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Over the weekend, Tenneco Inc., told the SEC that it had paid $12 million to attorneys, advisers, consultants and agents in 24 foreign countries. The company said that two payments totaling $10,000 to an official of an unnamed government "were improperly described on the books of the company and may have been improperly deducted for U.S. income tax purposes." Tenneco also acknowledged making contributions to candidates in Louisiana that violated state law. Meanwhile, there were reports that the Venezuelan Government was investigating bribes paid by Occidental Petroleum to local officials.
What surprises many U.S. businessmen who have any knowledge of overseas markets is that the bribery revelations have so shocked Congress and the public. True, the Lockheed case has stunned even the most worldly executives—but more because of the size and clumsiness of the bribery, the prominence of the receivers and the potential damage to friendly governments than because of the fact of the payoffs. On a less monumental scale, these managers assert, dash, baksheesh, pots de vin, la mordida—in a word, bribery—is an ancient and accepted practice, necessary in many countries to get any business done.
The chairman of a Chicago-based multinational company, for example, condemns Lockheed for going beyond accepted practice in its payoffs, but then adds that there is a "gray area" in which American companies must accept the moral standards of the countries where they operate, like it or not. His own company, he reports, is now negotiating a contract in an Arab country to which it will add 5% for an agent's fee. The chairman knows quite well that the agent will pass much of the money on to government officials, but will not be told their names and will not ask. If the payments were not made, he says, the company would not get the contract. In effect, the company—like many others—is being subjected to extortion.
Payoffs in about the 5% range appear to be standard in many countries. Edwin Schwartz, a Lockheed agent in Colombia, once wrote matter-of-factly to the U.S. company that "4% or 5% is usually needed to consummate transactions in the price range of Lockheed products. A number of people involved not only in making decisions to buy but also in the financing approvals, import licenses, contract negotiations, etc., etc., expect part of the pie."
The attitude that bribery is acceptable where it is customary seems to be widespread in American business. Recently, Pitney-Bowes Chairman Fred T. Allen commissioned Opinion Research Corp. to poll upper-and middle-level corporate managers on whether they believed bribes should be paid to officials in foreign countries where such practices are standard. A surprising 48% said yes. A survey of 73 senior international executives, announced last week by the Conference Board, an independent business research organization, came up with exactly the same finding. Three-quarters of the executives said their companies had been asked to pay bribes, and 25% added that the demands are a serious problem in their industries.