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Fair Is What You Can Get Away With

A Washington Post article of 3/20/11 carries an article relating that the SEC is accusing IBM of foreign bribery.  I can recall the era of the 50's-60's when IBM was thought to be the darling of the corporate world and incorruptible. 


Gisting the article, IBM is being accused of bribing South Korean gov't officials with cash and laptop computers.  Cash was distributed via a shopping bag in a Japanese Restaurant and through a bank account of a 'hostess in a drink shop'.   Bribes surfaced totaled some $207k.  In exchange IBM received Korean contracts worth millions. 

Likewise, IBM was charged with maintaining slush funds to provide gifts and overseas trips to Chinese gov't officials.  Involved are two key managers and more than 100 IBM-China employees. 

The company agreed to a settlement of $10M while neither admitting nor denying wrongdoing. 

In recent years the SEC has brought foreign bribery charges against US companies such as Tyson Foods, Halliburton, ABB and Daimler.  The article alludes that these cases, when combined, suggest bribery represents the status quo in corporate world. 

The SEC alleged that IBM recorded improper payments as legitimate business expenses and, in at least 114 instances, IBM employees worked with a local travel service in creating fake invoices.   Chinese gov't officials who took the trips received gifts and per diem payments. 

IBM's actions are more understandable when cognizant of the globalized economy where bribery is acceptable, more or less, in about ¾'s of the globalised world.  I refer to it as the ' wild west of free trade'.  Merge them up like beefy wrestlers and let them fight it out. 

China and S. Korea officials are surely aware of the SEC charges.  NTR there.  Somehow, I think China and perhaps S. Korea will be the ultimate winners in 'Free Trade'.  . 

Otherwise, we have the Corpocracy we deserve

Comments Section

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7 Comments

Roy,

Bribery is still how it is done worldwide,including the US. The trick is not getting caught.

This might explain why we really haven't advanced all that much from a feudal society, at least as I see it.

Greg, quite right. Free enterprise as a concept is like democracy. It is really very damned hard to achieve, requiring appropriate education, cultural requirements, and rigorous enforcement and policing to make such a concept work the way it was supposed to. Or, put another way, these kinds of concepts require systems which bring out the best in people's potential. We are a very long way from that kind of culture in the world or U.S., yet.

The single most important action humanity can take to raise the bar for democracy and free enterprise, is to effect political reforms that first get rid of bribery in the halls of government. Absent that, there can be no effective policing or enforcement, only token gestures and occasional token examples.

A major step, rhetorically, was taken under TARP which held that executives would be personally and directly responsible for the use of those TARP funds. Expand that concept and fund its enforcement, and a major down payment will be made in making democracy and free enterprise what that can potentially be.

When mired in shareholder demands for short term profits, and executive competition for the biggest compensation packages, it is all too easy to forego the fundamentals that can insure sustainable prosperity into the long term future.

Good topic, Roy. Thanks for bringing this to my attention.

IMO, nothing will change, no reform to be had, until we can abolish corporate personhood law through the efforts of a new 3rd party with a different political attitude (Republic Sentry Party for example).

Now, I hear a US Agency is going to make a $2B loan available to Petrobras, (Brazilian gov't oil entity). Can you tell me where in the Constitution the gov't is authorized to conduct business?

Otherwise, we have the Corpocracy we deserve.

Roy, can you show me ANYWHERE in the U.S. Constitution where it prohibits the government from conducting business? In fact, there are a number of places where it authorizes the conduct of business, expressly.

The government has been conducting business since before the Constitution was drafted, and every day since. It borrows, makes trade agreements, purchases labor services, contracts with the private sector, can take private property with fair compensation, and all these are either in the Constitution or were accepted practice before the Constitution was ratified. Check your Article 1 - Section 6, Section 7, Section 8, Article 6, Amendments 5, 16, 18 just for starters.

David, beyond authority to ‘regulate’ commerce and maintain a spiffy military I don’t know that the gov’t has the authority to conduct business. Specifically, using tax revenue in loaning a foreign gov’t $2B for a foreign gov’t entity to drill for oil. Eniway, seems a mute/daid issue as what I had ‘heard’ appears to be incorrect information. Seems the deal involved the Export-Import Bank in lining up US drilling equipment for Brazil to purchase.

The Washington Post put out more information on SEC bribery investigations today. In 2010, SEC top 10 settlements were: BAE – $400M, ENI – 365M, Technip – 338M, Daimler – 185M, Alcatel-Lucent – 137M, Panalpina – 82M, ABB – 58M and Pride Intl – 56M.
Haliburton, in pursuing Nigerian contracts allegedly routed bribe payments through bank accounts in Switzerland and Monaco. A middleman for the Italian firm ENI allegedly handed over several millions in US currency to a Nigerian gov’t official. The balance was paid in local currency allegedly requiring delivery by the carload. According to the article bribe payments were so accepted in the market place that Germany had allowed their companies to count foreign bribes as tax deductible.

Innospec, a mfctr of fuel additives, was paying bribe money to Iraqi officials and complained they were using most of their profits for bribes. Some bribes were used to ensure a competitors product failed a field test. Innospec paid $9.2M in bribes for 60.1M of profit and was fined $40.2M. Innospec and authorities agreed that the total was the most the company oould afford.

Otherwise - - -

Roy said: "David, beyond authority to ‘regulate’ commerce and maintain a spiffy military I don’t know that the gov’t has the authority to conduct business."

Then define 'conduct business', Roy. Because all the Constitutional provisions I cited enable the government to conduct business by my definition of the wording, which is as follows:

Buy and sell assets.

Invest in physical innovation, and social programs which benefit the American people.

Provide services to persons for fees.

Borrow and lend money at fair market rates.

Define and engage in contracts for services and goods.

All these are provided for in the Constitution and laws emanating from it, and have been activities of the government for a very, very long time, without successful challenge in the U.S. Supreme Court.

Your definition MUST be different from mine regarding 'conducting business', or, your statement has not pondered the meanings of the words in the Constitution.

If our government has been permitted since its beginning to borrow money from foreign governments, which it has, what makes you think the founders would have withheld the power to lend money to foreign governments, if deemed in the national interest. Did the U.S. not fund the restoration of Germany and Japan? Was that not a loan to foreign governments? Did the Supreme Court not uphold those loans? The answer to these questions, is YES!

The Continental Congress was engaged in all these behaviors BEFORE the Constitution was ratified, and George Washington's successful revolution absolutely depended upon these activities by the provisional government. There is no evidence anywhere, that I am aware of, that prohibits the government from engaging in business activities. The only difference between the government and private sector businesses, is the source of their incorporation and their source of revenues.

We are an international borrower. Ergo, we are obligated by the laws of economics to be, also, an international barterer, even if our role as international leader doesn't mandate this, which of course, it does.

One cannot manage trillions in annual budgeting without engaging in business practices. You can call it something else when it is the government engaging in these, but, they remain business practices, nonetheless.

Bribery in government and business dates back long before the Roman Empire but is most well documented in historical times in the Roman Empire. Nero and other emperor's lost their claim to power in part because of the corruption and cronyism and bribery rampant in their regimes.

Bribery in American government is absolutely shameful in light of holding ourselves out to be a nation functioning under rule of law. That law sanctions bribery through campaign financing. To fix American government bribery, one must first the legalized bribery in the political system.

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