Doing Business on a Global Scale

Today, it was reported that “Chinese court finds GlaxoSmithKline guilty of bribery”. This raises the question: Is the Chinese government really cleaning up? Or did they just not bribe the right people? Why is GSK in the spotlight and not others?

Having lived and worked in Russia, and frequently discussing their country’s state of affairs with friends from Columbia, Iran, China and India*, bribery and favouritism seems to be a fact of life in a number of countries including BRIC and the Middle East.

Most people here in Canada and presumably also in the US would agree that bribery is bad. In fact, the US has very strict laws forbidding US businesses to engage in such practices abroad. I agree that one should uphold one’s moral standards in contexts which challenge them.

But I’d like to add a word or two to explain why bribery is so rampant in some countries. It is not a lack of business ethics, as one might suspect, but rather a reaction to the conditions under which businesses have to operate in these countries. What is really lacking there is the rule of law.

For someone who has lived in the ‘West’ all their lives, it is difficult to image what the absence of rule of law looks like, and what it does to you. Imagine business where you sign contracts but you cannot enforce them. Where you accumulate wealth, but where it can be taken from you at any time. Where you apply to the authorities – police, judges, lawmakers – for help, but they do not serve you. All and everything you do, your success and failure is dependent upon knowing the right people, forging the right alliances, and often money changes hands. If you run a profitable business, others want a piece of the pie, or they won’t let you do your work.

If you make the wrong move, if you get in the way of someone more powerful than you, then you go down – accused of bribery, tax fraud, unsanitary working conditions etc. etc. Maybe you are guilty, maybe you are not. If you are lucky, you can pay your way out of it. Otherwise, you may end up in jail like Mr. Khodorkovsky, or worse.

Yes, people pay bribes and they should not be doing that. Yes, people defraud on their taxes and they should not be doing that. Yes, people let their employees work in unhealthy and unsafe conditions and they should not be doing that.

However, those that get singled out and publicly blamed for their wrongdoing are not necessarily the worst culprits. They are simply the ones who did not play their cards right, who ticked someone off. So how did Glaxo get into this mess?

* Thanks to Toronto’s multicultural community!

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