To Bribe Or Not To Bribe – Is That The Question?
August 19, 04 “How can you work in diamonds in Africa,
Writers
The diamond industry, which is very cognizant of reputational issues and the need to protect the integrity of the product, is displaying increasingly a laud
I was wondering how some of the world’s largest mining concerns (of other minerals, metals and commodities) are dealing with this issue. What are they telling their employees? One mining company (that has only a limited exposure to the diamond business) states that it enforces a strict prohibition of bribery of any kind. That it is clearly a non-negoti
At the same time – and here is the catch – the pragmatic mining company recognizes that it is not uncommon in some countries for employees to be asked to make relatively minor payments, more by way of a gratuity, to lower level officials or government employees. These payments (sometimes called “facilitating payments”) are sought to expedite routine services or administrative actions provided or performed by those individuals.
The huge mining conglomerate we analyzed states that it is opposed to making such payments as a matter of policy, and every effort should be made to resist them. They are not prohibited, per se. Employees are advised that an understanding of what lies behind a request (e.g. the person may be seeking recognition or status) may suggest ways to meet the request in an accept
The purpose of the payment is to expedite the completion of a routine service or administrative action which the company is entitled to under local law and in the ordinary course of events. The payment must not be an attempt to distort a proper decision-making process;
There is no reason
The business consequences of not making the payment will be serious;
The type and amount of the payment is consistent with what is customarily sought, made and sanctioned in the country concerned;
The payment will not expose the company or yourself to legal action under any applic
Management is made aware of the payment; and
The payment is accounted for clearly and accurately.
That laws must be adhered to is self-evident. To recognize that there are “impossible situations” that will require some kind of compromise requires also a very responsible attitude to one’s staff. In impossible situations (“you don’t get the equipment out of customs without some payment”) management must give employees clarity (and support) on how to handle. Recognizing this displays realism and pragmatism. As much as bribery should be considered evil and
Facilitation payments aren’t legal, and the mining conglomerate we use in our example makes that also fully clear. However, at the end of the day it is a business decision. The company understands from the various laws and OECD conventions that in most legal environments those making “facilitation payments” can depend on limited defense arguments provided that (1) the payment is considered lawful in the country concerned and (2) the payments are to facilitate ‘routine government action of a minor nature’.
This diamond mining company will allow such facilitation payments, but demands that “accurate records have been kept of transactions related to any payments of money or giving of a benefit, detailing:
The circumstances (conduct) under which the payment was made;
The value of the benefit;
The date of which the conduct occurred;
The identity of the foreign public official or other person the payment was made to;
Particulars of the routine government action that was sought; and
The officer’s signature or some other means of verifying their identity.”
One can forcefully argue that a facilitating payment seems to be just another name for a bribe. I find it hard to know where to draw the line – only a cynic or a fool could l
For the diamond industry it is interesting to compare the approaches of some of the major suppliers. The De Beers Diamond Best Practice Principles are binding upon the company itself and on its clients. The very strict interpretation of these principles makes life extremely difficult for its clients and, in some ways, makes clients vulner
Many corporate executives recognize that the very strict rules may inadvertently and unwittingly create a problem for lower- or mid-level field (out-in-Africa) employees: they are expected to do their job and senior management prefers not to know how things are done. These employees are always at “the mercy” of top management – and are in a no-win position.
Some mining concerns, enjoying the comfort of a long tradition of legal compliance, have adopted a more realistic approach, preferring the provision of enhanced comfort for their own officials. Their rules may not always be consistent with all international “good governance conventions”, but they en
Most companies put the compliance weight squarely on their own employees, and less on their clients and contractors. One company operates a “help-line”, a phone or e-mail system through which all employees are required to report all serious breaches of ethical or good conduct rules, and all instance of non-compliance with the company policies to a high-level internal ethics panel. This policy recognizes that the world is in a transition process. [I have argued with OECD officials that it is better that “good companies” operate in problematic countries, rather than leave the problematic countries squarely in the hands of the rogue operators.] The prevailing norms and rules are continuously changed and updated. What is allowed today may well become intoler
The new diamond industry anti-money laundering compliance rules (and bribing is part of money laundering) require the est
All of this comes at a price. Full legal and ethical compliance may well mean that some business opportunities are forfeited. Less money is made in the short run.
These are not easy issues – and there are no easy answers.