Facilitation or Bribery?
Geletex, Inc., is a U.S. telecommunications corporation attempting to expand its operations worldwide. As Geletex begins its operations in other countries, it has discovered cultural, governmental, and ethical standards that differ significantly from country to country and from those in the U.S. Geletex has had a code of ethics for its U.S. operations since 1975. The company's director of compliance, Jed Richardson, provides ongoing training for employees, runs a hotline through which employees can report problems, and is well known and respected throughout the company for his high standards and trustworthiness. As Geletex's international operations grow, Jed is becoming increasingly uncomfortable with what appear to be double standards for the company's U.S. operations and its operations in other countries. Jed, who has been traveling to each of the Geletex international offices, has found the following situations, which since have been causing him sleepless nights:
In Lima, Peru, Jed reviewed financial records and discovered that the commissions expense for the branch was unusually high. Geletex pays its salespeople commissions for each commercial customer they recruit for cellular or long-distance services. Jed knows from experience that some companies pay unusually high sales commissions to disguise the fact the sales personnel are paying kickbacks in exchange for contracts. In the U.S., such payments would be commercial bribery and a clear violation of Geletex's code of ethics. When Jed confronted the Lima district manager and questioned him about the high commissions, he responded, "Look, things are different here. We've got a job to do. If the company wants results, we've got to get things moving any way we can."
In Stockholm, Sweden, Jed noted a number of college age student employees who seemed to have little work to do. Again, Jed questioned the district manager, who responded, "Sure, Magnus is the son of a telecommunications regulator. Caryl is the daughter of a judge who handles regulatory appeals in utilities. Andre is a nephew of the head of the governing party. They're bright kids, and the contacts don't hurt us. In the Scandinavian culture, giving jobs to children is part of doing business."
In Mumbai (Bombay), India, Jed noted that many different payments had been made to both the Indian government and government officials. When Jed voiced his concern, the district manager responded, "I can explain every payment. On this one, we needed the utilities [water and electricity] for our offices turned on. We could have waited our turn and had no services for ninety days, or we could pay to get moved to the top of the list and have our utilities turned on within 48 hours. On the check for licensing, again, we could have waited six months to get licensed or pay to expedite it and be licensed."
Jed is an expert on the Foreign Corrupt Practices Act (FCPA). The act permits "facilitation" or "grease" payments, but prohibits bribes. Facilitation opens doors or expedites processes; it does not purport to influence outcomes. Jed is unsure about Geletex's international operations and compliance with the law.
What should Jed do ? Is Facilitation ethical? Is bribery unethical? Can there ever be a clear answer? What would you do if you were in similar situation?
What should Jed do ? Is Facilitation ethical? Is bribery unethical? Can there ever be a clear answer? What would you do if you were in similar situation?
Word Limit: 100-150 words.
Source: http://web1.calbaptist.edu/dskubik/bus_case.htm
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ReplyDeleteEthical & unethical, both are matter of perspective. There are two aspects to facilitation, first from perspective of Geletex employees in host country, may be they have too much pressure from top management to achieve results in fierce competitive international market therefore they don’t see any other way around to this established practice in host country. And from perspective of people on the other end of facilitation, maybe they see it as a friendly gesture or token of appreciation in their culture. Whatever the reasons are or whatever Jed thinks he should understand the thin line between facilitation and bribing based on their legality. This depends on the legal structure in country, some countries have legal distinction between facilitation and bribe and some don’t. In US, facilitation payments are one of the few exceptions from anti-bribery prohibitions of the law. So if I were Jed, I would let things happen ‘smoothly’ if facilitation is accepted & permitted legally in host country because in the end it is a result oriented approach and probably competitors are as well doing the same. But if it legally prohibited then regardless whether this practice is culturally accepted or not, I would order employees to stop this practice from their end.
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ReplyDeleteI think there is a very fine line between facilitation and bribery. Facilitation is a case of making things easy via a facilitator so that they become successful. Bribery would come down to act of giving money or gifts that alters the behaviour of the individual. The thing which demarcates one from other is the intention with which its given or maybe the amount of money involved.
A 100 rupees given to a peon, to get the work or some sign done quickly in a court maybe facilitation, but the same 100 rupees given to a policeman to not give a challan ticket can be considered a bribe.
If it doesn't involve other person
compromising his ethical role or duty accompanied with his job, it can be called facilitation otherwise bribery.
Sadly in a country like India, things don't work if you go follow the righteous path religiously. There will be a lot of bottlenecks in the way. So to flout those, there came up a concept of jugaad or jeck or approach, whatever name you may.
According to me jugaad/ facilitation can be considered somewhat ethical but bribery sure is not.
