Corruption! Bribery!

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To the victor goes the spoils! The question is? How much are you willing to pay to get what you want?

By its nature corruption can be difficult to detect as it usually involves two or more people entering into a secret agreement. The agreement can be to pay a financialinducement to a public official for securing favour of some description in return.

Corruption Chart

In overseas corruption this can manifest itself by a UK company paying a bribe for the benefit of an overseas public official in order to win a contract. This can be done through a 3rdparty commonly known as an agent or advisor who then passes the bribe on to the public official or directly by the UK company to public official.

Ingenious methods of making the payments are used by those involved, including moving the money through a number of offshore companies (that on the face of it has nothing to do with the intended recipient) registered in various jurisdictions.

The secret nature of the agreement means that it is difficult for anyone other than those involved to know what is going on. As a result of the work the Serious Fraud Office (SFO) has conducted, we have identified a number of questionable practices within various sectors. We call these corruption indicators.

Here are some definitions on some corruption-related terms that you may have heard of:

  • Bribery – Giving or receiving something of value to influence a transaction
  • Illegal Gratuity – Giving or receiving something of value after a transaction is completed, in acknowledgment of some influence over the transaction
  • Extortion – Demanding a sum of money (or goods) with a threat of harm (physical or business) if demands are not met
  • Conflict of Interest – Employee has an economic or personal interest in a transaction
  • Kickback – Portion of the value of the contract demanded as a bribe by an official for securing the contract
  • Corporate Espionage – Theft of trade secrets, theft of intellectual property, or copyright piracy
  • Commission/Fee – Used by a UK company or person to obtain the services of an agent/agency for assistance in securing a commercial contract

India and Corruption! But India is not alone! The vast majority of Asian countries with one exception Singapore, is on this list!

An Indian website,, set up last summer by anti-corruption activists, reveals just how grasping officials can be. It has documented over 8,500 instances of bribery adding up to nearly 375m rupees ($8.4m) in back-handers. These include 100 rupees to get a policeman to register a complaint about a stolen mobile phone and 500 rupees for a clerk to hand over a marriage certificate. The amounts are much larger to facilitate income-tax refunds, where the standard “charge” is 10%; sums between 5,000 and 50,000 rupees change hands.

But such initiatives can do little beyond allowing people to vent their anger about corruption. Kaushik Basu, the chief economic adviser to India’s finance ministry, suggests that this may be partly because the law treats both bribe-giving and bribe-taking as crimes. This makes it hard to blow the whistle on corrupt officials, because the bribe-giver has also broken the law. If he complains, he risks prosecution or, more likely, being asked for another bribe by the police. In a provocative paper based on game theory, Mr Basu argues for the legalisation of some kinds of bribe-giving. His proposal has instigated a furious debate in India, with television channels even assembling panels to discuss it.

In the land of opportunity, fair trade is not neccessarily the key to winning! Hotdogfish!