Business, Legal & Accounting Glossary
n. the crime of giving or taking money or some other valuable item in order to influence a public official (any governmental employee) in the performance of his/her duties. Bribery includes paying to get government contracts (cutting in the roads commissioner for a secret percentage of the profit), giving a bottle of liquor to a building inspector to ignore a violation or grant a permit, or selling stock to a Congressman at a cut-rate price. Example: Governor (later Vice President) Spiro T. Agnew received five cents from the concessionaire for each pack of cigarettes sold in the Maryland capitol building. The definition has been expanded to include bribes given to corporate officials to obtain contracts or other advantages which are against company policy.
Bribery, which is synonymous with pecuniary corruption, is an act implying money or gift given that alters the behaviour of the person in ways not consistent with the duties of that person or in breach of law. Bribery constitutes a crime and is defined by Black’s Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in discharge of a public or legal duty. The bribe is the gift bestowed to influence the receiver’s conduct. It may be any money, good, right in action, property, preferment, privilege, emolument, object of value, advantage, or any promise or undertaking to induce or influence the action, vote, or influence of a person in an official or public capacity.
It is a form of corruption and is generally considered unethical. In most jurisdictions it is illegal, or at least cause for sanctions from one’s employer or professional organization.
Bribery around the world is estimated at about $1 trillion (£494bn) and the burden of corruption falls disproportionately on the bottom billion people living in extreme poverty.
For example, a motorist might bribe a police officer not to issue a ticket for speeding, a citizen seeking paperwork or utility line connections might bribe a functionary for faster service, a construction company might bribe a civil servant to award a contract, or a narcotics smuggler might bribe a judge to lessen criminal penalties.
In some cases, the briber holds a powerful role and controls the transaction; in other cases, a bribe may be effectively extracted from the person paying it.
Expectations of when a monetary transaction is appropriate can also differ: tipping, for example, is considered bribery in some societies, while in others the two concepts may be interchangeable. In Spanish, bribes are referred to as “la mordida” (literally, “the bite”), in middle eastern countries they are Backshish or Bakshish. However, Bakshish is more akin to tipping and is socially permissible.
The offence may be divided into two great classes—the one where a person invested with power is induced by payment to use it unjustly; the other, where power is obtained by purchasing the suffrages of those who can impart it.
Bribery may also take the form of a secret commission, a profit made by an agent, in the course of his employment, without the knowledge of his principal.
The level of non-monetary favours that constitute an incentive to unethical behaviour is variable and may constitute a matter of opinion in a given field:
A grey area may exist when payments to smooth transactions are made. United States law is particularly strict in limiting the ability of businesses to pay for the awarding of contracts by foreign governments; however, the Foreign Corrupt Practices Act contains an exception for “grease payments”; very basically, this allows payments to officials in order to obtain the performance of ministerial acts which they are legally required to do, but may delay in the absence of such payment. In some countries, this practice is the norm, often resulting from a developing nation not having the tax structure to pay civil servants an adequate salary. Nevertheless, most economists regard bribery as a bad thing because it encourages rent-seeking behaviour. A state where bribery has become a way of life is a kleptocracy.
The tax status of bribes is an issue for governments since the bribery of government officials impedes the democratic process and may interfere with good government. In some countries, such bribes are considered tax-deductible payments. However, in 1996, in an effort to discourage bribery, the OECD Council recommended to that member countries cease to allow the tax-deductibility of bribes to foreign officials. This was followed by the signing of the Anti-Bribery Convention. Since that time, the majority of the OECD countries which are signatories of the convention have revised their tax policies according to this recommendation and some have extended the measures to bribes paid to any official, sending the message that bribery will no longer be tolerated in the operations of the government.
Pharmaceutical corporations may seek to reward doctors for heavy prescription of their drugs through gifts. The American Medical Association has published ethical guidelines for gifts from industry which include the tenet that physicians should not accept gifts if they are given in relation to the physician’s prescribing practices. Doubtful cases include grants for travelling to medical conventions that double as tourist trips.
Dentists often receive samples of home dental care products such as toothpaste, which are of negligible value; somewhat ironically, dentists in a television commercial will often state that they get these samples but pay to use the sponsor’s product.
In countries offering state-subsidized or nationally funded healthcare where medical professionals are underpaid, patients may use bribery to solicit the standard expected level of medical care. For example, in many formerly Communist countries from what used to be the Eastern Bloc, it may be customary to offer expensive gifts to doctors and nurses for the delivery of service at any level of medical care in the non-private health sector.
Politicians receive campaign contributions and other payoffs from powerful corporations or individuals when making choices in the interests of those parties, or in anticipation of favourable policy. However, such a relationship does not meet the legal standards for bribery without evidence of a quid pro quo. See also influence peddling and political corruption.
Employees, managers, or salespeople of a business may offer money or gifts to a potential client in exchange for business. For instance, the service company Aramark was recently accused of offering gifts to an assistant warden in the New Mexico Prison System in exchange for a contract allowing Aramark to provide the food services in the state’s prisons.
More recently, in 2006 German prosecutors conducted a wide-ranging investigation of Siemens AG to determine if Siemens employees paid bribes in exchange for business.
In some cases where the system of law is not well implemented, bribes may be a way for companies to continue their businesses. In the case, for example, where customs officials harass a certain firm or production plant, officially stating to check for irregularities, may halt production and stall other normal activities of a firm. The disruption may cause losses to the firm that exceed the amount of money to pay off the official. Bribing the officials is a common way to deal with this issue in countries where there exists no firm system of reporting these semi-illegal activities. The third-party, known as the White Glove may be involved to act as a clean middleman.
Specialists consultancies such as Interchange Solutions Limited (UK) have been set up to help multinational companies and SMEs, with a commitment to anti-corruption, to trade more ethically and benefit from compliance with the law.
Referees and scoring judges may be offered money, gifts, or other compensation to guarantee a specific outcome in athletic competition. A well-known example of this manner of bribery in sport would be the 2002 Olympic Winter Games figure skating scandal, where the French judge in the pairs competition voted for the Russian skaters in order to secure an advantage for the French skaters in the ice dancing competition.
Additionally, bribes may be offered by cities in order to secure athletic franchises, or even competitions, as happened with the 2002 Winter Olympics. It is common practice for cities to “bid” against each other with stadiums, tax benefits, and licensing deals to secure or keep professional sports franchises.
Athletes themselves can be paid to under-perform, generally so that a gambler or gambling syndicate can secure a winning bet. A classic example of this is the 1919 World Series, better known as the Black Sox Scandal.
Finally, in some sports, elements of the game may be tampered with — the classic example is from horse racing, where a groom or other person with access to the horses before the race may be bribed to over-feed an animal, or even administer a sedative to reduce a horse’s chances of winning. This is another type of bribery done for financial gain through gambling — bet against a clear favourite, and ensure that the favourite has an “off day.”
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This glossary post was last updated: 26th April, 2020 | 8 Views.