I am sorely tempted to use the Varsity Blues college cheating scandal as a teaching moment on how we Americans need to look more deeply at the rising inequality and unfairness in our country, instead of falling back on comfortable tropes like how we are the land of opportunity. Since this is probably not the place for that, I will instead use it as a teaching moment on why bribery is dangerous and even pointless.
Back in 2017, in China Bribery. Not Smart and Not Necessary we wrote of how it is wrong to contend that contracts are not needed in China because of court corruption. We discussed how most Americans don’t understand how court corruption usually works in breach of contract cases, using a Russian litigation matter my law firm had handled as an example. The point of that post and this one was that paying bribes is never wise:
Note also that we never discussed our client paying a bribe to anyone. That is always the worst alternative because it puts people at real risk of going to jail without anything close to a guarantee it will even work. When our Russian lawyer said that people in Russia rarely get arrested for bribery, he was talking about Russians, not foreigners. Do you really think you have the savvy to engage in risk-free bribery in a foreign country? I can tell you that none of our firm’s China lawyers would ever make that claim.
I then wrote about how after a talk I gave in Cleveland that touched on bribery and corruption I discussed China bribery with “an audience member, Kimberly Kirkendall, who had commented to the audience that in her experience many of the times where she was aware of someone having paid a bribe in China they had done so essentially because they wanted to, not because it was necessary they do so.” I mentioned to Ms. Kirkendall “how some companies seem almost to delight in paying bribes but that our China lawyers — believe it or not — had never once been asked to pay a single bribe in China, even though we are constantly dealing with the Chinese government to register trademarks and copyrights and WFOEs and Joint Ventures. Kimberly commented on how foreigners sometimes brag about paying bribes and how troubled she was by that. I then mentioned how stupid and risky it is to pay bribes in China.”
In that post I quoted extensively from something Ms. Kirkendall had written on bribery that I very much liked:
When I hear that a company has used bribes I start wondering about the reason for the bribe. Was it a payment to someone to do his or her job or a payment for them not to do their job? In almost every instance these days, it seems it is the foreigner who initiates the bribe. The below are examples of matters on which I personally worked that highlight the important difference between these two reasons.
Example: A U.S. company was importing components from China, using both its own team in China to find suppliers and control the orders and a trading company. The US management came to me for help in figuring out why some in their company were claiming they needed to use a trading company their China business, even though the trading companies were increasing costs by taking their own payments from the transactions. They wanted to know why they were paying a trading company to buy and export goods when they could do all that themselves. It turned out that a group within the company wanted to utilize lower HTS custom codes for export to save money and Chinese Customs didn’t agree with that custom code classification. The US company was using the trading company to pay China customs a bribe so they could export their products under the “wrong” code and save money. In other words, there was no need to pay bribes, just a desire.
Example: A company was setting up a factory in China and the local government was concerned about air emissions from its manufacturing process. In the United States, the company had shown its emissions met EPA guidelines. The local Chinese agency was not convinced and asked for more tests and documentation. The company was left with options – see if there was an “economic incentive” that would encourage the regulatory official to approve the paperwork, or spend a few months and thousands of dollars doing the research to prove their manufacturing met the guidelines. They chose the “economic incentive” route. Again, an example of a company choosing to pay a bribe out of a desire to get a government official not to do their job, not a bribe necessary to get that official to actually do their job.
The point I am trying to make here is that the excuse foreigners make about having no choice but to pay a bribe is rarely true. The foreign companies I hear about paying bribes chose to do so. They were not responding to a request for money; they were offering money as an incentive for a Chinese worker to deviate from their professional responsibilities.
Your thoughts?
