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Practices and Impact of Bribe in International Business in


Towsif Ahmed
Department Of International Business
University of Dhaka
Bribe is a common phenomenon throughout the world from developed countries to least
developed countries. "Bribery is a global phenomenon, and people engage in this type of
behavior all over the world," Serafeim says. "There are different magnitudes and different
extents of bribery, but everywhere in the world you can find it. The idea that bribery doesn't exist
in the developed world is a myth."From US, Canada, UK, Australia to Bangladesh, India, Chad,
Congo bribe exits everywhere. Bribery in international business transactions can be seen as a
function of not only the demand for such bribes in different countries, but the supply, or
willingness to provide bribes by multinational firms and their representatives. Bribe is a
hindrance to move business smoothly. This bribery has become a notorious problem both for the
businesses as well as in the country where they operate their business. It hampers the successful
performance and the growth by creating obstacle during the execution of the business processes.
ECGD(UK Export Credits Guarantee Department (ECGD) recognizes that bribery and
corruption distorts competition and investment, hinders free and fair trade, and represents an
unacceptable cost to business. Bribery is curse for Bangladesh when we are approaching from
lower middle income country to middle income country. This paper is discussed about the bribe
impact for Bangladesh in international business.

Bribe exists in every sector, in every part in our country. People are used to pay bribe as it is
their regular transaction. The amount of bribe varies depending on the nature of work and the
designation or reputation of individual or party. According to Transparency International
Bangladesh 2015, People need to pay 100 taka to 100000 taka to perform any govt. official
work as bribe. The most affected sector for bribe is business and in international business its
impact is tremendous. In international business, bribery takes place during demands from tax
authority, official processing of business license and renews it, customs officers offering to
expedite the clearance of goods through customs, and police officers threatening bogus fines. In
case of Bangladesh, bribe demand most for issuing license and clearing customs goods.

The recent sufferer for this bribery impact is Mustafa Centre, a Singapore based largest retail
outlet. They have invested more than 150 million dollar and within 6 months of starting business
operations, they want to shut down their business operations. So, the impact of bribery in
international business is tentoria.

Bribe Meaning
Bribe can be defined as the illicit transaction of money or monetary value item in order to
perform ones duty. Sometimes persuasion to perform job can be done through bribe. The most
basic from of bribery is the practice of giving gifts of monetary value to a client or potential
customer to persuade their decision. According to Black Laws Dictionary 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 is bribery. The UK government defines bribery as "the
receiving or offering/giving of any benefit (in cash or in kind) by or to any public servant or
office holder or to a director or employee of a private company in order to induce that person to
give improper assistance in breach of their duty to the government or company which has
appointed them." (Foreign and Commonwealth Office, UK Bribery and Corruption Law, May
2006). As Control Risks points Bribery is a widespread phenomenon in international business
transactions, including trade and investment, which undermines good governance and economic
development and distorts international competitive conditions.

Bribery Practice and Impact in International Business

The scale of bribery in international business has become immense. The World Bank estimates
that five percent of export goes to corrupt officials. Present finance minister of Bangladesh said
Bribe is speed money due to make speed to work completion process and he doesnt get
anything negative to bribe. But is it really good in international business. Lets see how bribe
Bribe raises the cost of capital. Bribe payment to obtain business licenses, permits, sanctions,
approvals, infrastructure and facilities from government departments and agencies in different
sector and different govt. officials increase the cost of capital. Many foreign firms consider
bribery is a legitimate cost to enter into business with the most plentiful resources countries like
Bangladesh, India, and Thailand.
Bribe is an investment to do business. To get a lucrative foreign contract, firms bribe the govt.
officials to make the contract in favor to them. To set up telecommunication network, Siemens
Company bribed 600 million dollar to our earlier govt.
Bribery is an impediment to enter into foreign business because not all countries firms are
encouraged to give monetary value gifts. So the efficient company who are unusual with bribery
practice cant enter into business and the host country deprives to get their services. Many
foreign companies are doing business in our country even though they arent good at doing that

Bribe can reduce the tariffs charges during the customs clearing. Customs officers often threat to
business people to seize product to earn extra money from them. Through negotiation, business
people offers bribe to corrupt officials in order to pay less tariff charges. Officials will not levy
the actual import duty on inbound materials which consequences is the govt. loss the price.
Another way to charge bribe is making delay to shipment the product. Delay shipment cause to
damage product quality and delay delivery to customer.
Bribe is a regular cash flow for firms and it has no productive use for firms. So it is opportunity
cost for firms. Firms cover the bribe cost from customers through charging on products. This
process distort the market includes distribution channels, product quality and competitiveness.
Webber and Getz go on to say bribery leads to distortion in multiplier effects, competitiveness,
fiscal functions, debt effects, and investment.
Bribe is a hindrance for FDI (foreign direct investment). Multinational firms focus on less
corrupted country because bribery creates disincentives to investment by increasing risk and
uncertainty for firms through assisting in closing deals, making poor relationship with other
countries firms and creating an obstacle to step ahead for competition with other countries firms.
Once India was the most corrupted country for bribery, and now their low corruption attract
many foreign investors.

Recommendation and Conclusion

It will be difficult to deal with things which whereabouts and existence cant be understood.
Bribery is social diseases and its existence is every part of the society from educational sector to
govt. service sector. In a study, 42.7 percent household paid bribe during their interaction of
different services. In international business sector, Companies lose business because they are
unwilling to pay bribes or are out-bribed by competitors. The Control Risks Survey reports states
that Overall, 43% of respondents believe that they failed to win new business in the last five
years because a competitor had paid a bribe, and one-third had lost business to bribery in the last
year. Bribe should eradicate from society and for this we need to understand its root.
We should teach ethics and morality from early school period and throughout the schooling
period and raise voice against not only bribery but also corruption.
The most bribery sectors are different govt. service sector. Because candidate have to pay 1
million taka to 1.6 million as a bribe to get the job during selection process, which makes them
greedier to earn money more than they paid bribe. This also makes them extremely vulnerable to
earn money. To stop this, selection process must be fair and selected the talented pool without
engaging bribe.

Anti-corruption unit need to be more active. Former Chairmen of Anti-corruption unit,

Bangladesh said, Anti-corruption unit is a toothless tiger. They have lack of judicial power to
remove corruption. So to make them more effective, govt. should allow them more judicial
The punishment to bribery people must be different from punishment to other crimes. The
traditional imprisonment and firing from job cant stop people to take bribe. Bribery punishment
should be a lesson to all others to avoid thinking to take bribe. Bribery corrupt person should
neglect in society.
The most needed action to stop bribe is to change the society structure and also its culture. In
some cases, people get life threat to take bribe even they dont want. To save life, people bound
to take bribe. Only a strong moral and ethical value holding society can relief from this.
Bribery is a cost and its impact in international business affects both sides; countries where it
takes place and the foreign companies who are doing or trying to do business in these countries.
Bangladesh achieves the 48th place for the most attractive place for investors. It is a land of
business resources but the bribery creates an impediment to effective use of these recourses. In
this paper, I tried to concentrate in international business where the bribe needs and what is the
impact on business. By analyzing bribes impact, I must say to eradicate bribery culture from

1. Hamra, Wayne (01 October, 2000) Bribery in International Business Transactions and
the OECD Convention: Benefits and Limitations Vol. 35. PP. 3-7.
2. Cynthia Schoeman (November, 1997), Combating Bribery of Foreign Public Officials
in International Business Transactions.
3. Control Risks, International Business Attitudes to Corruption Survey 2006.
4. Olufemi Adekoya, To bribe or not to bribe: What are the effects of bribery in international
Business Transaction PP. 10-14