While in some cases one man's facilitation could be other man's bribe. So there isn't really any ethical monitor to fine tune the both.
They say 'When in Rome, do as the Romans do.' If other people in Mumbai or Scandinavia are doing so, and its permitted, then why not ?? If I were Jed, I would have taken the easy way to get my work done or help speed it up, if it did not involve hurting someone like in a life threatening way or violate the legislation of the country.
The issue here needs a solution that is more practical than a one that sounds better in notes !!!
ReplyDeletefacilitation payments and bribery are related and there exists a thin mark to differentiate them and this mark needs to be clearly defined ...and this is exactly what i would do if i were at jed's place !!
the company should clearly define the options which fall under the scope of facilitation payments and put a clear red flag for corruption .
the scope for facilitation has to kept in mind in today's scenario and are quite common in many countries ,however the fact they are common does not mean they are justified...rather these represent a step towards a culture of corruption in society but from business point we have to move accordingly and moreover making small facilitating payments would not jeopardize company's name in a country where grand corruption is rampant!!!
Facilitation and bribery have unfortunately become the most common business practices in today’s business environment. There exists a very thin demarcation between these two concepts, that too on the grounds of legality. While bribery is totally unethical and illegal in a business, facilitation payments leverage the advantage of being exempted from the anti-corruption laws in some countries. But both of these practices do not qualify on the grounds of ethicality, though culturally acceptable in some countries.
ReplyDeleteAlso while going global with its operations, a company must adhere to the laws of not just the home country but the foreign country as well. So even if the laws in the home country permits such practices as facilitation payments, but are prohibited in the foreign country, then such practices should be curbed there and then.
If I would have been in Jed’s shoes, I would have considered the laws of the concerned countries and acted in the most ethical and legally accepted manner.
According to the FCPA Act, facilitation is ethical and common in many cases. But influencing someone to an extent that it influences the decisions then it is considered as bribery and is unethical.
ReplyDeleteIn this case some sites are having such trade practices that needs to be answered if ethical or not. Like to increase your business it is necessary to reward your employees rightfully but if that commission is used to bribe your customers it is unethical. This will cost company in terms of their goodwill, which is the case of Peru. In this case Jed should warn its employees and take action if they still act wrongly.
In Sweden wards of officials are given jobs. If recruited people are competitive enough then it is fine to keep them on board.
In Indian case, yes it is true that work will be done swiftly if you pay to government and officials. But there are laws if someone unethically restricts you from doing business, and company can go to court against such cases and there is no need to pay bribe.
If the company has some rules and regulations designed then there will always be a clear answer.
If I would have been in such situations I would have taken actions which are legally and ethically correct as stated in the above paragraphs.
Being an expert of FCPA, its Jed duty to talk about the matter openly with his employs and higher authorities of the company. And make them understand the difference between bribery and facilitation payments. Even the difference is not too wide but he should tell them if the money is used for speeding the process its good but not when we are using it to fight with competitors in market to alter results, which is unethical.
ReplyDeleteAnd when i put myself in jed place and see the situation, i feel that In today’s scenario one cannot avoid the use of facilitation to get there work done and this not even can harm company image but what could harm ,is a case of bribery so a company has to take decisions considering the rules and laws regarding a particular country
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ReplyDeleteBribery is something when you offer or seek to, a gift to have an influence on your or others business outcome. Facilitation is something that you offer to speed up the process. But the two terms are often confused with each other. If we talk about the ethical issues what I feel is that, any thing which is offered or intended to be offered either to speed up the process or to get things done is unethical. But still it depends on the culture you live in, as we know that lobbying is illegal in India but it still happens and is a legal procedure in USA. So it all varies form nation to nation, culture to culture.
ReplyDeleteFacilitation payments are a fact of life in global business. Nobody likes them, and no one wants to pay a bribe disguised as a facilitation payment. After all, we have facilitation payments domestically in india also. If you want a passport, you pay a different fees for normal and comparatively more for Tatkaal and get your passport in half the usual time. That's a facilitation payment, pure and simple. Other countries have all sorts of facilitation payments as well, say, to get a visa processed quickly or to clear goods through customs rather than let them rot on the docks. Urgent needs happen in business, and facilitation payments get you through them. That's life.
ReplyDeleteBut when the money is demanded by a person, to do some job duty he would normally perform anyway, is not legal according to me. It is his job to do it, but in order to get our work done quickly they demand extra for that and this thing should actually stop to curb corruption there and then. But the law also varies for different countries , for some it is bribe but for other countries it is not. If I would have been in Jed’s place, I would have gone by the norms of that particular country but not according to what are the norms in my own country. Sometimes, it also depends on the situation. As an exception, Brazil adopted its own tough law that does ban facilitation payments, but considering that the nation was convulsed with riots about bad governance at the time, lawmakers were ready to approve the strictest measure they could. So, law varies for different countries, it is on you how you adapt them and turn them in your favour legally.
