Wednesday, August 15, 2012

A Corrupt Culture

This Reuters story in Yahoo News reminds me of a situation shared with me by an MBA student nearly thirty years ago. The student worked for a well-known U.S. manufacturing firm that sold major systems to be installed in buildings; he managed the Southeast Asian region of the firm.

He indicated that Indonesia was one large nation in which his firm did no direct business, because doing business there required bribing government officials. Such bribing would violate the Foreign Corrupt Practices Act.

Instead what his company did was sell their systems to an Indonesian firm which in turn marketed them to end users. They also trained the Indonesian firm's technicians.

The U.S. firm did no bribing, engaged in no corruption. Their tacit assumption was that the Indonesian firm must be corrupt, although they were careful not to know for certain. This is known as "plausible deniability."