Bribery, Corruption, or just playing the game??

[guestgulkan]

Every now and again we hear some scandal involving some company and the passing of "inducements" to seal some iffy contract.

I remember my time as a project manager.
Contracts including laptops for "remote diagnostics and monitoring" knowing full well "remote" probably means all the way from the buyers living room.
Or "free training" - who comes on these "freebie" training sessions but the bosses, people who will be nowhere near the equipment in real life!

Bribery? Corruption? or just building good customer relations??

 

[PCLine]

In my humble opinion, what you are talking about is a crime.

Of course there are many people out there that will see it differently, that is why these practices continue to thrive.

Essentially the excuses for these inducements revolve around issues such as "everyone does it", "it's not harming anyone", "it's accepted business practice" etc. etc. These are all lame excuses to justify this form of "corporate crime".

This is not a "victimless" crime as so many people would have you believe. Market forces dictate "supply and demand", "survival of the fittest" but who is paying the price. The bigger the company the larger the inducements they can offer so the more likely they will "win" a contract. Firms that cannot compete in this "dark realm" will inevitably cut back and/or go under. The result is less competition which moves the market closer to a monopoly and the closer you get to a monopoly the greater the danger of inflated prices.

In the end, even though it appears that there is no victim there is. It's "all of us" who have to foot the bill through paying higher prices for a company's "inducement budget". It's "all of us" who have to foot the bill through paying higher prices when "market cometition" is stifled and allows price fixing.

But those that are the "winners" are the people with the power. They decide the rules that's why it won't change. Of course this type of "crime" is veiled in "open secrecy". We all know it goes on but how do you prove it? Why would you bother to prove it? Governmental and Non Governmental organisations are not interested in punishing "corporate criminals", they are only interested in securing compliance with "standards" of behaviour or practice.

So to answer your question, yes it is bribery, yes it is corruption and yes it is building good customer relations.

Regards.

 

[sleipnir214]

I'm going to vote no on bribery, maybe on corruption, and yes on customer relations.

I suppose technically that I can only bribe you if I expect that what I give you will change your behavior. If I give you something with the expectation of only changing your perceptions of me to a more favorable state, then I have given you a gratuity.

But some formal ethics systems, for example for those working for government agencies, prohibit both bribery and gratuities. So long as the customer in question does not fall under that category, you're okay.

Likewise, if the value of the gratuities don't negatively effect the profitability of your project, you're also okay. It's neither reasonable nor ethical to give a gratuity of a $3000 laptop when the total expected profit on the project, should the client award you the contract, is $1000.

But I don't know what this has to do with ethics in information technology -- this has been going on in every industry I know of for at least 5000 years. In large parts of the world, you can't get anything done without spreading around a little cumshaw, so I expect perceptions on the practice are cultural.

But if you do think it's bribery, make sure that you never accept any of the goodies given away by vendors at trade shows. Never, ever purchase a "Not for Resale" copy of software. And never let a potential vendor pick up the tab at lunch.
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[PCLine]

sleipnir214,

Your definition of gratuity is wrong.

A BRIBE is offered to alter someone's perception of you to be more favourable.

A GRATUITY is given as a reward for services rendered - I would add with "no strings attached"!.

The points of emphasis are that a bribe is given before or during transactions. A gratuity is given after the deal has been completed.

Still, giving a gratuity, if it is not out of your personal funds may be seen a misappropriation. Please remember that the amount is not significant (theft is theft): All the remains to be considered is who is stealing what from whom, lol. Is it business from others company's that is being stolen by these actions or is it money being stolen from the consumer through higher pricing etc. probably both.

By the way, just because something may be viewed as part of a "culture" it doesn't mean that it is a legitimate action. Equally, how you or others define or see cultural activities may differ. For example, stealing, robbery, burgalry are all daily activities in western modern societies, that may (or may not) make them "cultural" but no one would suggest for a moment that it is behaviour that should either be encouraged, rewarded or unpunished. Well, some people might, lol.

Regards.

 

[Craig0201]

Neither bribery or corruption on behalf of the supplier.

How are they to know what the user would do with a laptop. And they don't choose who goes on the training.

And on behalf of the purchaser, it is unethical if the laptop was not declared as the companies property. As for the training, this is poor management.

As long as the contents are stated in the contract, this is not unethical or bribery.

