The Corruption

Introduction

Everybody has already heard about bribes in business. This form of corruption appeared in Ancient Greece when it was time to vote.

But far more than just bribes, corruption is one of the biggest problems in business nowadays. Indeed, this scourge can affect politics, administrations, institutions and the business world. But, this concept can be discussed: How, in practice can we say what it is substantially corrupt, and how can we measure this corruption? In fact, this concept is not very precise and can be a very subjective notion.

That’s why in the following report, we will discuss the concept of corruption and establish its definition according to the legal institutions. Moreover, we will see the different forms of corruption and the way of limiting it in the global business.

We can assume that if corruption still occurs, that some favorable conditions for corruption must exist. What we can do is analyze concrete cases of corruption in business, in order to understand the issues of corruption and it’s impact on the economic environment. That’s why we will try to explain how to “measure” the corruption, and the measures that have been taken in the world to control corruption and to limit it.

So, in the first part we will define what corruption is concretely, and then we will introduce different ways of measuring it and how policies try to limit corruption. In the last part we will extend the debate to lobbying which can be, in certain cases, considered as corruption because of some illegal ethics.

I. What is the corruption?

I.1. Definition

Bribery or corruption is the act of giving money or gift in exchange of a “service”. The definition in the dictionary for corrupt is: “willing to act dishonestly in return for money or personal gain”. (www.wordreference.com).

Corruption is the use of a power with the aim of self enrichment. It can be used in several fields of activity. For example, by an official, an elected representative, a doctor, a referee, an employee, etc. by abusing their position of authority, by not doing, doing, helping with his power in exchange of a gift, money, promise…

Corruption in business is something else. In most cases it borne from a need to win a contract. For example big contracts for weapons, nuclear power station, etc.

For some very important contracts, the companies sometimes need to give bribes to the state in which they want to win the contract. To hide the illegal transactions in the bookkeeping, companies cheat: They claim that they buy services legally from a consulting company for example.

Corruption is also something that can happen between countries. For example companies that sell weapons need the support of their own government to go overseas and be credible.

One of the most significant problems of corruption is that of people, companies or states that use different types of corruption to make businesses stop serving their country, company or organization to make profit for themselves without considering the rest of their country, company or organization. Most of the time corruption is only profitable for the corrupter and the corrupt.

I.2. Famous cases of corruption in business

In this part we will speak about two big companies who used bribes and were judged: the French company Alstom and the German company Siemens. The case of Alstom is very interesting because it’s a company that is close to our school, and the one of Siemens is also relevant as they hire a lot of business engineers.

I.2.1. Alstom

In November 2011 Alstom was found guilty by a Swiss court of corruption. The attorney general gave them a fine of € 31 million for using “consultants who used some of the money for illegal purposes, whether to influence the award of contracts or to pay kickbacks to employees”. Alstom used “consultants” in three countries: Latvia, Malaysia and Tunisia.

Even if Alstom got a fine, there is no evidence that they used bribes. Over two years the Swiss court looked for criminal wrongdoing in the company, but they didn’t find any. Alstom received a fine for “failing to meet the standards for an international group employing over 75,000 people” and for “corporate negligence”.

In a statement, Alstom said it had “constantly stated that the company had never organized, authorized or allowed any act of bribery or any breach of the rules and current laws”.

I.2.2. Siemens

The case of Siemens is much more expansive. We are not speaking about a single use of bribes but years and years of using corruption in their business in order to win contracts all over the world.

Indeed, it seems that for several years, Siemens used bribery to win contracts in Argentina, Bangladesh, Iraq and more.

They gave money to different government to earn $billion contracts. Most of the time these were large contracts relating to energy companies, mass transportation and telecommunications networks.

After co operating with investigating authorities, Siemens arranged to pay € 620 million in fines to the US court and € 395 million to the German court for “unsatisfying management”.

The € 1 billion fine they got from USA and Germany is for an estimated €1.3 billion use of bribes.

Since the trial, many changes have been effected by Siemens: to the leadership team and the organizational structure of the company. They hire an ethical observant to fight against corruption. Theo Waigel, this ethical observant, was a finance minister in Germany between 1989 and 1998. The shocking part is that Siemens would have lost the right to sell in United States if they didn’t pay the US court. The new CEO wants to claim damages for the old leadership team.

If we consider that a policeman is corrupted when he receives money instead of giving a fine, we can consider that the US court is also corrupted because it received money instead of leading a trial against Siemens.

Another thing that I’m sure of is that some of our teachers who worked for big companies in overseas sales saw briefcases full of banknotes.I.2.3. French government

A few weeks ago, the ex French president N.Sarkozy was accused by a newspaper of being corrupt by another country.

The facts:

According to newspapers and the Libyan, Nikola Sarkozy during his campaign of 2007 to become the new French president promised to Mouamar Kadhafi, the

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