Clean business comes from culture, not just laws
- Source: Global Times
- [22:49 August 23 2009]
- Comments
Officials from three Chinese State-owned companies are denying they were involved in an overseas bribery case in the United States with California-based Control Components Inc (CCI).
However, six other Chinese firms that allegedly accepted bribes have not responded yet to the accusations. Some say they should, even though there is also widespread suspicion in China as to the US Justice Department’s motives in making the names of the companies involved public.
It is not just a few in China who are wondering if Washington is using another strategy to counter competition from Chinese businesses. Some ask if it is trying to damage the reputation of prominent Chinese companies to prevent them competing in the international market, or creating more excuses for denying them from going overseas through mergers and acquisitions.
Negative media attention alone can devastate the bottom line and harm the shareholder value of any company. Siemens, the German engineering giant, was badly damaged after US authorities published suspicions regarding their allegedly inappropriate business conduct overseas.
But “no one can be a worm in another’s stomach,” as a traditional Chinese saying goes, and therefore, it is almost impossible to judge with 100 percent accuracy as to what the original motives were. However, what one can do is to examine, and if necessary, clean one’s own backyard to be confident and eventually free from accusations.
Skepticism toward anti-corruption efforts can be found everywhere. The United States is no exception. For example, the Foreign Corrupt Practices Act (FCPA) is the central piece of legislation being applied in the investigation against CCI. It prohibits bribery of foreign officials for purposes of obtaining or retaining business by anyone subject to US jurisdiction.
However, the enforcement of the act was not easy. In fact, it was enacted in 1977, but was largely unenforced until about a decade ago. There are still many who say it deters corporations from investing in developing countries where “corruption is rampant and bribes are commonly sought.”
Despite skepticism, FCPA enforcement and penalties are on the rise in the US. In one spring alone, 120 companies were investigated for FCPA violations. Companies that paid bribes to foreign officials have been subjected to criminal and civil enforcement actions, resulting in large fines, as well as suspension from federal procurement contracting.
In responding to the U. investigation of CCI, China’s State-owned Assets Supervision and Administration Commission of the State Council (SASAC) has also formed a special group to investigate the accusations.
But some Chinese legal experts believe more can, and should be done. For example, Chinese procuratorial branches should follow the case closely and take overseas prosecutors' evidence into account, weighing it against Chinese laws.
Over the years, China has always had the courage to deal with business bribery. Previously, in one of China's most high-profile bribery convictions, Chen Tonghai, the former head of Sinopec, China's state-owned oil and petroleum company, was convicted of taking $28.8 million in bribes and received a suspended death sentence.
Recently, Chinese prosecutors, despite heavy external pressure, also formally arrested four Rio Tinto employees on charges of obtaining trade secrets and commercial bribery. This time, China should show its people and the world its determination to stem out business bribery in the country as well.
But legal methods are not the only way to deal with business bribery and corruption. A cultural belief in clean transactions and business morals can be even more crucial.
A common belief in business used to be that maximizing shareholder value was the only goal. However, after the financial crisis it has been recognized that this contributed to economic turmoil. Increasingly, people believe that business in the 21st century should focus not only on economic development but also on social progress and a corruption-free corporate environment.
In Asian cultures, reciprocity and flexibility is seen as a source of strength in business dealings. However, people are raising the question: where do you draw the line between kinship and nepotism, between respect and corruption?
A blurring of the lines will only lead to corruption, turning a cultural strength into a weakness.
Eventually, no matter how sophisticated the legislation or moral codes are on business conducts, every country, business and individual has to look within to make difficult ethical decisions, China included.
We must make choices that every one of us, and the whole world, can be proud of.
Tian Wei is the host of “Dialogue” on CCTV's English Channel, and the main anchor of CCTV's special coverage of important domestic and international events. Previously, Tian worked in Washington D.C. as a correspondent, and covered the wars in Iraq and Afghanistan. Her blog is http://blog.cctv.com/html/09/960109.html. Reach her at tianwei.gt@gmail.com