Craig

 

[sleipnir214]

PCLine:

The Merriam-Webster online dictionary defines a gratuity as "something given voluntarily or beyond obligation usually for some service". There is nothing anywhere that says that the gratuity must be paid after a service is rendered. There is nothing in there that requires that the gift be given only for some service -- merely that it usually is. Their definition does imply agreement with your assertion, that there must be no strings attached.

Giving the laptop to the client has no strings attached. The client is in no way obligated to give the company the contract, and the company's making the gift of the laptop is not predicated on their winning the contract. All the company is doing is attempting to buy goodwill.
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[guestgulkan]

But none the less,when all is said and done, there is a certain expectation on the buyer.
It is expected that the inducements will cause him/her to favour your company above the competition.

If the laptop cost $2000 and the total contract value is $1,000,000 it represents a mere 0.2% of TCV.

 

[sleipnir214]

Exactly.

A bribe is to change a person's behavior in your favor. A gratuity is to change a person's attitude in your favor.

If this were a bribe, then the understanding would be that the customer must give the contract to your company -- a change in behavior (well, a potential change in behavior. The client might have decided already to choose your company for the contract. Wouldn't that be ironic?).

This gratuity is saying, "Look how generous we are! This means we're nice people!". If your company's bid is way over everyone else's, you're not going to get the contract, regardless of how generous you are. Want the best answers? Ask the best questions:

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[sleipnir214]

Also, the term "bribe" is usually only applies to an inducement given to a person in a position of trust -- a policitian, a cop, a judge, your boss.
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[GDGarth]

Regardless of whether you call it a bribe or gratuity, if someone works for me and accepts a laptop from a supplier, they're history.

Gifts of that value create the perception (and very likely the reality) of bribery. I want suppliers to provide value in goods and services, not presents to employees.

 

[sleipnir214]

So what you're saying is that it's okay for the company to give the laptop to your company, but not okay for the company to give the laptop to one of your employees, right?

In such a case, a laptop would be value in goods and services provided by the supplier. Want the best answers? Ask the best questions:

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TANSTAAFL!

 

[PCLine]

sleipnir214,
You are missing the point here.

Your reading of the definition is that you would PAY MORE than the asking price for a service YOU HAVEN'T HAD YET. Where I come from we don't call that a gratuity we call it something else.

Also, your reading of the situation and the definition you offer of gratuity is that the roles have been reversed. We both agree that a gratuity is given "for some service", yet it is the supplier who is supplying the service who is giving the gratuity. Wouldn't the world be a nicer place if the parking attendant gave you money for using his car park

Also, the distinction you make between altering "behavior" and "attitude" is unclear as you leave unanswered the purpose (or effect) of altering attitudes or behaviours.

Craig0201 - Your statement about it not being bribery or unethical if it is in the contract makes a big leap by totally ignoring or redefining ethics.

Ethically speaking all suppliers have equal opportunity within the market place. There goods should be judged on their own merit - that is the ethical side of business. The unethical side is when inducements (to use a nicer word) are used to get a foothold in a company.

As I outlined above - when inducements hold sway over the market it is the consumer who suffers in the long run as the biggest wallet will gain the contracts.

If you accept bribes now from these companies how do you think they are going to treat you once the competition has gone under?

sleipnir214 - I suggest you invest in a better dictionary than the one you have access to - I wouldn't want you to get arrested for offering a policeman a gratuity

Regards.

 

[Craig0201]

"Every now and again we hear some scandal involving some company and the passing of "inducements" to seal some iffy contract."

My interpretation of this was that were part of the contract. Hence my reply that the supplier can offer whatever they wish. If we are talking about undisclosed offers, this is a different matter.

Craig

 

[CajunCenturion]

PCLine - Although I can appreciate the difference in interpretation, I think you're taking sleipnir214's points out of context.

The gratuity is not a means to pay more for something you've haven't received. Rather, it is a separate investment in the other party, so that the party will over time, return the favor in future dealings. It is entirely voluntary, and not necessarily tied to any specific action or transaction, but rather, one that fosters an improvement in relations that last over time. No strings attached, and hence, it is addressed as maniuplating attitudes. The parking attendant who pays you for parking there is doing so in hopes that you'll choose to park there again, knowing full well, and not expecting, that you'll receive the gratuity in the future. Companies do this quite regularly, and they are called rebates!

I think its also possible that we're confusing the kickback with the gratuity, when in fact, kickback is more closely related to a bribe. I think PCLine that you thinking more in terms of a kickback (ie role reversal) whereas sleipnir214 is talking more about a gratuities, although not distinguishing between gratiuities and rebates.