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ReplyDeleteFacilitation and Bribery are two terms that describe the functioning of any organisation , whether the organisation is private, govt, or joint venture. Because in today's world it is very difficult to demarcate between what is facilitation and what is bribery, as bribery can also be there in any form anoother from monetary one. And to some extent facilitation can be allowed or tolerated as some things cannot be done in another way but this thing does not hold good for bribery at all. And being a high level manager , one should learn how the things work as different things change for company as political culture, economical culture , social culture and various other factors that affect the company changes. Thus in a nation like India , bribery is a need to exist in market along the required facilitation , and thus one should learn how to make place in market ..
ReplyDeleteethical or unethical are the things of the past.now nothing is wrong as far as the job is done in a complete manner.. when we are not left with any other alternative but to give bribe or forget what we are upto...so what they have done is something which needs to be practice by heart if we want our work to be completed.
ReplyDeleteand ofcourse the laws are different in each country as lobbying is illegal at some places and is illegal at others..
so now it is just that your work your self is important and we do every wrong and right to for us...
let suppose if a person is in between of his business plan implementation and the higher authorities are not signing or allowing so what are the options that the person is left with,that is either the bribe or Facilitation ..in the end work is important , we have to get it done no matter what we have to do for that.
If we think as a global perspective, one should have all the cultural insights of various countries in which the company works. countries have different ways of doing things, and completing their work, so as followed by industries.
ReplyDeleteIn some countries even giving money or gifts for your work to be done is considered as crime, and you can't even imagine to offer some money or so called facilitation to be escaped by police. whereas in some countries ironically, it is a part of their culture. If you want to escape from a lengthy legal process, you just have to offer some money to officials and your work will be done.
As a global manager I have to think from all the perspectives so that keeping the ethics in company as well as getting the results from all the subsidiaries in various countries. If I were Jed, I would have stopped the bad things happening in my company like bribes that leads to corruption and can ruin ethical standards of my company. At the same time I would have allowed the top managers of subsidiaries to handle the things according to their culture but within the limits.
Every company and even every employee of a company have their different ways of getting a work done. And this working style partly depends on the external environment stimulus and partly on individual beliefs and perspective. If in some cultures its evident that things dont work without such facilitation then one cannot put work on back burner, ultimately the way of working has to be molded to repond to the external environment if the company wants to sustain in long run. Adaption to changing scenarios is a must. In this particular case Mr. Jed seems to be a learned person so he should perform a detailed analysis of the situations he is facing and take a call on wether he is okay with such facilitations or not. He needs to know where to draw boundaries and take into consideration his ethical beliefs as well as companys long run welfare. A balance difficult to strike but imperative to handle the situation.
ReplyDeleteIn my point of view, facilitation and bribery both are unethical in their respective terms.
ReplyDeleteFor an example, a student burning midnight oil and preparing very hard for exams gets average marks and other student on the name of setting/jugad with the administration, get to pass the exams with brilliant marks.
This is only one instance; there are hundreds and thousands of instances in our everyday lives where we all come across these situations and avoid in the name of ‘chalta hai’ attitude.
Now if i were in place of jed, and being a expert on foreign corrupt practices act , would lay proper guidelines for all my employees across various different countries and would make sure that adopting a host’s country culture to do business in their country is acceptable but breaking the protocols which the company posses is certainly not acceptable. Yes it will take time to proceed further, but when you are truthful to yourself then eventually if not immediately, things will fall into your place.
Facilitation is ethical under some bounds beyond which it turns out to be bribery. The Tatkal Railway ticket we buy in case of urgency is facilitation, on the other hand bribing the Ticket collector to influence his decision is stated as bribery. One might think, one way or the other extra money is being spent; in one case money taken is recorded in financial records of service provider, in other it does not.
ReplyDeleteThere is clear definition stated by FCPA Act that, facilitation is ethical and common in many cases. But influencing someone to an extent that it influences the decisions then it is considered as bribery and is unethical.
Facilitation payments can be difficult to distinguish from a bribe, however, because ‘routine nature’ and‘duties or functions’ are not clearly defined, except that they do not include decisions to award new business or to encourage another person to make any such decision.So line should be create and anything which influences decision power should be discouraged.
