Russian companies are the most likely to engage in bribery when conducting international deals, followed closely by China, according to the 2011 Bribe Payers Index from Transparency International.
Holland and Switzerland tied for the countries where businesses are the least likely to pay bribes. The United States came in tenth place and Transparency International recorded that 651 international businesspeople witnessed an American company trying to bribe a foreign company.
The index looks at the 28 largest export countries, evaluating them by surveying 3,000 international companies and business executives by which countries are mostly likely to offer bribes when doing business abroad.
Russia on Top
Russia's history of bribery is not well documented but is well known. Transparency International's Russia director Yelena Panfilova told The Moscow Times that 'Bribe' is one of the first words uttered in a business deal when Russians are involved.
I am ashamed every time these indexes come out, Panfilova added. I don't want to sit with a red face yet again. Let the Chinese or the Mexicans take the honor.
Russia's bribery problem was witnessed first-hand in July after a cruise ship called The Bulgaria sank in the Volga River, killing more than 70 people. The ship was built in 1955 and was dangerously overcrowded and under-maintained.
The Bulgaria had not been inspected or retrofitted for years, according to an AP report, and the last major renovation might have happened as far back as 1980. After the boat sank, Yakov Ivashov, Russia's river fleet regulator, was arrested for not properly inspecting the ship.
Presumably, Argorechtur, the cruise company that owned the boat, paid Ivashov to allow the boat to sail, despite its well-documented engine troubles. Argorechtur General Director Svetlana Inyakina was also arrested.
Panfilova claims that corruption is worse when businesses and government officials interact.
Business does not want to get involved [in corruption], but they [officials] come and show a price list, Panfilova told the Russian paper.
In October, Russian billionaire Boris Berezovsky filed a suit against fellow oligarch Roman Abramovich for bullying him into selling shares of the Sibneft oil company at a fraction of their value.
Abramovich allegedly told Berezovsky that Vladimir Putin, then President of Russia, would seize his assets if he did not comply. While the case doesn't directly involve bribing, a barrister for Abramovich testified about a lawlessness of Russian business since the fall of the Societ Union.
There was no rule of law, barrister Jonathan Sumption said, according to The Telegraph.
The police were corrupt. The courts were unpredictable at best -- at worst open to manipulation by major political or economic interest groups... Nobody could go into business without access to political power.
This culture has apparently been hard to shake.
Paying the Price
This suggests that corruption is not only a concern for the public sector, but for the business sector as well, carrying major reputational and financial risks for the companies involved, the organization stated.
Bribing seems like the business tool of a bygone day, when men in three-piece suits handed briefcases to local politicians. But, with the world still trying to pull itself out of a three-year financial crisis, any sort of questionable economic practice receives a well-deserved scrutiny.
Bribing is chiefly unethical. It gives richer companies unfair advantages in business and, more importantly, bypasses the vetting process and thereby exchanges cash for professional responsibility.
In Russia, this is what led to the Volga tragedy. In a larger, global sense, bribing is part of a too-often unchecked business system that has allowed companies to make profits at the expense of long-term financial security.
Just ask the 99 percent. Or Goldman Sachs, who paid a $450,000 settlement after the SEC accused them of violating short-selling laws in 2008. While naked short-selling and bribery are not at all the same thing, both are examples of the less-than-legal practices that are endemic to the global market.
Petty graft, such as tax evasion or demands for bribes, aren't so petty when the cumulative effect can shake an entire country, a region, and the global economy, the Christian Science Monitor's Editorial Board stated on Tuesday.
With none of the 28 countries listed being bribe-free, the Transparency International index just shows how prevalent the problem is. When the G-20 (all G-20 member states made the index) meets this week, it will work on an Anti-Corruption Action Plan, and the issue needs to be pushed to the foreground of the discussions.
In their meeting in Cannes this week, G-20 [Group of 20] governments must tackle foreign bribery as a matter of urgency, Transparency International Chairwoman Huguette Labelle said in a statement. Governments can press home the advances made by putting resources behind investigations and prosecutions of foreign bribery, so that there is a very real deterrent to unethical and illegal behavior.