Wednesday, June 20, 2007
the highway scribe "On Bribery"
Back in December, while reading The Economist, the highway scribe ran across the announcement of a $10,000 Essay Contest conducted by the TRACE Institute. TRACE is dedicated to transparency and the elimination of bribery in international, corporate transactions. The essay was to cover the question of, well, bribery and specifically address the four questions in boldfaced print found within the text below. the scribe did not win, although he probably should have. Nonetheless, an "honorable mention" was bestowed upon his work (small consolation) and the essay will appear, at some point, on the organization's Web site along with others mentioned honorably.
Perhaps you will find it interesting.
The Bottom Line and The Commonweal
by the highway scribe
Can Bribes Be Avoided?
“I’m a free citizen,” David Rosen, a former fundraiser for Sen. Hillary Clinton (D-NY), told a badgering federal prosecutor in 2005. “Just because I work on a campaign doesn’t mean somebody can’t loan me a car.”
The car in question was a $90,000 Porsche that had been excluded from Rosen’s accounting of “in-kind” campaign contributions and Assistant U.S. Attorney Allen Zeidenberger wanted to know why it was unworthy of reporting to the Federal Elections Commission.
Rosen responded that the Porsche was accepted, “As a gift from a friend.”
And therein lies the rub; before you can avoid a bribe, it must be recognized as such.
Rosen, by the way, was acquitted.
In “Bribes: An Intellectual History of a Moral Idea,” U.S. Appellate Court Justice John T. Noonan traces the pedigree of what he terms “reciprocity” from the earliest days of Mesopotamia, where the custom of bringing “gifts” to curry official favor was universal.
Centuries later, Popes at the Vatican regularly accepted munera in exchange for the cleansing of souls, and proper munificence toward a Catholic crusade bound for the Holy Land could assure a potentate’s place, and that of his family, in heaven, regardless of their earthly transgressions.
All along there were critics, from Cicero and Justinian in the Roman Empire, to medieval Christians Ysidro of Seville and Caterina of Siena, through Dante, Chaucer and The Bard himself, in the world of letters.
But their critique did not so much affect the universal practice that dare not speak its name, rather developed, brick-by-brick an “anti-bribery” ethic rooted more in personal shame than in concrete criminal retribution.
The term “bribery,” as currently understood, found its first expression in the writings of Hugh Latimer and his 16th century contemporaries.
Bribery was identified by name in the United States Constitution, and the first federal law addressing it was enacted in 1789. That legislation made reception of “any bribe, reward or recompense” for altering a customs entry, a crime.
In it, concern for commercial purity prevails over that of the government kind, which would remain the common pattern, at least in Anglo-American culture, into the mid-20th century. The measure recognized how business becomes a potential source of corruption where the state possesses the power to grant privilege.
Notable, too, is the buttressing of “bribe” with “reward or recompense,” just in case it wasn’t clear what was meant, since it rarely has been.
Wrote Noonan, “Need one catalogue the forbearances, the appointments, the promotions, the kindnesses to siblings and in-laws, the sexual favors paid for or voluntarily given, or the business opportunities afforded, which constitute the common coin of reciprocity as much as cash and which, escaping legal condemnation, are morally indistinguishable as returns to officeholders? The perfect impossibility of making any but arbitrary definitions of what is morally acceptable from what is ‘bribery’ is evident.”
In 1975, payments to whet the interest of foreign governments for planes manufactured by Lockheed Corp., became an international cause célèbre and target of the Senate Banking Committee.
Hearings were presided by Sen. William Proxmire. A Democrat from Wisconsin, Proxmire was well known for “The Golden Fleece Award” he meted out to egregious government boondoggles and something of anti-corruption populist.
“You say these bribes paid off to the best of your knowledge? It was money well spent?” Proxmire prodded his quarry, Lockheed Chairman Daniel Haughton.
“I don’t necessarily call these bribes,” responded Haughton.
“Maybe the customer does not feel that way about it. How do you feel about?” the senator pursued.
“Well,” said Haughton, “I feel under the circumstances that it is a cost of winning the competition.”
Haughton’s dodgy sense of the term’s meaning did not save Lockheed from financial penalty nor prevent passage of the Foreign Corrupt Practices Act of 1977 (FCPA), which made it a crime to soil foreign officials with payments not concomitant with their position.
Can Extortion Be Resisted?
There exists a common and reasoned argument that bribery is not a question of corrupting a foreign official so much as a matter of being forced to corrupt one – of being extorted – although different cultures and epochs have treated briber and bribee with equal or uneven status, depending.
A. Karl Kotchian was instrumental in the distribution of Lockheed’s largesse to the governments of Japan and South Korea, and later wrote a kiss-and-tell account entitled, Lockheed Sales Mission, in which he explained the rationale that kept him bribing:
“I thought of all the effort expended by thousands of Lockheed men and women since the conception in designing and developing the L-1011 Tri-Star; our superhuman effort to avoid bankruptcy because of our own financial difficulties as well as similar difficulties of the engine maker; the successive defeats in both the KSSU and Atlas competitions in the European theater; I thought of the painful final efforts of the last 70 days; and I thought of being told that ‘If you make this payment, you can surely get the order (of as many as 21 planes).’”
