 1st they agreed to pay ~ €135 million(~$185 million)Daimler videoAs Germany outlawed bridery in 1999, Daimler was in

violation of the governance requirement and economic efficiency principles.

As Daimler was fined ~4 times what they made, in the long-run it was not economically efficient for them to pay the brides… total, that’s $200+ million that can no longer be used to create profits or anything beneficial to the company.

Intro Ethical Principles Excerpts News Article Advantages Disadvantag

esPersonal Position

http://www.reuters.com/news/video?videoChannel=5&videoId=61810363

Advantages to building reputational capital

Strengthens investors’ trust in your company According to the OCED, abstaining from bribery in

international business can “strengthen development, reduce poverty and bolsters confidence in markets.”

More apt for sustainable developmentCoincides with suppliers’ and consumers’

code of conduct for their supply chain, and thus good for business relationships


esPersonal Position

Disadvantages to building reputational capital

Loss of a profitable opportunity for critical stakeholders Not maximizing shareholder valueLoss of profitable opportunity for suppliers who

have a surplus


esPersonal Personal

Our opinion if we were the management team facing a bribery situation

Kimberly-Clark: Giving Gifts, Entertainment or Favors (p.20)“Do not give gifts, entertainment or favors if you are

doing it to make the other person feel obligated to give business to Kimberly-Clark”

“Make sure that you are not violating the other company’s gift and entertainment policy”

“Never give cash, checks, money orders, gift certificates, loans, or other types of money”

Ethical Principles supporting this include Government Requirements, Personal Virtues, and

Economic EfficiencyIntro Ethical

Principles Excerpts Article Advantages

Disad, vantages

Personal Position

Works Cited Sten Scheibye, . Coloplast Group. Coloplast A/S, 8 June 2010. Web. 8 June 2010.

<http://www.us.coloplast.com/About/ourcompany/responsiblity/Documents/Code%20of%20Cond uct%20corruption%20and%20bribery%20final%20version.pdf>.

OECD, . Organization for Economic Co-operation and Development. OECD, 25 Mar. 2010. Web. 7 June 2010. <http://www.oecd.org/department/0,3355,en_2649_34855_1_1_1_1_1,00.html>.

Hosmer, Larue T. "Trust: The Connecting Link Between Organizational Theory and Philosophical Ethics." Academy of Management Review 20.2 (1995): 379-403. Web. 10 June 2010. <http://www.jstor.org/stable/258851>.

Reuters, . Reuters. Thomson Reuters, 24 Mar. 2010. Web. 9 June 2010. <http://www.reuters.com/news/video?videoChannel=5&videoId=61810363>.

Folk, Thomas. J. Kimberly-Clark. Kimberly-Clark Worldwide, Inc., 2009. Web. 12 June 2010. <http://www.kimberly-clark.com/pdfs/Code%20of%20Conduct.pdf>.