Transparency International has just come out with a new ranking of bribe paying countries, entitled the 2011 Bribe Payers Index (h/t The Diplomat). This index “ranks 28 of the world’s largest economies according to the perceived likelihood of companies from these countries to pay bribes abroad. It is based on the views of business executives as captured by Transparency International’s 2011 Bribe Payers Survey.”
Not surprisingly, “companies from Russia and China, which invested US $120 billion overseas in 2010 and are increasingly active in global business, are seen as most likely to pay bribes abroad. Companies from the Netherlands and Switzerland are seen as least likely to bribe.”
Though I know there is no wholly objective way to measure a country’s scale of bribery, I am always impressed by Transparency International’s rankings because they always correspond fairly closely to my own “sense” of what is going on out there and the same is true of this ranking. However, in my own experience, China is far worse than Russia.
My law firm does a lot of Russia, as well as China work. We have many good Russian clients. We have only a few good Chinese clients. I am defining “good” here as a company that understands how to use lawyers, pays its bills, treats those in my firm with respect, and abides by the law.
We have confronted bribery issues head on many times with both Russian and Chinese companies and they virtually always respond very differently.
Let me explain.
A couple of times, Russian companies have strongly hinted or just come out and suggested that we pay off government bureaucrats or judges to get things done. Each time they have done that, I have made very clear that my law firm will not be a part of that and that if they are not comfortable with that, they should fire us right then and there. I then point out to them that their Russian lawyers referred them to us because we know how to handle things in the United States and the right way to handle things in the United States is NOT by paying a bribe. Every time I have had this discussion, it has worked. Sometimes, in fact, the Russian company has come back and said that they had mentioned our conversation to their Russian lawyers and their Russian lawyers had said we should not be fired.
Our results with Chinese companies have been very different. They tell us that “so and so told them that they can get this done in two weeks because they know so and so at the government and they know how the system works.” We tell them this is not how the system works and, in fact, what they are proposing to do is only going to turn something relatively easy and straightforward into something difficult and illegal. The Chinese company often acts like we are a bunch of naive idiots and moves on, which is fine by us.
Anyway, I think the difference between Russian companies and Chinese companies (and yes, I realize I am generalizing from a relatively small sample) is that the Russian companies are much better able to adapt to where they are doing business. They simply have a better understanding for the fact that just because they do business one way in one country does not mean they must do business that same way in every country. I do not have any illusions about whether the Russian companies who choose not to pay bribes in the United States are paying bribes elsewhere, but I am impressed with how they are able to do things correctly in the United States. Far too many Chinese companies seem unable to believe that not all countries do business the same way.
So even though Transparency International says Russian companies are a bit more likely to pay bribes than Chinese companies, my sense is that the opposite is true in those countries (like the United States) where bribery is rarer overall. My experience has been that a Chinese company is more likely to pay a bribe in the United States than a Russian or any other one. I also note that our American clients have a much tougher time convincing their people in China to eschew bribes than they do in convincing their people in Russia not to pay bribes.