The bribe, on the other hand, is usually tied to a specific transaction. The person offering the bribe does so to directly and immmediately influence the actions and decisions of person accepting the bribe. Bribes usually do have strings attached, specifically as to how the impending tranaction will unfold. Often, the bribe is used to control and direct that transaction.

I don't think that either gratuities nor bribes have specific direction associated with them, unless we add into the mix both rebates and kickbacks. When using all four terms, we can perhaps agree to direction.

Gratuity - from consumer to supplier
Rebate - from supplier to consumer

Bribe - from consumer to supplier
Kickback - from supplier to consumer

What makes the Gratuity and Rebate ethical is that they are voluntary, and does not have any direct affect on the outcome of any particular transaction, but rather are attempts to influence the attitudes of the two parties towards each other with the return being realized in future transactions.

Bribe and Kickback are unethical because they are means to directly control the outcome of a specific transaction. An outcome that would not otherwise happen without the bribe or kickpack in play. Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[Craig0201]

"Bribe and Kickback are unethical because they are means to directly control the outcome of a specific transaction."

Working in a professional purchasing department, I can comment on this greatly. A buyer will negotiate with a supplier to reduce the price, increase the volume, increase the scope, obtain free training, etc. The supplier can offer this to make the deal. This is not unethical. This is negotiation.

What is unethical is HIDING the additional goods by both parties. If I obtain a laptop as part of a contract and do not declare that as part of the contract to my employer, that is unethical as is offering goods 'under the table'.

Adding extras to contracts is not unethical and is a sign of good negotiation on the part of the buyer.

Craig

 

[sleipnir214]

PCLine:
I give cops gratuities all the time. The last time, as I recall, was late February of this year.

I was at a Mardi Gras parade on a warm day, and police in my area wear dark-colored uniforms. I had an ice chest containing more bottles of water than I could drink, so I gave one to a cop who was obviously uncomfortable in the heat. We chatted a couple of minutes, then I went on my way.

I had given the cop a gratuity. It was a gift given with no strings attached. It was merely an attempt engender a positive opinion of me in the cop's mind. Sure, the gratuity cost me nearly nothing -- but it is a gratuity nonetheless.

What did I expect to get out of it? Nothing. But suppose a fight had broken out on that parade route right next to me, and I had gotten mixed up in the resultant chaos. Then suppose that the same cop was one of those who waded into the crowd to break things up. He questions me, and I tell him I was not involved, but just a bystander who was enveloped by the donnybrook, but my testimony is rebutted by another witness who says he saw me throw a punch.

If my gratuity positively affected the cop's attitude toward me, he is more likely to believe me than the witness.

Contrast this to my offering the cop a bottle of water after the fight, his getting the water contigent on his letting me go. This would be a bribe.

A gratuity attempts to engender positive goodwill. A bribe is a contractual transaction of value for an action.


All:
The line between gratuities and bribes gets blurred when the item is of a sufficiently high value. It is natural that if the item you received is very valuable relative to your personal wealth, you would feel obligated to act in a manner favorable to the potential supplier.

And it is the concept of obligation that differentiates a gratuity from a bribe. Even if the laptop is a gratuity, freely given without definite expectation of a reciprocal action on your part, its value would make you feel that it is a bribe.

No one, I believe, would have any qualms about accepting a plastic pen from a sales reptile. It can be freely accepted without its feeling like you are required to reciprocate. Make that pen a Mont Blanc, and then the situation begins to change. Make it a $2000 laptop, and the situation has changed tremendously. (Unless you're as rich as Bill Gates -- he might just say, "Thanks! Could you put it in that closet with all the other ones?&quot

However, if the laptop is given to the company, the wealth of the company is large enough that the addition of the laptop is not enough to make anyone feel obligated. Want the best answers? Ask the best questions:

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[PCLine]

A gratuity is given as a reward for services received - it is given in gratitude for services received.

Rebates are refunds of monies already paid by yourself and usually apply to people who meet a certain criteria, but essentially gives something back to good customers - BUT a rebate only applies to people who are already using the services.

Negotiation is the "art" of buying or selling your product at the most advantageous price. Even negotiations can enter the realm of the unethical, I am sure I don't need to give you any examples.

