To Pay The Bribe Or Not To Pay The Bribe--Dealing With Corruption Overseas

Many people thinking about spending time or money in another country worry about the local corruption. Will it be a problem?

From cops looking for small bribes (la mordida) in exchange for not giving you a speeding ticket to presidents who siphon off millions from government funds, corruption exists everywhere. And I mean everywhere.

A reader who wrote in last week talked about her disgust at the corruption where she lives. She lives in the United States.

Many Americans are oblivious to the corruption around them because much of it is organized beneath a veil of "public interest." Forcing someone to join a union and pay dues if he wants to get a job is a form of organized corruption that isn't so different from paying off the guy who makes hiring decisions so he'll hire you. The latter simply eliminates the middle man.

Political Action Committees (PACs) can now legally outspend citizens, and they can make or break a candidate, leaving that candidate completely beholden to whoever is behind the PAC.

Corruption by another name.

Beyond unions, Political Action Committees, and lobbyists are the property confiscation rules that allow the U.S. government to seize assets if they even suspect you of illegal activity. Then there's the local developer who gets a zoning permit to build a rehab center in a residential community thanks to his son who is on the city council (this is an exploding issue right now in the community where my mother-in-law lives in Maryland)...and the governor who tries to auction off a Senate seat...

Sure, much of the blatant corruption in the States is eventually found out and prosecuted, but don't delude yourself into thinking it doesn't exist. It is really a matter of whether or not the corruption affects your life day-to-day. If you're not trying to get a job in an industry that's unionized, you don't pay attention to unions. Until your name is mixed up with that of some guy involved in a drug deal with a similar name and the DEA launches proceedings to take away your house, you don't think about the government's corrupt and unconstitutional activities. Etc.

The same principals apply in other countries. Is there corruption in Latin America? Definitely. Is there corruption in Ireland, France, the UK, Australia, and China? Yes. The question you have to ask yourself is whether or not the activity you're planning to engage in, whatever the country, will be negatively affected by the local corruption. And, if so, how are you going to react?

Much lower-level corruption in most of the world can be categorized as a facilitation fee. You pay someone a small amount to minimize or speed up the bureaucratic process. A cop pulls you over for speeding. You can pay him a small amount (most foreigners overpay, by the way) not to write you the ticket, or you can take the ticket. This means not only paying the fine (which will be more than the bribe you could have paid), but also figuring out how to pay the fine. Paying the cop facilitates the process, in terms of both money and time. Further, one could rationalize that the direct payment to the cop helps the working man on the street augment his probably meager income. Paying the fine, on the other hand, means cash into a pool out of which (no doubt) some higher-up politician is skimming.

Facilitation can be an option when it comes to immigration authorities, driver's license offices, cable companies, and nearly every other activity related to day-to-day life. Moving around the world, you're going to face this, and you're going to have to make a choice.

Some foreigners feel like they have no choice. If they don't pay the cable guy 10 bucks, he'll go away and maybe not return for months.

We had a container load of stuff we'd been keeping in storage in Paris delivered to us in Panama City earlier this month. This was the fifth container load of stuff we've taken delivery of in different countries over the years. In our experience, a representative from customs shows up when the container arrives to watch as the seal is broken and the contents are off-loaded...to be sure that what's coming out of the container is what's on the record as having been packed in the container. Then the customs rep goes on his way.

This time, two customs guys arrived on the scene. They watched as the container was opened, watched as the boxes were unloaded, then they sat down at a table inside. They sat and sat. At first, we weren't sure why. So we ignored them and began unpacking boxes.

Finally, after 20 minutes or so, the senior of the two guys approached our assistant to say that he wanted to inspect inside the boxes. Every single one. He wanted all contents unpacked as he watched, box by box. Then we began to understand. That's why the guy and his friend had been hanging around. They were waiting for us to offer them some kind of tip. Finally, tired of sitting and waiting, pay me off, the guy was saying, or I'm going to spend the rest of the day here watching as these 80 boxes are unpacked.

Before we could regroup on the situation, the customs guy had the shipping guys unpacking boxes. Furiously. Chaotically. Four shipping guys were unpacking four boxes in different rooms at the same time, taking out every item and placing it on the floor at random. My wife wasn't going to stand by and watch this.

"No, stop!" she cried out to all the shipping guys. "You can't unpack like that. You can't just take every item out at the same time and lay it on the ground. It won't be long before the entire floor area of the entire house is covered with stuff. That doesn't make any sense. Things will be broken.

"You have to unpack one box at a time, with me supervising," Kathleen explained, in the loudest voice she could manage.

The shipping guys obeyed. They stopped unpacking where they stood and gathered around a single box with Kathleen. She called out for the customs guys.

"If we're doing this," she said, "we're doing it systematically. One box at a time. And I've supervising.

"Come on," she said. "Let's get started."

The two customs guys looked down at the floor, then at each other. They walked back over to the table where they'd been sitting, gathered their things, and then headed toward the front door without a word. It was clear they weren't going to be offered a pay-off, so they were moving on.

This is the position Kathleen and I have taken all these years everywhere we've done business. We don't pay bribes. We just don't. Every time the option has presented itself (which has been often), we've chosen to wait things out.

I've been pulled over by cops for speeding or other legitimate traffic infractions in maybe a dozen countries. Again, I've never paid a bribe...and I've received only a couple of tickets. In every case, I could have offered the cop a few dollars. He would have preferred that to wasting ink, paper, and time writing out a ticket. Instead, I chat. I engage the guy in conversation as best as I can, depending on the language, until he gets tired of waiting for the slow gringo to figure out what's going on.

In Montenegro once, the nice cop and I tried four languages before settling on Italiano for the conversation that followed. I don't speak Italian, but I muddled through long enough for the guy, again, to get tired of waiting for me to figure out what he was waiting for. He sent me on my way, wishing me a nice stay in his country.

Only once has a cop said outright, "You can pay me, or I can write you a ticket." That was in Panama. I told him to write the ticket, which he did.

My point is that you shouldn't ever feel like you have to pay a bribe, like you have no option. You always have a choice. In Latin America, especially, it's as much a game as a source of cash flow. I choose to play, rather than to pay.

I'm writing from Medellin this week, where Kathleen and I have come to prepare for the Live and Invest in Colombia Conference Kathleen's group is hosting in this city starting Wednesday. We invited longtime friend and colleague Lee Harrison to spend the week here with us. He'll participate as one of the panel of speakers for the Live and Invest in Colombia event (as he's invested in real estate in Medellin and is planning to live in the city part-time). When I mentioned the topic for today's dispatch, he replied:

"The most corrupt country I've lived in was Ecuador. Although it's vastly improved under President Correa, when I moved there, it was second only to Bangladesh. But unlike Political Action Committees in the US--which take control of the election from the citizens--my own participation in corruption was under my control. If I wanted to pay a cop US$5 not to give me a ticket, that was up to me. And if I did so, it didn't affect the rights of other citizens...while saving me hours of standing in line at the police station to pay the ticket.

I'm not saying that the Third World corruption is a better system...but it's ethically no worse than what you find in the States."

Regards,

Lief Simon