Events - 13.06.2016 - 00:00 

Corruption – a perennial issue

Systematic corruption is a matter of course in many Latin American countries. At the same time, Swiss SMEs and multinational companies insist on zero tolerance of corrupt practices on site. How are they still able to do business successfully in such an environment? This is the question which the Centro Latinoamericano-Suizo (CLS-HSG) asked at the conference on “Corruption as a challenge for Swiss SMEs in emerging countries”.

14 June 2016. A gripping field report was provided by Franco Langsam. Langsam worked as an adviser to international pharmaceutical companies in Mexico for many years. During that time, the Swiss national experienced a wide range of attempts at corruption. He always reacted to them unequivocally, and this made an impact. “My friendly and steadfast demeanour ensured that I was accepted as a consistent firm and representative.”

“In the end, officials were fired.”

Once he was instructed to take goods through the customs, for instance. “The customs official offered me fine dinners and overnight stays in luxurious hotels. This was combined with an invitation to drop in regularly and see whether the goods were really clearing the customs.” Langsam then chose a different customs agent. Another time, his job was to obtain an application for approval more quickly. When he lodged his request, officials offered him dubious services, which Langsam did not want to accept: “I forged networks, we took action against the officials and in the end they were fired.” Subsequently, the authorities ensured that the processes proceeded faster.”

Great loss of reputation for companies quoted on the stock exchange

The adviser forcefully pointed out the image losses that threatened after shady dealings: companies would be threatened by great losses of reputation if it came to light that they were involved in corruption. The value of a company quoted on the stock exchange could easily drop by something like 30 per cent. For big corporations, in particular, long-term action is important, which primarily means: “Only do transparent deals and don’t become dependent on anyone or anything. Also, word will get round if you reject corruption.”

How can corruption be fended off?

To conclude his report, the adviser provided five tips as to how entrepreneurs can avoid the corruption trap: first, attempts at corruption are unlawful – the relevant authorities should be notified of them on site. Second, don’t make or accept any presents of money or donations. Third, don’t give any cash to authorities. Fourth, you should set up a compliance department in your own firm when corruption is attempted. And fifth, always assess the balance between service and consideration.

Corruption not always easy to discern

In the subsequent discussion, the audience raised an important question: what is corruption, actually? In practice, was the answer, corruption was not always easy to discern. Thus in many countries, presents are a matter of course in the transaction of business. Also, how do we rate the opulent business lunch in the high-end restaurant? Here, too, transparent communication can be helpful, i.e. such issues and uncertainties should be debated openly in your own company.

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