European Institute of Management and Finance | What is Anti-Bribery and Anti-corruption?
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What is Anti-Bribery and Anti-corruption?

20 Aug What is Anti-Bribery and Anti-corruption?

Corruption is “the abuse of entrusted power for private gain”. It can be classified as grand, petty and political. Grand corruption occurs at a high level of government, through acts that distort policies or the central functioning of the state. These acts enable state leaders to benefit at the expense of the public good.

Petty corruption refers to everyday abuse of entrusted power by low- and mid-level public officials in their interactions with ordinary citizens, who are trying to access basic goods or services in places like hospitals, schools, police departments and other agencies.

Political corruption occurs when political decision makers manipulate policies, institutions and rules relating to the allocation of resources and financing, thus abusing their position to sustain their power, status and wealth.

Bribery is a main form of corruption.  Simply put, bribery is the gift given to influence the recipient’s behavior. The Black’s Law Dictionary defines bribery as “the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legal duty.”

Bribery is a two-way transaction that comes in many forms. It requires both a bribe-payer and a bribe-taker. That is why so much emphasis is placed on stopping people and companies paying bribes, even if they relate to small amounts. The problems arising from bribery are vast and the repercussions are widespread. If the supply-side of bribery is cut, then we may have a solution to the problem of corruption.

Bribery exists throughout the world. It is unethical, illegal and by definition corrupt, meaning it is an abuse of power for personal gain.

What is bribery and what is not?

Bribery and corruption are defined differently in different parts of the world.  Hence, what constitutes bribery in one country may not be in another.

In economics, bribe has been described as rent. In bureaucracy, bribery has been viewed as a reason for the higher cost of production of goods and services. As it will be further elaborated in the course, bribes do not necessarily involve giving out cash. For example, they could be in the form of extra work, gifts, loans, services, donations or job offers.

Bribery, as commonly perceived, is the act of giving money, goods or other forms of reward to a recipient in exchange for an alteration of their behavior to the benefit or interest of the giver, which the recipient would otherwise not alter. Hence, a bribe could be active or passive. Active bribery includes the offer or promise or giving of a financial or other service to induce an action, which is illegal unethical or a breach of trust. Passive bribery occurs when a person requests, agrees to receive or accepts a bribe.

Gifts of money or other items of value which are otherwise available to everyone on an equivalent basis, and not for dishonest purposes, are not bribery. Offering a discount or a refund to all buyers is a legal rebate and not bribery. For example, it is legal for an employee of a Public Utilities Commission involved in electric rate regulation to accept a rebate on electric service that reduces their cost for electricity, when the rebate is also available to other residential electric customers. However, giving the rebate to influence them to look favorably on the electric utility’s rate increase applications, would be considered bribery.

Facilitation payments are illegal under the UK’s Bribery Act and in many other countries. However, under US law, small facilitation payments are permitted if the purpose of the payments is to expedite or secure the performance of a “routine governmental function”, which the company is entitled to receive anyway.  It should be noted that this is a very narrow exception. If the activity involves the exercise of any official discretion, or the amount involved is large, say over $100, then the exception may not apply. A company that pays serial facilitation payments without attempting to stop them may also breach US law.

Political campaign contributions in the form of cash are considered criminal acts of bribery in some countries, while in the United States, provided they adhere to election law, are legal. Furthermore, tipping is considered bribery in some societies, while in others the two concepts may not be interchangeable.

Another exception to the rule, relates to extortion and duress.  If an alleged bribe payment is genuinely made due to extortion or duress that threatens an individual’s personal safety, then such a payment is unlikely to be deemed as bribery.

Therefore, one must be careful of differing social and cultural norms when examining bribery. Expectations of when a monetary transaction is appropriate can differ from place to place.

Where is bribery prevalent and who is affected by it?

Do bribery and corruption affect society? Yes, they do! Do bribery and corruption matter? Definitely, yes!

According to the Organisation for Economic Co-operation and Development or OECD “bribery and corruption are damaging to democratic institutions and the governance of corporations. They discourage investment and distort international competitive conditions”.

In recent years, there has been increasing research into the impact of corruption. It has become clear that corruption, including bribery, is not a victimless crime. Let’s use Kenya as an example. According to Transparency International “bribery is estimated to raise the average Kenyan family’s annual cost of living by 15%”.

The Kenyan statistic is an example of how demands for bribes affect even individuals, often the poorest of the poor. Bribery gives rich people the ability to get away with breaking the law through paying money to officials. This creates an unjust society that prosecutes the poor while leaves the rich almost invincible.

The question is “How do we cut through and make real change?”

According to Robert Barrington, Executive Director of Transparency International UK, “Each time a company pays a bribe it is contributing even in a small way to perpetuating a system of corruption that embeds poverty and inequality. Stopping this supply-side bribery is vital, if the fight against corruption is to be successful.”

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