I have been dealing with this government bureaucrat in charge of procuring supplies for his office. Our first transaction was a-okay. I had no complaints and it went on fairly smoothly in spite of slight delays in payment.
Our next transaction involves a reorder of supplies from my company, at volumes much bigger than the first.
This time, I received broad hints that we should pay a certain so-called “SOP” in order for the officials to sign the requisite invoice and purchase order.
The amount they are asking is not too exorbitant and won’t eat too much into our expected profit. But I have serious reservations about paying “SOPs.”
On one hand, I want the deal to go through as I was hoping for more repeat orders in the future from this large GO; on the other, I do not want to sacrifice my principles in giving in to that demand.
How can I deal with this situation without compromising on my ideals while not losing on opportunities to do business with this agency?
Yours is not a case an isolation. Many businessmen have experienced being asked for grease money in dealing with government at some time or other.
The temptation to give in may be strong. Paying a bribe can secure an immediate benefit to the business but it is ultimately detrimental to you. With that initial bribe, you will start to be dependent on the corrupt official. In turn, he would be demanding more and more money from you. And what if the irregularity is unearthed? You will be implicated in the case and who knows what the consequences will be?
Do you know that there is Anti Corruption and Graft Practices Act? This law prohibits government officers and employees to request or receive any gift, present, money or material benefit from the public transacting with it in connection with contracts, permits or licenses from the particular GO.
In turn, it is also unlawful for any person to induce or cause any public official to commit these offenses.
Consider also the advantages of running a business ethically:
1. Competitive advantage – An SME with a good reputation has a competitive advantage as it becomes the preferred supplier . A good reputation also increases your chances of being selected as supplier to multinationals and local large companies in their supply chains.
2. Reduced cost of doing businesoss – Bribes can be costly and even small ones add up. Money that would have gone to bribes is saved and can be used to expand the business.
3. A business with high ethical standards is conducive to high employee morale and becomes known as a good place to work
4. Should the business owner decide to sell the business, a good reputation will make the business more attractive to potential buyers.
5. Corruption is against the law. An SME that does not engage in corruption will be better protected against penalties, blacklisting and suspension of license.
You will probably lose this one customer if you stand your ground. But you will gain in other more important and lasting ways.
Reference: Anti-Corruption Manual for SMEs by the Hills Program on Governance, 2011