WHAT IS FOREIGN BRIBERY?

 Bribery is one of the most common and controversial issues that MNCs face.  Bribery is UNIVERSALLY CONDEMNED and no government in the world legally permits bribery of its own officials.  The main ethical question is whether companies are justified in making payments when they are necessary for doing business in a corrupt environment.

3 Bribe - The offering, giving, receiving, or soliciting of something of value for the purpose of influencing the action of an official in the discharge of his or her public or legal duties. 3 UNITED STATES has legally prohibited certain kinds of payments since the passage of Foreign Corrupt Practices Act in 1977. 3 However certain kinds of payments are legally permitted and do not constitute bribe. 3 These include facilitating payment which are made to expedite the performance of routine governmental action

CASE STUDY-MOTOROLA
3 Shamus O Shaunessy was an aggressive engineer of Irish nationality, who had won steady promotions at Motorola/Dublin. 3 He was promoted to be Director of Motorola facility in a host nation with a culture very different from Irelands , namely Exotica. 3 The corporation trusted in his strong reputation as a no-nonsense guy who challenged conventional wisdom and got to bottom of issues. 3 Shamus had never before worked outside his native Ireland and relished the challenge of his new assignment.

3 A week after arriving in Exotica , Shamus began taking a hard look at every major cost figure. One item that quickly caught his eye was freight forwarding costs. 3 A freight forwarder, forwarder, or forwarding agent is a person or company that organizes shipments for individuals or other companies and may also act as a carrier. A forwarder is often not active as a carrier and acts only as an agent, in other words as a thirdparty (non-asset-based) logistics provider that dispatches shipments via asset-based carriers and that books or otherwise arranges space for these shipments. Carrier types include ships, airplanes, trucks, and railroads.

3 Shamus understood how important it was for Motorola to get its materials , parts and products cleared through the Exotican Customs Service quickly,conviniently and predictably. 3 But there was a problem , he noticed that the fees charged by Motorolas freight forwarders had been escalating steeply for the past seven years for no apparent reason. 3 Shamus called in Peter Plassitt , the Manager in charge of shipping and logistics.

3 Peter was a native exotican who had been with Motorola for twenty one years. 3 He had the reputation of being forever eager to keep everything smooth and harmonious. 3 Peter told Shamus that when Motorola established its Exotica facility twenty two years ago, it made use of three freight forwarding companies namely golden wings expediters, Quickshot brothers, and Magic touch ltd. 3 It became clear that the corporation got the best service from Magic touch Ltd and so the company grew to handle about 80 or 90% of Motorolas freight forwarding business in Exotica

 The converse was also true about 75% of magic touchs business was with Motorola.  Peter explained Magic Touch understands the culture of the Exotican Bureaucracy. They know how to handle all the messy details so we dont have to.  Shamus felt troubled , he was eager to know , What were those messy details? Why did it cost so much to handle them? And why did peter seem so reluctant to talk about them?  Before Shamus could answer these questions to his own satisfaction , Ray Brainright answered them for him in a story in "International Gold Street Journal.

 The extract is as follows:  The foreign business community in this Exotican capital is buzzing with stories about the escalating cost of so called freight forwardingservices.Most officials of the Exotican Customs Service are known to be willing to accept under-the-table payments. They are masters at the art of dragging their heels when a foreign company does not understand exotican culture and resists making such payments under the table.  More than a few Exotican freight forwarders have been feeding in this corrupt trough for years.  They make their best money serving MNC s whose products require short deadlines.

3 They often charge two to three times the going rate for local exotican firms. 3 Shamus took several minutes to cool off. Then he called a senior staff meeting with a single agenda. 3 When Motorola first entered 22 years ago , it had a written assurance from Exotican ministry of development that this sort of practice did not go on and would not be allowed. 3 However the situation has changed , inflation rated have been steep and exotican custom officials raises have fallen short of inflation rate. This has led to loosening of discipline among the officials.

y The exotican government seems to assume tacitly

that it is unnecessary to raise customs officials salaries to keep up with inflation, because they can find ways to collect part of their income from under-the table payments.