Reference no: EM13916828

Baksheesh, Mordida, and Kumshah: Making Grease Payments Abroad

In the Middle East, bribes are called baksheesh. In Mexico, they are mordida; and in Southeast Asia, kumshah. Although it takes place in many parts of the world, bribery is not officially sanctioned by any country.

In the United States the Foreign Corrupt Practices Act prohibits giving anything of value to a foreign official in an effort to win or retain busi- ness. However, this law does allow payments that may be necessary to expedite or secure "routine governmental action." For instance, a company could make small payments to obtain permits and licenses or to process visas or work orders. Also allowed are payments to secure telephone service and power and water supplies, as well as payments for the loading and unloading of cargo.

Your Task. In light of what you have learned in this chapter, how should you act in the following situations? Are the actions legal or illegal?

a. Your company is moving toward final agreement on a contract in Pakistan to sell farm equipment. As the contract is prepared,
officials ask that a large amount be included to enable the government to update its agriculture research. The extra amount is to be paid in cash to the three officials you have worked with. Should your company pay?

b. You have been negotiating with a government official in Niger regarding an airplane maintenance contract. The official asks to use your Diner's Club card to charge $2,028 in airplane tickets as a honeymoon present. Should you do it to win the contract?

c. You are trying to collect an overdue payment of $163,000 on a shipment of milk powder to the Dominican Republic. A senior government official asks for $20,000 as a collection service fee. Should you pay?

d. Your company is in the business of arranging hunting trips to East Africa. You are encouraged to give guns and travel allowances to officials in a wildlife agency that has authority to issue licenses to hunt big game. The officials have agreed to keep the gifts quiet. Should you make the gifts?

e. Your firm has just moved you to Malaysia, and your furniture is sitting on the dock. Cargo handlers won't unload it until you or your company pays off each local dock worker. Should you pay?

f. In Mexico your firm has been working hard to earn lucrative con- tracts with the national oil company, Pemex. One government official has hinted elaborately that his son would like to do marketing studies for your company. Should you hire the son?