By Darren Foreman from Flickr.com

Legend has it that when Darius was king of Persia, he called forth several Greeks who were visiting his court.  When formalities had been set aside, he asked them an unusual question:  What would it take for them to eat the bodies of their dead fathers?  The Greeks were disgusted.  They responded to Darius that no amount of money, in fact, no earthly riches at all, could make them eat their father’s bodies.  Fair enough, Darius responded.  He then called forth some Indians from the Callatiae tribe, who did indeed eat their deceased parents, and asked them what it would take for them to instead burn their ancestors’ bodies (as was the custom of the Greeks).  The Callatiae were disgusted.  They said that under no circumstances would they ever consider performing such a heinous act.

Presumably, the point that Darius was trying to make is that rituals and beliefs are relative.  Different people believe different things, and much of our moral constitution is a product of our environment.  Thus what is repulsive to one society may be perfectly acceptable to another.  Or as Gordon Marino says in the introduction to the book Ethics, The Essential Writings:  Custom is King.

Today the problem of cultural relativism is as prevalent as ever.  We see it manifested in wars, political disagreements, religious clashes and, increasingly, business.  In the United States, the Justice Department is cracking down on those who pay corporate bribes to foreign government officials, a violation of the Foreign Corrupt Practices Act.  On the surface, this sounds like a good thing.  After all, we want our businesses to act in an ethical manner.  The problem, however, is that in many of these countries, bribery is the norm.  As such, companies that do not engage in “paying it forward,” can find themselves on the losing end in the competition for potentially huge paydays.  Thus while the Justice Department has been gaining some major victories, they may be coming at the expense of American companies and their shareholders.

Arguments For and Against A Crackdown on Corporate Bribery

Those who support the Justice Department’s crackdown do so on two grounds: morality and the law.  In terms of the first, people argue that paying a bribe is dishonest, and therefore immoral.  Following this logic, they conclude that those who pay a corporate bribe are acting unethically.

In terms of the second argument, supporters of the recent government crackdown say that it is a legal issue.  The Foreign Corrupt Practices act is a law, and as such companies that ignore it are lawbreakers.  For these people, there is no grey area, or room for skirting the rules:  cultural relativism is a non-issue.

The problem with arguing the first ground is that it ignores the differences in cultural norms.  While paying a bribe is considered very dishonest in America, it is considered a standard way of life in many countries.  This isn’t to say that regular citizens enjoy bribery, or that it doesn’t hurt them, but rather they just don’t consider it a big deal.  This begs the question:  How do you deal with something that is unethical in America, but morally acceptable somewhere else?

The problem with arguing the second ground is that the law, while supreme, is derived from ethical principles.  The law is established in response to a need for justice; a need for elucidating what is right and wrong.  Therefore while it may be an excellent regulating mechanism in our country, it does not necessarily carry over to other countries.  Of course, American companies are still subject to the law of the land.  The previous point is not made to advocate that any U.S. Company should break the law – they should not – but simply to point out the problems with using the law as the final say in the case against corporate bribery.

The Challenge Ahead

The World Bank estimates that around $1 trillion in bribes is paid annually to government officials.  This number has been growing over the last decade, which suggests that bribery is becoming a global endemic.  As graft continues to rise in popularity, corporations and their employees will increasingly find themselves in difficult situations.  In 2003, for example, there were no business people charged with corporate bribery under the Foreign Corrupt Practices Act, while since 2009 there have been 67 people charged.  According to the New York Times, there are currently at least 78 companies being investigated for FCPA violations.

The problem with the current Justice Department crackdown is that it hurts the ability of some companies to be competitive.  This can lead to less than stellar economic performance, which in turn can affect their stock price, and the livelihoods of their shareholders.  Thus while the Justice Department may be acting appropriately, and in legal compliance, they might also be propagating an unjust law.

Again, none of this is to say that bribery is desirable.  In an ideal world, bribery would not exist.  People would perform their jobs out of duty to their country – a sense of virtue – and companies would operate in a morally superb way.  In reality, however, things are far from perfect.  The challenge moving forward will be for the Justice Department to help U.S. Companies stay competitive, while also finding a way to account for varying cultural values.  How this plays out will have huge implications for all parties involved.

Business Ethics Review

http://www.nytimes.com/2012/03/11/business/corporate-bribery-war-has-hits-and-a-few-misses.html?pagewanted=all