May 2, 2012

You can Succeed in Korea without Resorting to Bribery?

The following is a post by Tom Coyner a Senior Adviser to IPG.

Perhaps in a few warped ways, I have a bit of affection for the Foreign Corrupt Practices Act, which bars American companies from bribing officials overseas.

From a nostalgic perspective, I recall when this act was made into law while I was at my first “real job” at The Chase Manhattan Bank in Seoul. The immediate reactions around me in the US business community were those of dread. We were certain that we would be put to disadvantage when competing with the locals as well as with other foreign nationalities. It turned out not to be the case. In fact, by and large we discovered the act gave us legitimate cover not to “go local” in conducting unethical and potentially sordid business practices.

In time, other Western nations passed similar laws. While this clean business movement has hardly eradicated corruption, it has contributed to reducing unethical business behavior – most notably among large multinational corporations. It now seems the smaller and more local the business entity, the greater the likelihood for kickbacks, bribes, etc. – usually more with corresponding local governments or other small-time businesses.

In Korea, the Big Boys in business really don’t have to resort to bribes at the same levels as they once did. The biggest players pay their top managers well enough and these companies can command (squeeze) price concessions without needing in most cases to risk legal jeopardy.

Recently someone was passing around on the Internet a “Korea business unmasked”-type English language tips on doing business here – many of which suggested the wisdom of bribes, etc. I would guess that person has not been doing business long enough or perhaps operates on a small enough scale to avoid getting him or herself entangled in the law so far. Perhaps I should have passed on those suggestions. I might have been able to drum up some new business for a lawyer buddy of mine.
In any case, while some business continues to be done unethically, we should remind ourselves that ethics are not morals based on some kind of religious foundation. Rather, ethics are based on accumulated wisdom based on the centuries’ observations of what is likely to succeed and what is almost certain to fail – in the end.

As such, many of my friends & colleagues and I have reputations of being straight arrows when it comes to doing business. Again, it is not because we are so moral (we probably are not!), but it is because we are a bit street wiser than those business folks who are too often cutting corners and getting away with it – for now.


A Wall Street Journal article on this issue can be found at:  With Wal-Mart Claims, Greater Attention on a Law
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Sean Hayes, IPG's Co-Chair of the Korea Practice Team, may be contacted at: SeanHayes@ipglegal.com