Bribery (With Foreign Characteristics)

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There is a lot of talk of bribery and corruption in China (and another former bank head just got arrested – more on this below), but foreign firms are not immune – as Dan Harris pointed out recently in a post on China Law Blog about Lucent.

Now IBM is in the frame. According to Bloomberg:

    “International Business Machines Corp., the world’s biggest computer-services company, paid $225,000 to a sales agent who helped bribe the former chairman of the country’s fourth-biggest bank, a Beijing court verdict said.

    IBM was identified by Beijing No. 1 Intermediate Court as one of three companies introduced by the agent, Zou Jianhua, to former China Construction Bank Corp. Chairman Zhang Enzhao. The court determined Zou paid 2.68 million yuan ($340,000) in bribes to the banker, who was sentenced to 15 years in jail on Nov. 2.

Stories of bribes, gifts and all the rest are common enough, but the spate of anti-corruption arrests seems to be speeding up. While some gifts may be borderline in terms of corruption, I think most people would agree that when Zhang took hold of the following items, the line was no longer visible:

    • 19 bribes valued at 4.19 million yuan ($532,700)

    • RMB2.68 million in gifts from Zhou, including:

    • A Shanghai apartment (US$334,000)

    • A pair of Tiffany watches (of undefined cost, but not cheap!)

So much for “gifts”. What about “service fees”? – as the IBM payments were defined by the company. Again, I think that common sense prevails and that it is very unlikely any big company would sign off large payments without knowing what they could expect in return. I know, because I know what processes consultants have to go through to get contracts.

It seems that keeping your hands clean may not be enough to save you from the law (in China or at home) if your intent is dirty – and obvious. But giving bribes is not such a good idea anyway, and can be bad for business in the long run.

While bribes will continue to be given in China, and elsewhere, the market has developed a lot in the past 10 years, and is mostly more transparent and professional. Anyway, the true “guanxi merchant” would never have to part with cash, apartments or Tiffany watches (OK, maybe a watch or two between friends) in the first place….the debt would be much more subtle (perhaps political), and without a sell-by date.

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One Response to “Bribery (With Foreign Characteristics)”

  1. ‘You have well profited by your opportunities, Sir Christopher,’ said - Amineka Says:

    […] ovince-wide online study of nearly 600 adult British Columbia and Alberta residents… Bribery (With Foreign Characteristics) There is a lot of talk of bribery and corruption in China […]

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