The implication in Justice Noonan’s accounting of pre-FCPA corporate practices is that executives felt bribing was not a matter of choice.
On the eve of South Korea’s first democratic election in 1970, Gulf Oil Company’s vice president of government relations was summoned by the incumbent party’s leader, one S.K. Kim, who solicited $10 million for purposes that remain a secret of his own keeping.
Told the request was “preposterous” Kim responded, “I’m not here to debate matters. You are either going to put up the goddamn money or suffer the consequences.”
Did the Gulf official resist? Sure. After all, $10 million is not an inconsiderable hit to the bottom line, especially in 1970 dollars. Did the extortion prevail? Some of the money was paid.
That was nearly 40 years ago, but last December (2006), The Economist noted in, “Bribe Britannia,” that the British government had brought to “sudden end” an investigation into dealings between BAE Systems and Saudi Arabia involving, “the country’s biggest-ever defense contract, the Al-Yamamah deal.”
Specifically, the Serious Fraud Office stopped probing whether the British company had paid bribes to Saudi Arabian officials in exchange for a contract to develop, supply, and train the country’s air force.
The Prime Minister, Tony Blair, hinted the move was meant to protect Saudi officials and relations with that country, “but suspicions linger,” the article inferred, “that an equal motive was protecting thousands of British jobs,” which is to say it takes two to complete a bribe and, once done, there’s corruption aplenty to go around.
Indeed, bribery cuts two ways; demeaning briber and bribee alike, endowing financial benefits upon the taker, while removing their purposeful obstruction to the benefit of the giver, who has much bigger fish to fry.
Once the bulwarks of fairness are breached, notions of good and bad are left to float in the light ether of moral discourse.
The surrealist filmmaker Luis Buñuel was no corporate honcho, but he was subject to the laws of the marketplace and made thirty-two films of the most unorthodox kind because they continually got producers a return on their investment.
A self-proclaimed anarchist, Buñuel was exiled to Mexico after his side lost the Spanish Civil War. Trying to escape one dictator in Francisco Franco, he found little variation in his adopted homeland where he observed the democratically elected president to be nothing short of “omnipotent.”
In his 1983 memoir, My Last Sigh, the director observed that, “The consequences of this enormous power, or ‘democratic dictatorship,’ are alleviated, however, when we add a certain amount of corruption to the system. The mordida, or bribe, is often the key to Mexican life. It’s carried on at all levels and in all places; everyone knows about it and accepts it, since everyone is either a victim or beneficiary.”
Ever attuned to life’s contradictions -- a keystone to his art -- Buñuel refused to make peace with the mordida, noting that, “Without this corruption, of course, the Mexican constitution, which on paper is one of the most enlightened in the world, would make the country the exemplary democracy in Latin America.”
Bribery is not for high-minded moralists, those who grow queasy when things get sleazy. It is for the hard-boiled realist whose acceptance of the practice is accompanied by the shrug and worldly rationalization.
The American muckraking journalist, Lincoln Steffens, traveled early 20th century urban America uncovering corrupt municipal practices and concluding, “That is the way it is done.”
He told a Los Angeles audience, “You cannot build or operate a railway, gas, water, or power company, develop and operate a mine, or get forests and cut timber on a large scale, or run any privileged business, without corrupting or joining in the corruption of the government.”
Eventually, this greatest of moral crusaders either soured or mellowed enough to declare that, “political business corruption is a natural, well-nigh universal process of change.”
James Wilson, a one-time professor of government at Harvard, opined in the early 1970s that moral questions often get in the way of practical issues, “even when the moral question is a relatively small one and the practical matter is very great.”
Americans he suggested, were “puritanical” in their elevation of the minor morality over the greater practicality.
Wilson might have added the qualifier, “sometimes,” to the analysis.
In The Gilded Age, his satirical turn on post-Civil War corruption in Washington D.C., Mark Twain had Colonel Beriah Sellers remark, “And yet when you come to look at it you cannot deny that we would have to go without the services of some of our ablest men, sir, if the country were opposed to, to, bribery. It is a harsh term. I do not like to use it.”
Save for the occasional and crusading journalist or reformer, neither does anybody else who resorts to the practice.
Bribery is mostly the provenance of society’s mid-to-high echelons. A business cannot gain official favor, or much else, from the poor.
Given the rank and station of its practitioners, at least up until the Watergate era, the anti-bribery ethic in Anglo-American culture rarely yielded more than a measure of shame, stained reputation, and expulsion from the halls of power.
