Sat, 10 Jul 2004

The other end of corruption

Michael L. Tan Philippine Daily Inquirer Asia News Network Manila

We often think of corruption in terms of the receiving end, which is, in turn, perceived mainly as sleazy-looking politicians, policemen, and government employees on the take.

We forget that the bribes have to come somewhere, and that the giver is not always a victim. It can be a corporation, working through intermediaries to facilitate a multibillion-peso government contract, all the way down to the jeepney driver trying to weasel his way out from the latest traffic violation.

It might be helpful for our diagnosis if we looked into results from a survey on corporate misconduct, directed by the Asian Institute of Management (AIM)'s Prof. Eduardo L. Roberto together with the Social Weather Stations (SWS). (I have to qualify that I'm relying on a news report that came out in the July 6 issue of BusinessWorld and that I'm basing this on the online edition. I'm on assignment out of the country but hope to get more details about the survey when I get back.)

The survey looked into the views of senior company executives from eight business organizations on various corporate practices. The results are not encouraging:

Twenty-four percent of those surveyed felt that tampering with company records was not always wrong, while 2 percent thought it was not wrong at all.

Forty-six percent thought that overstating company assets to get a loan was not always wrong. Three percent felt it was "not at all wrong" and 4 percent felt it was "wrong only sometimes" to fix the winner of a promotion in exchange for "something in return."

Three percent thought it was "not at all wrong" to sabotage the products of competitors. Conversely, if someone knew their own product was defective, 6 percent said it was not at all wrong not to disclose this.

What do all these figures suggest? On one hand, it seems we've imbibed the worst of capitalist values, the type that we've seen in recent months with large American corporations like Enron. This shouldn't be surprising: the American economist Milton Friedman has repeatedly stated that corporations exist for profit.

Even worse, it seems that to be bad is to be good. These days unethical corporate executives actually make money writing about how bad they've been, their books making more money than those talking about corporate ethics!

What makes it worse in the Philippines is that we are trying to develop capitalism by sowing its seeds on a seedbed of feudal values. This is illustrated by two of the AIM/SWS survey's findings. First, 8 percent of the executives said it was not always wrong to do "something" for friendship, position or seniority.

"Whistle-blowing" is just not acceptable because all too often, your colleagues in the office are relatives and friends.

The term "whistle-blowing" was used by the researchers, but I'd say even in cases where you agree to keep quiet but try to bring about reforms, you can get into a lot of trouble. The idea that a friend or relative might be wrong is simply unacceptable.

If, on one hand, we feel unflinching loyalty to the worst of scoundrels, we also have the converse: trying to win favors with the powerful. The most astounding finding of the AIM-SWS survey was that 15 percent of the respondents felt it was "not at all wrong" and 26 percent felt it was "not always wrong" to donate to the foundations of influential people with whom they would eventually have dealings.

No wonder so many of our politicians have set up foundations through which bribes -- let's call a spade a spade -- can be channeled. And I can't think of anything worse than using charitable foundations as a front; it's tantamount to stealing food from a hungry child. But that's what's happening today, reflecting the depths of corruption to which we've descended- charity converted into profit-making ventures.

Again, we've borrowed -- and corrupted -- this system of foundations and philanthropy from the United States. Remember that unlike Western Europe, the United States has never had a strong system of government social services. The idea behind American capitalism was that everyone gained if businesses could be left on their own, with minimal government intervention.

Fortunately, there were families and corporations that had some form of social conscience, and who would plow back some of their profits into social services, scientific research and the development of the arts and humanities. The contributions of these foundations have been tremendous: in 2003, some 63,000 American grant-making foundations gave out $29 billion to support a wide array of domestic and international projects, the Bill and Melinda Gates Foundation alone accounting for $1.1 billion.

Working for some of these foundations, I can tell you that most of them adhere to the most scrupulous of ethics. For example, if someone calls me to ask if he or she can discuss a potential project for funding, and we meet for lunch or dinner, I am required, by the foundations that hire me, to pay for the meal to avoid any conflict of interest. If that person or organization gets a grant later on, and I'm assigned to monitor their project, I again pay for my transportation, accommodations, and meals.

Unfortunately, we've again corrupted the concept of a foundation and charity as we graft feudalism to capitalism. We've aped the American system of powerful corporations with little accountability, and with few safety nets from both the government and private sectors. As for the system of foundations, the best I can say about so many of our local foundations is that they seem to be there more out of a feudal sense of noblesse oblige, that is, the rich throwing loose change to the poor. In other cases, the foundations are there as tax shelters or as public relations outfits ... and then with the politicians, well, we've already discussed them.

Developing a moral compass for our corporations and organizations will take time, but we need to start now by looking at, and correcting, our blind spots. As long as we deny the existence of corruption in our offices, all talk of such values as honesty itself becomes a form of deceitful corruption. As I keep telling my students, "If you cheat in your personal lives -- in your exams or in your relationships with your parents or boyfriends and girlfriends -- you have no right to complain about government corruption."