A bribe is a payment made to alter some present or future action or outcome in favour of the person paying the bribe. Talking about whether you are altering behaviour or attitudes is totally irrelevant BECAUSE attitudes affect behaviour I don't believe there is anyone who can isolate attitudes and behaviours, they are part and parcel of what drives people.

sleipnir214: Giving water to a policeman would not be seen, generally speaking as a bribe BUT if the altercation you described had taken place and the policeman was likely to believe you AND the other person had seen you give water to the Policeman then there would be questions over the integrity of the officer involved. I don't really think that a bottle of water would bribe a police officer but neither do I think that a police officer would let a bottle of water sway their judgement if they were called to act. In fact you would probably be treated more harshly (not too much) to make sure that no one could say that you were given preferential treatment.

Regards.

 

[sleipnir214]

PCLine:
No definition of "gratuity" I have ever read requires that it be given for services received. Some say "usually", but no definition requires it.

Again, the difference between a gratuity and a bribe is obligation or reciprocation.

My gratuity to the cop is given without any requirement of reciprocation. I don't know at the time, and neither does the cop, that the fight is about to break out. I'm just buying a little good will between myself an a member of the local constabulary -- without obligation, it's not a bribe.

And the inconsequential nature of my gift makes it very difficult for anyone to make a case of bribery. The gift is not sufficient to make even the appearance of obligation.

But if everything else is equal, and the cop has to make a judgement call as to whom to believe, the goodwill I may have engendered with my bottle of water may tip the cop's judgement in my favor.

But even if a gratuity is given for services received (which I do not stipulate), do you think that the wait staff in a restaurant does not keep track of which regular patrons are and are not good tippers? With my tip, it is possible that I can buy goodwill for future visits to that eatery. My tip does not obligate anyone to give me better service next time. But if you were a server in that restaurant and two regular patrons both wanted your attention, and one tips well and the other does not, with all things being equal, which patron will you server first? Want the best answers? Ask the best questions:

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[manarth]

seems we all got a bit sidetracked into the semantics of gratuities and briberies... hows this?

Both cases: Big IT company selling a service

Case 1
ITco: the contract is $100 000 for these services. We'll include a laptop free of charge so you can monitor the service.

Case 2
ITco: the contract is $100 000 for these services. Take some time to check out the quality of our services whilst you're deciding - here's a free laptop to help you check us out.


Similar but different scenarios - I'm not really sure how it stacks up ethically... The main problem (in my view) is the purchasing guy being biased towards the rep offering the freebies.... but as long as the purchasing guy's company know the freebies are there (and they're OK with this) then everything's above board.

As for company giving away the freeby - Case 1 stands up to more scrutiny than Case 2, but the company is probably gaining more than it's losing, so why change? <marc>[ul]help us help![li]please give us feedback on what works / doesn't[/li][li]not sure where to start? click here: faq581-3339[/li][/sup][/ul][/sup]

 

[sleipnir214]

The cases are probably more different than yo think. In Case 2, the laptop is given. In case 1, you don't get the laptop unless ITco gets the contract -- it's not a gratuity but a part of the contract, even if not charged for. It's neither a gratuity nor a bribe.


Try these two pairs of cases:
Set 1
Case 1a
ITco: the contract is $100 000 for these services. We would like to present your company with this new laptop as thanks for considering our bid. If you do not award us the contract, the laptop is still your company's to keep.

Case 1b
ITco: the contract is $100 000 for these services. We would like to present you with this new laptop as thanks for considering our bid. If you do not award us the contract, the laptop is still yours to keep.


Set 2
Case 2a
ITco: the contract is $100 000 for these services. I'll make a deal with you: we'll give your company this laptop if and only if you promise to award us the contract.

Case 2b
ITco: the contract is $100 000 for these services. I'll make a deal with you: we'll give you this laptop if and only if you promise to award us the contract.


In Set 1, Case 1 is an obvious gratuity -- there are no strings attached to the giving of the laptop to the company. Case 2 is still a gratuity, but one of such value, relative to the wealth of the company's representative, that the gift will feel like an obligation to award the contract, even if none is expressed or implied.

In Set 2, both cases are obviously bribes -- by accepting the laptop, the company or the person accepts an obligation to award the contract. Case 2 is is a classic bribery scenario. Case 1 is odd, because the value of the laptop is not that great, compared to the wealth of the company -- it's still a bribe (acceptance requires obligation), but it's such a small bribe that it takes on the appearance of a gratuity. Want the best answers? Ask the best questions:

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