ReplyDeleteI think Corruption is a complex and difficult issue to combat, both legally and culturally, but it is a fight that must be maintained. It distorts markets and penalizes the honest citizen or corporation so Jed should take this issue to the required level and intimate concerned authorities there are many international anti corruption laws in world which should be globally focused and this is what will make us better by it.
In this world of equality, one perspective is that every person must be treated equally with equal opportunities for everyone.
ReplyDeleteFacilitation in itself is a very broad term. Some may consider facilitation an evolved form of bribery. Unless and until this "facilitation" is depriving any other party of his right and a fair means to anything it is ethical. But according to me, making this clear distinction is in itself a very difficult task. I think any form of facilitation must be banned and there must be a fair chance for all.
There is no clear distinction between facilitation and bribery. Determining whether a payment is a facilitating one may be difficult and depend on the circumstances. In some countries norms are strict, while in other’s they are liberal. This now days has become very common and necessary as ease of doing business varies in different countries that is, while it is easier in Switzerland which is ranked 1, it is very difficult in India which is ranked 142 “according to a recent report by world bank”.
ReplyDeleteIn my opinion until and unless it influences the outcome, it can be done, though it varies from person to person.
Facilitator makes things easy and become successful. Bribery is giving of money or gifts in order to that alter the behaviour of the individual.
ReplyDeleteNo wonder these disparities are varying country to country and culture to culture. In this case, Jed who is the director of the Geletex, inc. Company had found brutal facts related with code of conduct, standards and other organizational issues.Jed starts his journey from Lima, Peru office and found that corruption is at peak and sales persons are earning high commission. Unfortunately, bribery is violating his company policies. Employment is not done on the basis of merit, big people and government officials are preferred and selected only. They were hiring to their relatives and politicians nephews.When fed visited at Bombay office, he has found bribery hits the highest point. At Bombay office, he identify that, additional payment is an important element to do work faster.
But fundamental morality is an important element for the business dealings. Different cultures have different morals. Ethical relativism is very important; they create discrimination between right and wrong. Different principals are being followed to comply with the ethical and cultural practices. Cultural standards are being formulated by the universe.
Business values are evaluated by market practices; it is seemed beyond the fact and situations. What is good and what is bad, is decided by the moral values. Everyone is bound with the universal ethics. Here is no standard mention; just they are given for all. For future growth, it is very important to deal with truth. Many moral norms are given to us by our society; we have to follow then at any cost.
Geletex Inc. is the multinational firm; huge number of human resource is working in it. Human resources are the blood of an organization, if it is recruited properly at the right time than many problems can be solves before it’s arise. Moreover, Geletex Inc should protect their employee’s rights. It is significant to retain loyal employee. Take care of personal human rights and follow moral ethics properly by providing healthy and safe working environment.
It can not be clearly said that facilitation is ethical or bribery is unethical, it depends upon culture of that country and sometimes situations.
Well, my action under similar condition could have been according to legal rules and norms and culture of that country but within the limits of law and order of the country.
circumstances make things done as bribes and facilitation. There is very thin line between them,and it depends country to country. A particular act done may be a facilitation in which no one is harmed but that same act may be as bribe in some other country.
ReplyDeleteBoth facilitation and bribe are not good as because of them,people don't get fair chance of gaining things. A small crime lead to big crimes and treat unequally to others is itself a crime. If we are getting something through wrong means then obviously others will take something through wrong way.
If i were at jed position then i would had held the meeting with all high executives and bought the whole scenario in front of them and ask their suggestion and along with that i would had kept my view point and abolished all such activities through my company.
Every country has a culture that dominates it and culture is learned, passed and practiced knowingly or unknowingly. Now, if a country wishes to expand globally and wants its business to flourish it should try to adapt the practices of that particular nation. Self referencing criteria can prove fatal for a country.
ReplyDeleteZed, therefore in my opinion should continue to stick with whatever keeps the company moving, and iI would have done the same. Having said that, there is one thing that Zed should bear in mind and that is to not fall into anything that might be categorized as criminal. Apart from an illegal act whatever it takes to keep the show going is fine.
Every country has a culture that dominates it and culture is learned, passed and practiced knowingly or unknowingly. Now, if a country wishes to expand globally and wants its business to flourish it should try to adapt the practices of that particular nation. Self referencing criteria can prove fatal for a country.
ReplyDeleteZed, therefore in my opinion should continue to stick with whatever keeps the company moving, and iI would have done the same. Having said that, there is one thing that Zed should bear in mind and that is to not fall into anything that might be categorized as criminal. Apart from an illegal act whatever it takes to keep the show going is fine.
