Lubricating business transactions

By Myrna Rodriguez Co

(This article was first published in the Philippine Daily Inquirer, November 17, 2017.)

At the Small Enterprises Research and Development Foundation (Serdef), we have sometimes been asked for advice by small business owners on the ethical dilemma: To bribe or not to bribe?

Our response has been an unvarying “Don’t give in if you know what’s good for you.”

Photo credit: negativespace.com, www.pexels.com
Photo credit: negativespace.com, www.pexels.com

Most entrepreneurs have experienced being asked for some amount in order to facilitate transactions with some institutions they do business with.

Often, this has something to do with contracts, licensing, securing permits and clearances, and obtaining certification.

It is not always money that is asked for.

It could instead be a request for a donation in kind; for example: food and beverages and raffle and door prizes for institutional get-togethers, especially during the holiday season.

Many entrepreneurs admit they “go with the flow.”

They are able to overcome initial reservations about the practice and have come to accept the requests as standard operating procedure or SOP.

Consequently, they regularly set aside an allocation for it in their budget. However, there are also some who continue to feel bothered.

As one engineer-contractor has put it: “I cannot forget that there cannot be bribe-takers if there are no bribe-givers. If we give what is being asked for, we are as much responsible as the corrupt officials for the ethical breach .” This engineer, who refuses to be named, adds: “I want to be proud of my business; it is my baby. I cannot keep on feeling good about my baby if I took part in fishy transactions. ” Luckily, he was able to successfully shift his market from government to private institutions.

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 its sustainability and reputation.

With an initial bribe, a business will start to be dependent on the corrupt official.

In turn, more and more money may be demanded with each succeeding deal.

Photo credit: pixabay.com, www.pexels.com
Photo credit: pixabay.com, www.pexels.com

Not too well known to the small business community is the Anti-Graft and Corrupt 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 office.

In turn, it is also unlawful for any person to induce or cause any public official to commit these offenses.

Business owners found to violate this act could be permanently or temporarily disqualified at the discretion of the Court, from transacting business in any form with the government.

Consider also the advantages of running a business ethically:

1. Competitive advantage—A small or medium-scale business with a good reputation has a competitive advantage as it becomes the preferred supplier . A good reputation also increases one’s chances of being selected as supplier to multinationals and local large companies in their supply chains.

2. Reduced cost of doing business—Bribes can be costly and even small ones add up. Money that could have gone to bribes is saved and can be used to expand the business or modernize it by acquiring state-of-the-art technology or hire highly-skilled workers.

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. A small or medium-scale enterprise that does not engage in corruption will be better protected against penalties, blacklisting and suspension of license.

A principled entrepreneur will probably lose a few customers if he stands his ground. Initially, that is. But he will gain in other more important and lasting ways.

Reference: Anti-Corruption Manual for SMEs by the Hills Program on Governance, 2011

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