Said Colonel Sellers of legislative inquiries into bribery: “They just say ‘Charge not proven.’ It leaves the accused in a kind of shaky condition before the country, it purifies Congress, it satisfies everybody, and it doesn’t seriously hurt anybody.”
Over the first 140 years of American history, neither president, vice president, cabinet member, or federal judge were criminally convicted as bribetakers.
But to borrow from playwright George Bernard Shaw, it is not ours to see things as they are and ask why, but to dream things that never were and ask, “Why not a business world without bribery?”
Do Businessman Try?
“Businessman” is a broad category encompassing just about anyone who plies a trade in the private sector.
“Businessman” applies to the gray-haired (to borrow from C. Wright Mills), “broad-gauged” oil executive, and snake oil salesman (Beriah Sellers’ Infallible Imperial Oriental Optic Liniment and Salvation for Sore Eyes), alike.
As such they “try” different things. Some try to engender well-run and transparent organizations. Costing a contract or two, it nonetheless keeps them from running afoul of the federal government; the maws of which it is tough to extricate a company from once ensnared.
And, if they’re upstanding conscientious sorts, it helps them sleep well at night and look loved ones in the eye with serenity.
Others try to work within the preexisting framework and conform to what Steffens referred to as, “the way things are done.”
All are concerned with the bottom line and the bribe is more often than not considered a cost of doing business, whether it is for Mafia “protection” in the case of a northern New Jersey pizzeria or payments to a South Korean party hack’s campaign slush fund.
They may view the extorting bribee as a despicable creature taking bread from the mouths of babes under their charge, but history demonstrates no shortage of merchants, large and small, willing to pay and go about, well...their business.
The merchant is less likely to be a reformer of corruption than the local pastor, the underpaid reporter, or self-envisioning alderman with pretensions of leading his district to the promised land.
Reformers must be paid for their grueling and sometimes perilous efforts at bringing the corrupt to heel, or feed off the mystical food of missionary zeal. The individual businessperson is likely to be distracted by more mundane considerations.
The concern of businessmen, or lack thereof, is inconsequential because, throughout all of history and every culture, the bribee awaits with itchy palms.
Do Companies Care?
The role of good corporate citizen is a well-defined one. Transgressions of the law and moral order, such as it is, are bad for business. There are companies that strive for a prominent position in the community, and still others with considerable philanthropic input.
Larger corporations maintain running relationships with regulators of all stripes: environmental, financial, work safety professionals often access a revolving door that drops them now at the steps of government, next at the corporate trough.
When Gulf Oil Company found its political contributions “fund” in the cross-hairs of Watergate prosecutors it was the founding Mellon family of Pittsburgh, Penn., that became indignant at the sullying of their name.
In response, an internal review committee was created to sift through the operations and actions of Claude C. Wild, head of the “Government Relations Office” under scrutiny.
Wild was a well-known source of political contributions and the Gulf auditors wondered how it was that top executives never inquired as to where the money came from. They concluded that Chief Executive Officer Robert Dorsey, “perhaps chose to shut his eyes to what was going on.”
Wild himself told the committee, “It was one of those things, I guess, that they – nobody wants to talk about but everybody realizes may be going on.”
Dorsey said he did not inform company directors of the payments because he found the topic “rather delicate,” adding that revelation would have been “embarrassing.”
The committee’s recommendations focused on making the professional class in Gulf’s employ responsible for eliminating off-the-books accounts, enhancing internal audits, and burdening in-house counsel with acting as the company’s legal conscience.
The harried small businessman can either pay up, move on, or divide precious resources between the bottom line and the commonweal.
The corporation, however, can dedicate resources to cultivating a class of employees that serve as a check on the more ambitious natures of those doing the buying and selling; to consider worldly concerns beyond profit and stockholder satisfaction.
With all its ambiguity, shadowy presence, and ancient persistence, a good businessman should know a bribe when asked for one.
And if he doesn’t, or chooses not to, somebody else in a good company is paid to do the job of reminding him.
1. Stephen Siciliano, “Defense Rests in Trial of Rosen, Former Fund-Raiser For Sen. Clinton,” Money and Politics Report, May 27, 2005, p. 1.
2. John T. Noonan, Jr., Bribes: The Intellectual History of Moral Idea (Berkeley: University of California Press, 1984), p. 689.
3. Noonan, p. 658.
4. Noonan, p. 761.
5. Noonan, p. 638.
6. “Bribe Britannia,” The Economist, 23 Dec. 2006, pp. 83-84.
7. Luis Buñuel, My Last Sigh, (New York: Vintage Books, 1983), p 212.
8. Noonan, p. 534.
9. Noonan, p. 534.
10. Noonan, p. 547.
11. Noonan. p. 503.
12. Mark Twain, The Family Mark Twain, (New York: Dorset Press, 1988), p. 1311.
13. Noonan, p. 575.
14. Noonan, p. 635.
15. Noonan, p. 635.
16. Noonan. p. 638.