In my opinion bribery is unethical but facilitation is subjective. It can be ethical or unethical depending upon the situation. A clear answer is not possible in all situations but it is possible in specific situation. Also different countries have different rules and regulations. So, what is ethical in one might not be ethical in other.
ReplyDeleteI think, if facilitation doesn’t harm anyone, it’s accepted. If it harms or hurts someone it should not be done.
If I were Jed, I would have dealt with people from different country differently, as required in their country, to facilitate my work. I think a mid-way is always possible.
Facilitation is sometimes good or sometimes bad according to situation. Although we cannot comment that either one of them is ethical or not.moreover we can also say that it all depends according to culture of a particular country. In country like India its bribery is considered to be a legalized form of doing work.One needs to adapt accordingly in order to survive in the particular environment.
ReplyDeleteI will definitely present the situation among the high executives and get the suggestions from them and will find a way out of this.
At a broader level, paying small bribes feeds a climate of corruption, which creates an unstable operating environment for companies. It destroys trust in government and public administration, undermines the rule
ReplyDeleteof law, damages human rights and distorts business transactions. Small bribes are not confined to demands
made to companies, as there are no boundaries for officials and others who demand bribes. The effects in
countries with high levels of corruption can be widespread. In such circumstances, businesses and citizens
may face daily demands for payments for essential transactions, increasing the costs of living to citizens and
adding costs and uncertainties to business.
if i was Jed i would have suggested my employees to follow the work culture of host countries with respective rules and regulation.
The situation in which either of the practices would be considered ethical is subjective. Each company in every country would have a different way of getting work done dependent on it's environment, culture, legal rules, political stance and to some extent an individual's belief system.
ReplyDeleteJed, on behalf of Geletex would have to allow a little flexibility in it's global operations. However, he may choose propose to introduce a clause in the company's international code of conduct outlining, prohibiting and severely punishing corruptive practices. Such an action may draw the line between facilitation and corruption and hinder the spread of corruption as well.
As per my view about facilitating payment is a certain type of payment to foreign officials which is not considered to be bribery according to legislations of some states as well as in the international anti-bribery conventions.
ReplyDeleteFor legal purposes, it is distinguished from bribery, however the distinction is often blurred.
Determining whether a payment is a facilitating one may be difficult and depend on the circumstances. The value of the payment is not immediately relevant, however the greater the value, the higher are chances that it will be a red flag for law enforcement.
Small unofficial payments are customary and even legal in some countries, nevertheless they may present a risk of liability according to the laws of the host country.
Converse has, as a point of pride, sponsored many events and concerts without putting their name on it anywhere. Of course, they will brag about having done so after the fact, effectively putting their name on it and gaining notoriety for it.
then they started a clothing line at Target with their name all over it. I don't know why this is different from doing the same thing with shoes, but it is. It just is.
The most important thing that you need to answer is "am I ready to take a pay cut " when these startups say me -- Ok you are a fresher in this field so would not be paid like a 7yr old IT person. If the answer to that question is No you may be wasting your time unless you have a tremendous luck by your side...
Facilitation Vs Bribery-
ReplyDeleteI don't really see much of a difference between the two, it is like choosing between killing someone with a knife or killing someone with poison. At the end of the day, you have committed a murder, regardless of the method used. Similarly, whether you use Facilitation or Bribery, you are using unfair-trade practices and you are literally 'killing' the competition.
Ethical vs Unethical-
All of us B-schoolers are taught how we should always follow ethical business practices. However, the reality is contrasting. It takes less than Rs 20 in manufacturing and packaging of a can of RedBull. Whereas it retails at price of around Rs 100. Now if this same company spends millions of $ in the name of Corporate Social Responsibility would you consider this company an ethical one?
The point that I'm trying to make is simple, the objective of every corporate is to make profits and being ethical is the last thing on their mind, they follow the policy of 'Ends Justify the Mean' for the same. All these terms like 'Ethical Practices' and "Corporate-Social Responsibility" are nothing more than a Veil for these MNCs.
If I were Jed, I would not change a thing, I would just convene a meeting with the Legal team of the Company and ask them to make sure that we do not break any local laws in the countries we operate.
There is no doubt about Jed's credibility and knowledge, but in the process of his company going global he has to update him while increasing boundary of legal parameters. As every rule doesn't fit to every country because of plethora of reasons.Hence Jed has to support facilitation while bribery could be avoided.
ReplyDeleteAdaption to changing scenarios is a must. In this particular case Mr. Jed seems to be a learned person so he should perform a detailed analysis of the situations he is facing and take a call on wether he is okay with such facilitations or not. He needs to know where to draw boundaries and take into consideration his ethical beliefs as well as companys long run welfare. A balance difficult to strike but imperative to handle the situation.
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